Item - 2016.AU6.12

The Audit Committee recommends that:

1.   City Council request the Treasurer to require the City's Long-Term Disability (LTD) Benefits Administrator to provide up-to-date diagnostic statistics and reports, in aggregate data, to the City reflecting claimants' initial and current primary diagnoses. 

2.   City Council request the Treasurer to assess, within the framework of Human Rights and Privacy legislation, the feasibility and appropriateness of requiring the City's Long-Term Disability (LTD) Benefits Administrator to ensure all new mental and nervous disorder claims, and claims in which the diagnoses change to mental health and nervous disorders, are supported by medical reports from specialists (Psychiatrist or Psychologist) prior to or soon after the claim approval to assess claimants' return to work potential and accommodation needs.

3.   City Council request the Treasurer to implement adequate steps to ensure that the City's Long-Term Disability (LTD) Benefits Administrator conducts telephone interviews with all LTD benefits claimants' supervisory staff as part of the claim adjudication process.

4.   City Council request the Treasurer to develop a process whereby the appropriate City staff are informed by the City's Long-Term Disability (LTD) Benefits Administrator of workplace related issues associated with LTD claims and return to work.  The workplace related issues should be communicated in a manner that complies with applicable privacy legislation and in a timely manner allowing the appropriate City staff to adequately address the issues and accommodate LTD claimants' needs for returning to work.

5.   City Council request the Treasurer to review the need and consider incorporating into the new five-year contract with the City's Long-Term Disability (LTD) Benefits Administrator requirements to develop and implement specific criteria to help ensure:

a.  LTD benefits claimants' timely participation in rehabilitation program; and

b.  Case Managers undertake timely return to work actions during claim management process.

6.   City Council request the Treasurer to review the need and consider incorporating into the new five-year contract with the City's Long-Term Disability (LTD) Benefits Administrator performance measures pertaining to:

a.   Acquiring timely medical updates to support continuation of LTD benefits;

b.  Timely claim management actions to address claimants' delays in responding to the Administrator's contact; and

c.  Timely claim management actions in arranging for rehabilitation activities for claimants.

7.   City Council request the Treasurer to review the need and consider incorporating into the new five-year contract with the City's Long-Term Disability (LTD) Benefits Administrator a requirement to provide the City with internal audit results if available.  These internal audit results should be reviewed by the appropriate City staff to ensure ongoing compliance with contractual requirements.

8.   City Council request the Treasurer to require the City's Long-Term Disability (LTD) Benefits Administrator to take steps to ensure all active claims are supported by medical information provided by physicians who are licensed to practise medicine in Ontario.  Such steps should include but not be limited to:

a.  Review all active claims and the license status of the physicians and specialists, including the two claims supported by the physicians whose licenses had either been suspended or revoked; and

b.  Implement a process to verify physicians' license status during the initial claim assessment.  The license verification process should also be conducted on all active claims at least on an annual basis.

9.  City Council request the Treasurer to ensure the amount of refund received from Manulife in relation to extra tax and administration fee charges for Long-Term Disability benefits administration is complete and accurate.

This interim report provides the results of the Auditor General's review of a sample of Long-Term Disability (LTD) benefits claim files as part of the Auditor General's Phase Two Audit of the City LTD benefits program.

The Auditor General’s 2015 Audit Work Plan included an audit of the City’s management of LTD benefits.  The audit was divided into two phases.  Phase One, which focused on how City staff managed the LTD benefits was completed in October 2015, and the audit report was submitted to the Audit Committee in October 2015:

http://www.toronto.ca/legdocs/mmis/2015/au/bgrd/backgroundfile-84556.pdf

Phase Two of the audit included a detailed review of a sample of LTD claim files administered by Manulife.  The Phase Two audit is currently underway.  A full audit report will be presented to the City Audit Committee at its October 2016 meeting.

The City's current five-year contract with Manulife will expire in December 2016, and the award of a new five-year contract is pending City Council approval.  In view of the pending contract award and the ensuing preparation of a new contract, we are providing our claim review findings and recommendations earlier through this interim report.