The Fenty administration was warned three years ago that there were problems in a city workers’ compensation fund that is now the center of at least four investigations, The Washington Examiner has learned.
Last week, Fenty and his attorney general, Peter Nickles, conceded that workers had been paying for insurance but the city’s Office of Risk Management wasn’t forwarding the money on to insurance companies. The pair asked Inspector General Charles Willoughby to investigate.
Nickles and Fenty claimed at the news conference that they discovered the problem last month.
“So we started, 24 hours a day, seven days a week, since that point in late May to look into this matter,” Nickles said.
In April 2007, Willoughby sent a report to Fenty and city leaders. He warned Fenty that Risk Management and its insurance contractor “lacked procedures to account for claimant’s health and/or life insurance benefits.”
“As a result,” Willoughby’s report states, “claimants had no assurance that their health and/or life insurance benefits were properly accounted for or whether their health and/or life insurance coverage was active or lapsed.”
The findings were part of a larger probe that found Risk Management was “at risk for significant fraud, waste and abuse.”
Willoughby attributed the insurance problems “to a lack of policies and effective procedures,” but his audit foreshadowed problems that are now the focus of investigations by the FBI, the D.C. auditor, the finance office’s integrity unit and, once again, Willoughby’s agency.
“During our audit, we observed one situation in which a claimant died and the claimant’s family was struggling to file for the claimant’s life insurance because the [company] had no record of the claimant having life insurance,” Willoughby’s report states. “The lack of accounting for claimant’s benefits has created and has the potential to create further serious problems for claimants and ORM.”
In her response to Willoughby, Risk Management Director Kelly Valentine said she was “investigating” ways to keep disabled workers informed about their deductions and said she was discussing whether to have another agency handle the insurance benefits.
She reminded the inspector general, though, that her agency had recently been upgraded by outside auditors for cleaning up its books.
Nickles said Tuesday that the 2007 report “has been brought to my attention” but that he stood by his earlier statements.
“They were not focused on the particular issue as I am,” Nickles said.
Iwo Fairrow, who has been battling with the city over insurance benefits for her dead husband, James, said she has lost faith in the city.
“They just want it to die down,” she said. “What have they done with the money?”
