Newspaper: State disability fund wastes millions each year

Sunday, January 26, 2003
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(01-26) 18:13 PST SACRAMENTO (AP) --
California's disability insurance program wastes tens of millions of dollars each year because of bureaucratic errors and a complex claims system that invites abuse, a newspaper reported Sunday.

The State Disability Insurance program has not paid some people's benefits and has overpaid others, according to a review of audits by the San Francisco Chronicle.

The program paid about $2.7 billion in 2001 to compensate pregnant women and workers injured off the job. It is funded by an 0.9 percent payroll tax on income up to $56,900 per year for each employee.

The newspaper found that between 1999 and 2001 the program overpaid between $124 million and $200.7 million to people who may not have qualified, and denied as much as $191.9 million to people who should have received benefits.

About 40 percent of all claims processed in the last three months of 2001 had errors, up from about 12 percent in 1997, the paper reported.

"I don't believe any of them know what they are doing," said Stephen Gatto, a 45-year-old Vallejo resident who has been trying to get compensation for a foot injury that prevents him from working.

"If there are people out there getting two checks and I'm getting none, that is not fair. I've paid into that system. That is my money."

Deputy Director LaVera Gaston said employees are working on reducing errors. The actual loss to taxpayers is only about 3 percent of the $2.7 billion paid in 2001, officials said.

"These audits look very scary, but they're not," Gaston said.

Auditors say many of the errors are eventually corrected and the payments are valid.

The maximum weekly benefit is $602. Most government employees, some nonprofit employees and some domestic workers are not covered.

Part of the problem is that injured people will apply for disability before applying for workers' compensation, which only pays for injuries that occur on the job, because disability applications must be processed in 14 days. Workers'
compensation can take three months.

That means that the disability program must try to get its money back if an improper payment is made, and it sometimes only gets a partial payment from workers' compensation. Workers' compensation has paid more than $530 million to the disability program since 1998 because of this problem.

The complexity of the workers' compensation program may also lead to the errors. About 30 percent of the overpayments were a result of failing to verify whether someone was using the wrong benefit program or getting workers' compensation and disability.

The disability system will have an added responsibility in July 2004 when the state's family leave law begins. That law lets workers take paid time off to care for sick family members or to spend time with a new baby.

http://www.sfgate.com/cgi-bin/articl...113EST0095.DTL