Workers' comp reform pays off

New approach saves city millions

unions complain of unfairness

January 25, 2005|By Laura Vozzella | Laura Vozzella,SUN STAFF

Six months into Mayor Martin O'Malley's first term, his chief of staff made a surprise visit to the office that handled workers' compensation claims for city and school employees.

Most of the workers were missing - at lunch, Michael R. Enright was told, although the hour was 2 p.m. There was paper everywhere, Enright said - piled on desks and crammed into shelves, defying any organized filing system. And near the entrance hung a picture of the mayor - former Mayor Kurt L. Schmoke, that is.

Today, that office no longer exists. In its place is a private company, CompManagement Inc., hired to manage claims for the city. A city-run health clinic that evaluated injured employees has been replaced by a private one operated by Mercy Medical Center that tends to send them back to work sooner.

Those are a few of the changes that have come in the past five years to the city's workers' compensation system, whose backlog of 13,000 cases two years ago amounted to about one for every two current employees.

The city is more aggressively investigating and challenging claims, and requiring that injured workers who aren't able to return to their old jobs take a demotion or retire. They can no longer hang in the limbo of "permanent light duty," a classification that the city says did not exist officially but did in practice, with hundreds of employees doing lesser jobs at their regular pay for years.

City officials say the changes are saving Baltimore millions of dollars - in the two years since CompManagement and Mercy were hired, and for decades to come - by getting workers' compensation claims under control. The backlog of cases, some involving workers who had retired or filed multiple claims, has been reduced to 4,300.

"This ... is the type of reform that will have a significant and lasting financial effect on the city's bottom line," said Enright, now first deputy mayor. "It isn't like a clean alley or a safe block or a better park in your neighborhood. But it really does have an effect on parks and streets and safety because money that could be going to them is better managed."

Union officials say the changes have been unfair to some of the city's 14,000 municipal, police and fire employees and its 11,000 school workers, forcing them out of their jobs or back to work too soon.

"We're not looking to line people's pockets," said Stephan G. Fugate, president of the city fire officers union. "I'm looking to make sure they and their families are covered."

No one disputes that the changes, which follow the privatization of more than 200 city custodial and security guard jobs in O'Malley's first term, are saving Baltimore money.

In 2002, the last full fiscal year under the old system, the city spent $2.9 million on the salaries of workers who were on leave for injuries. In 2004, the figure was $773,000.

The average award for every case closed has fallen by more than 40 percent, from about $11,443 in 2002 to $6,713 in 2004. By reducing that average cost, city officials say they saved $10 million last year on the 2,133 cases that were closed.

The city was able to achieve those savings in part because the Mercy clinic applies stricter standards for awarding leave time. In 2002, 92 percent of the workers who claimed injuries were granted time off. Last year, 42 percent of them were.

"The city seemed to have a culture of rewarding nonwork rather than work," said Donald C. Fry, president of the Greater Baltimore Committee, a business group that urged the city to privatize the clinic in a May 2001 study.

But union officials say the private clinic takes too hard a line. The fire officers union has started advising members to file malpractice complaints against clinic doctors who override the advice of their private physicians.

"A lot of employees are being sent back to work with casts on their feet; they're being sent back when they should be recuperating," said Norman Green, a labor relations specialist with the American Federation of State, County and Municipal Employees

The city also has stopped allowing injured employees to be placed on "permanent light duty," which let them collect their full salaries indefinitely while performing less strenuous assignments, such as answering telephones.

The city began taking a closer look at light-duty cases in March. Since then, it found 195 of its nonpolice and nonfire employees were on light duty for more than 60 days. The average time on light duty was close to a year - 342 days. The longest case was 14 years. In the months and years that those workers were assigned to light duty, the city lost $11 million in productivity, overtime and other related costs.

The Police Department has 160 police officers on light duty, more than 100 of them hurt in the line of duty. The light-duty officers, who were ordered this month to retire, cost the city $10 million a year.

The city has started reviewing each light-duty case to determine whether the workers are ever expected to recover enough to resume their old jobs. If they aren't, the city is offering them several options, including taking a demotion to the lower-paying job they had been performing on light duty, retiring with a disability or conventional pension, or termination.

Union officials say the city is being ungrateful to workers, but city officials say Baltimore simply cannot afford to keep injured workers permanently at their old salaries.

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