MTA Combats Fraud by Workers

Faced with skyrocketing workers’ compensation costs, Los Angeles’ transit agency has joined with county prosecutors to launch a program aimed at deterring employees from making false claims and urging them to turn in colleagues who fake injuries.

For the last two weeks, Tom Higgins, head of the district attorney’s workers’ compensation fraud bureau, has been visiting work sites at the Metropolitan Transportation Authority, which has 9,000 employees.

Addressing large groups of workers, Higgins warns of harsh legal consequences for those lining their pockets by faking on-the-job injuries.

He notes that scofflaws are sitting at home collecting paychecks while hard-working drivers and maintenance workers are on the job. And he appeals to law-abiding workers to turn in colleagues who don’t play by the rules.

“I am going to treat these MTA cases no different than any I’ve worked in my career,” said Higgins, a veteran deputy district attorney who prosecuted murderers, rapists and other hard-core offenders before taking over the fraud unit in October.

“What I do first and foremost is prosecute ... and generally win.”

The tough talk is needed at the MTA, officials say, because the agency’s workers’ compensation plan is in crisis.

Since 1995, costs have doubled, standing now at $60 million a year. According to the MTA, it now spends roughly $6,500 per employee every year to pay for workers’ compensation.

Those costs are the highest in the nation for big-city transit agencies--about six times as much per worker as is paid by the similar-sized Washington, D.C., bus and rail system and nearly 10 times what New York pays.

The MTA estimates it spends about twice as much per worker as most other California transit agencies.

Officials at the transit agency say the costs affect long-term planning, as well as the daily operations of buses and trains.

Nearly 10% of the hourly cost of running a bus goes toward paying workers’ compensation costs, for example.

“We’ve just got to get the costs in line and reasonable,” said Richard Brumbaugh, the MTA’s chief financial officer. “It’s a huge issue for us.”

Brumbaugh added that most claims are legitimate and that the agency’s high costs are partly due to a confluence of factors--including statewide insurance deregulation, rising medical costs and legislation that favors workers.

But he said the partnership with the district attorney’s office is aimed at knocking out claims that the agency believes are fake.

The MTA earlier this year dropped the private insurance company that had monitored its workers’ compensation cases for years.

Agency officials brought the program in-house because they were concerned that the insurance company was not aggressive enough in fighting suspect claims. MTA workers filed about 6,000 claims over the last four years; of those, just 16 were referred by the insurance company to the district attorney’s office as possibly fraudulent.

Officials believe the MTA will significantly increase the referrals for possible prosecution under the new partnership. MTA managers have recently started meeting nearly once a week to review claims.

If red flags are raised, the agency and the district attorney are poised to begin spying on workers with video cameras on and off the job--looking for the supposedly injured worker who is out playing softball or lifting weights.

The weekly meetings, according to Brumbaugh, already have turned up a number of questionable cases.

Among them is a bus driver with nearly 100 claims over the last five years and another who filed 59 claims in two years.

Citing one example without identifying the employee, Brumbaugh said: “In September of 2001, she had a sharp pain in the shoulder from turning the wheel. In May of 2001, she sprains a right ankle getting off the bus. In April 2001, she runs over a pothole.... All told, she got paid $230,000.”

Higgins said he is convinced that if he educates workers--telling them how to use workers’ compensation properly and what fraud is and urging them to call his unit if they know someone who is taking advantage of the system--he can help reduce misuse of the system.

MTA workers who break the law “think nobody is paying attention, and that they can slip under the radar,” he said.

“These sorts of people, I think--we can really stop them from doing wrong if we can convince them we are out there.”

UCLA professor Daniel Mitchell, a business and public policy expert, said public agencies and private businesses in California have been grappling for years to rein in workers’ compensation costs.

He said that relaxed California laws allowing workers time off with pay for such things as psychological stress, coupled with holes in health insurance coverage, sometimes can entice workers to take advantage of the system.

Mitchell also said some workers, unhappy with the way they are treated by management, use workers’ compensation as a “grievance mechanism.”

Focusing on that issue, Higgins used one of his recent lectures to MTA workers at the Carson bus division to emphasize that he is not interested in fielding complaints about management.

Speaking to a group of about 100 workers, Higgins spelled out the types of fraud he sees and gave the drivers, mechanics and janitors a number to call if they knew of people engaged in such abuses.

When he finished, a number of workers approached Higgins. One of them, a longtime driver who did not want to be identified, said he did not think many people would turn in their fellow employees.

“If word gets out, you could get beat up,” he said.

But another man, an MTA custodian, said he believed some workers would welcome the chance to crack down on fraud.

“I’m tired of seeing people rip off the system, stay at home and collect a check when they’re fine,” he said. “They end up ripping me off, the way I see it.”