Calling it a “historic settlement,” consumer rights attorney Jack Landskroner, of Landskroner Grieco Merriman, LLC, filed a stipulation of settlement with the Los Angeles Superior Court to formally settle a landmark class action lawsuit (Antwon D. Jones vs. City of Los Angeles) brought on behalf of all Los Angeles Department of Water and Power (“LADWP”) customers. The settlement will assure the return of over $44,000,000 to customers who were overbilled for water, electricity, and other services. Additionally, the comprehensive settlement:
- Mandates an independent audit of all 1.6 Million LADWP customer accounts to assure a 100% recovery to every Los Angeles resident and business which has been overbilled.
- Requires the LADWP to invest $20,000,000 in a comprehensive overhaul of its billing system.
- Establishes new rules as to how the nation’s largest public utility bills its customers.
- Appoints an independent monitor to ensure compliance with the terms of the agreement.
“Families and small businesses have enough financial stress,” said Landskroner. We set out to make sure every customer would be made whole. Under this settlement agreement, every single customer who was overcharged will have their money returned. Thankfully, the LADWP took the overbilling problem seriously and understood both the legal and moral obligation to right this injustice and resolve this matter in the best interests of the ratepayers.”
In 2010, LADWP hired the consulting firm PricewaterhouseCoopers (PwC) to modernize the utility’s nearly 40-year-old billing system. In 2013, LADWP implemented the PwC’s $181,000,000 computer billing system. The conversion failed miserably, producing tens of thousands of inaccurate bills and hourlong phone hold times as ratepayers tried to get their bills corrected. The faulty billing system overcharged thousands of customers by estimating meter readings and by failing to charge some commercial customers at all.
Jack Landskroner, whose law firm is based in Cleveland, Ohio, began investigating utility billing problems after the 2009 launch by PwC of a new water billing system for the Cleveland Water Department, which also turned disastrous. His knowledge of the Cleveland billing fiasco enabled Landskroner to understand the necessary comprehensive reforms approved in the groundbreaking LADWP settlement. Most significantly, the deal provides for an independent third party to monitor LADWP’s compliance and their timely progress in enacting these reforms over the next eighteen months, to assure the terms of the settlement are met and that all customers are made whole.
“We applaud the LADWP for not only standing by their customers while they address the problems created by the faulty PwC billing system, but accepting third party oversight and agreeing to fix the faulty system,” said Landskroner. “That was critical to guaranteeing both transparency and meaningful reform, which LADWP is embracing in this result.”
Under terms of the settlement, LADWP addresses the errors created by the PwC billing system, its impact on its customers and agrees to:
- Review and audit the accounts of every single customer. Approximately 1.6 million accounts will be reviewed/audited.
- Customers who were overcharged will either receive a full credit (100 cents on the dollar) to their account if they were overcharged or they will receive refunds if their account is closed.
- It will not be necessary for the majority of ratepayers who were overbilled to file a claim. Credits or refunds will be generated automatically and noted on customer’s bills.
- Customers that incurred incidental expenses related to these billing errors are able to submit a claim for reimbursement of costs, with supporting documentation.
- If an audit shows that residential customers owed money for services but had not received a timely bill, the LADWP will only be allowed to bill for the prior to 9 months (270 days) of services. The LADWP legally can currently charge up to four years.
- Commercial accounts would be responsible for paying for services for up to four years;
- Customers that owe for back services that had not been timely billed will have up to 4 years to pay back any verified balance – interest and penalty free with qualifying small businesses permitted to apply for an extension beyond 4 years if under a hardship.
- Retain Paul Bender Consulting, an independent third-party expert in utility billing systems, which will monitor the settlement terms for the court to ensure that the settlement terms are implemented and the LADWP data is accurate. (Mr. Bender was the consultant who successfully implemented sweeping improvements to the Cleveland Water Department that was plagued by similar catastrophic billing problems, staffing inefficiencies and complaints of poor customer service.)
- Within 540 days from the final settlement approval, the LADWP will be responsible for 90-95 % completion of remediation of all system errors and to improving call times and customer service.
- A third-party will be hired to administer the settlement.
“The failed computer system hurt families and small businesses throughout Los Angeles,” said Landskroner. “This agreement recovers the overbilled amount, puts systems in place to monitor and test the billing system while at the same time holding the LADWP responsible for successfully implementing the settlement.”
For a copy of the stipulation of settlement, go to www.teamlgm.com.
In March, Los Angeles City Attorney Mike Feuer filed a lawsuit against PwC alleging that the company misled LADWP by claiming it had the expertise to run the utility’s new billing system. No one at PwC or LADWP could initially figure out the billing problem. The LADWP hired Oracle who reportedly discovered that PwC defectively coded part of the program. If successful, all of the costs incurred by LADWP in settling this case could be recovered from PwC.