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Wayne Parthun, one of Berwyn’s ethics commissioners, has now sued the city twice.
In February, his workers’ compensation claim for being hurt by a tree branch was settled for $3,675. Three months later, the retired Parthun filed a federal lawsuit alleging he was passed over for a new job with the city because of his age.
Lawsuits like these and dozens of others have begun to strain the city’s budget — and more directly, taxpayer dollars.
While Berwyn has insurance coverage for lawsuits costing more than $750,000, it hasn’t faced a settlement that large in the last three years. As a result, the city has paid for every recent lawsuit out of pocket.
City officials estimate lawsuit costs are trending downward from a peak of $3.5 million in 2009, while budget documents show $2.1 million in liabilities this year.
However, a records examination by the Berwyn Life shows lawsuit expenditures actually are going up.
Although Berwyn officials said they were unable to provide a list of local cases settled every year, the City Council is required to vote to approve each settlement. Adding those listed in meeting records, the city’s totals have jumped from about $258,000 in 2008 to nearly $742,000 in 2009.
In 2010, that number rose to about $1.68 million.
Although a Freedom of Information Act request detailed varying figures (see the breakout box accompanying this story), those also signified an increase in lawsuit expenses.
In part, the numbers discrepancy is fueled by accounting techniques — but adds to the confusion. For budgeting purposes, the city writes off liability “as soon as we determine that it is reasonable and likely we will have to pay out,” said city finance director John Wysocki.
Lawsuits the city wrote off when the suits were filed — potentially years ago — are finally being settled. Mayor Robert Lovero’s administration has settled claims from as far back as 2001, city Attorney Anthony Bertuca said.
“I don’t think 2010 was a particularly bad year because we’ve been moving to dispose of some of these cases,” Bertuca said. “There were a couple of bigger cases, and some of those were inherited from past years.”
Lovero attributed the increase in actual settlements to an effort by his administration to finalize lawsuits that have already been written off years ago.
“It’s just an effort to get some of these lawsuits off the books,” Lovero added.
But while the city’s legal team is cleaning up those cases, it’s still affecting Berwyn’s budget — and those served by it.
Wayne Parthun, one of Berwyn’s ethics commissioners, has now sued the city twice.
In February, his workers’ compensation claim for being hurt by a tree branch was settled for $3,675. Three months later, the retired Parthun filed a federal lawsuit alleging he was passed over for a new job with the city because of his age.
Lawsuits like these and dozens of others have begun to strain the city’s budget — and more directly, taxpayer dollars.
While Berwyn has insurance coverage for lawsuits costing more than $750,000, it hasn’t faced a settlement that large in the last three years. As a result, the city has paid for every recent lawsuit out of pocket.
City officials estimate lawsuit costs are trending downward from a peak of $3.5 million in 2009, while budget documents show $2.1 million in liabilities this year.
However, a records examination by the Berwyn Life shows lawsuit expenditures actually are going up.
Although Berwyn officials said they were unable to provide a list of local cases settled every year, the City Council is required to vote to approve each settlement. Adding those listed in meeting records, the city’s totals have jumped from about $258,000 in 2008 to nearly $742,000 in 2009.
In 2010, that number rose to about $1.68 million.
Although a Freedom of Information Act request detailed varying figures (see the breakout box accompanying this story), those also signified an increase in lawsuit expenses.
In part, the numbers discrepancy is fueled by accounting techniques — but adds to the confusion. For budgeting purposes, the city writes off liability “as soon as we determine that it is reasonable and likely we will have to pay out,” said city finance director John Wysocki.
Lawsuits the city wrote off when the suits were filed — potentially years ago — are finally being settled. Mayor Robert Lovero’s administration has settled claims from as far back as 2001, city Attorney Anthony Bertuca said.
“I don’t think 2010 was a particularly bad year because we’ve been moving to dispose of some of these cases,” Bertuca said. “There were a couple of bigger cases, and some of those were inherited from past years.”
Lovero attributed the increase in actual settlements to an effort by his administration to finalize lawsuits that have already been written off years ago.
“It’s just an effort to get some of these lawsuits off the books,” Lovero added.
But while the city’s legal team is cleaning up those cases, it’s still affecting Berwyn’s budget — and those served by it.
Each city department pays into a pool known as the Internal Service Fund, which serves as a reservoir for lawsuit settlement money.
Despite transferring $2.25 million from other operating funds into the Internal Service Fund, the city is still projected to finish this year with a fund balance just below $1 million in the red, down from about a $3 million deficit in the beginning of 2010, according to budget documents.
The city has coped with increased expenses by transferring in cash from other funds and increasing the money each of the city’s departments pays into the Internal Service Fund. For instance, the police department’s contribution jumped from about $1 million in 2009 to more than $1.8 million in 2010. (That number decreased about $400,000 this year.)
Meanwhile, local lawsuits range from run-of-the-mill workers’ compensation claims — from a few hundred dollars to $150,000 each — to a $600,000 settlement in 2010 for a child who suffered brain injuries on playground equipment.
Larry Frang, executive director of the Illinois Municipal League, said local governments often have high lawsuit costs because of workers’ compensation claims due to the risky nature of police, fire and public works jobs.
Frang and representatives from the Intergovernmental Risk Management Agency — another municipal insurer — declined to comment specifically on the number and cost of lawsuits in Berwyn.
Although some area towns carry municipal liability insurance, city officials said self-insurance is the best way to handle Berwyn’s lawsuits because adding a middleman would only increase the cost to taxpayers. The city does carry libability insurance, but it doesn’t cover the first $750,000 of a lawsuit.
In hopes of controlling the cost of claims, the city has been trying to pay down the deficit in its Internal Service Fund and hired an outside company to manage liability claims.
Berwyn also will receive some help on the issue from a recent law passed by the Illinois state legislature that reforms workers’ compensation claims. It’s estimated to save local governments between $500 and $700 million each year.
Frang added the law, which went into effect July 1, should cut workers’ compensation claims by about 30 percent across the board.
As the city struggles to get that fund balance back into the black, Bertuca said he thinks the city’s lawsuit woes already are turning around.
“In the past year, I would say that there have been fewer lawsuits filed,” Bertuca said. “So, I think it’s getting better.”
