Outside firm will administer $100-million-a-year workers’ comp program that Burke ran without oversight
For decades, the program was run by now-indicted Ald. Edward Burke (14th); as of March 31, it had roughly 1,300 “open” claims that have cost the city $294.5 million and counting.
Mayor Lori Lightfoot on Thursday began the serious cost-cutting needed to make the case for a painful, post-election tax increase — by hiring a professional outside claims administrator to ride herd over a $100 million-a-year workers compensation program so loosely run, it was “ripe for corruption.”
Gallagher Bassett, which Lightfoot described as an internationally known firm chosen after competitive bidding, will administer a program that, as of March 31, had roughly 1,300 “open” claims that have cost the city $294.5 million and counting.
More than 600 of those open claims are at least a decade old.
It all happened under the not-so-watchful eye of indicted Ald. Edward Burke (14th).
“A system of this size and significance has no business being controlled by a single member of the City Council — not to mention controlled without meaningful oversight, controls or transparency,” Lightfoot told a City Hall news conference, promising oversight by Inspector General Joe Ferguson and the City Council.
“The system that Ed Burke ran was ripe for corruption. We’re gonna learn more about that as we dig into the details of these old legacy claims. But what we’re trying to do now is establish a bright line that Chicago is actually gonna come into the modern age that is consistent with best practices across the country.”
“The system that Ed Burke ran was ripe for corruption.”
Lightfoot said the city should have tried to settle those open claims and bring employees back to work or terminate their employment.
Instead, the city continued to shell out disability checks to employees who, in some cases, were well enough to hold other jobs.
“While other cities across the country have long ago reformed and professionalized their own programs, here in Chicago, we continued to operate in such an opaque and antiquated manner that even members of our own City Council didn’t know how the program worked. That all ends now,” the mayor said.
For decades, the program that compensates city workers injured or disabled on the job was Burke’s exclusive purview.
The now-indicted alderman even hired private law firms at taxpayers’ expense to fight Ferguson’s efforts to examine the system.
Former Mayor Rahm Emanuel tinkered at the margins to achieve savings, but kept the program in the Burke-chaired City Council Finance Committee — and walled off from scrutiny — until Jan. 3.
That’s when Burke was charged with attempted extortion and forced to relinquish the Finance Committee chairmanship that had been his primary power base for decades. Only then did Emanuel shift control of workers comp from the Finance Committee to the city’s Department of Finance and order an outside audit of the program.
That audit, released last month, concluded there was little if any effort to “detect potential fraud, waste and abuse.” It suggested hiring an outside administrator.
In 2006, a Sun-Times investigation exposed such abuses as allowing patronage workers to file for injury claims at a higher rate than any occupation tracked by the Labor Department — including the most dangerous ones — and paying workers’ comp benefits to people who held outside jobs.
The highest rates of injury coincided with the names of people who had the most clout.
Three years earlier, the Sun-Times ran a series of similar stories, including one about the city forking over $136,036 to a Streets and Sanitation worker who beat up his daughter’s boyfriend while out on disability for an injured hand.
In 2016, whistleblowers again called the workers’ comp program a cesspool of patronage and favoritism. Still, Burke persuaded his City Council colleagues to block Ferguson from auditing the program.
In a lawsuit filed last summer, the maverick son of former Ald. Bernard Stone (50th) accused Burke of exploiting the workers’ comp program to award jobs to precinct workers who deliver votes for his hand-picked candidates. Stone also accused Burke of cutting disability checks as favors to political pals, such as to a precinct captain of a fellow alderman.
On Thursday, Lightfoot said she won’t know whether to seek reimbursement for fraudulent claims until Gallagher Bassett digs in.
But, over time, she’s convinced the outside administrator will achieve “significant” savings by eliminating decisions based on clout and by implementing a rigorous back-to-work program for injured employees. Emanuel promised such a program, but never delivered.
“When you have a program of this magnitude that’s operating completely in the dark with no transparency for years, there is absolutely a concern that decisions are being made on something other than a merit basis,” she said.