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L.A. should take steps to limit lawsuit payouts, audit finds

The city controller says a weak risk-management system and a lack of communication drive up settlement costs.

January 08, 2008|Jean-Paul Renaud | Times Staff Writer

Los Angeles' approach to potential lawsuits is "reactionary and knee-jerk," often wasting taxpayer money in costly settlements and court judgments that could have been avoided, City Controller Laura Chick said Monday.

Chick said the city paid $35 million in legal settlements in 2006, a figure she believes was driven up by a disorganized system in which each city department handles risk-management duties independently.

In the controller's 80-page audit released Monday, Chick did not blame any specific department for the problem but instead pointed to inadequate communication.

In some cases, the potential for liability could be prevented even before damage or injuries occur, Chick said. By the time many incidents have blossomed into lawsuits and reach the city attorney's office, she said, there is little the city can do but settle or risk an even bigger court judgment.

"One of the worst ways to spend taxpayer dollars is to waste them on lawsuits, settlements and court judgments," Chick said.

She recalled a settlement discussion that took place when she was on the City Council. The case involved injuries sustained in an auto accident on a dangerous curve where no warning signs were posted. A year after the accident, there still were no signs posted at the site, exposing the city to further liability, Chick said.

No one, she said, had informed Public Works Department officials about the accident and the need for signs.

The city attorney "ends up having to defend the city on things that shouldn't have happened," Chick said. "And some of those things are undefendable."

Mayor Antonio Villaraigosa asked Chick to audit the city's practices after a proposed $2.7-million settlement for firefighter Tennie Pierce was approved by the council and sent to him in late 2006. Pierce had alleged in a lawsuit that he had been hazed by fellow firefighters and fed spaghetti laced with dog food.

Villaraigosa vetoed the settlement, and the city paid Pierce $1.5 million. With the addition of attorney's fees, the final bill for taxpayers was $2.8 million.

Chick says that settlement, among others, could have been prevented with stronger oversight and communication between departments, as well as a centralized way of tracking and prioritizing claims.

The audit recommends placing ultimate responsibility for risk management under the mayor's office, as well as adopting citywide standards for handling claims and identifying potential risks.

It also calls for adding two positions under the chief administrative officer to coordinate between departments and identify potential lawsuits before they happen. Those employees also should begin compiling valuable statistics on claims, which Chick says are not gathered citywide.

The report is being forwarded to both Villaraigosa and the council.

"This audit reaffirms the fact that continuing to improve and centralize our risk-management practices can significantly reduce the city's liability," Villaraigosa said in a written statement, "and I look forward to augmenting the work we have already undertaken to minimize risk and protect taxpayers' dollars."

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jp.renaud@latimes.com

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