by Melissa Steffan July 1st, 2011
SUMMARY: A recent City of Seattle Auditor’s report found that over a four-year period, from 2007 to 2010, the City of Seattle spent nearly $30 million to settle lawsuits filed against it. This accounts for 39 percent of the total $74,767,406 spent by the City of Seattle to cover legal judgments and financial claims against it during that time. The annual total continues to trend downward from a recent high in 2008. The auditor’s report recommended several strategies including stronger leadership and employee involvement, a focus on root causes of financial risk, and regular collection and analysis of data.
BACKGROUND: Seattle City Council members Jean Godden and Bruce Harrell requested a review of the City of Seattle’s risk management practices compared to those of other areas and agencies. The report comes as the result of the Office of the City Auditor’s study of nine jurisdictions of varying legal and organizational structure, including the University of Washington and the State of Washington. The purpose of the audit was to determine a set of “best practices” that, if implemented, could reduce the City of Seattle’s long-term financial loss and liability.
“KEY LINK: Promising Practices in Risk Management, David Jones, City of Seattle Auditor, Office of City Auditor
- The June 22 report found that over a four-year period from 2007 to 2010 the City of Seattle spent a total of $74,767,406 to supports its judgments and claims expenditures. According to the report, handling and litigation expenses for the city accounted for 36 percent of the total amount, while non-lawsuit claims settlements on behalf of city departments or employees comprised only 25 percent of the total. Lawsuit judgements and settlements comprised the rest.
- The total judgements and claims of $11.8 million paid by the city in 2010 was less than half of the total paid in either 2008 and 2009, and was also lower than the 2007 total.
- In a separate analysis, the report also included a breakdown of non-court claims including damages and other liabilities. For the ten-year period between 2000 and 2009, 16,073 such claims were filed against the City of Seattle. The total cost of these claims was $37,611,823. Major claims categories are broken down in further detail below.
- Seattle Police Department (SPD): The 1,040 claims filed against SPD cost $3,494,331, accounting for 9.3 percent of the total.
- Seattle Public Utilities (SPU): Sewer (1,182), water line (625), and flood (432) claims accounted for 46.9 percent of the total claims; however, sewer claims alone clocked in at 32.1 percent of the total, the largest of any category. The combined cost of these claims categories was $17,660,836.
- Seattle Department of Transportation (SDOT): The 2,941 claims filed against SDOT cost $3,773,701, accounting for 10.1 percent of the total.
- Seattle City Light (SCL): Damaged power line claims (187) accounted for 4.4 percent of the total claims costs, carrying a price tag of $1,646,863.
- A different analysis broke down the cost of claims and lawsuits against the City of Seattle for 2010. Of the total 92 lawsuits filed against the City of Seattle in 2010, 42 percent were against SDOT while 33 percent were against the SPD Together with SPU, these three departments accounted for 90 percent of all lawsuits against the city.
- Of the total 1,395 claims filed against the city in 2010, six departments, including SDOT, SPD, SPU, SCL, Parks and Recreation, and the Seattle Fire Department, accounted for 95 percent of all City of Seattle claims losses.
- Based on its study, the Auditor’s report determined that the City of Seattle does not always follow “best practices” when it comes to risk management. However, the City of Seattle’s draft Enhanced Loss Control Procedures was recently revised to be consistent with the report’s five promising practices in risk management, including a comprehensive strategy called “Enterprise Risk Management.”