SR-101-003-02-02~_ . .
~ ~;ty of City Council Report
Santa Monica~
City Council Meeting: May 9, 2006
Agenda Item: ~~
To: Mayor and City Council
From: Marsha Jones Moutrie, City Attorney
Subject: City Manager Approval of Worker's Compensation Claims in Excess of
$15,000
Recommended Action
City staff recommends that the City Council act to clarify the City Manager's authority to
resolve Worker's Compensation claims by adopting the attached emergency ordinance.
Additionally, staff recommends that Council direct staff to review Chapter 2.44 of the
Municipal Code for possible proposed revisions.
Executive Summary
Currently, the Municipal Code does not provide explicit authority for the resolution of
Worker's Compensation claims. The proposed ordinance would clarify staff's authority
by explicitly conforming the Municipal Code to the longstanding City process for
authorizing settlement payments of Worker's Compensation benefits in excess of
$15,000. Specifically, the ordinance would amend Municipal Code Section 2.44.050 to
expressly authorize the City Manager to approve such settlements. This authority
would apply to settlements in any form and would therefore apply to both settlements by
Compromise and Release and settlements by Stipulation and Request for Award. The
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ordinance would also require that notice of the payments be reported to the City
Council. The ordinance is proposed as an urgency measure because of the pendency
of claims which must be processed in accordance with state standards. There are no
budget impacts resulting from the proposed Municipal Code amendment.
Discussion
The Risk Management Division of the City Manager's Office receives and administers
claims for Worker's Compensation benefits filed by City employees in accordance with
state laws and regulations. Since 1976, the City has been permissibly self-insured for
Worker's Compensation. The current self-insurance limit is $1 million.
Worker's Compensation benefits are governed by statute. The system is considered a
no-fault benefit system and generally is the exclusive remedy for an employee who
sustains an injury or illness at work. Benefits include medical expenses, temporary
disability benefits, rehabilitation costs and provision for permanent disability benefits.
Benefit payments due must be made timely under state law or an employer is subject to
monetary penalties.
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In Santa Monica, many undisputed claims are resolved informally, without the need for
formal resolution. Disputed claims and claims involving permanent disability and/or
future medical provisions may be resolved either through a Stipulation with Request for
Award or a Compromise and Release. The Worker's Compensation Appeals Board
("WCAB") approves settlements and retains jurisdiction unless its decision is overturned
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through an appellate process. Stipulated settiements itemize the statutory benefits
provided and are usually done when an employee will continue to work for the City.
When an employee has separated from the City, the claim is usually resolved through a
Compromise and Release which resolves the contested claim or mitigates the cost of
future benefits through a lump sum payment. This is the type of payment that the City
Manager approves.
Chapter 2.44 of the Municipal Code, governing self-insurance, settlement authorization
and other matters is antiquated. In a recent review, it became apparent that the
Chapter does not reflect the process for approving some payments of Worker's
Compensation benefits. For decades, such payments in excess of $15,000 have been
approved by the City Manager based on the recommendations from the Risk
Management Division and on legal advice. For clarity's sake, the Municipal Code
should be amended to expressly authorize this practice. This action would ensure the
continued timely processing of claims and expeditious delivery of benefits.
Additionally, legal staff recommends, as a longer term project, that all of the Municipal
Code Sections in Chapter 2.44, which address self-insurance and settlement authority,
be reviewed and updated. This recommendation is based upon the fact that several
provisions are antiquated and do not reflect current realities.
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The City Council could choose to allocate responsibility for approving Worker's
Compensation payments in some other way. However, that would require immediate
modifications to the present system which appears to be operating well.
BudgetlFinancial Impact
There are no budget or financial impacts to adopting the attached ordinance.
Prepared by: Marsha Jones Moutrie, City Attorney
Attachment: Proposed Ordinance
Approved: Forwarded to Council:
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M r ha Jone outrie
City Attorney `
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