San Francisco workers' compensation claims seize millions

Cracking down on abuse by city workers claiming to be sick or injured is one way The City is attempting to save millions of dollars this year as officials search for ways to bandage a hemorrhaging budget deficit.

Identifying abuse, lowering claims and managing workers’ compensation cases more efficiently saved as much as $4 million for The City last fiscal year, but more than $40 million in payments were still doled out.

The city and county of San Francisco employs approximately 26,000 people, and 3,406 workers’ comp claims we filed last fiscal year — which ended June 30 — costing The City $41.85 million.

The payouts were 8 percent less than the previous year, in which $45.5 million was spent on compensation. This year, city officials say they aim to reduce claims by 5 percent as a projected budget deficit of $522.2 million looms.

Workers’ comp claims are paid directly from San Francisco’s operating budget, and each department is financially responsible for the claims filed by their employees.

For example, the Police Department paid $9.8 million in workers’ comp claims last fiscal year. If the department was able to reduce its payouts by 5 percent, it would save more than $490,000.

Workers’ comp claims fit into two basic categories: medical or indemnity. Medical claims are for examinations or treatments when only a few work days are missed. Indemnity claims involve long-term leave.

Last fiscal year’s savings were not achieved by workers filing fewer claims; the number of new worker claims declined by just 15, from 3,421 to 3,406.

Significant cost savings were achieved through other means implemented by the Department of Human Resources, including changes to how The City was dealing with workers’ comp claims. The procedure was overhauled to cut down on “inefficiencies, waste and fraud.”

Other than the actual costs of the claim, The City also incurs costs whenever a worker misses work. The department generally either fills the position by paying overtime or simply loses productivity. In this area, the department has “put a lot of effort” into working with city departments to have employees return to the work force as soon as possible by putting them on light or modified duty.

One example of a department that is looking to cut down its workers’ comp payouts is the Recreation and Park Department. Last fiscal year, one out of five workers in the department filed a claim. Compensation and residual costs — such as paying for overtime to replace the workers — drained $3.5 million from the department’s budget.

This year, department director Phil Ginsburg has made it one of his priorities to reduce the number of workers’ comp claims filed by his employees by educating workers, like gardeners, on how to reduce the risk of sustaining injuries while on the job. That could save the department several hundreds of thousands of dollars.

Doctor oversight one way to lessen workers’ comp

In order to trim workers’ compensation costs, city officials started to examine certain portions of spending more carefully and have begun altering procedures.

In the past, city workers could visit any doctor they wanted, “without any oversight in quality of care or appropriateness of treatment,” Department of Human Resources spokeswoman Jennifer Johnston said. The City recently established a network of doctors to which injured workers are required to go.

As the department works toward reducing costs this fiscal year, it also wants to curb the skyrocketing costs of prescription drugs. Last year, The City paid approximately $2.5 million for prescriptions.

“We expect those costs to continue to increase dramatically as they have the past couple of years,” Johnston said. To that end, the department has just finished a review of the prescriptions, examining the “appropriateness of cost and type.”

Procedures that wasted money were exposed and eliminated. For example, in the past, each MRI bill had to undergo a review, which costs a fee. But The City has since negotiated a flat MRI rate, and the bills no longer require a review.

The Department of Human Resources  has also increased its oversight of medical treatments and procedures by establishing a panel of doctors who review The City’s case files to ensure treatments are necessary and appropriate.

— Joshua Sabatini


The number of workers’ compensation claims filed by the top 10 city departments*:

Department 2007-08 2008-09 Change
Police 663 600 -63
Public Health 771 935 164
Fire 499 440 -159
Recreation and Park 164 180 16
Public Works 218 213 -5
San Francisco airport 128 114 -14
PUC-Water 140 132 -8
Juvenile Probation 45 29 -16
Sheriff 211 125 -86
Human Services 172 161 -11
Total for top 10 departments</td>

3,011 2,929 -82
Total for all city departments 3,421 3,406 -15

* Excludes the San Francisco Municipal Transportation Agency

Source: Human Resources Department

Shelling out millions

Departments across The City cut their workers’ compensation spending by an average of 8.06 percent between fiscal year 2007-08 and 2008-09. The spending for the last fiscal year, which ended on June 30, however, still totaled more than $40 million.

Department 2007-08 spending 2008-09 spending Change
Police $12,257,638 $9,810,392 $2,447,246
Public Health $8,181,677 $7,659,150 -$522,527
Fire $7,063,385 $7,220,845 $157,460
Recreation and Park $2,514,149 $2,253,386 -$260,763
Public Works $2,330,783 $2,627,522 $296,739
San Francisco airport $1,507,574 $1,152,689 -$354,885
PUC-Water $1,312,071 $1,192,208 -$119,863
Juvenile Probation $970,814 $739,481 -$231,333
Sheriff $2,492,445 $2,191,903 -$300,542
Human Services $1,680,805 $1,369,809 -$310,996
Total for top 10 departments $40,311,341 $36,217,384 -$4,093,957
Total for all departments* $45,520,988 $41,853,369 -$3,667,619

*Excludes the San Francisco Municipal Transportation Agency

Source: Department of Human Resources



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