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HomeMy WebLinkAbout07-City Attorney ~~ITY OF SAN JECNARDINOo- AEMORANDU::J To HONORABLE MAYOR AND COMMON COUNCIL From JAMES F, PENMAN City Attorney June 8, 1987 Subject Violation of Charter Section 55 (d), Date Risk Management supervision of legal matters Approved Date 700.18 Section 55 (d) of THE CHARTER of the CITY OF SAN BERNARDINO, STATE OF CALIFORNIA, reads (in pertinent part) as follows: "The City Attorney shall be the chief legal officer of the City; . . . he shall represent and appear for the City in all legal actions brought by or against the City, .. " (emphasis added). The Mayor and Council of the City of San Bernardino have, in violation of the above quoted Charter section, and, consequently, in violation of State law and the Constitution of the State of California, assigned numerous legal duties to the Risk Management office of this City. Said legal duties include, but are not limited to, non-attorney supervised investigation of legal claims filed against the City, decision making on claims and potential and actual lawsuits, hiring of attorneys in liability and Workers Compensation cases, making recommendations to the Mayor and Council on the settlement of law suits and potential lawsuits (in violation of the Charter mandate to the City Attorney that " . . . he shall represent and advise the Mayor and Common Council and all City officers in all matters of law pertaining to their offices; . . ." Charter, Section 55 (d), emphasis added), working and settlement of Worker's Compensation cases, giving legal advice to departments and other City employees, and doing all of the above without the advice, consultation with, consent, and in the face of the opposition of the Office of City Attorney. The manner in which other cities administer their risk management programs and/or the issue of which administrative office is assigned to supervise risk management functions in those cities is irrelevent to this City. Likewise, the issue of insurance company reviews and preferences as to who represents the City is also irrelevent to our unique situation. Those factors are irrelevent because our City Charter makes it clear that the City Attorney shall conduct and be responsible for all leqal actions and advice in this City. The Constitution of the State of California, as well as State statutory law, gives our Charter the full force and effect of State law. Numerous Federal and State Supreme Court decisions dictate that the word, "shall", as used throughout the above-cited Charter section is mandatory language and is not permissive. The Mayor and Common Council have two legal options today: 1. Remove all legal functions assigned to the City Attorney by the Charter from Risk Management and place them under the City Attorney (i.e. investigation of claims, advice and decision c.ry Oil rH.~~~. 7 .......-'" o '-...I ,) ., MEMORANDUM MAYOR AND COUNCIL June 8, 1987 page 2 making on all claims, hiring of attorneys, working and settlement of all Worker's Compensation cases, etc.). Non-legal department functions (i.e. safety, health, etc.) should remain under Risk Management, or, 2. Transfer supervision of the Risk Management Office to the City Attorney from the City Administrator as to legal department functions (as stated in option 1. preceding) only, retaining under the City Administrator supervision of the non-legal department functions (as stated in option 1. preceding). The City Attorney is not the appropriate official to supervise safety, health and similar risk management functions. If the Mayor and Council do not wish, as a policy matter or for administrative reasons, to have all of the legal affairs of this City under the City Attorney as the present Charter requires, the remedy is to prepare a Charter amendment and present same to the electorate. At the present time, however, it is my duty to advise you that you are not in compliance with the Charter in the allocation of legal work to the Risk Management office. No onus attaches to you prior to the date of this memorandum as I am aware that this is the first time you have received official notification of this violation. I respectfully advise the Mayor and Council (now that you have been informed and placed on notice) to immediately correct this ongoing violation of the Charter, and to bring this City into compliance with the law. Respectfully Submitted, / . f) A.".., f rc,..~" /""/ / tAMES F. PENMAN (/ity Attorney ,. . ~ ";.---" \. " :) '\ , ,j COUNCIL ACTION CORRESPONDENCE To James Penman City Attorney Sub~ Request to Transfer the Risk Management Division from the Office of City Administrator to the Office of the City Attor- ney Oltt June 3, 1987 Meeting Oltt June 1, 1987 AQlnda Item No, 54 Action The request to transfer the Risk Management Division from the Office of the City Administrator to the Office of the City Attorney, was continued to June 8, 1987. SC:dc cc: City Administrator l\i,k Management r'''' ~ /SHAUNA CLARK City Clork ? ,~ ( c C I T Y ',...... o o F SAN B ~ R-N A R INTEROFFICE MEMORANDUM 8705-1508 DIN 0 ' /, ~~'rf) ...."":0 t> ;.- . ....~;,. '.," ~ ~:> \. ~.... ..,'\ " TO: RAYMOND D. SCHWEITZER. CITY ADMINISTRATOR ',' FROM: E. M. LIGHT, DIRECTOR OF RISK MANAGEMENT SUBJECT: SURVEY - MUNICIPAL RISK MANAGEMENT PROGRAMS DATE : May 28, 1987 (7088) COPIES: MAYOR EVLYN WILCOX ------------------------------------------------------------- In anticipation of some possible proposed organizational changes, we discussed conducting a survey to ascertain the Risk Management structures of other relatively comparable municipalities. In consideration of other issues already raised during my one month tenure with the City, I expanded the survey to incorporate' a comparison of these apparently controversial issues. In essence, the focus is to look at the Risk Management reporting relationships, settlement authority levels, and legal defense arrangements in a sample of other relatively large California charter cities, To avoid adverse selection or skew the results of the sample, I chose the ten cities in the Authority for California Cities Excess Liability (ACCEL) Pool, informally known as the "large cities pool," plus five cities which are presently exploring participation in the Independent Cities Risk Management Authority (ICRMA) large cities liability insurance pool, The result is a good cross section of cities from relatively small Visalia to San Diego, the second largest city in the State, Exhibit I details the relative size of the cities and shows the Risk Management reporting relationships. Of special significance, in twelve of the fifteen cities the Risk Manager reports to someone other than the City Attorney. On the other hand, in Palo Alto and Santa Ana, the Risk Managers have a dual reporting relationship, reporting to their respective City Attorneys only insofar as liability issues (we all know what the management organization experts say about dual reporting relationships). In only one of the fifteen' cities, however, does the Risk Manager report directly and only to the City Attorney, These results are not surprising. report to top executive officers. tiated by the following excerpt Risk Managers should This is further substan- from a 1985 book entitled " r \"., 1.... ~ J I NTE:;':OFF:::E MEMORANDUM: SURV~v - IIUNICIPAL RISK May ~B, 1987 Page 2 8705-1508 MANAGEMENT PROGRAMS R i s k 1/ a :l age m e n:Lil.d..4u._~ - H ow j; 0 G u i.d..ILJ~,Ll.l:ls;,.4.l_]iQ~.ll..J:.nJU.D.j; pub' sne~ in cooperation with the Public Risk and Insurance Mana~~~er~ Association by the International City Management Ass c::: ' a ~ " : n . -If the person designated risk manager is someone other than a person with general executive respon- sibilities (for example, someone other than a city or village mayor or manager, a town supervisor, a county manager, etc.) or someone who a1 ready reports to such a person (for example, the budget officer), then Rrovision should be made for the risk manager to report directly to a top executive person. This will emphasize the importance of the ~isk management program to all local officials and ~mp10yees, It wf11 also make clear to them that the risk manager can easily call upon a high level of authority for assistance if other parties fail ';0 coope ra'te." -Those with a special obligation to assist the risk ~anager include the municipal attorney, the budget ~fficer, and other persons with special expertise, such as in property appraisal (the assessor), safety (police officers and firefighters), engine- ering (the city -engineer), etc." I s-=:-cnS")' believe the va1fdity-of the above statements. Thro~~t. Cl:! experience with the City of Pomona where I repo:---=e::: :::rect1y to the City Administrator, I can attest to the "'Z!::t 't~at th i s arrangement g reat1 y fac il itated my ab 11 ity to e-=-=":::e;"'t1y perform all of the Risk Management functions. Exhi= -~ :: details settlement authority arrangements for both workao-s' ::ompensation and public liability in the sample citi=. ::- the area of workers' compensation, nine of the fift~r. ":sl< Managers have un1 imited workers' compensation sett- ~llle"''!: authority. Three more have at least $20,000 of authc.:--:t;)'. This is consfstent with the rating procedure of the .::-<e:-s' compensation system which pretty much dictates the 'S-e";";~ement value of cases, I.e., it is determined by stat:...-:=s i!.~:: usually subject to minimal negotiation, Inso"'~'" as liability settlement authority, the first line authc.-'~:es range from $1,500 to $20,000, However, in eight of tr:: f:fteen cities, either the Risk Manager alone, or in comb'-at:or with one or more other officials, has authority to .=;-e";t~e for $5,000. This is reasonable and is cc~nc ::e-tal1y the minimum provided by statute under the Tort ,.... I c. o u.'.) " -:.,..;0 INTEROFFICE MEMO~ANDUM: 8105-1508 SURVEY - MUNICIPAL RISK MANAGEMENT PROGRAMS May 28, 1981 Page 4 evidence of this philosophy and coincident goal, In ad- dition, my short time with the City of West Covina opened my eyes to one of the best "team work" efforts since my five year private sector tenure as an executive with the progressive Getty Oil Company. The bottom line is that the City of San Bernardino either wants a true, cost saving, Risk Management Program or just a figurehead for a chara\l-e-. A true Risk Manager's goal is to save the City monies which it may otherwise lose through excessive workers' compensation, public liability, and property losses, including expenses related thereto, i.e" legal fees, etc. In line with this goal, the true Risk ~anager is not desirous of building an empire with attendant costs which might neutralize, or even exceed, the potential savings. The true Risk Manager is well versed in business administration in order to evaluate the least cost alterna- tives, I meet the aforementioned criteria: I am a true Risk Management professional: and therefore, for the envisioned good of the City and my own self consciousness, I must not, and I will not, compromise the cr-iteria set forth for effective Risk Management. I will propose specific recommendations if the Mayor, Common Council, and you appear to be receptive to my philosophy and request such recommendations, Otherwise, as you well know, it would be a fruitless effort and waste everybody's time at the taxpayers' expense. Please advise. e~-~ E. M, Light Director of Risk Management EL/sf Attachments '"" l '""", " v o :J -- I ~ I i I i I ~ I I I I I I , ' ~ 0 I i il I .. Ii ! I n I I I . . - - - ~ - ' ; . . f . ; . . . . . !' :' . . .' . . ~ . ... . .. .. . .. .. . . . . . . . . . . . . . . . . . i . ! ! . . . . . . . . . ! . . . . . . . . . . ... ... -. 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I e I i t I ; ; R . , . , I I ~ ! ~ I n I ~ ~ ill : ' il : I: ~ n n .. - ~ . ~i .. III = i ~ . a . . >> . . . c z I ii " i ~ ~ . - -~ c o o ,.~ .J '7-1)' /, '~. r ....~}), <' .-- . ~ . ......... '.," (:) ~:> \ C I T Y 0 F SAN B ERN A R DIN 0 INTEROFFICE MEMORANDUM 8705-1508 TO: RAYMOND D. SCHWEITZER, CITY ADMINISTRATOR ~ ...;. 0" " ....... FROM: E. M. LIGHT, DIRECTOR OF RISK MANAGEMENT SUBJECT: SURVEY - MUNICIPAL RISK MANAGEMENT PROGRAMS DATE: May 28, 1987 (7088) COPIES: MAYOR EVLYN WILCOX In anticipation of some possible proposed organizational changes, we discussed conducting a survey to ascertain the Risk Management structures of other relatively comparable municipalities. In consideration of other issues already raised during my one month tenure with the City, I expanded the survey to incorporate a comparison of these apparently controversial issues. In essence, the focus is to look at the Risk Management reporting relationships, settlement authority levels, and legal defense arrangements in a sample of other relatively large California charter cities. To avoid adverse selection or skew the results of the sample, I chose the ten cities in the Authorfty for California Cities Excess Liability (ACCEL) Pool, informally known as the "large cities pool," plus five cities which are presently exploring participation in the Independent Cities Risk Management Authority (ICRMA) large cities liability insurance pool. The result is a good cross section of cities from relatively small Visalia to San Diego, the second largest city in the State. Exhibit I details the relative size of the cities and shows the Risk Management reporting relationships, Of special significance, in twelve of the fifteen cities the Risk Manager reports to someone other than the City Attorney. On the other hand, in Palo Alto and Santa Ana, the Risk Managers have a dual reporting relationship, reporting to their respective City Attorneys only insofar as liability issues (we all know what the management organization experts say about dual reporting relationships). In only one of the fifteen cities, however, does the Risk Manager report directly and only to the City Attorney, These results are not surprising. report to top executive officers. tiated by the following excerpt Risk Managers should This is further substan- from a 1985 book entitled 1 , c o o ~ INTEROFFICE MEMORANDUM: 8705-1508 SURVEY - MUNICIPAL RISK MANAGEMENT PROGRAMS May 28, 1987 Page 2 B..llk__~M~~JIUlllt Today: A-Holi__1~ll.d.~ for U)c'A,LG.QYli.nmu1 published in cooperation with the Public Risk and Insurance Management Association by the International City Management Association. "If the person designated risk manager is someone other than a person with general executive respon- sibilities (for example, someone other than a city or village mayor or manager, a town supervisor, a county manager, etc,) or someone who already reports to such a person (for example, the budget officer), then provision should be made for the risk manager to report directly to a top executive person, This will emphasize the importance of the risk management program to all local officials and employees, It will also make clear to them that the risk manager can easily call upon a high level of authority for assistance if other parties fail to cooperate." "Those with a special obligation to assist the risk manager include the municipal attorney, the budget officer, and other persons with special expertise, such as in property appraisal (the assessor), safety (police officers and firefighters), engine- ering (the city engineer), etc," I strongly believe the validity of the above statements. Through my experience with the City of Pomona where I reported directly to the City Administrator, I can attest to the fact that this arrangement greatly facilitated my ability to efficiently perform all of the Risk Management functions. Exhibit II details settlement authority arrangements for both workers' compensation and public liability in the sample cities. In the area of workers' compensation, nine of the fifteen Risk Managers have unlimited workers' compensation settlement authority. Three more have at least $20,000 of authority, This is consistent with the rating procedure of the workers' compensation system which pretty much dictates the settlement value of cases, 1.e., it is determined by statute and usually subject to minimal negotiation. Insofar as liability settlement authority, the first line authorities range from $1,500 to $20,000. However, in eight of the fifteen cities, either the Risk Manager alone, or in combination with one or more other officials, has authority to settle for $5,000. This is reasonable and is coincidentally the minimum provided by statute under the Tort c o o :) INTEROFFICE MEMORANDUM: SURVEY - MUNICIPAL RISK May 28, 1987 Page 3 8705-1508 MANAGEMENT PROGRAMS Claims Act of 1963. This antiquated provision in the California Government Code allows authority to settle claims up to S5,000 by a representative of a municipality without Council approval unless the Council provides more stringent guidelines, such as our S2,OOO limit adopted by resolution, or the more restrictive Sl,500 limit still in effect in 8urbank. Times have changed since 1963. There have been vast increases in the cost of living and the value of services. A mere "fender bender" in one of today's new cars can exceed S2,OOO. Should the City Council devote its valuable time to such routine matters when it's dealing with an annual budget in excess of $70,000,000 and other pressing matters? Most city councils think not, Exhibit II also addresses workers' compensation and liability (tort) legal representation. Who does the better, and the most efficient, job; the City Attorney's office or outside independent specialists? This is obviously open to debate but is probably dependent upon the size, skill, and diversity of the City Attorneys staff. The survey shows that nine cities rely heavily on the City Attorney for liability services and even for workers' compensation services in four cities, It's definitely not an impossibilityl On the other hand, liability insurance companies and liability insurance pooling authorities cast a sharp eye at such in-house arrangements, especially if they have not proven a "good" past track record. Also, excess workers' compensation insurance carriers are very much interested in who is handling the City's litigated workers' compensation claims. In fact, interest is so strong in both workers' compensation and liability that insurance companies and pooling authorities are certain to request resumes of those attorneys providing the City's defense in order to ascertain total education, training, and especially jury trial experience. This whole issue of legal services would appear to be a critical concern of the City at this time when it is vigorously searching for a liability insurance market or a viable pooling alternative. The foregoing is not to say that I am adverse to City At- torney involvement. On the contrary, I am a strong advocate of a teamwork philosophy. We should all work together toward the same goal, i.e., the good of the City and its citizenry. To me, this equates to the best possible service at the least possible cost, My record of mutual cooperation with the City Attorney of the City of Pomona for more than eleven years is c 1''"\ V INTEROFFICE MEMORANDUM: SURVEY - MUNICIPAL RISK May 28, 1987 Page 4 o :J 8705-1508 MANAGEMENT PROGRAMS evidence of this philosophy and coincident goal. In ad- dition, my short time with the City of West Covina opened my eyes to one of the best "team work" efforts since my five year private sector tenure as an executive with the progressive Getty Oil Company. The bottom line is that the City of San Bernardino either wants a true, cost saving, Risk Management Program or just a figurehead for a charade. A true Risk Manager's goal is to save the City monies which it may otherwise lose through excessive workers' compensation, public liability, and property losses, including expenses related thereto, i,e., legal fees, etc. In line with this goal, the true Risk Manager is not desirous of building an empire with attendant costs which might neutralize, or even exceed, the potential savings. The true Risk Manager is well versed in business administration in order to evaluate the least cost alterna- tives. I meet the aforementioned criteria: I am a true Risk Management professional: and therefore, for the envisioned good of the City and my own self consciousness, I must not, and I will not, compromise the criteria set forth for effective Risk Management. I will propose specific recommendations if the Mayor, Common Council, and you appear to be receptive to my philosophy and request such recommendations. Otherwise, as you well know, it would be a fruitless effort and waste everybody's time at the taxpayers' expense. Please advise. e~.~ E. M. Light Director of Risk Management EL/sf Attachments .. c o ~ II I I I I I I 0 , i ~ ' ~ 0 i a ; 6 ; . . . - - : ; ; , M i . . . . ~ . :' . ~ !' . . f . . . . . . .. .. . . . . . M . . . . . . . . . . . I ~ . . . . . . . . M ~ . : . . . . . !' ~ . . . .. -. . '. . ;. .. .. I . . ~ . . . . . . !' . . ,. !' . . .. . . .. . M '. .. . . . . . . . . . . . . . . . . - - - t . . . . . .. ;. . .. d . ~ ~ . M . . . . . . . . . . . ~ . n ! ! U ~ ~ ~ ! ~ . . i i i . i I I I I I I I . Ii Ii ~,. ~ . - ~ ~ = . ~ n rl I III !:!! 2 , I 2 I i ~ . i I ~ ~ ~ ~I ~I I n I 2 h n ~ . . ~ ~ ~,. P I! 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