By Jorge Casuso

March 20, 2025 -- After dropping to a seven-year low, City workers' compensation liabilities shot up by $8.2 million last year, the highest amount in at least ten years, the City's top finance official reported Tuesday.

The sudden jump -- from $27.8 million in Fiscal year 2022-23 to $36 million in the fiscal year that ended June 30 -- was largely due to three catastrophic claims that totaled $7.9 million.

Two of the catastrophic claims -- which required "extensive medical care" -- were from the Fire Department and one from the Police Department, the memo notes.

Program expenses also "increased substantially" due to a rise in claims -- from 245 to 294 -- that reached a four-year high, according to the memo to the City Council from Finance Director Oscar Santiago.

The number of new claims is expected to continue increasing due in large part to an aging workforce that typically files "more frequent and complex claims," Santiago wrote.

In the most recent fiscal year, the City spent approximately $15.8 million on medical treatment and indemnity payments for injured employees, up from $12.2 million the previous year.

Of that amount, medical costs accounted for $7.6 million, an increase of $3.1 million, while indemnity payments, which "offset lost wages and/or the residual impact of the injury," accounted for the other $8.2 million.

During the 2023-24 fiscal year, the City also settled 72 claims totaling nearly $4.3 million, down from 80 claims that totaled nearly $5.2 million the previous year.

"The number and value of settlements tend to fluctuate from year to year due to the severity and timing of injuries, and the willingness of injured employees to settle claims," Santiago noted.

In general, temporary disability payments for sworn employees increased by 11 percent, a rise that can be in part attributed to "higher claim frequency within the Police Department."

"The absences (from work) of sworn personnel for work-related injuries are particularly costly for the City," Santiago noted.

That's because sworn employees, who include police officers and firefighters, receive 100 percent of their pay while recovering from injuries, compared to 66 percent for non-sworn personnel.

The absence of sworn employees "must be backfilled to maintain staffing levels, resulting in higher overtime costs, a major factor impacting the City’s general fund annually."

During the past fiscal year, 71 percent of sworn employees who were off work for at least six months were 45 years or older, the memo notes.

The City's Risk Management has implemented several "strategic cost control measures" to contain the City’s workers’ compensation costs.

These include “Wow, that’s Fast,” a program to "reduce the number of litigated workers’ compensation claims from sworn personnel by providing them with a comprehensive case management service without attorney fees."

Since it was implemented in 2014, a total of 572 employees have participated in the program.

A Return-to-Work program has also helped reduce temporary disability costs and overtime pay by assigning employees recovering from work-related injuries to "temporary light-duty assignments."

During the past fiscal year, 67 injured workers participated, saving an estimated $925,000 in temporary disability costs.