The Trenton Times published the following article on May 20, 2013. To read the full article, click here.

Workers’ compensation claims on the rise in Trenton, officials say

By Erin Duffy/The Times of Trenton 
on May 20, 2013 at 7:00 AM, updated May 20, 2013 at 7:11 AM

TRENTON — Legal costs, expensive civil settlements and a barrage of workers’ compensation claims are adding up for the city.

During the past three years, public records show the city and its insurers have paid out $6.6 million in workers’ compensation claims, union disputes and lawsuits — and that doesn’t include thousands more in legal fees.

Several hefty settlements this year have caused the city’s general liability insurance premiums to rise. One of those was a $1.3 million settlement tied to a canceled municipal courthouse project and subsequent breach of contract suit brought against the city.

City business administrator Sam Hutchinson has registered concern at the rate of workers’ compensation claims. Since 2010, employees hurt on the job have received $2.2 million in compensation settlements, according to a review of city records obtained by The Times through an Open Public Records Act request.

Hutchinson, Council President Phyllis Holly-Ward and Councilwoman Marge Caldwell-Wilson met last month with the city’s workers’ compensation attorney and doctor.

“We wanted to get an idea of what was going on because there are an increasing number of workers’ compensation cases,” Hutchinson said. “Are these new claims, or are we just clearing old claims out of the pipeline? What’s the process? And we wanted to discuss a few specific cases” — like a $5,000 claim for former Water Works employee Stanley “Muscles” Davis, who is serving jail time for official misconduct. Davis is the half-brother of Mayor Tony Mack.

The payout rate also has city council members asking questions, especially as council was asked to vote recently on $349,000 in contract extensions for 10 outside law firms with specialties in municipal litigation and tax law.

Council ultimately pulled the contracts from the docket for further review.

Several council members have come down hard on the city’s reliance on outside law firms, at times refusing to extend contracts or pay pending legal bills for companies that continued to work under expired contracts or without council’s approval.

In January 2012, public records showed the Mack administration accrued $1.1 million in bills from outside law firms since taking office in July 2010.

“Why are we spending over a quarter of a million dollars on legal fees when we have a legal department and a city attorney?” resident Patricia Stewart asked at the May 7 council meeting.

Paying up

The city has settled 172 lawsuits and workers’ compensation claims from July 2010 to the present, records show. The lawsuits and settlements range from the relatively minor — $8,000 for a man injured on city property, $500 for a workers’ comp claim — to the seriously expensive, including a $375,000 settlement for a group of radio dispatchers who alleged racial bias and a 15-year, $3.4 million settlement over a land deal gone awry.

Many of the lawsuits were filed years ago, leftovers from the administration of former Mayor Douglas Palmer. They have taken years to wend their way through the courts. Several police brutality and civil rights violation lawsuits settled in the past several years, for example, date back to the tenure of former Police Director Joseph Santiago, who resigned in 2008 amid a fight over his residency.

But other suits are more recent. The Westside Plaza courthouse project suit cost the city $1.3 million this year and could end up costing a total of $8.1 million to $8.5 million if the city has to continue paying rent on the former supermarket where a new municipal courthouse was planned. Mack terminated the contract in 2010 and the city was promptly sued.

Mack pinned the blame for the hefty settlement on Palmer, saying his predecessor had brokered a bad deal when he signed a 30-year contract with Westside Plaza LLC to rent and renovate space for a new courthouse.

The city’s insurance premiums have spiked as a result of the Westside Plaza litigation and other settlements this past year.

The city’s general liability insurance fund costs rose $885,000 in fiscal year 2013 due to settlements, Hutchinson said in one budget presentation. The city paid $2.7 million for general liability insurance this year, up from $1.9 million in 2012. Workers’ compensation insurance was up $204,000 over last year, at $3.7 million for 2013.

The city’s $1.3 million settlement with Westside was included in this year’s budget.
At the May 7 council meeting, city attorney Caryl Amana defended the city’s use of outside law firms, daying the law department’s much reduced staff is not able to keep up with the scores of lawsuits over the past several years.

“There are two of us,” she said. “I am the city attorney, not acting, I’m permanent. I have a deputy. There are two of us.”

The city is in the process of hiring an additional three attorneys, but Amana said the city had to vet people and assure they had experience in specific areas such as civil law or real estate.

“We have run into, quite frankly, people who are very, very interested in the job but who are not qualified,” she said.

Before Amana’s permanent appointment in January, the city’s law department has seen high turnover since Mack came on.

Walter Denson, first appointed by Mack as the economic development director, became acting city attorney after former director Marc McKithen stepped down in June amid alleged pressure from Mack to stifle some Open Public Records Act requests. There were two other acting law directors before McKithen.

Amana served as the city’s attorney from 2000 to 2004 under Palmer.

Costly comp cases

Hutchinson said he was less concerned with the large civil suit settlements than the ongoing wave of workers’ compensation claims.

“The liability insurance doesn’t trouble me that much from a budget standpoint,” he said. “There are some large settlements that kicked in and I’m sure down the line there will be others. There’s always some ongoing cases with accidents that emergency services or first responders have.”

Hutchinson said an April 10 meeting with the city’s workers’ compensation professionals was enormously helpful in explaining the process to him and the formulas used to calculate how much in lost wages an employee is entitled to after an on-the-job injury.

The city also is figuring out how it can cut down on workers’ compensation expenses by processing some of the claims in-house instead of paying a third-party processor and by creating tighter guidelines for what can be considered a workplace injury.

“We want greater assurances that these are job-related,” he said. “From the medical side, I was also telling them we want to make sure we’re taking into account pre-existing conditions.”

The city settles so many workers’ compensation claims largely because of how expensive it can be to try cases in court, where doctors, lawyers and other experts have to testify, Hutchinson said. The city also has a backlog of cases due to layoffs and staff shortages that are just getting around to being settled.

“Lastly, we want employees to get to work,” he said.

Too many employees have been placed on indefinite light duty by workers’ compensation doctors, he said. The city is trying to change the designation to “modified duty” and keep better track of how long employees are off their regular work duties.

“If workers are on light duty, they can’t be on light duty forever,” he said. “At some point we have to modify duties, but we need you back at work.”