A Brand New Start of It

By bringing claims management into the 21st century, Comptroller Alan Hevesi has saved New York City millions.

When Alan Hevesi was elected Comptroller of New York City in 1994, his office at One Centre Street looked pretty much the way it did when Tammany Hall, J.P. Morgan, and John D. Rockefeller ruled the town. Little had been refurbished, not everyone had computers, and files were overflowing into the hallway.

The time warp extended to the mountain of paperwork burying the city’s claims processors. “If someone fell on the sidewalk, a policeman filled out Form UF-18, the same form a policeman filled out a hundred years ago,” says Michael Aaronson, chief of the New York City Bureau of Law and Adjustment, which is responsible for managing claims filed against the city. Moreover, says First Deputy Comptroller Steven Newman, chief of the city’s Bureau of Management and Accounting, “When attorneys showed up to settle claims, there was no place to meet with them. We had to seat them in the elevator bay–not exactly the most comfortable way to reach a settlement.”

Hevesi, a former state Assemblyman, was stunned. “I visited the claims unit when I became Comptroller, and found the offices filled with cartons of papers with files overflowing,” he says. “I soon realized why I was receiving calls from my old colleagues at the Assembly, complaining that their constituents with claims could not get any service. The reason was the staff around here spent most of their time just trying to locate files.”

To bring 21st-century solutions to the city’s 19th-century bureaucracy, Hevesi began overhauling the entire claims process function. The overhaul, which included leveraging state-of-the-art technology, strategically using consulting expertise, and forging a new partnership with the city’s law department, has paid off in ways that would make Vanderbilt and the other old titans proud. So far, more than $50 million has been saved for New York City’s taxpayers. “We’re spending now about $500 million a year on claims,” says Hevesi. “Our goal is to stop the annual increase. To get there, we’re hoping to cut in half the average claims costs we incur in several categories, such as schools, roadway claims, and sidewalk trips and falls.”

A Legacy of Chaos

More than antiquated surroundings and outmoded business practices challenged the Comptroller. “There was a culture here that believed the way to deal with claims was, well, not to deal with them,” says Newman. “The assumption was that claimants would die or lose interest–not the best way to manage claims.”

The mordant response derived from the “pass-the-buck” mentality of politics. “A company thinks long term, but in the world of politics, we think short term,” says Newman. “From a business standpoint, we should be more like Allstate: settling claims right away. But politically, the culture was to push off paying a claim–even if you could settle it for one-third less–into the next administration.”

Complicating matters was the fact that claims processes were established at a time when the legal environment in New York was profoundly different. According to Newman, “The populace had become far more litigious, and the legal profession had evolved into an aggressive and powerful business interest capable of taking advantage of every weakness in the system.”

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