A memo from Detroit Auditor General Joe Harris to the City Council sounds the alarm: The current fiscal year (which ends June 30) could see the city surpass the record $47 million it paid to settle legal claims during fiscal 1999-2000.
Metro Times reported on the city’s turbocharged ATM of settlement nearly two years ago (“Slipping Up,” Aug. 21, 2002).
Harris and Councilwoman Sheila Cockrel say the city is too quick to pay claims and too hesitant to try cases. To date, more than $45.7 million has been spent settling claims this year. Cockrel says that number is way too high. How high? The entire budget for the city’s Building and Safety Engineering Department this year is $34.5 million.
“As of May,” Cockrel says, “we’re substantially ahead of where we were [in 1999-2000], with two months to go in the fiscal year.”
The city’s tab for legal claims last year was a paltry $30.6 million, meaning the 10-month total this fiscal year is already a 33 percent increase.
Calls to the city’s top in-house lawyer, Corporation Counsel Ruth Carter, and mayoral spokesman Howard Hughey were not returned.
Harris attributes the hemorrhaging to a lack of risk management, a science utilized by governments and businesses to reduce claims and payouts. Many governments have a specific department. In Detroit, it’s part of the Finance Department. The city, which is self-insured (as are most large cities), puts money into this fund, then pays settlements from it.
Without true risk management, according to Harris, the city has paid $88.2 million to settle lawsuits filed against the Detroit Police Department alone since 1999, by the far the most for any department. Another $25 million has gone to settle public works claims since 1999, the memo states.
“You can’t address risk management in a vacuum,” says Harris. “You can’t tell managers in the different departments, ‘Manage risk.’”
He says the Law Department has failed to complete a database that will track claims and settlements (one that Harris says has been talked about for years).
Harris whips out a letter written to City Council by the director of the Detroit Department of Transportation. It’s a response to an inquiry about a bus driver hired in November 1996. According to the letter, the driver has been involved in 33 accidents, three of which resulted in lawsuits.
“Why is he driving?” says Harris.
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