1-30-2017; The Biggest IL WC News In History That No One Is Reporting But Us!; RICO Suits To Disappear As WC Bad Faith Claim; Uninsured Motorist Loses Coverage If Too Much WC Paid and more

Synopsis: The Biggest News in Illinois Workers’ Comp History No One is Reporting—I Assure You The IL Workers’ Comp Commission Is Set To Close Thirty Days From Today!


Editor’s comment: I had a reader tell me Illinois State Government appears to be filling in for the Ringling Bros. and Barnum & Bailey Circus that is soon to close. Everything that is happening in our state government appears to make our leaders look like clowns and teetering out of control. The problem with seeing legislative clowns is the lack of any humor when billions of our tax dollars are at stake. In short, the “grand bargain” for an actual IL state budget appears to have fallen to the wayside as the battle between Governor Rauner and Speaker Madigan accelerates wildly.


Last week, Speaker Madigan’s daughter, IL Attorney General Lisa Madigan filed a request in St. Clair County Circuit Court, to stop paying all Illinois state workers' salaries until legislators and Gov. Bruce Rauner work out a spending plan to end an 18-month budget impasse.  The motion asks the St. Clair County Circuit Court to dissolve by Feb. 28, 2017 a preliminary injunction that has allowed state workers to be paid even though the Legislature and governor haven't approved a spending plan. A six-month "stopgap" state budget was approved last summer but expired on Jan. 1, 2017.


Attorney General Madigan's surprise legal motion was criticized both by government employee unions and other state officials. I feel it is an exercise in brinkmanship (brinkwomanship?) to force an unhappy budget truce. Please also note the screaming you can’t hear are the holders of over $11 billion, yes, billion in unpaid bills owed by our crazy State government—the amount of unpaid state gov’t bills is going up by millions upon millions each day.


Governor Rauner said he was "deeply disappointed, very upset" by Madigan's move. "I hope this is not a direct attempt to cause a crisis to force a shutdown of the government to force another stopgap spending plan — short-term, unbalanced, incomplete — as a step to force a tax hike without any changes to our broken system," the Governor said in Chicago.


Unless things change dramatically, it is my current assumption Attorney General Madigan will win her motion and the preliminary injunction will be dissolved. Following that ruling, all IL government salaries and other monies paid to IL State workers will end on February 28, 2017. After that date, I further assume the IL WC Arbitrators, Commissioners, Chairperson and support staff won’t volunteer their services but will stay home or away from work until the impasse is resolved. In short, the IWCC and lots of other state agencies and services will close until a budget deal is struck. Could it happen? Youbetcha.


What Happens Then? Can We Survive Without WC Hearing Officers?


It will be interesting to see what happens but an IWCC shutdown may certainly happen. The main crisis would be termination of medical and/or lost time benefits for seriously injured workers—there would be no place for such folks to go. Even Medicaid might shut down in a total government collapse. We assume the IL WC claims community isn’t going to do silly stuff because at some time, the IWCC will return to action and get back into the swing to punish defense wrong-doers.


What Is Happening With the Pending 2017 IL WC Reforms?


From my last web search, literally all sides appear more and more tired of the new WC “reform” concepts and seemed to be either losing interest or actively discarding them. Some of the WC reforms have promise but all of it seems to be rapidly cobbled together without strong metrics to support them. We assure our readers some of them are hilariously nebulous and when there is unclear WC legislation, that is never good for the defense side of the matrix because our “activist” courts will make us pay for any uncertainty.


Whether anything of the many proposed IL WC reforms will survive and be passed into law is yet to be seen—watch this space. With what is at stake in a government shutdown, my vote is back out of the few reforms of value and take the time needed to come up with “hard” reforms that will make the system operate more effectively for IL business and local governments. I am happy to quietly help, if asked.


Will The State of Illinois Ever Dig Out of the Massive Financial Hole Created by Our Legislative Leaders?


The “Grand Bargain” currently being proposed includes


·         At least $7 billion in new state borrowing for a state awash in spiraling debt and

·         State income tax being dramatically raised to record levels for individuals and corporations and

·         The stupidest tax on moderate and small businesses I have ever heard of. Some PR guy gave this proposed tax the silly name “Business Opportunity Tax.” Our legislative leaders want to raise $750M to tax payroll and 1099 payments for businesses working in Illinois. If it passes, every incentive will be to move jobs and business out of this state even faster than is already happening. In my view, the only “opportunity” that will almost certainly come from such a tax is to have businesses jump on this “opportunity” to get out of this state and bring jobs and work elsewhere.

·         Lots of other unpalatable things that will infuriate you and me, as taxpayers.


What this bargain doesn’t include are any budget cuts or government efficiencies or basically anything to get us out of the giant financial mess in the years and decades to come. If you don’t change what caused these new and higher taxes and borrowing, you are going to need more taxes and borrowing until something snaps. I feel they are simply patching up the financial mess they caused with literally no long-term relief in sight. All I see the legislature doing is fighting Governor Rauner and digging deeper and deeper into an anti-business and anti-local government financial abyss. Lots of folks and businesses are fleeing with fewer and fewer new Illinois jobs being created—does anyone in the General Assembly care?


I suggest we all diary February 28, 2017 to watch and see if they can come up with a plan that will keep the IL WC Commission open and our circus-like state government afloat.


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Synopsis: RICO Claims To Disappear from U.S. Workers’ Comp World And Good Riddens.


Editor’s comment: If you don’t know, the Federal RICO concept was, in my opinion, created to stop Mafia folks from defrauding and extorting money from our citizens. The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a private civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focused specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to do the act and then be exempt from the trial because he did not actually commit the crime personally.


About ten-fifteen years ago, WC Claimant lawyers in Michigan decided to bring RICO into the world of workers’ comp. Several lawsuits were filed and a heated battle ensued.


Now a Michigan Federal Court just again ruled RICO may not be used for workers’ comp bad faith claims. Citing two earlier precedents, a U.S. District Court in Michigan has once again ruled, in pertinent part, that racketeering activity leading to a loss or diminution of workers’ comp benefits a plaintiff expects to receive under a state workers compensation system does not constitute an injury to “business or property” under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Accordingly, where an injured worker alleged a claims conspiracy, pursuant to which the workers’ compensation insurance provider hired IME or other doctors to write allegedly fraudulent reports for the purpose of denying his workers’ compensation benefits, the worker stated no demonstrable cause of action.  


In Gucwa v. Lawley, the worker sought to distinguish earlier decisions—Jackson v. Sedgwick Claims Management Services, 731 F.3d 556, 563–64 (6th Cir. 2013) (en banc), and Brown v. Cassens Transport Co., 546 F.3d 347, 354 (6th Cir. 2008)—on the grounds in his own case, he alleged tortious activity by “independent medical examiners.” The U.S. District Court held the worker’s argument was meritless and a motion to dismiss granted.


As I have advised my readers on many occasions, if RICO were to come into the world of workers’ comp, the same sword could cut both ways. We could see aggressive and upset employers filing RICO actions against phony and/or questionable claimants seeking treble damages and attorney’s fees. If that happened, it would be very hard for the Claimant bar to step up and fight back—Federal RICO litigation is very, very expensive to defend.


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Synopsis: When Enough Work Comp Benefits Are Paid, Uninsured Motorist Benefits May Not Be Due.


Editor’s comment: In Country Preferred Insurance Co. v. Groen, Claimant suffered an accident that occurred during the course of her employment and Claimant-defendant Groen received substantial benefits under the Illinois Workers’ Compensation Act in excess of $400,000. In addition, she sought uninsured motorist benefits from Plaintiff Country Preferred Insurance Company, under a policy, which contained a provision entitling Plaintiff insurance company to reduce the amount of its liability by any payments made or due under the IL WC Act.


Ultimately, the trial court granted summary judgment in favor of Plaintiff Country Preferred and against the injured worker. She appealed, arguing the court erred in granting summary judgment because Plaintiff insurer should be prohibited from reducing the amount of its available

uninsured motorist coverage by the amount of medical expenses paid by her employer in her work comp claim. Specifically, she argued


(1) medical payments made pursuant to the IL WC Act are not “for” an insured and, therefore, are not subject to setoff under her uninsured motorist policy;

(2) alternatively, the setoff provision was somehow ambiguous as to whether medical payments made by an employer under the IL WC Act are subject to setoff and, therefore, should be construed in her favor; and

(3) the setoff provision “is unenforceable because it violates the IL WC Act.”


On October 7, 2013, the worker was struck as a pedestrian by an uninsured motor vehicle and suffered serious injuries. At the time of the accident, Claimant Groen was working and was acting within the scope of her employment. As a result, Claimant sought and received workers’

compensation benefits under the Act. Specifically, she received temporary total disability benefits in the amount of $328.33 per week beginning on October 7, 2013, and up to at least July 28, 2014, the date Claimant signed an affidavit in the within action. In addition, as of July 22,

2014, defendant’s employer had paid $410,266.63 in medical bills pursuant to the Act.


In addition to receiving workers’ compensation benefits, Claimant Groen sought benefits from Country Preferred under an uninsured motorist policy with limits of $250,000 per person and $500,000 per occurrence.


In June 2014, the insurer filed a complaint for declaratory judgment, seeking a declaration of the parties’ rights and obligations under the uninsured motorist policy, which, in relevant part, provides as follows:


“Amounts payable for damages under Uninsured-Underinsured Motorists, Coverage U, will be reduced by the present value of all amounts paid or payable under any workers’ compensation, disability benefits or any similar law.”


The insurer asserted Claimant Groen was not entitled to benefits under her uninsured motorist policy because she had already collected more than $250,000 in workers’ compensation benefits. In March 2015, the insurer filed an amended motion for summary judgment, asserting Ms. Groen could not maintain a viable uninsured motorist claim, since she had already received workers’ compensation benefits in excess of the uninsured motorist policy’s limits. In August 2015, Counsel for Claimant Groen filed a cross-motion for summary judgment, asserting the setoff provision (1) violated the Act and was unenforceable and (2) excluded medical payments made by her employer directly to her medical providers.


Following a December 2015 hearing on the motions, the trial court granted the insurer’s amended motion for summary judgment and denied Ms. Groen’s motion for summary judgment. In its written order, the trial court found the setoff provision was enforceable, unambiguous, and not against public policy. This Appellate Court unanimously agreed.


We checked the IWCC website and note the underlying WC claim is now moving into its fourth year.


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Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need To Be UPDATED RETROACTIVELY(!). Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!


Editor’s comment: There continues to be an upward spiral of IL WC rates. As mentioned twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.


We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $775.18. When it was published, this rate changed retroactively from July 1, 2016 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong. If you have a claim with a date of loss after July 2016 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. WORD OF CAUTION: There is pending legislation which Gene reported last week and this week which currently states “The maximum compensation rate for the period July 1, 2017 through June 30, 2021, except as hereinafter provided, shall be $755.22. Effective July 1, 2021 and on July 1 of each year thereafter the maximum weekly compensation rate, except as hereinafter provided, shall be determined as follows: if during the preceding 12-month period there shall have been an increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act, the weekly compensation rate shall be proportionately increased by the same percentage as the percentage of increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act during such period.” THIS NEW LEGISLATION WOULD POTENTIALLY CHANGE THIS PPD MAX AGAIN. If this isn’t clear, send a reply to Shawn at sbiery@keefe-law.com.


The current TTD weekly maximum has risen to $1,435.17. A worker has to make over $2,152.76 per week or $111,943.52 per year to hit the new IL WC maximum TTD rate. Does any state in the United States have a TTD maximum that high?


The new IL WC minimum death benefit is 25 years of compensation or $538.19 per week x 52 weeks in a year x 25 years or $699,647.00! The new maximum IL WC death benefit is $1,435.17 times 52 weeks times 25 years or a lofty $1,865,721.00 plus burial benefits of $8K. On top of this massive benefit, Illinois employers/governments have to pay COLA increases.


The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa with your mailing address if you would like to be mailed a laminated copy at mpatel@keefe-law.com and they will get a copy routed to you before they raise the rates again!



Synopsis: Happy Valentine’s Day from the Gang at KCB&A!!


Editor’s comment: Okay, so it is a little early but, like the Boy Scouts—Be prepared!