Here is a mix of Illinois WC topics for your consideration.
The State of the State’s WC System—A Smoking Mess along with a sidecar problem at the City of Chicago
To get the best sense of how messed up State of Illinois and City of Chicago workers’ compensation claims programs are, try to imagine the State having a fleet of 1,294 airplanes of every size, shape and model. Assume the fleet of planes are supposed to be used for government purposes. Now, further assume they have just one mechanic whose job it is to keep all of them fueled, oiled, checked out, cleaned up and otherwise functional. What would you next assume would happen? Well, either the one mechanic would work overtime on a night-and-day basis to keep a handful of planes functional and safely flying or one would assume planes would start crashing or locking up and all of them would be grounded faster than a cat can wink its eye. If you are going to have a fleet of planes, trains or automobiles, you have to take care of them right? If you can’t/don’t or won’t take care of them, get rid of them, right?
Continuing with that analogy, please note last week, we have learned from several very good sources the State of Illinois has approximately 25,000 pending workers’ compensation claims brought by State of Illinois workers. Many of these claims appear serious and involve lots of medical care and lost time. Lots of them have claimant lawyers and the State of Illinois CMS Department sends about 5,000 of them to the Attorney General’s office and some private firms for what we feel is lackluster defense.
Penny-wise and Pound-ridiculous
How many adjusters would you think the State has right now to manage 25,000 pending claims? The winning answer is just 17—the simple math means each and every adjuster is supposed to be handling 1,294 pending Illinois workers’ compensation claims. Each!!! You can’t make this stuff up, folks. To compare that math to the private sector, we feel a solid veteran Illinois WC claims adjuster should be able to handle about 150-200 claims if he/she works hard and keeps their nose off the internet. When you exceed 250 or more claims, even the best and move efficient adjusters have to “cut corners” and/or start to pay monies their accounts may not owe. In thirty-plus years of watching claims handlers in this state, the only private sector claims handlers we ever saw who tried to handle more than 500 claims were at the now-defunct Fremont Insurance—they went broke almost as fast as they entered the market because their troops were paying claims they shouldn’t pay and fighting claims they couldn’t fight. We feel that is precisely what the State of Illinois and City of Chicago are doing. They will continue to do so until they get “religion” and stop saving nickels to pay out millions. They need to spend the money, add staff, improve their computers and start to make dramatic cost-saving changes.
Solid WC claims adjusters have a tough and demanding job. They need to do at least a dozen things on each claim to be effective:
1. Initiate contact with claimant and their supervisors following a claim being reported;
2. Set up the claim in their systems;
3. Get an accident investigation underway quickly and preliminarily concluded in about 72 hours (or the accident may never be adequately investigated, as evidence starts to scatter);
4. Set reserves to include claims targets for medical care, lost time and eventual permanency, as appropriate.
5. Start paying benefits;
6. Manage the flow of benefits including TTD and medical care;
7. Push closure with
8. Drive the claim to targeted MMI
9. Induce the treaters to release to light work;
10. Push the worker back to full work
11. Then, the claims handler should focus on closure via settlement or hearing.
12. Having closed the claim, the claims handler should try to figure out how to avoid such claims and litigation moving forward.
Overwhelmed claims adjusters basically do one thing—keep everyone quiet by paying, paying and typically overpaying benefits. You can’t truly “blame” them—in Illinois WC claims, a quiet file is a file you are paying on. If the claims handler stops paying, the file gets noisy with claimant’s and claimant’s spouses and claimant attorneys and motions and emergency petitions and petitions for penalties and fees. That mess can be “avoided” at a high cost to the taxpayers by simply paying and paying. The problem is the taxpayers are starting to notice.
State of Illinois claims handlers at Central Management Services define “overwhelmed” and from the outside-in, we assure our readers they are doing what all overwhelmed claims managers do—they pay and pay and pay to the annual tune of something like $133,000,000 and more. We are told by claimant attorneys across the state, one aspect of dealing with the State of Illinois on WC claims is you never know what they are going to do. They fight the simplest and most patent claims and pay the most dubious, as if they are completely lost in a sea of uncertainty. When one contemplates the State of Illinois claims handlers not only are overwhelmed, they are on enforced furloughs and therefore can’t work as hard as they might like, one can see the problem is chronic and getting worse on a daily basis.
To our knowledge, an annual WC payout of $133,000,000 is by far the highest of any employer in the state and exceeds the national WC budgets of almost every private company in this country. We challenge anyone to find a private company that pays more than $133M on a national basis and let us report their name. We are fairly confident there is no private company, none, that pays $133M per year in WC benefits for operations occurring solely within this state.
Remembering we are also analyzing the City of Chicago’s WC mess, if you look on the web at: http://illinoisissuesblog.blogspot.com/2010/12/workers-comp-reform-swimming-in-data.html, you will note in December 2010, they quote Eugene Munin, budget director for the City of Chicago who said the City has seen workers’ compensation costs rise while the number of city employees decreased. Munin said the city has eliminated around 6,000 positions in the last 10 years because of budget cuts. He said the City had 2,000 workers’ compensation claims in 2005 and had 1,350 in 2009. But workers’ compensation cost Chicago $61 million in 2009 versus $38 million in 2005—again, they are making the same “penny-wise, pound-ridiculous” claims approach the State of Illinois is.
We assure our readers the City of Chicago has about 1,350 pending WC claims right now and just one adjuster. They have one defense attorney. Both are totally and completely swamped. They are paying and paying and paying. Their overall annual payout exceeds the national budget of hundreds of major U.S. employers. And there is no true end in sight—it is going to keep on rising until they stop doing the goofy political dance and get some specialists in who aren’t forced to make heavy political donations to do their jobs, get needed staff and confusers (yes, that is a joke) and save the taxpayers millions.
We hope this email reaches Governor Pat Quinn, Senate President John Cullerton (who actually looked great last Friday at the Chicago Cubs’ opener holding the 9/11 flag), House Speaker Mike Madigan and Chicago’s Mayor-elect Rahm Emanuel (who was also nobly holding up the 9/11 flag). They are not the cause of this amazing mess but at some point, they are all going to be measured by it. We hope they will start to contact the experts and consultants and find a solution that isn’t blowing millions in taxpayer dollars.
We appreciate your thoughts and comments. You can post them on our award-winning blog tomorrow.