A Brand New Start of It

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

The new automated system also offers claims analysis, something that eluded the Comptroller’s staff in the past. “A dozen people could trip over the same sidewalk crack before we’d ever realize it and get it fixed,” says Newman. “Now this pops up immediately as a red flag.”

Aaronson notes another benefit. “It used to take us 22 discrete steps to disallow a claim, all of them involving human intervention,” he says. “Now we have a sophisticated workflow system that does all of these clerical tasks automatically. In other words, we’ve gone from 22 steps to 1 that involves no human intervention whatsoever.”

Sidewalks of New York

With the new claims system up and running, Hevesi launched his most ambitious initiative to date: the large-scale early disposition of bodily injury claims. The initiative focused on the two biggest claim categories–sidewalk trips and falls, and claims arising from the city’s Board of Education–which together represented 35 percent of all bodily injury claims filed and 22 percent of all bodily injury claim expenses.

To encourage settlements in those categories, vertical teams were created in March 1999 to manage the entire claims process, from investigation through settlement. Under the vertical approach, employees were assigned specific claim types and given the responsibility to manage the process. At the same time, duties that previously were performed by staff, such as field investigations and statutory hearings, were outsourced, freeing staff to focus on settling the claims. “We outsourced the investigation function to professional claim investigators, who go out immediately to an accident scene, take good pictures, find witnesses, and so on,” says Aaronson. “None of this happened before.”

Other outsourcing proved to be equally vital. Outside law firms, for example, were hired to conduct prelitigation hearings instead of having employees conduct them, putting the city on a more even footing with a plaintiff’s attorneys. Having an experienced defense attorney conduct the deposition has become a powerful tool in reducing case backlog: so far, more than 130 cases have been abandoned by plaintiffs immediately preceding or following what Newman describes as “pretty rigorous proceedings.”

The Comptroller’s office also entered into contracts with independent medical examiners who were hired to conduct physical examinations of claimants right after they had filed a claim. Such exams had never been conducted prior to litigation before, and they are a compelling disincentive to feign or exaggerate injury claims. “We’re seeing cases where claimants refuse to appear for the [medical exams], and the cases are dropped,” says Aaronson. “In fiscal year 2000 [ended June 30], there were 200 cases where the claimants totally dropped their claims or the attorneys removed themselves from representing the claim,” he adds. “If these had gone to settlement, given that our average settlement is $20,000 per claim, the cost would have been $4 million. And that is only settlement costs. The processing and carrying costs are also substantial, and we avoid litigation.”

Armed with timely, well-documented investigations, more incisive hearings, and complete medical reports, Hevesi’s staff now has a comprehensive case file workup. They’re able to quickly assess the value of a case long before litigation starts, and proactively negotiate settlements. In fiscal 2000, only 9,343 action starts were filed, compared with 12,769 in 1995. The number is still dropping: In the first quarter of fiscal 2001 (through September), the city has experienced a 17 percent decrease in action starts compared with the previous year, from 2,538 to 2,091. In short, claims settlement is now an art form and not a pass-the-buck strategy.

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