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City Paid $2 million To Insure Dead Workers

By:  Brian Meyer
News Staff Reporter

Mayor Byron W. Brown is not ruling out the possibility that he might push for the removal of Buffalo's human resources commissioner in the wake of disclosures that the City of Buffalo paid $2 million for health insurance benefits for 152 dead employees.

"I'm not taking anything off the table," Brown said today when asked about the possibility of Human Resources Commissioner Karla L. Thomas' ouster.

The city has paid has paid premiums for 152 deceased employees, several of whom have been dead for four years, according to an audit released Thursday.

What's more disturbing, said City Comptroller Andrew A. SanFilippo, is that officials in the city's Human Resources Department were ordered by Brown seven months ago to tighten controls and take new steps to ferret out "systemic problems" that triggered improper payments and other glaring mistakes.

"To be honest, it's a disgrace," SanFilippo told The Buffalo News. "It's a major embarrassment to the city and a $2 million slap in the face to taxpayers."

But the comptroller stopped short of calling on Brown to fire Thomas.

"It's the prerogative of the mayor to make a determination and assessment as to whether he feels there has to be some sort of an adjustment or amendment in personnel," SanFilippo said. "I don't make that decision."

Today, Brown said he's disturbed by the latest revelations coming from the Human Resources office.

"It is unacceptable. I will not tolerate it as mayor," he said.

Still, Brown would not proclaim the commissioner that he tapped for the job two years ago as incompetent.

"I  think the commissioner clearly has the ability to do the job. I don't know what has resulted in us being in the position that we're in now. Obviously, I am not happy about it."

Meanwhile, Brown made public a letter he sent to acting corporation counsel David Rodriguez directing him to work with the Human Resources Department to address what Brown calls "unacceptable" problems. Brown wrote "there can be no excuse for the failure of the Department of Human Resources to subscribe to monthly reports of death from the Social Security Administration."

Brown told the city's top attorney to make sure that the city subscribes to the service immediately.

The mayor ended his memo by saying he's "extremely displeased" that issues he outlined seven months ago have not been resolved. His memo said he would consider "all necessary steps" to correct the problems.

Thomas came under fire from the Common Council and Brown in January after the release of an audit that SanFilippo said showed a "management meltdown" in her department. That audit raised the likelihood that health premiums were paid for some deceased workers, although it did not quantify the problem.

That audit also discovered that the city made double payments for health insurance for up to 250 sanitation and water workers, resulting in a $526,309 overpayment. As of Thursday, SanFilippo said, the city has yet to recoup the money from its insurer.

Thomas became a lightning rod for criticism after auditors said she had complained about getting "TMI" -- too much information -- as officials engaged in detailed discussions about problems in her department. Thomas later claimed that auditors "mischaracterized" her comment, and she criticized The News for "besmirching" her qualifications.

Thomas is the only commissioner who does not serve at the pleasure of the mayor. The state sets fixed terms for personnel administrators supervising civil service policies. Thomas' term expires in September 2014.

But when the initial audit was released earlier this year, documenting paperwork backlogs, poor delegation of tasks and a weak system of checks and balances, some Council members suggested that steps be taken to remove Thomas based on incompetence.

Most of the 152 dead workers for whom the city has been paying health benefits died within the past two years, meaning that the majority of the costs have been incurred since 2009. But several workers have been dead for four years, and in at least one instance, an employee who died 12 years ago was still on the benefit rolls as of earlier this year.

City officials are investigating whether some relatives of the deceased who were listed on family policies may have improperly taken advantage of the health insurance.

"It's inexcusable in this particular [financial] climate -- or in any climate for that matter -- to be wasting precious resources due to incapable management," SanFilippo said.

Chief auditor Darryl McPherson oversaw the review. He said there are simple steps that municipalities take to ensure that their benefits rosters do not include former employees who have died.

"My staff was able to quantify all this information on the Internet for free. So it's not really difficult if you put in the effort," McPherson said.

When Thomas was interrogated by the Council in January about sloppy and incomplete procedures, she went on the defense. Most of the problems pinpointed in the audit predated her arrival as commissioner in September 2008, she said.

What about the fact that the city was paying health benefits for some deceased employees?

"Dead people can't talk," Thomas replied. "And their spouses have little or no motivation to notify us [of deaths]."

Granted, dead people can't talk, McPherson said Thursday. But he noted that there is something called the Social Security Death Index, a database that can be purchased and allows employers to identify deceased individuals fairly quickly.

On Jan. 11, Brown issued a directive that ordered Thomas to take 10 steps to deal with "deficiencies" in her department, including "immediately" subscribing to monthly reports of deaths gleaned from Social Security data.

"The division not only failed to immediately purchase the Social Security Death Index to remove any deceased employees on our medical insurance rolls, [but] as of this follow-up report eight months later, the division still has not purchased the database," the comptroller's investigation found. "Since health care is one of the largest cost centers of the city, this is a major finding."

It's unclear how much money the city might be able to recoup from insurers for the health premiums that were improperly paid for deceased employees.

"Certainly it is our intent to try to recoup this money," Brown told reporters today. "But I don't know as we speak if that will be possible."

The follow-up investigation concluded that there has only been marginal progress in addressing other problems, officials said. For example, a senior accountant's position that was authorized by the mayor and Common Council has yet to be filled. There are also lingering issues regarding the city's management of injured-on-duty cases.

SanFilippo said he hopes that no one views the scathing report as an "attack" on Thomas or any other individual. His only goal, he said, is to improve performance.

But more than any other commissioner in recent years, Thomas has been embroiled in controversy since even before the Council confirmed her nomination in a 6-3 vote. Some lawmakers expressed concerns about her qualifications and her ties to local politics.

When she was nominated for a job that is supposed to help protect civil servants from political antics, she was chairwoman of Grassroots, a political group that Brown helped to build years earlier. She resigned that post after some lawmakers raised objections.

Thomas' resume also indicates that she worked for more than seven years as an aide to Crystal D. Peoples-Stokes in both the county and state legislatures. Thomas later served as human resources director at the Erie County Water Authority.

SanFilippo said it's not the role of auditors to become embroiled in the politics of any issue. His staff limits its review to scrutinizing numbers, management policies and oversight systems, he stressed.

But he said that given the progress the city has made over the years in improving its finances, it's a shame that Buffalo's image is taking a "body blow" in the mess caused by the Human Resources Department. "People expect and deserve more from their government. I think, in this case, the city let them down," he said.