City Tackling Workers' Comp Claims Now To Save Money Later
By Associated Press - June 14, 2006PITTSBURGH, PA (AP) The city, which is saddled with more than 1,000 workers' compensation claims, is trying to settle some of the claims now so it can save money later.
At a cost of $23.3 million this year, Pittsburgh "has one of the largest budget percentages dedicated to workers' compensation of any place we've seen," said Dean Kaplan of Philadelphia-based Public Financial Management Inc.
Now, in the first year of its fiscal recovery plan, the city is starting to make lump-sum settlements to avoid shelling out money over several years.
"Clearly, the city can't afford to settle all of these claims at what everybody thinks they should get," said Kaplan, a member of the city's state-run financial recovery team. "But there are people who might want to settle at fairly favorable terms."
When an injured worker is awarded workers' compensation or disability, the city continues paying a portion of the salary until the employee returns to work or dies, unless the city successfully challenges the claim or reaches a financial settlement.
But only 14 of Pittsburgh's estimated 1,099 workers' compensation claims were settled this year, as of Aug. 1. The cost of the settlement was $652,000, but that could save Pittsburgh $9.3 million over the expected life spans of the employees. The average settlement cost $50,000 and the average age of the workers was 47.
Councilman Doug Shields said it's in the city's best interest to settle claims.
"It's a 'pay me now or pay me later' situation, but if we pay now, we'll end up and pay a lot less later," Shields said.
Some city officials, however, say the burden could be lessened by weeding out questionable claims.
"There are a lot of bogus workers' comp claims, and the city is paying for them," Public Works Director Guy Costa said.
Costa cited the case of a worker who returned to the job after an injury but later claimed a persistent injury and since mid-June has been receiving $10.40 in workers' compensation for every work hour he spends at home. Officials recently found out that police had charged him with punching and kicking the car and front door of his estranged spouse.
"Why does his doctor approve workers' comp when he's out knocking down doors?" Costa asked.
Pittsburgh's financial overseers say reducing workers' compensation costs is critical, which is why one reason they asked outgoing Mayor Tom Murphy to change his proposed 2006 budget.
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