10-17-2016; State of Oregon Nat'l WC Premium Ratings are Released With Surprising Results; IL WC Legislative Update from the IL State Chamber; Bob Kosin RIP and much more
/Synopsis: State of Oregon Rankings Released--Illinois WC Gets One Spot Better for Business.
Editor's comment: One of the more statistically significant methods to track WC costs across the U.S. is the every-other-year ranking from the State of Oregon.
Here are some key links for the Oregon study of state by state workers' compensation costs:
• To read a summary of the study, go to http://www.cbs.state.or.us/external/dir/wc_cost/fi...
• Prior years' summaries and full reports with details of study methods can be found at http://www.oregon.gov/DCBS/reports/Pages/general-w...
• Information on workers' compensation costs in Oregon, including a map with these state rate rankings, is at http://www.cbs.state.or.us/external/dir/wc_cost/ma...
You will note Illinois WC dropped to eighth from seventh nationally in workers’ compensation premiums.
For the other states KCB&A handles and defends our great clients:
Indiana remains 49th,
Michigan is 34th,
Wisconsin is 12th (their ranking two years ago was 23d); and
Iowa is 24th.
We predicted and had high hopes for better progress on IL WC premium costs but to no avail. This minimal change will probably keep Illinois WC system at the forefront of Governor Rauner’s goal of bringing down WC costs to bring in more businesses. The State of Illinois continues to lose manufacturing jobs to our neighboring states because of our workers’ compensation premium rate and some of the highest property and overall taxes in the nation, per the Illinois Policy Institute and the American Insurance Association.
The Illinois WC premium rate is $2.23 per $100 of payroll. The national median WC premium cost was $1.85 so IL is getting slowly closer to the median.
Chris Hurley, president of the Trial Lawyers Association, was quoted as claiming the 2011 IL WC reforms lowered benefits but did not reduce WC insurance premiums. Those IL WC reforms included reducing all WC medical fee schedules by 30% for all treatment performed after Sept. 1, 2011. We continue to tire of ITLA telling everyone the WC problem in Illinois is those “evil” insurance carriers that aren’t passing along their savings to customers.
AIA advocates an IL WC Medical Fee Schedule based on 175% of Medicare rates and the need for a close examination of its indemnity benefits.
Illinois government faces a growing budgetary crisis: nearly $10 billion in a backlog of unpaid and badly aging bills and a years-old estimate of $111 billion in government pension liability the Illinois Policy Institute says is actually double that amount because investments are not growing at the 7% rate projected by Illinois policymakers. Two weeks ago, Standard & Poor’s dropped Illinois’ credit rating to BBB, citing its history of deficits and failure to reduce spending or address future pension needs.
IL WC System Isn’t Happy About Always Being Compared to Indiana! We Assure our Readers Indiana Isn’t the Garden of Eden for Work Comp.
Take a look at this article:
We are certain Indiana workers' comp program provides truly minimal WC benefits in many settings. They do pay for medical care and their medical costs were some of the highest in the U.S. They just brought in a hospital medical fee schedule to rein in rising WC medical costs.
IN WC T&P Awards are, in my view, comically low and push Claimants to other gov’t benefit streams, making Indiana WC appear "cheaper" but not really. A total and permanent disability award in IN WC provides benefits for only 10 years or 120 months. After 10 years, that's it. The employer/insurance carrier is done. A 25 year old Indiana worker with serious injuries/brain damage and an unquestioned inability to work again only gets benefits until age 35. That means he or she is going to be going on SSDI or welfare to eat and feed a family. Those expected costs aren’t characterized as workers comp costs but someone has to pay for a seriously injured worker and their family for a long time.
Moving away from T&P values, IN WC PPI or impairment ratings are so low as to barely be worth it. A worker with a badly broken arm or leg in IN with pins and plates in the extremity who goes back to regular work might get $1,000 to $5,000.
This sets up the odd scenario where a worker can be walking into the workplace with a friend who doesn't work there. They both fall down on a slippery substance negligently left by the owner/employer and badly break their arms. They both get over $100,000 in medical care to fix their arms.
The friend sues and wins a jury verdict for $500,000 for the badly broken arm due to the negligence of the property owner.
The worker has the same medical care and same recovery and gets $3,000 for PPI. The worker can't sue in civil court for the negligence of the employer; WC coverage blocks any third party claim against the employer.
Most people feel this wildly disparate outcome is unfair. Folks in the federal government are starting to notice per the link at the top above. If and when the leading Presidential candidate on the Democrat side wins, I feel you can expect the pressure on the low-ball states to get hotter. IL WC may be a little bit too much but there needs to be a fair middle-ground.
On the Other Side, Illinois WC Total and Permanent Disability Awards Are Becoming Comically/Shockingly Expensive.
The maximum total and permanent disability rate in Illinois is now $1,428.74. Consider as an example a 25 year old construction worker who is adjudicated to be T&P, they will receive $74,294.48 a year on a tax-free basis to start. The silly IL WC Rate Adjustment Fund will boost that income to double in about 23 years so this worker at age 48 will be getting about $150,000 a year, every year. The amount will continue to rise and the same worker will be getting quadruple that amount or about $300,000 in the 46th year or when they reach 71. Yes, you are correct, they will be receiving about a million dollars every three years! And the WC payout will continue to spiral until they pass.
If you do the math, you will note such a claim has a lifetime cost well into the tens of millions of dollars. When some rocket scientist created the IL WC RAF or Rate Adjustment Fund, no one apparently did the math.
You may also note a worker in IL doesn’t have to be seriously injured or brain-damaged to get T&P benefits in this crazy state. Our “odd-lot” total and permanent disability concept provides multi-million benefits to lots of IL State and City of Chicago workers who get “permanent restrictions” and the hapless government claims people don’t bring them back to sedentary jobs when they open up. To our understanding such government workers not only get zillions in T&P benefits, they can simultaneously receive IL government pensions. Both systems have built-in COLA increases!
We vote the secret-powers-that-be that run the IL WC Commission come up with a middle ground to make sure injured workers are taken care of without making them wildly rich.
We also vote all IL state and local governments should be required to bring all injured workers on restrictions back to sedentary jobs when such work opens up. Anyone who tells you our governments don’t have sedentary jobs is not telling you the truth.
We appreciate your thoughts and comments. Please post them on our award-winning blog.
-----------------------------------------------------
Synopsis: Illinois WC Legislative Update from the Folks at the IL State Chamber.
Editor’s comment: At last week’s IL State Chamber Annual WC presentation, Jay Dee Shattuck, one of the top WC Gurus at the IL State Chamber of Commerce provided a legislative update for Illinois workers’ comp participants.
As we indicate above, Governor Rauner feels IL workers’ compensation reform is important to maintain a competitive business environment in Illinois. Unfortunately, the Governor’s efforts have been blocked by the Illinois General Assembly. The House and Senate both pushed their own workers’ compensation bills, but both their bills did not become law.
There are currently negotiations with a state-wide working group trying to come up with an “agreed bill” This might be bipartisan workers’ compensation reform that can be supported by employers, labor, and the medical community. A goal is to tie these reforms to a budget bill to help address Illinois state finances.
There are several key issues in these reform negotiations:
- Causation – The IL WC causation standard is challenging for Illinois employers as Illinois allows a workers’ compensation claim for even a minor aggravation of a preexisting condition. The Governor is pushing for a causation standards in line with some other states where they require the work exposure to be the “prevailing factor” in order for a claim to be viable.
- Traveling Employees – The IL WC Act does not define what a “traveling employee” is and efforts to codify the concept continue. Our concern is coming up with language that reins in the concept. What we saw being proposed as legislation would clearly expand the idea.
- Self-insurance regulation – The state is pushing for a higher level of reporting claims data from self-insured employers so that more analysis can be done.
- WC Premium regulation – Some are saying there is no issue from the claims side and the problems with Illinois workers’ compensation is excessive insurance carrier premiums. They are calling for greater regulation of rates because of this. There are significant concerns insurance premium regulation could reduce the number of carriers willing to write coverage in Illinois which would ultimately drive up costs further and drive more employers into the assigned risk pool.
- Reining in the IL Reviewing Courts - There is concern around the appeals process as the IL Appellate Court, WC Division has consistently expanded the application of work comp concepts beyond the simple “plain English” version of the IL WC Act.. The Appellate and Supreme Courts also require the employer post an appeals bond for litigation that is appealing which creates an undue burden on employers. Finally, cases cannot be appealed to the Supreme Court without certification from two of the justices of the “middle” court. If the Appellate Court decisions are unanimous, there is no avenue for further appeal. And it always appears to us the certification of many claims for Supreme Court appeal seems to be political, as in the Interstate Scaffolding ruling that was a fight over $5,000!
- PPD awards – Illinois has some of the highest indemnity benefits in the nation. The proposed reform legislation is not looking to reduce these rates, but they are looking at reforms that would allow credit for prior PPD awards on a body as a whole injury. Under current case law, an employee can receive cumulative PPD awards that far exceed what the body as a whole is valued at. This lack of credit for prior injuries to the whole body significantly increases employer exposures for PPD awards. Another concern around this area is that the courts have started oddly ruling injuries to the shoulder or hip are whole body injuries and not arm or leg which would allow for credit.
- AMA guidelines are also causing a challenge as the Commission and courts do not like just basing PPD awarded on the AMA guides alone because they feel the benefits are somehow inadequate. Prior to adopting the AMA guidelines PPD in Illinois was determined by the whims of the Arbitrators and Commission panels..
- Professional sports teams are looking for caps on wage loss benefits for professional athletes.
- The IL WC Medical Fee Schedule is one of the highest in the nation as it is based on billed charges. Some employers and local governments are pushing to use a Medicare-based fee schedule which is used in most other states.
- Drug compounding – This is a loophole in the fee schedule which some observers feel is being abused. Many states have passed legislation to address this issue. We agree with the attack on this concept.
- Durable Medical Equipment – This is another area where loopholes in the fee schedule are being exploited and providers are billing rental charges that far exceed the full value of the equipment. We agree a DME provider should be allowed to bill two or three times the value of the equipment.
- Electronic medical billing – IL WC Payers are required to accept electronic billing and to in turn make electronic payments. Medical providers are complaining this is not happening consistently.
- Physician dispensing – This is a continued cost driver that requires additional legislation to fix. Many feel this is greatly abused. However, there is recognition physician dispensing may make sense in some areas (first fill for example) so it is important to have fee regulation in place so the charges are not excessive. Our favorite example was a single tube of “pain cream” being dispensed by a physician for $4,000!!
- Interest on delayed payment of WC medical bills – The medical community is pushing for some path to actual enforcement of a 1% interest charge for delayed payment of medical bills. Issues arise due to needed documentation and whether there is a legitimate dispute over the charges.
- Penalties on delayed payments – Medical providers are pushing for increased penalties on delayed payments.
- Limits on Physical Therapy visits – There has been discussion about limits on physical therapy visits. Many feel this is better addressed with utilization review.
We strongly support Mr. Shattuck and State Chamber President Todd Maisch and all their staff who do the hard work to seek to rein in IL WC costs. For more information, please reach out to the Chamber at their great website at www.ilchamber.org.
------------------------------------------------------
Synopsis: Bob Kosin, Rest in Peace.
Editor’s comment: Wereceived news Attorney Bob Kosin passed away about ten days ago. Bob was a stalwart Claimant attorney, first licensed in 1956. He leaves two great attorneys as part of his legacy, son David Kosin and daughter-in-law Marilyn Kosin who learned well at the foot of this master advocate. Their carry on his legacy at www.kosinlaw.com.
Bob had a gruff exterior but a heart of gold. He will truly be missed.