Joseph Charney: L.A. supervisors were slow to foresee and prevent fraud

In 2019, the California Legislature enacted AB 218, a law that allowed individuals to seek compensation against institutions and individuals for alleged child abuse dating as far back as the 1950s. It was predictable that once AB 218 was enacted, law firms would be incentivized to gather as many alleged victims as possible to file complaints within the three-year window provided by the statute. The result: an avalanche of claims, with the Los Angeles County Board of Supervisors agreeing to a record-breaking settlement of $4 billion for alleged child abuse that occurred in its juvenile and foster care facilities. Later, a separate settlement was reached for $875 million. That almost $5 billion could have financed L.A. County’s Fire, Sheriff and Probation departments for one budgetary cycle. It ‘s about 10% of the county’s budget, a budget intended to serve the needs of almost 10 million Angelenos.

Statutes of limitations prevent the filing of claims where the passage of time makes defending them very challenging. Documents disappear, witnesses can’t be found and fraudulent claims are likely to appear. Once filed, the way to guard against frivolous lawsuits is to vigorously vet each one thoroughly and to cull out fraudulent claims.

While the board expressed justifiable concern about the consequences of AB 218, there is little evidence that it adequately prepared to monitor the predictable avalanche of claims. What resulted was the supervisors agreeing to pay this record-breaking amount in the absence of effective oversight and procedures to ensure the integrity of the claims.

It was not until the press exposed instances of unlawful solicitations by law firms and bogus claims by individuals who never suffered injuries that supervisors scrambled to secure protection for the county’s precious resources by initiating additional oversight. Why didn’t the board initially hire private counsel with the necessary expertise to monitor thousands of multi-decade old claims of injury?  The county often calls upon such assistance from those who have sufficient experience and expertise to protect the county’s interest — in this case its budget. In 2023-2024, the board spent more than $75 million to secure private litigators to do just that.

Yet, for reasons only known to the supervisors, adding a large team of experienced and capable private lawyers to protect county residents from the predictable onslaught of claims was not initiated. Instead, the supervisors chose to rely on the recommendations of its appointed CEO and county counsel. These appointees apparently advised their bosses to take the biggest payout deal in L.A. history or risk runaway verdicts that could bankrupt the county.

Initially, the board chose to settle cases with minimum scrutiny and pay out claims that included more than $1 billion paid to their lawyers. Now, the process includes requiring each case to be reviewed by a judge, initiating a fraud hotline and securing the legal oversight to protect taxpayers against fraud, specifically protecting against the recruitment of fraudulent clients. District Attorney Nathan Hochman has directed his office to aggressively investigate and prosecute fraudulent claims. The county should have integrated the oversight of the prosecutor at the earliest possible moment to help deter fraudulent claims.

Apparently not a single supervisor challenged the multi-billion-dollar deal and demanded more vetting. The board might have saved the public hundreds of millions of dollars that could have been used to better meet the county’s obligations to improve the welfare of juveniles in custody or children under the protection of the foster care and dependency system, not to mention better assisting the many thousands of homeless people suffering from addiction and mental illness languishing on county streets.  At a time of rising costs of living, when the government simply expects its constituents to tighten their belts, taxpayers are entitled to such increased fiscal oversight. Moreover, they should insist upon it.

South Pasadenan Joseph Charney is a former Los Angeles County deputy district attorney.