5-12-2011; Aaaaah, the little Irishman speaks and everyone’s ears perk up. Workers’ compensation reform is clearly afoot—Illinois business, keep your eyes peeled on what is about to happen this week

It is crunch-time, folks. On Friday, Illinois House Speaker Mike Madigan basically gave the signal for the Illinois Trial Lawyers/Illinois Medical Society and Illinois Hospital Association to “man/woman-up” and stop clowning around on reforming Illinois’ workers’ compensation system. He told reporters Friday afternoon if he doesn't see rapid progress this week on workers' compensation reform he'll allow a floor vote on Rep. John Bradley's bill to pull the plug and eliminate the entire workers’ compensation system in this state. Observers report Speaker Madigan has almost 60 votes in his caucus for the bill, and some Republican votes are reportedly ready to join in flushing it all down the nearest drain.


Please remember this silly idea was started by a noted claimant attorney who is the Section chief of the Illinois State Bar Ass’n’s workers’ compensation section. As you read this, there is a chance that If the Trial Lawyers, Doctors, Business lobby and the Republicans can't come together to support a real bill Speaker Madigan thinks can pass, then the nuclear option may be used. It will almost certainly happen during this week to allow it to be finalized and presented to the Governor next week for enactment.


We have repeatedly made our recommendations for WC reform and most of it has fallen on deaf ears. We truly hope the Illinois workers’ compensation system isn’t ended by our legislators and Governor but one never knows. Our continued recommendations to the other side of the practice is you are either going to participate in meaningful reform or the reform is going to happen to you. We would prefer the claimant bar rapidly try to find a reasonable middle ground and stop fighting to keep Illinois WC as expensive as it clearly is.


Please note most of the major IL WC defense firms aren’t actively involved in this process, so whatever happens in Springfield, we aren’t invited to the table so please don’t shoot your defense lawyer. We are happy to consult with either side to insure they don’t mess it up, as they did in 2005 to require a “correction” of the legislation. Most of us are out in chilly Las Vegas, NV trying to out-position each other at blackjack tables and the National Council of Self-Insurers Annual Conference and Shin-Dig. Former IWCC Chairman Robert Malooly is out here and doing quite well in a software concern in the State of Washington. Every national risk manager we have talked to is strongly interested to see reforms that may allow Illinois WC return to the middle of the pack on their cost charts.


As we have done in the past, below we have reviewed another proposed bill amending the Illinois Workers Compensation Act, 820 ILCS 305, and provide a synopsis of all changes proposed therein follows. There are quite a bit of new amendments in the proposed bill, some minor, some major.


Please note – this is the working proposal, and although it is our understanding this may be put to a vote as early as this Friday, there is a good chance some of the enclosed changes may be modified or redlined. We note the current legislative session runs through May 31, 2011, so if there is any action this year, it will be probably be taken by that date because after this session, future changes have to be approved by a super-majority.


The following are moderate changes; most of these are changes that will not significantly affect the bottom line choices for Illinois employers:


·         Employment Leasing Companies will have to confirm their clients are listed as named insureds on their WC policies.

·         A “preponderance of the evidence” standard is written into the act, confirming existing law that a Petitioner must prove by a preponderance of the evidence an accident must arose out of employment and occurred  in the course of employment before a claim can be found compensable.

·         Ethical rules are written into the act for Arbitrators and Commissioners. Essentially the judicial canons, with other articles confirming Arbitrators will dispose of matters promptly, officially and without bias. Unprofessional behavior becomes sanctionable.

·         Employers/insurers now have 30 days to dispute or otherwise explain non-payment of medical charges as opposed to 60 days.

·         Investigators may, at their discretion, issue fines to companies operating without WC insurance.

·         Employers and Insurers will have to implement means to accept electronic billing from medical providers.

·         Medical bills sent to collections will still be subject to employers negotiated rates of reimbursement.

·         All Arbitrators and Commissioners will require more detailed training in ethics.

·         All newly appointed arbitrators must be licensed Illinois Attorneys, and all appointments will be made by the Governor with counsel from the Senate.

·         At close of business on July 1, 2011, all sitting Arbitrators will be terminated, but will continue to work until re-appointed or until their replacement is appointed.

·         All Arbitrators will sit for terms of appointment form 1-3 years, at the end of which their performance will be reviewed by the Chairman who will make recommendations to the Governor.

·         Three Arbitrators will be appointed to each hearing site, with two arbitrators sitting at each site at any given time. No Arbitrator will sit at the same site for more than two consecutive years.

·         It is now a Class A misdemeanor for an Arbitrator or Commissioner to accept gifts, which are defined fairly broadly to exclude only meals under $75.00 per person on a single calendar day.

·         The Department of Insurance will have to issue and annual report detailing extensive reporting on the state of IL WC claims. This provision also requires hefty reporting measures to be imposed on the Insurers.


The following are the major changes, which have the potential to significantly impact overall costs to employers:


·         An entire new section devoted to Collective Bargaining Agreements and how the Commission shall recognize the provisions of such an agreement creating ADR, medical provider lists and various other measures. Our focus on this concept is unions and union employers that want out of the Commission should stay out of the system and lose voting rights relating to Commission appointments and boards.

·         TPD calculations are derived from the gross amount of the modified duty pay, as opposed to the net amount.

  • For awards and settlements entered after 9/1/2011, wage differential awards will be capped at either 5 years or Age 67, whichever is greater – essentially tying them to retirement age.

·         An entire section devoted to creation of Preferred Provider Networks for the purposes of obtaining medical care under the Act, effective January 1, 2014.

  • PPD will now need to be determined by a physician stating the level of impairment in writing. The physician must consult AMA guidelines in determining the level of impairment, but there are numerous factors they can address to raise or lower the level beyond that of the AMA guidelines, and the hearing officer can take many other factors into account to modify the physician’s suggestion.

·         Carpal Tunnel claims are statutorily capped at 20 weeks of PPD, or roughly 9.75% of the hand – we note this appears to apply to operated and unoperated claims alike. We vote Cubital Tunnel claims should be treated in the same fashion to end the thousands of such money-making surgeries in Illinois which are extraordinarily rare everywhere else on the planet.

·         Major Fee Schedule changes are included in the proposed bill – essential aspects include streamlining the geo-zip concept, covering “implants” and other medical products at 25% above cost plus reasonable shipping fees, and covering prescriptions under the Medical Fee Schedule. We applaud these significant cost saving mechanisms.

·         Medical providers will not be able to hold Petitioner liable for medical billing deemed excessive or unnecessary by the Commission.

·         UR implementation in medical care is further regulated and will now create a rebuttable presumption if the proper procedures of notice and reporting are followed.  

·         Intoxication will become a defense with threshold amounts of toxicity for Alcohol, Cannabis, and other drugs.  For instance, .08% blood alcohol level will create a rebuttable presumption intoxication was the cause of the injury.

·         Section 25.5 of the Act is expanded to include presentation of a fraudulent medical bill as a criminal act, and the penalties are tiered as opposed to a Class 4 felony violation for each instance. Also – offenders shall have to pay restitution to the injured insurer or employer.

·         The WC Fraud Unit will have to make an annual report to the Governor of their actions.


The following are State-specific changes, which have the potential to significantly impact claims for State of Illinois workers:


·         A provision specific to the State, there is a new section allowing the State of Illinois to consider obtaining WC insurance and/or getting a new TPA involved in State claims.

·         A State WC program advisory board would be created, which might annually suggest cost-saving measures to the Gov’s office in regard to the State’s unconscionably expensive WC management system.

·         All claims by current or former employees of the IWCC are to be handled by a certified independent arbitrator not employed by the IWCC; appeals from these decisions will be handled in the courts.


All in all there are quite a few cost saving measures, but also a fair amount of changes which may have no net effect. As noted above, it remains to be seen whether this bill will change in whole or in part in the next coming weeks.


This article was researched and written by Arik D. Hetue, J.D. If legislation is enacted, Arik and the troops at KC&A will provide a free webinar to explain what the heck happened to everyone’s lives and jobs. Watch this space for news and scheduling.