A new audit shows that the city of San Diego worker’s compensation spending is rising annually, but is not taking the necessary steps to curb the cost.
The audit, released this week, says last fiscal year the city spent $40.7 million in employee medical expenses and industrial leave. But when accounting for indirect costs such as lost productivity, that amount skyrockets to $224 million, an amount higher than the library and parks and recreation annual budgets combined.
The audit says the amounts spent on workers comp have increased each fiscal year for the past five years, and the city’s workers comp claim rates are 17 percent higher than similar agencies.
According to the City’s Injury and Illness Prevention Program (IIPP), individual departments are responsible for developing and implementing their own safety programs.
While departments have different safety needs based on the type of work conducted, auditors found that some departments’ safety programs do not address core elements of the Citywide IIPP. In addition, it found that the City’s Occupational Safety and Health program (OSH) had not, until recently, started reviewing and verifying whether departments have implemented and continue to maintain their required safety programs.
Finally, interviews with City staff indicated that some departments may not have enough resources dedicated to developing, managing, and promoting an effective safety program. These issues have likely contributed to the City having workers’ compensation claims rates that are 17 percent higher than similar agencies, as well as increased workers’ compensation costs and work days lost. Further, many employees indicated a lack of confidence in the City’s safety programs.
Auditors say it is imperative for the City to leverage data analytics to take a closer look at its existing safety programs and develop effective incident prevention strategies. Auditors found a lack of Citywide requirements on root cause analysis and corrective actions, coupled with insufficient incident investigation trainings provided to supervisors, has contributed to inconsistent and ineffective incident investigation practices. In addition, they found that, while the City performs some analyses with workers’ compensation claims data, it does not systematically collect and track injury, illness, and near-miss data to identify and prioritize safety issues
The Workers’ Compensation Division’s Claims Adjusters are trained to identify red flags for potential fraud in workers’ compensation claims. Additionally, fraud tips can come to Workers’ Compensation through either the City’s Fraud Hotline or directly to Workers’ Compensation. Although Workers’ Compensation has a process for reviewing and documenting investigations into red flags and tips, it does not centrally track all allegations of fraud or red flags and the outcome of investigations into the red flags or tips. As a result, Workers’ Compensation is missing potential information on the pervasiveness of workers’ compensation claims fraud or potential trends across the City.
Recommendations to improve Citywide safety management and the monitoring of controls over potential workers’ compensation fraud, and management agreed to implement all 10.