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Audit: Delgadillo Fund Cost Taxpayers Millions

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(credit: AP Photo/Kevork Djansezian)

(credit: AP Photo/Kevork Djansezian)

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LOS ANGELES (CBS) — A long-delayed audit of a workers’ compensation fund run by former City Attorney Rocky Delgadillo shows lax oversight may have cost taxpayers millions of dollars annually.

Chick, Delgadillo Legal Fight Continues: KNX 1070’s Bill Cooper Reports

The audit — which former City Attorney Rocky Delgadillo tried to block by suing then-City Controller Laura Chick — found that during his administration, the Workers’ Compensation Division referred only 4 percent of claims to fraud investigators when the industry standard is 17-21 percent.
The lack of oversight is potentially costing the city $5.4 million a year in benefits that should never have been paid, according to the audit.

The division was also faulted for collecting only 6 percent of the claims to which the city was entitled, potentially depriving the city of about $3 million in revenue each year.

Another $1-2 million is potentially being lost because of a practice of adjusting disability payments to mask errors committed by the Personnel Department, according to the audit.

Finally, the audit found that the division took about 5.8 years to resolve cases, when the the industry standard is a year or two. One case had been open for more than 20 years before being closed, according to the audit.

The delay was attributed in part to the division being understaffed. The auditors found that the City Attorney’s Office persuaded the City Council to hire lawyers and investigators to handle workers’ comp cases, but actually had them perform other work.

“The audit found that the City Attorney’s Office management of its workers’ compensation program was plagued with poor oversight, a lack of budgetary accountability and had the potential for millions lost to the city each year,” current City Controller Wendy Greuel said upon releasing the audit.

“I hope that this serves as a roadmap for the current city attorney to reform the Workers’ Compensation program in his office,” she added.

Current City Attorney Carmen Trutanich agreed to let Greuel conduct the audit, even though a judge agreed with Delgadillo that the city controller does not have authority to audit programs in the offices of elected officials.

“That was a power play between Laura and Rocky, Rocky versus Laura, and I’m not into that …,” Trutanich said. “The Charter does not authorize this type of audit, but for me, I welcome it, because if you have two heads thinking about something, you come up with a solution.

“I’m not the smartest guy in the world, I don’t claim to be, and if I get somebody else to come in and look at something and they say `You know what, you may have missed this,’ then God bless them because it helps the citizens,” Trutanich said.

“I welcome this because I want to fix the problem. I don’t want it to propagate. It’s not about me, it’s about the people of this city.”

Trutanich added that reforms are already under way, including boosting staffing for the Workers’ Compensation Division.

(©2010 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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