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Payments for workers’ compensation claims have dropped by about $500,000 since an Albany-based firm was hired a few years ago to administer the Town of Tonawanda’s program, but a councilman questions the cost of that achievement.

Councilman Daniel J. Crangle was the lone opponent of a new one-year agreement approved last week with Public Employer Risk Management Association, or PERMA. The contract, which runs from last Friday through next Feb. 28, carries a price tag of $585,461.

“The bottom line is, where’s the savings?” Crangle asked during a Town Board work session.

“The savings is what we are not paying out,” said Councilman Joseph H. Emminger.

A 2010 audit by the State Comptroller’s Office, examining the period between January 2005 and May 2010, found that the town didn’t have an adequate risk-management program or a claims-management system. It noted that workers’ comp expenses totaled $1.7 million in 2009.

For most of those five-plus years, the town was self-insured for claims of up to $750,000 per occurrence and also bought insurance coverage for aggregate claims of up to $25 million.

In the town’s response to the audit, Supervisor Anthony F. Caruana noted that the town already had recognized the escalating costs and has begun addressing shortcomings in the program – problems blamed on lack of oversight by previous town administrations.

“We had a third-party administrator, and the problem was there were claims that were just not being handled appropriately,” Councilwoman Lisa M. Chimera, chairwoman of the board’s Insurance Committee, said last week.

The board first contracted with PERMA in March 2010, with Crangle voting against that two-year agreement, as well as last year’s renewal.

What’s impressive about PERMA, Chimera said, is that it handles a variety of issues, including safety programs for employees and making sure that injured workers are seen by medical personnel in a timely manner.

“It’s hard to put a cost to that,” she said, adding that there has been a reduction in claims and a change in the culture in the town.

Under the town’s current coverage, the deductible is $750,000 for claims involving police officers and $500,000 for other employees.

Last month, PERMA representatives reported that since they were hired, annual claim payments have gone from about $1.4 million to less than $1 million in 2012. The number of open claims has gone from approximately 2,500 to 53, as of Feb. 11 – when the PERMA reps appeared at a work session.

But what has Crangle riled are the approximately $2.2 million in premiums paid to PERMA during the last three years. Those costs decreased in 2012 and again under the current contract.

email: jhabuda@buffnews.com