Audit points to violations

St. Petersburg Times--June 23, 2008

By Barbara Behrendt, Times Staff Writer

BROOKSVILLE — An audit of the county’s workers’ compensation program has found violations of county policy, inefficiencies and sparse or missing information on financial decisions that may have cost the county thousands of dollars.

The findings of the audit, which was conducted by the office of Clerk of the Circuit Court Karen Nicolai, come on the heels of other problems in the human resources office, which this year cost director Barbara Dupre her job.

Many of the concerns about workers’ compensation surround the contract the county has with an outside administrator, the Johns Eastern Co.

The audit determined that when the contract was renewed in October, it was not bid. That is a violation of the county’s policy, according to the auditor.

In addition, the renewal did not come before the County Commission for approval, which is also a violation. In fact, the contract even included language about arbitration that "the Board of County Commissioners cannot legally agree to,” the audit states.

Also, the deal with Johns Eastern included the purchase of a "bundle" of "service units” — contract terminology for the case administration fee for each individual workers’ compensation claim. The auditor questioned the decision to buy by the bundle rather than the "pay as you go” plan when the cost per claim was the same either way.

Looking over the last three years of claims history, the county paid for 78 more claims than it actually had, according to figures gathered by the auditor. This year’s contract totaled $36,500, or $292 per claim, presuming 125 claims paid for in the bundle.

The auditor asked for documentation on why the management of human resources thought there was a cost benefit of purchasing services as a bundle, but "management was not able to provide this documentation.”

Dupre took issue Monday with the auditor’s criticisms. She said that the reason the Johns Eastern contract wasn’t bid was because it never was in the past. When human resources took over workers’ compensation several years ago, she said, she was told that, because it was health insurance, it was exempt from bidding requirements.

She said the county’s purchasing office has maintained that same opinion until this year.

Johns Eastern has administered the county’s claims since 1985, and Dupre said nothing significant has changed in the contract. She also said approval by the County Commission has not been sought in the past because she was told it wasn’t needed.

Jerry Haines, interim human resources director, agreed that the bidding and approval had not been done in the past. But as soon as the auditor brought up the issues, he said, the staff began planning for making the needed changes.

As for the bundling of workers’ compensation claims, Dupre said the number of claims was higher in the past and that is why the bundle included more cases than have actually been filed with the county in recent years.

"That’s a positive because it means less claims are being filed,” Dupre said.

She said she wasn’t sure the county would have saved anything by paying case by case because she assumed that Johns Eastern would charge more by the case if the county didn’t bundle.

County officials responded to the audit criticism by agreeing to have the purchasing office seek proposals from firms interested in administering the workers’ compensation program when the current agreement with Johns Eastern expires in October 2009.

The county legal staff will take part in that process by making sure the language is acceptable.

In another finding by the auditor, workers’ compensation money was used to pay for a shredder that was actually used by human resources, a "clerical error,” according to Dupre.

The auditor also cited issues of inefficient duplication of efforts in the claims paperwork and a series of issues with workers’ compensation paperwork not being properly secured — issues that were dealt with at the time the audit was being conducted.

As a direct result of the audit, about 30 county employees who deal with payroll will be trained this week with the latest information on the security of sensitive records, Haines said.

The audit also cites the need to monitor the billing of the outside attorney who handles workers’ compensation. And it recommends discussion of whether the existing insurance committee is needed, what its functions should be and how it establishes workers’ compensation rates.

County officials responded to those comments by making the necessary changes in attorney monitoring and agreeing to study the committee’s questions.