11-23-15; Illinois Reaching Crisis--Can WC Reform Be the Turning Point?; Brad Smith's Big Wins Make IDC Advance Sheets; Wisconsin Advisory Council Releases Agreed Bill and Republicans Issue Theirs...
/Synopsis: As the State of IL Reaches a Crisis-Point, Can IL WC Reform Truly Be The Turning Point?
Editor’s comment: IL Government hasn’t had a budget since July 1, 2015. This has caused widespread consternation but it is amazing how folks adapt. Here are a few things that have gone wrong so far:
· The IL WC Commission has stopped mailing decisions and is now effectively forcing participants to waive their right to get a copy via snail mail. This is happening even though the Commission has a budget/funding separate from the State General Revenue Fund. If you are short a few stamps, consider closing those unnecessary and do-nothing satellite offices.
· Illinois 911 emergency centers are not receiving revenue from a dedicated tax on cell phones, which will result in layoffs and longer wait times for people reporting emergencies;
· The 138-year-old Illinois State Museum in Springfield and its four satellite locations were closed on Sept. 30, along with the World Shooting and Recreational Complex in Sparta, leading to more than 100 layoffs. As we said in No. 1 above, we aren’t fans of unnecessary satellite locations when the State has over $100B in debt;
· Hundreds of training classes for police department have been canceled, despite the passage of a law on Aug. 14 that requires additional training and re-training for officers;
· At first, the Illinois Lottery said it wouldn't be able to pay people who win cash prizes of more than $25,000. Now anyone who wins more than $600 won't be collecting a dime until the State budget impasse is resolved. Tickets still are being sold.
There is a meeting set on December 1, 2015, next Tuesday between the Governor and Senate President Cullerton and Speaker Madigan. For reasons unclear to us, workers' compensation is emerging as a key element, as political leaders in Illinois try and find a way to break the state's nearly five-month budget deadlock. Various budget proposals are circulating in the state, with two appearing this week; one from state lawmakers, the other from a well-connected political operator. Both plans include proposals for substantive workers' compensation reform, including changes to the rules on “causation” of a work-related injury. This linking of reform to the budget goes to the heart of the debate and the lack of movement as Democrat leaders, particularly House Speaker Michael Madigan, D-Chicago, want to deal with the budget separately from the Governor's reform agenda. Moderate statutory reform of workers' compensation is inextricably a factor in the wider budget debate. The public meeting of the three most powerful state politicians will be a breakthrough, of sorts, but the bona fide negotiations will be done behind closed doors, as always happens in Springfield.
One plan has been put forward by Illinoisans for Growth and Opportunity, a political action committee led by Greg Goldner, a former campaign manager for Mayor Rahm Emanuel, who is also close to Gov. Rauner. The organization, known as IllinoisGO, leans Democrat. On workers' compensation, Goldner proposes, in the document published by IllinoisGO, that to control costs, the “state should look at the tighter causation definitions.” A second plan, put together by lawmakers on a bipartisan basis, also includes a reference to substantive workers' compensation without going into any strong detail. While workers' compensation forms a small part of the overall budget, it is likely to be key to discussions between political leaders in the state, not least because Rauner has included it as a main element of his turnaround agenda.
With the release of the Goldner plan and the one proposed by legislators, including Democrats, it appears increasingly likely workers' compensation reform is an area where compromise is possible. The Goldner plan supposedly includes potential savings of $300 million in state and local government workers' compensation costs, mainly through tightening rules on causation. We assume this new concept may end what we call “repetitive working” claims. Currently, in Illinois, a work accident does not need to be sole or primary cause of the employee's injury for it to be compensable—it just has to be “a” cause. The Illinois Manufacturing Association wants any new law to mandate at least 50% of a worker’s injury must be related to work done for his or her employer in order to receive compensation.
Michael Lucci, of the Illinois Policy Institute, has published a paper outlining potential savings to state and local government if the $2.35 Oregon WC Premium Rate study level was to be reduced by different percentages. Using information gathered from the Bureau of Labor Statistics, the Illinois Legislative Research Unit and the Oregon study, Lucci calculated the potential reductions on a covered payroll of $24.5 billion and total workers' compensation costs of $590 million for state and local governments. A 20% reduction, bringing Illinois' costs in line with Iowa, would result in savings of $118 million, a 50% reduction would save close to $300 million to state and local governments. “Causation is a core issue, but there are other issues,” said Lucci. Mr. Lucci said in addition to establishing a tougher “causation standard,” specific definitions for “traveling employee” need to be included in any potential workers’ compensation legislation. First, the IWCC and the courts have applied the doctrine to employees who are not traveling to areas that are unfamiliar and who are only engaged in incidental “travel” as a part of their regular job duties. Rauner has proposed an accident would be compensable only if the employee's travel and actions during travel are necessary for the performance of job duties.
Please remember changes to causation in this state will still require hearing officers with the brains and guts to put the legislative changes to work and cut the esoteric claims. We can also safely assume the IL Appellate Court, WC Division may later rule any legislative changes unconstitutional or find some esoteric way to counter the legislation, if that thinking becomes part of their and ITLA’s agenda. In our view, WC legislative changes are a “feel good” concept but their impact will take some time to weigh.
It appears the rather dramatic 30% cut to some IL WC medical costs has fallen out of favor (or maybe just out of sight of the media). We will have to wait and see—we are sure the doctors and hospitals across Illinois aren’t happy about this proposed change on top of almost 50% WC medical fee schedule cuts from 2005 to present.
How About Tackling Illinois’ Government’s Biggest Fiscal Issues?
With respect to Governor Rauner, Mike Lucci and everyone else, we don’t see how the workers comp reforms are on the point as do-or-die changes to save our State from this budget crisis and its decades of internal mismanagement. We continue to wonder why Governor Rauner isn’t using his executive power to cut, cut and cut bloated department budgets and trim staff across the state. We are looking for ABBC—Across-the-Board-Budget-Cuts. Cut the fat out of state government. Once you have accomplished that, there are other simple and patent ways to save Illinois taxpayers billions by bringing hundreds of injured state workers back to light work when sedentary and light duty jobs open up. On top of that, they can and should automate and get rid of hundreds of inefficient and antiquated positions, like collecting tollway tolls by hand—to fully automate the IL tollways would save $100M+ the first year they do it. We don’t need a state treasurer and a state comptroller—they are clearly duplicative departments. We can provide hundreds of other examples of do-nothing state jobs that should have been ended years ago.
How About Reforming State Pensions Before $100B in State Debt Grows to $200B?
Please remember, under former Governor Pat Quinn, our state’s debt picture doubled from $52B to over $100B. In our view, another spiraling and major problem in Illinois government are the hilariously de-funded state government pensions that are now costing taxpayers 25% of every state tax dollar—that ratio continues to spiral. We assure you your children and their children will be paying or post-funding government pensions for state workers who never worked for the state during their lifetimes—if you don’t understand, send a reply.. State government pensions come with “death math” where the State collects a couple bucks from the lower paid state workers as they rise in the ranks, then State government occasionally and sporadically “matches” that way-too-small contribution and then owes the worker 85% of their highest (and not median) salary plus 3% compounded annual increases that will cause their already-too-high pension to double in about 20 years after retirement. All of the changes to IL state pensions were made stupidly and without any true analysis about what our General Assembly or then-Governors were doing in boosting and boosting the payout. There are close to a million Illinoisans entitled to government pensions and there is no question we are moving to bankruptcy at some future time if the status quo isn’t meaningfully changed. We ask the rhetorical question—when are Governor Rauner, Senate President Cullerton and Speaker Madigan going to stop worrying about work comp issues and tackle meaningful state pension reform?
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Synopsis: KCB&A Defense Team Leader Brad Smith’s Big Wins Make the IDC Advance Sheets!
Editor’s comment: As our GL, EPLI and MVA work grows, we want to be sure our readers know of our biggest wins. Here are the reports:
Summary Judgment Granted for Keefe, Campbell, Biery & Associates’ Client
Northern District of Illinois Judge John Z. Lee granted summary judgment for Keefe, Campbell Biery & Associates’ client, a pharmaceutical company. Bradley J. Smith argued in his motion for summary judgment that the defendant is not subject to 42 U.S.C. § 1983 as it is not a state actor subject to liability. Smith further argued that plaintiff failed to bring forth any evidence demonstrating that defendant had a policy or pattern of practice that was deliberately indifferent to the plaintiff’s claimed serious medical needs. Plaintiff is a prisoner at Stateville Correctional Facility located in Crest Hill, Illinois. Plaintiff argued that the defendant was deliberately indifferent to his alleged serious medical needs by failing to timely fill prescription medications for the plaintiff. Plaintiff also argued that defendant was a state actor as it maintained contracts with a private company to fill pharmaceutical products for the Stateville prison population. In turn, the private company contracts with the Illinois Department of Corrections for the purpose of providing medical services to its prison population. Judge Lee granted defendant’s motion for summary judgment and dismissed the defendant from the case. Judge Lee based the summary judgment decision on plaintiff’s lack of evidence supporting a theory that defendant was deliberately indifferent to plaintiff’s alleged serious medical needs. The above matters are still subject to litigation and are subject to appeal. This article is in no way meant to influence the outcome of any potential appeals.
Bradley J. Smith of Keefe, Campbell, Biery & Associates, LLC Successfully Argues Case
After a week and a half of trial and approximately five hours of deliberations, a Cook County Jury found the decedent 50% comparatively at fault for her own death and ultimately awarded only $15,000.00 in pecuniary damages in a case tried by Bradley J. Smith of Keefe, Campbell, Biery & Associates, LLC. The decedent’s estate filed suit against the defendant alleging that its employee/driver was negligent in operating the armored truck at approximately 2:20 a.m. on New Year’s Day 2013 on East State Street in Rockford, Illinois. The plaintiff sought a range of pecuniary damages up to $3,500,000.00. The decedent made contact with the armored truck within the farthest left lane of the eastbound lanes. The employee/driver and his passenger did not see the decedent prior to the impact with the truck, but were keeping a proper lookout and scanning the roadway for hazards. Smith successfully argued that defendant’s employee/driver was not negligent and further that the decedent’s death was caused by her own lack of due care, including becoming intoxicated and impaired, crossing a dark area of roadway while wearing dark clothing, not keeping a proper lookout, and placing herself on a 6-laned roadway at 2:20 a.m. The above matters are still subject to litigation and are subject to appeal. This article is in no way meant to influence the outcome of any potential appeals.
If you need assistance or counsel on similar claims, you can reach Brad on a 24/7/365 basis at bsmith@keefe-law.com.
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Synopsis: Wisconsin WC Advisory Council Releases Agreed Bill. Wisconsin Republicans Issue Another Version. Lots of New Concepts in the WC Mix.
Editor’s comment: Our top WC defense team members Jim Egan and Matt Ignoffo are closely watching the new workers' compensation legislation introduced to the Wisconsin Legislature this year. The number of stakeholders is a big increase from previous years and reflects the level of interest in the state's workers' compensation system. Last week, the Advisory Council released an agreed bill that represents a hard-fought compromise between the five labor and five management representatives on the panel. The Wisconsin Advisory Council will put finishing touches on the draft legislation, likely by the end of next week. The Council will then present their bill to both sides in the WI State Legislature. If the process is the same as in previous years, the bill will then be assigned to a committee, which will hold public hearings.
Legislators have been considering a break in tradition, in which state lawmakers did not tinker with any aspect of the workers' compensation system without an agreement between the management and labor on the WC Advisory Council. Republican lawmakers have taken an unprecedented step and introduced a separate workers' compensation reform bill—this isn’t typical WI politics. The competing bill that isn’t an agreed bill was filed last week and assigned to the Assembly Committee on Insurance.
The second and Republican-sponsored bill includes completely cutting all benefits to employees injured on the job as a direct result of being intoxicated or high on illegal drugs. That challenging provision would also apply to dependents if the injured worker dies. Presently, compensation for death benefits is only cut by 15% if intoxication is shown to be a contributing cause to an accident. This bill would proportionally reduce benefits for claimants who failed to follow instructions to use safety devices.
Under the bill, employers will not be liable for temporary disability benefits if a worker is suspended or fired for misconduct during the recovery. The legislation would also eliminate the deadline for filing claims for traumatic injuries from 12 to six years. Management had proposed cutting that to three – the second bill would reduce the statute of limitations to two years.
The bill also would change the rules on apportionment of causation for permanent partial disability claims. If a worker is permanently disabled, but only a portion of that disability was caused by an injury sustained at work, the employer would be liable only for the work-related percentage.
In exchange for the concessions by labor, the bill would increase the maximum weekly compensation rate for permanent partial disability to $342 from $322 for injuries occurring before Jan. 1, 2017, and to $362 for injuries occurring on or after that date.
The agreed bill would not make any changes to hold down medical fees in a state that has no workers’ comp medical fee schedule. A study released last week by the Workers Compensation Research Institute or WCRI showed Wisconsin workers’ comp system had the highest average fees for medical services of 31 states studied. On the other hand, WCRI studies have shown that Wisconsin employees get back to work quicker and have a higher level of satisfaction with their medical care.
The Republican-sponsored bill does not include any substantive proposals in relation to workers’ comp medical costs, either.
The Republican-sponsored bill would also:
- Prohibit a claimant from pursuing claims worth similar amounts in two states, with Wisconsin benefits reduced by the amount paid in another state.
- Reduce the statute of limitations for reporting traumatic injuries from 12 to two years.
- Mandate that making a false statement on an application may result in denial of benefits.
- Give the Department of Justice more powers to investigate and prosecute work comp fraud.
- Direct the Department of Workforce Development to study light-duty programs with the goal of establishing a definition that saves employers money.
- Provide employers are not liable for temporary disability payments if an employee is terminated for good cause.
- Allow employers to choose the medical provider for claimants who are not participating in a health benefit plan and allow the employer to require claimants who are provided a health benefit plan to choose a practitioner from within that plan.
We will continue to watch and report for Wisconsin risk managers and claims adjusters. We appreciate your thoughts and comments. Please post them on our award-winning blog.