Slipping up

On Nov. 16, 2000, a Detroit Department of Transportation bus driver left the wheel of a moving bus to struggle with an unruly passenger. The bus careened into an intersection and smashed a car carrying Robert Leichtman, who was seriously injured and fell into a coma. In July, the city paid Leichtman, who suffered brain damage, $700,000. Leichtman is recovering.

In July 2000, Daughfus Grant, 47, was struck by a car and killed as he stepped from a pedestrian overpass at Newport Street onto the I-94 service drive. There was no crosswalk, stop sign or traffic signal where the walkway met the road. The city is negotiating with Grant's family to settle for as much as $250,000.

In September 2000, Kelvin Nevins gashed his left leg and sustained other injuries when his motorcycle struck two potholes on East Grand Boulevard. The city knew of the holes before the accident but didn’t repair them. In July, the city paid Nevins $125,000.

Every year, Detroit faces hundreds of claims stemming from injury, death, property damage and other losses. The claims cost city taxpayers astronomical sums — payouts that have been rising without discernable management or monitoring.

And the city’s per capita cost to settle dwarfs liability payments made by other major cities.

Since 1997, Detroit has spent an average of $62 million a year to settle claims and pay court-ordered judgments. When interest payments on the city’s self-insurance fund are included, Detroit’s average yearly bill is a whopping $75 million. The cost has skyrocketed since 1987, when the city paid $32 million. During the same period of time, the population plummeted to less than a million people.

More than $600 million has been spent on claims in the past decade. It’s a staggering bill in a city that desperately needs more ambulances to cut response times from the current average of 12 minutes, and for a government that can’t find $23 million to renovate Belle Isle Park.

Detroit is an old city. Fractured sidewalks, pocked and unlit streets and poorly trained, equipped and compensated police and fire departments create an environment ripe for mishaps — and the lawsuits that result. While lawsuits abound in every city, a Metro Times analysis shows Detroit spends more to settle them.

The Motor City forks out $38 per resident per year to settle claims. Chicago pays only $14, despite having three times the population, exponentially more tourists and commuters and 100 more square miles. Philadelphia, with nearly double Detroit’s population, averages $18 each year per resident.

In Phoenix — a newer city without icy weather but with 350,000 more residents than Detroit and three times its geographic size — the payout averages $11 per resident a year.

Claims against Detroit police account for a hefty portion of the city’s payouts. Last year alone, allegations of misdeeds by officers cost the city $11 million.

Since July 1997, $14 million has been spent to settle “trip and fall” cases. More than $8 million was spent — $500,000 in 2002 already — on cases arising from injuries caused by broken sidewalks.

During the same period, the city spent less than $3 million to fix sidewalks (though $4 million is budgeted for sidewalk repair during the current fiscal year).

While many people don’t believe the city has a public transportation system, the city’s fleet of 380 buses racked up as much as $25 million for lawsuits in 1998. Last year, $15 million was spent on claims, an amount equal to nearly 10 percent of the department’s $163 million budget.

“It’s rough being a bus driver,” says Art Vardiman, vice president of the drivers union. “We’ve had a lot of drivers attacked out there on the line. We’ve had some jumped on, some stabbed. It’s a scary situation out there you have to deal with.

“People are mad because they have to wait so long. It’s not the driver’s fault. Sometimes, drivers do get into accidents and it’s still not their fault.”

Indeed, managing the city’s hazards, where possible, and firing or disciplining troubled union-protected workers, is not Detroit’s strong point. Personal injury lawyers depend on this reality, for to win cases they must prove that Detroit officials were aware of dangers or problem employees and did not act to remedy the situation.

Risk management is a science employed by cities, insurance agencies and large companies to reduce claims payouts. Evidence of the practice in Detroit is scant.

“The problem is there is zero risk management in Detroit, that I can see,” says Geoffrey Fieger, an attorney and former gubernatorial candidate who estimates he’s won at least $30 million for clients from Detroit. “If there is, they’re keeping it well hidden from me. I think I would have noticed it by now.”

Mismanaging risk

Analyzing Detroit’s lawsuits and claims payouts is a daunting task, because the city doesn’t track the information. No database exists of cases and the departments and officials involved in them; nor is there an accounting or analysis of claims payments. If such information is compiled, the city bureaucracy — namely officials in the Law and Finance departments — keeps it well hidden from public and City Council scrutiny.

When asked for an analysis of annual expenditures, breaking out “trip and fall” and other categories over time, Law Department officials say the data is not available, and that no such report exists. The Law Department only provides long lists of cases.

Meanwhile, the cities of Chicago, Philadelphia and Phoenix, chosen for comparison because of their relative population size or physical and historical characteristics, provide such information in short order.

“We don’t generate reports,” says Corporation Counsel Ruth Carter, Detroit’s new top lawyer.

Neither, apparently, does the city’s risk manager, Angela Moss. Despite Moss’ title, she says she’s mainly in charge of tracking and reducing workers’ compensation payments.

“We don’t handle lawsuits,” Moss says. “That’s all handled out of the Law Department.”

Moss declined to elaborate on her job, saying, “We’re really supposed to get permission before we talk.”

Moss refers questions to her boss, Finance Director Sean Werdlow, who did not return numerous calls for comment on this story.

Detroit’s Finance Department keeps all records of lawsuit payments because the city is self-insured, meaning Detroit pays its own settlements instead of paying an insurance company to do so. Because city liability and premiums can be so high, most large cities insure themselves.

For years, settlement claims were paid out of various funds. In 1995, the city sold $100 million in bonds to create a self-insurance “risk management fund” to consolidate and stabilize payments from year to year.

The fund pays workers’ compensation, damage, liability and auto claims and claims arising from the Detroit Department of Transportation. The Detroit Water and Sewerage Department and the Civic Center, because of their potential massive liability, also carry private insurance.

Each year, City Council reimburses the risk management fund with an amount equal to the five-year average annual payout. For instance, in 1998-1999 Detroit paid an all-time high $78 million to settle claims and judgments. Instead of draining the general fund of that amount, the City Council spent $59 million — the five-year average at that time — to reimburse the fund.

City ordinance requires the finance director to report once a year on the fund’s activity to City Council. To date, the report has never been given, according to City Council fiscal analyst Irvin Corley. City Council members are not regularly notified of court judgments against the city, and council members receive little information about cases when asked to approve out-of-court settlements.

Information about the fund is so closely held that City Councilwoman Sharon McPhail, a trial attorney, is considering filing a lawsuit to get it.

“I’m concerned the risk management fund is a slush fund, and that the public doesn’t know what the money’s spent for, and the public has a right to know,” says McPhail.

She says she’s been asking the Kilpatrick administration and its Law Department to provide a full accounting of the fund for six months, but still lacks key information. “All I want to know is the name of the case, what it was about, how the money was paid, every cent paid out of the fund and what it was for.”

Any data she gets is “like pulling teeth,” she says.

“It’s public money. It’s government money. All I’ve been able to do is argue and fight about it with the Law Department, which leads me to believe that they are hiding something.”

McPhail is not alone. Some council members refuse to approve settlements unless the Law Department provides details and until the city department involved verifies it is addressing the problem that led to the claim, such as a broken sidewalk or missing stop sign.

City Councilwoman Sheila Cockrel has attempted to track the city’s payments for years. But with an average of 500 settlements each year, not including other paid claims and court judgments, the task is formidable.

To address the lack of data, City Council’s financial analysts began recording council-approved settlements in 1997. Since then, they’ve documented 2,400 settlements totaling $190 million.

“Right now, there’s no accountability,” says Cockrel. “We need to bring accountability to the system. We need the information so we can make sure the condition [that led to the claim], whether it’s physical or human, can be rectified.”

Cockrel says she has been getting answers from city departments in a more timely fashion of late. Still, there are no comprehensive reports or analyses detailing where problems exist — for instance, hazardous intersections, dangerous sidewalks, open sewer grates — and what’s being done about them.

Data is so scarce that Allan Charlton, Detroit’s litigation supervisor, could not provide an analysis of cases over the years. He says the $62 million-a-year figure is too high. The number was culled from an internal Budget Department listing of risk management fund expenditures and how much City Council has reimbursed the fund over the years. Charlton says Detroit spent $26 million last year on litigated cases — ones settled or taken to court by city attorneys — and that the number has been going down.

But he could not provide data to explain the gap between the $26 million and the $62 million spent by the council to reimburse the risk management fund. He referred questions to the Finance Department.

“Your numbers are way, way high,” says Charlton. “The numbers from City Council, they don’t make any sense.”

In Chicago, a claims division evaluates damages and makes payments when the city is clearly liable, says Jennifer Hoyle, Law Department spokeswoman. The program processes hundreds of claims a year.

“We believe that has reduced our exposure,” says Hoyle.

Karen Seimetz, deputy counsel for Chicago’s tort division, says the city actively battles to reduce payouts.

“Because we’re very aggressive, a lot of these lawyers find it’s more trouble than it’s worth to sue the city,” Seimetz says.

Also, the Law Department “springs into action” to secure evidence when there is a major accident that might lead to a claim. Lawyers themselves go to the scene, coordinate efforts with police and emergency services and hire investigators when necessary, she says.

“We are on it immediately,” she says, which helps prevent misplaced liability or fraud.

The Chicago Law Department uses a three-year-old database to run reports detailing the city’s cases, she says. An annual report is provided to Chicago’s elected leaders.

In Detroit, the city does not follow its own laws and charter mandates regarding risk management.

For instance, a 1997 charter revision calls for the creation of a risk management council. The mandate has been largely ignored.

The charter states the risk management council will be composed of the finance director, city auditor general, corporation counsel, chief of police and human resources manager. The council began meeting at the end of Mayor Dennis Archer’s term last year, but its fate under Mayor Kwame Kilpatrick is unknown. Neither Kilpatrick nor his spokesman, Jamaine Dickens, was available for comment.

The risk management council is supposed to monitor the risk management fund and make recommendations on reducing the city’s liability and payouts. Further, the council is to audit the fund every two years.

City Auditor General Joe Harris says the lack of risk management is a tremendous problem that must be addressed. Harris says he’s preparing to audit the fund in coming months.

“We have no risk management department,” says Harris, saying that Moss is only the “so-called” risk manager. “When you spend between $50 [million] and $100 million a year in claims, you think you’d have a department that looks at these claims, analyzes them, and figures out how to reduce them in the first place.

“Risk management is, well, what it’s called: managing risk. We don’t do a good job of that.”

Harris says some claims against Detroit are “absolutely absurd.”

“They get on the bus and the bus suddenly stops, and all of a sudden they’ve got a back injury.”

It was late and Eric Vance was cruising down John R. He yelled out the window to an undercover cop posing as a prostitute, calling into question her ability to turn a trick. It was a moment of flippancy. Moments later, a police car pulled him over. An officer cuffed him. Words were exchanged. The cop got in Vance’s face, and Vance said, “Quit spitting in my face.” The cop knocked Vance unconscious with one punch to the head. The cop hit him a few more times and dragged him along the gravel to the squad car. That was 1996. Vance suffered a brain injury. He sued the city and told his lawyer, Christopher Trainer, that he’d settle for $250,000.

“My client wanted to get on with his life. He was unsure of what a jury would do. He wanted his medical bills covered,” Trainer says.

City attorneys said they’d give Vance $75,000. “I laughed in their face,” says Trainer.

In 1999, a jury awarded Vance $4.9 million. The city appealed. Last year, interest on the judgment and fees brought the sum to $6.2 million. In October, Vance settled for a $4.5 million payment.

“He’s got a head injury and tremors; this money helped him start his own company,” says Trainer, a Detroit attorney. “He’s getting into real estate and he’s actually moving forward.

“He was being a smart aleck, for that he was severely beaten. There’s never justification for beating a handcuffed perpetrator. There’s never any excuse.”

The city attorney who worked on Vance’s case, who Trainer declined to name, “never even looked at the case — he didn’t know anything about it. He took a hard-line stance. The litigation supervisor had no authority to settle (because of upper management).”

For many years, according to news reports and court officials, the city Law Department was disorganized, understaffed and underpaid. City attorneys were unprepared and even defaulted on cases when deadlines were missed. Throughout the 1980s and early 1990s, city attorneys did not have the authority to settle cases, so the cases would head to trial where the city would get hammered, as in the Vance case.

But that’s the old Detroit Law Department. By many accounts, current city attorneys are competent, aggressive and well-prepared.

“They’ve gotten rid of some deadwood in the Law Department and they’ve got some good people in there who are going to take care of business,” Trainer says.

He gives Charlton, the head of litigation, high marks. “Now, he has the authority to settle cases,” Trainer says of Charlton. “He didn’t before. Some of the people in there were idiots. It’s just stupid. I think [Charlton] is going to change things around. He’s going to save the city some money.”

In recent years, settlements have accounted for more than half of the city’s total payouts. No breakdown of judgments versus settlements exists, but in 2001, City Council approved $35 million in settlements; total payouts (including judgments and other claims) was $60.4 million. In 2000, settlements accounted for $50 million of $62 million the city ultimately paid.

Fieger says the city erred in the past by hiring outside firms to represent the city in big cases. Because private firms are paid by the hour, it is in their interest to keep cases going.

“There have been opportunities to settle cases for much less than the verdicts. But there was an absolute refusal to do so,” Fieger says.

What could the city do to reduce payouts? “Supervise, scrutinize, fire the bad ones, run the city more efficiently, settle cases early, identify cases that could be settled, so things can’t get out of hand, so that you end up in trial with your back up against the wall,” says Fieger.

“The city makes desperation settlements” because it takes too long to negotiate, he says.

“There would have to be someone put in there to risk manage,” says Fieger. “It’s not to run and manage lawyers, it’s to manage the risk.”

Judge Robert J. Colombo Jr., a 20-year veteran of Wayne County Circuit Court’s civil division, sees cases against the city weekly. He, too, believes the city Law Department is doing its job.

“I think the corporation counsel does a very good job and there are some very good trial attorneys over there,” Colombo says. “Generally, when they try cases in front of me, they win. They are well-prepared, and they do a very good job in representing the people of Detroit.”

Colombo disagrees with Fieger. He says the city should settle fewer cases out of court and take more to trial.

Chief Judge Pro-Tem Pamela Harwood says she’s surprised the city’s payouts are so high, because from her vantage point, the number of civil cases is declining, as are payouts.

“It’s more difficult to recover damages. Therefore, there are fewer cases filed,” she says.

“I don’t think that any change in the amounts paid out can be attributed to the quality of the lawyers working for the city,” adds Harwood, who herself worked for the Detroit Law Department in the early 1980s.

When John Thomas was arrested in April 2000, his wife told police he’d been smoking PCP all day. The officers took Thomas to the 9th floor lockup at Beaubien Street headquarters. Thomas complained a seizure was coming on and asked for a priest. He wasn’t checked on for an entire shift and was later found dead. In April, the city paid his family $220,000.

In March, the city paid Monstikee Darryl Perry’s family $650,000. Perry, 23, was a bystander to a fight when he was fatally shot by off-duty Officer Daniel Vinson at the Brass Key Lounge on Nov. 14, 1999.

Police shootings and mistreatment of city residents are well-documented. According to a 2000 City Council report, police lawsuits cost Detroit $124 million between 1987 and 1999.

Since 1998, the city has spent $20 million to settle out-of-court cases of improper arrests; $700,000 for improper search or raid; $11 million for shooting injuries or death; $3.8 million for accidents involving police cars; and $55,000 for two dogs that were shot.

A string of civilian shootings in 1999 and 2000 prompted the U.S. Justice Department to launch an investigation of the department.

New Police Chief Jerry Oliver says the problem is lack of training and problem officers who remain on the force despite repeated offenses. Indeed, City Council’s report states that 38 percent of the city’s payouts for police cases involved repeat offenders.

Just this weekend, Oliver fired five officers for their involvement with the arrest and detention of a diabetic who died in custody.

Since taking office, Oliver created a risk management bureau to track officers, assess a backlog of hundreds of misconduct cases and establish a database of officer history, says Cmdr. Shereece Fleming Freeman, Oliver’s chief of staff.

“Now, risk management has a major role,” says Freeman. “We’re going to be progressively proactive to prevent problems before they happen.”

City Auditor Harris says the Police Department must begin keeping computerized data on officers.

“One of the problems we have is if you go to the Police Department and ask for a schedule of all claims by type and by category of police officers, or by age, they claim they do not have that information and are just now compiling it.”

City Council has been waiting for the reforms for years.

“I’m sick and tired of the excuses from the Police Department,” says Cockrel.

“Their problem is they [police] never punish anybody,” says Sam Posner, 86, who has been trying cases in Detroit for 63 years. “The union kills them. Under the union contract they can’t fire nobody.”

Fix what’s broken

For years, people who worked at the All Saints Neighborhood Center complained to City Council and the Department of Public Works about the intersection of Springwell and Longworth in southwest Detroit. It was dangerous; visibility was low, accidents were common. The council got involved; nothing happened. The Department of Public Works said the signage was fine.

Then, last year City Councilman Ken Cockrel Jr., Sheila’s stepson, was hit by a car at the intersection. He was out of commission for a week.

“Someone tore through a stop sign and didn’t see me. He knocked me, slammed me broadside. There was a long history of that there.”

Cockrel says after his accident, the issue of the city’s liability was raised. What if someone was killed?

“Subsequent to all that, their request was granted. They got some additional signage there.

“If there’s a clear history of problems and the city doesn’t do anything, and someone gets really hurt or killed, not only is that a tragedy, but you have to deal with the city being on the hook.”

The city has notice of thousands of problems that for various reasons don’t get fixed. Damaged sidewalks, problem police officers, problem intersections, all need to be rigorously addressed, says Cockrel.

While personal injury attorneys readily admit that cases of fraud do exist, attorney Posner says most injury cases in Detroit are legitimate.

“What are you going to do with someone who has no pennies and you offer them $10,000, $20,000? The people are hurt. You get sidewalk cases where there are trees that lift up the sidewalk. Slip and falls are bad. You can get hurt bad.”

Detroit is liable for its sidewalks. Under the city’s sidewalk repair program, the city fixes the sidewalk and then bills the homeowner.

“The problem with Detroit is that their sidewalks and curbing are atrocious,” says James Brennan, a personal injury attorney who recently won a $125,000 settlement for a client who tripped and fell on a sidewalk. “Not only have I had people who hurt themselves because the streets are in horrendous shape, but the streets are pitch-black.

“It’s a triple threat.”

Are people fabricating injuries, knowing Detroit is an easy mark? Attorneys say no. Fieger says it would be a waste of time and money for attorneys to take bogus cases, because payment usually depends on the case settlement.

“You have to be a desperate and stupid attorney to do that,” says Fieger of taking a trumped-up case.

Sheila Cockrel says it’s not so much the way cases are handled once the lawsuit is filed that causes Detroit problems. It’s the overall lack of risk management.

“After nine years of monitoring issues of risk management, I don’t think we are making changes needed to avoid paying $38 a person for lawsuits. It’s awful that we’re paying the money. But it’s just as awful that bad things are happening to people in the city and we aren’t doing what we should to make it stop.”