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We have received so many inquiries, John P. Campbell, Jr. and Arik D. Hetue have worked hard to create this and your editor has finalized it. The opinions voiced are presented by the members of our firm and no one else. The following is a preliminary summary of the “new” workers’ compensation legislation passed by the Illinois General Assembly on May 31, 2011. We caution readers Governor Quinn has not signed the bill into law as of June 1, 2011 (the date of this memo).
In this regard, we remind readers the General Assembly has passed the legislation but it is not yet Illinois law. The Governor may be asked to make new or unexpected changes and we understand he may exercise line-item veto power to strike some provisions. Unless/until this bill is signed into law by the Governor, these changes have not yet been enacted and are not final. However, upon being signed by the Governor, the legislative changes outlined below will become effective immediately unless otherwise indicated in the Statute. We will advise our readers if/when the Amendments become law.
We assure our readers much more detailed analyses with a book and webinar will follow shortly. If you have specific questions or concerns, send a reply or post them on our award-winning blog at www.keefe-law.com/blog.
Changes to the Illinois Workers’ Compensation Act:
Section 1 was amended to specifically outline an employee bears the burden of showing, by a preponderance of the evidence; they have sustained an accidental injury arising out of and in the course of employment. This was always the legal standard pursuant to case-law, but it is now codified in the Statute. Please note case-law holds repetitive trauma can be classified as an accident.
We do not consider this to be a significant change nor is it a true “cost-savings” for Illinois employers or insurance carriers.
Section 1.1 implements Standards of Conduct for Commissioners and Arbitrators, who shall conduct hearings in a fair manner without bias or prejudice. Portions of the canons of the Code of Judicial Conduct have been adopted and are to apply to the Commission and Arbitrators. We also note that pre-trials are specifically addressed as a practice that is permitted as long as the pretrial is performed in accordance with the rules of the Commission.
Again, this is not a significant change nor does it represent a cost-savings.
Section 4(a)(2) specifically defines Employee Leasing Companies under the Act and compels them to provide to the Commission with proof any client company of the Employee Leasing Firm is listed as an additional named insured on their policy.
Not a significant change—this provision addresses a concern of the claimant bar. It will be a concern for Employee Leasing Companies.
Section 4(d) is broadened to allow an investigator with the Illinois Workers' Compensation Commission Insurance Compliance Division to issue citations to employers that are not in compliance with their obligation to establish workers’ compensation insurance under the Act. Fines range from $500.00 to $2,500.00 for violations. The knowing or willful failure to comply with a citation issued by an investigator could result in fines up to $500.00 per day with a minimum penalty of $10,000.00.
Not a significant change and it is another concern of the claimant bar.
Section 4b (not to be confused with section 4(b), which is a subsection of 4) of the new Workers’ Compensation Act is an entirely new section which addresses a collective bargaining “pilot program” which applies only to businesses involved in “construction” as follows:
- The director of the Department of Labor shall designate two labor organizations to participate in a collective bargaining process. The prospective parties to a collective bargaining agreement shall file with the Commission and the State shall recognize any valid binding collective bargaining agreement between the construction employer and the labor organization which properly outlines the obligations and procedures for workers’ compensation benefits. The terms may include alternative dispute resolution to replace the procedural function of the Commission and this will include mediation, arbitration or other dispute resolution proceedings which may be final and binding.
- An agreed list of medical treatment providers may be an exclusive source of all medical treatment.
- The use of a limited list of impartial physicians to conduct independent medical examinations.
- The creation of a specific light duty modified return to work program.
- A limited list of individuals for the establishment of agreed vocational rehabilitation.
- The establishment of a joint labor management safety committee. Of note, specifically outlined in this Section is a rule prohibiting any collective bargaining agreement from diminishing or increasing a construction employer’s entitlements under the Act or an employee’s entitlement to benefits otherwise set forth in the Act. Therefore, it appears the collective bargaining agreement cannot contract away the rights and protections as well as the right to recovery for injuries as determined under the Act. Of note, the construction employer must notify their insurance carrier of their intention to enter into such a collective bargaining agreement. The Commission is to record any settlements under the “alternative dispute resolution plan”.
This is considered a significant change but the significance will be measured by the level of participation of construction unions and their employers. In our view, we do not anticipate high levels of participation but it is impossible to predict acceptance in the specific industry.
Section 8(a) of the Act clarified medical bill payment shall fall within the fee schedule even where the accounts receivable of the provider are sold to a third party (e.g., the Med-Finance-type groups).
Not a significant change and may be more properly termed a clarification.
Section 8(a)(4) outlines when an employer has an approved “preferred provider program” pursuant to Section 8.1(a), the employer shall, in writing on a form promulgated by the Commission, inform the employee of the preferred provider program and then subsequent to the report of injury, the employee may choose in writing at any time to decline the preferred provider program in which case that would constitute one of the two choices of the medical providers to which the employee is entitled. Subsection C indicates prior to the report of an injury, when an employee chooses non-emergency treatment from a provider not within a preferred program, this will constitute the employee’s one choice of medical provider to which the employee is entitled.
- Our guess is this will take care of repetitive trauma claims where treatment begins prior to an alleged date of injury.
- We expect this to be a major and significant change in which preferred medical provider programs may take on a very strong role in the future handling of Illinois workers’ comp claims. If they reach a high level of acceptance, it could have a strong impact in saving costs.
Section 8(d)(1) of the Act confirms any award for wage differential after September 1, 2011 shall be effective only until the employee reaches the age of 67 or five years from the date the award becomes final, whichever is later.
This new Section should be a dramatic savings in resolution of wage loss differential claims that are currently valued and reserved as lifetime benefits. All current wage loss claims should be reviewed and new reserves set once this legislation is signed by the Governor.
Section 8(e)(9) the Act specifically delineates hand injuries involving carpal tunnel syndrome due to repetitive or cumulative trauma be returned to their pre-2005 scheduled amount of 190 weeks, and places a disability limit of 15% loss of use of the hand in such cases, unless clear and convincing evidence can show an award should exceed this amount. In such cases the award should not exceed 30% loss of use of the hand.
This new Section should have an impact on handling CTS claims. Once the Amendments are signed, all existing claims should be reviewed and potentially reserved with this new provision in mind.
Section 8.1(a) outlines a Preferred Provider Program starting on the effective date of the Act whereupon an employer may utilize a preferred provider program approved by the Illinois Department of Insurance. In such instances the employee is considered to be a court beneficiary and the employer is considered to be “the insured”. This Section of the Act also outlines that any provider network must include adequate occupational and non-occupational providers. It shall include an adequate number and types of physicians to treat common work injuries in the general geographic area where the employee resides. The Director of Insurance may deny approval of any such preferred provider program where it is determined a policy or procedure is put in place which causes unfair reduction or delay of medical treatment.
- A word of caution: it appears the employee, once he or she elects to treat within the provider network is permitted to choose any physician within the network without restriction on the choice of physicians. Therefore, it appears employees may be allowed to seek numerous second, third or fourth opinions, as long as the providers are within the network.
- We consider this one of the three most significant cost-saving aspects of the 2011 Amendments to the Act—we urge all Illinois employers to implement Preferred Provider Programs for their WC risk moving forward.
Section 8.1(b) Delineates the determination of permanent partial disability. For all accidents occurring on or after September 1, 2011, permanent partial disability shall be established by a licensed physician reporting on the level of impairment in writing. The report shall include an evaluation of medically defined and professionally appropriate measurements of impairment that shall include, but not be limited to, lost range of motion, loss of strength, any atrophy or tissue mass reduction or any other measurement that may establish the nature and extent of impairment. The most current edition of the American Medical Associations Guide to the Evaluation of Permanent Impairment shall be used.
In determining permanent partial disability value, the Commission shall base its determination on the following factors: 1) the reported level of impairment pursuant to the above Section, 2) the occupation of the employee, 3) the age of the employee at the time of injury, 4) the employee’s future earning capacity, 5) evidence of disability corroborated by the treating medical records. Of note, no single enumerating factor shall be the sole determining factor for disability.
We do not consider this provision to be a significant change to Illinois WC law. Obviously, treating doctors and IME evaluators may start using the most current AMA Guidelines but the Commission may do with them as they will.
Section 8.2 contains vast medical fee schedule modifications which appear to be the major cost saving mechanism in the new changes to the Act on its face. The changes are as follows:
- Out of state providers shall be reimbursed at the lesser of that state’s fee schedule or the State of Illinois fee schedule. In the event there is no fee schedule in the outside jurisdiction, the lesser of the actual charge or the Illinois Fee Schedule shall apply. This applies as of the effective date of the legislation.
- The Commission is to maintain schedules for procedures and services including ambulatory surgical treatment centers, facilities and prescriptions filled and dispensed outside of a licensed pharmacy.
- Beginning January 1, 2012 the fee schedule amount shall be grouped into geographic regions which are consolidated from the present geographic breakdown. These include 1) Cook County, 2) DuPage, Kane, Lake and Will County 3) Bond, Calhoun, Clinton, Jersey (and other downstate counties) 4) any counties not delineated in the Act specifically. In the event any fee schedule regions overlap, the Commission shall average the two fee schedule amounts.
- If a fee schedule amount is in place, effective September 1, 2011, the charge shall be no more than 70% of the fee scheduled amount. If a fee schedule amount cannot be determined, the default reimbursement shall remain at 76% until September 1, 2011 at which time a 53.2% reimbursement rate shall apply.
- Prescriptions filled outside a licensed pharmacy shall be reimbursed at a rate that does not exceed the Average Wholesale Price, plus $4.18 as a dispensing fee.
- Implants shall be reimbursed at 25% above the manufacturer’s invoice price, less rebates.
- Please note that the timeline for prompt payment has been reduced from 60 days to 30 days whereupon a provider provides a substantially all data required to pay the bill. This imparts an obligation on the insurance companies or self-insureds to promptly identify the basis for non-payment within a 30-day period rather than the prior 60 day window.
- Of particular relevance, providers may no longer bill or attempt to recover from an employee the difference between the provider’s charge and the amounts paid by the employer for treatment determined by the Commission to be excessive or unnecessary. This is significant to the extent that any denied treatment which has been deemed excessive by the Commission will prohibit those providers from alternatively seeking payment directly from the claimant.
This is the biggest savings provision in the 2011 Amendments to the Illinois Workers’ Compensation Act. We feel this will result in savings well into the hundreds of millions of dollars on a system-wide basis. We caution it will take some time for the industry and Workers’ Compensation Commission to catch up to it.
Section 8.2(a) outlines a requirement for the acceptance of electronic medical billing and also compels medical providers to establish standardized forms. The Director of Insurance shall establish the necessary criteria.
This is not a dramatic cost-savings but should result in streamlined payment and medical bill handling; if that occurs, litigation and confusion may be avoided in the future.
Section 8.7(a) provides in utilization review, nationally recognized treatment guidelines and evidence based medicine shall be used.
We don’t consider this a change to existing law.
Section 8.7(i) is a new section on implementation of UR for treatment rendered or proposed after September 1, 2011 as follows:
1. Upon written notice the employer or an insurer is invoking utilization review, the provider must submit to the utilization review process and make a reasonable, timely and complete reports of clinical information needed to support he request. If a provider fails to make such reasonable efforts, the charges for treatment or services may not be compensable nor collectible by the provider or claimant. Any findings upon utilization review must be provided to the provider and employee.
2. Clarification of an important restriction on utilization review indicating an employer may only deny payment or refuse authorization on the grounds the extent and scope of medical treatment is excessive or unnecessary pursuant to utilization review guidelines. This is significant to the extent utilization review providers shall no longer be allowed to comment on causal connection, or at least such opinions will not be considered.
3. A petitioner must establish by the preponderance of the evidence that a variance from utilization review standards is reasonably required before treatment denied under UR will be awarded.
4. There is a requirement the final reviewing professional must be either available in the State of Illinois for interview or deposition, or be available via telephone, video conference or any electronic means for remote deposition purposes. We consider this a needless waste of money and time, as the UR professional is no longer able to effectively comment on causation, their report is essentially a non-opinion medical record. Explaining the disability guidelines will be as effective on paper as it is verbally.
Consistent with existing law and past practices, this is going to be a significant cost-savings if the Commission adheres to UR—we can only wait and watch to see what they do.
Section 11 provides an intoxication defense, however, this was greatly limited in the last version of the bill.
- The new section confirms no compensation shall be payable if an employee’s intoxication is the proximate cause of the employee’s accidental injury at the time of the accident, or if the employee was so intoxicated the intoxication constituted a departure from the employment.
- Admissible evidence of the concentration cannabis or a controlled substance listed in the Illinois Controlled Substances Act shall be construed in any hearing to determine any level of intoxication. The .08 alcoholic standard applies for alcohol pursuant to Illinois law. Concentrations at these levels create a rebuttable presumption of intoxication being the proximate cause of the injury.
- If the employee refuses to submit to testing of blood, breath or urine, there shall be a rebuttable presumption that the employee was intoxicated and that the intoxication was a proximate cause of the injury.
- The employee may overcome these rebuttable presumptions by proving by a preponderance of the evidence the intoxication was not the “sole or proximate cause” of the injury. The defense was stripped of its teeth with this addition – as a “sole proximate cause” is almost a legal nullity; any first year torts student can tell you proximate cause is a tricky issue, as every event leading up to an injury can be a proximate cause of the injury.
Employers should be careful to note the rules must ensure that samples are collected and tested in conformance with national, state, legal and regulatory standards for privacy in a manner reasonably calculated to prevent substitutions or interference in such collection. Employees are afforded the opportunity to provide notification of any information which they believe relevant to the tests, including identification of any recently used prescription or non-prescription medication. The sample storage, transportation and place of testing must reasonably preclude the possibility of contamination.
There is no way to tell if this new Section is going to be a cost-savings; we will have to wait and see what the IWCC does with it.
Section 13 confirms Commissioners must complete 20 hours of training in areas of ethics and evidence every two years that they remain in office.
We don’t consider this a change of any interest.
Section 13.1(d) confirms the members of the WC Advisory Board are terminated on the effective date of the legislation, and new members shall be appointed by Governor Quinn within 30 days.
We don’t consider this a change of any interest. Observers may note the WC Advisory Board had little to do with the Amendments to the Act.
Section 14 confirms the term of all sitting Arbitrators shall terminate as of July 1, 2011; however, incumbents shall continue to exercise all duties until they are appointed or successors are appointed. Thereafter all Arbitrators shall be appointed to three year terms by the full Commission.
- Of note, all Arbitrator appointments shall be made by the Governor with the advice and consent of the Senate.
- Arbitrators are subject to the same ethical and training requirements as Commissioners were in Section 13.
- Twelve Arbitrators shall be appointed with terms expiring July 1, 2012. Twelve other Arbitrators shall be appointed with expiration July 1, 2013 and all additional Arbitrators shall be appointed with terms expiring July 1, 2014. Upon expiration of a term, the Chairman shall evaluate performance of the Arbitrator and may recommend he or she be reappointed.
- Moving forward, each Arbitrator appointed after the effective date of the amendments who is not previously served shall be required to be authorized to practice law in the state of Illinois and maintain such authorization.
- The Commission shall also assign no fewer than three Arbitrators to each hearing site and the Commission shall establish a procedure to ensure cases are assigned randomly. No Arbitrator shall hear cases in any county other than Cook for more than two years in each three year term.
This is not a significant change but we will have to watch and wait on who gets to keep their jobs and who the Governor lets go and then randomly appoints. We feel the current Arbitration staff is being unfairly punished as a group for mistakes made by two Arbitrators in the Menard Corrections Center “scandal.”
Section 16(b) has a gift ban explaining that attorneys appearing before the Commission shall not provide compensation or any gift to any person for exchange for referral of a client involving a matter to be heard before the Commission except for the division of fees between lawyers who are not in the same firm. A gift is explained to be any type of gratuity, entertainment or hospitality except food and refreshments not exceeding $75.00 per person on a single calendar date.
This is not a significant change and we consider it virtually impossible to enforce. Please note it applies to attorneys on both sides of the practice.
Sections 18 and 18.1 indicate any claim by a former or current employee of the Commission must be assigned to a certified independent Arbitrator, not employed by the Commission, and as designated by the Chairman.
Again, this is not a significant change and we don’t know how they are going to find “independent” hearing officers who know the Act and Rules.
Section 25.5 addresses fraud and delineates unlawful Acts and penalties for various violations.
- Subsection (a)(9) adds intentionally presented bills or statements for services not provided as a violation.
- Any violation of subsection (a) for $300.00 or less becomes a Class A misdemeanor;
- Any violation over $300.00 and not more than $10,000.00 is a Class 3 felony;
- Any claim or attempt to collect fraudulently in excess of $10,000.00 is a Class 2 felony;
- Any attempt to collect fraudulently in excess of $100,000.00 is a Class 1 felony.
- Any person convicted under this section shall pay restitution for any such charges fraudulently collected.
- Subsection (e-5) requires the insurance non-compliance unit to develop a computer modeling system which looks at social networking, data mining, and other advanced computer processes to prevent fraud and waste. The unit will implement this by July 1, 2012 and will provide annual reporting on the topic to the legislature, the Governor, the Chairman of the IWCC and the Director of Insurance annually after implementation.
- Subsection (h) requires the Fraud and Insurance Non-compliance Unit to issue an annual report to the Chairman of the Commission and the General Assembly outlining the number of allegations of insurance non-compliance and fraud reported, the source of reporting and the number of allegations investigated.
We still don’t see this as a major change but we will have to see how State’s Attorneys across Illinois handle the newly heightened felony levels in prosecuting WC fraud.
Section 29.2 implements insurance oversights where the Department of Insurance shall submit to the Governor and the President of the Senate and Speaker of the House, reports detailing the state of workers’ compensation insurance market in Illinois. The reports are to contain the following:
- Gross premiums collected and the number of insurance companies engaged in the business.
- The extent of loss ratios reported and gross profitability of workers’ compensation insurers.
- Statistics on Illinois’ rank relative to other states in terms of TTD benefits and PPD benefits in addition to aggregate growth of medical utilization for the top ten most common injuries.
- Various other items such as the utilization of nurse case management, utilization review, the number of claims in which outside defense counsel participate, a total amount paid to outside defense counsel.
- The total amount paid by injured workers to attorneys for the representation shall be reported.
We caution this section could impose significant costs on employers and insurers in regard to collating and transmitting sensitive information. We predict it will not be strictly enforced.
Changes Specific to State of Illinois Workers’ Compensation Claims Management, as provided in amendments to bills other than the Workers Compensation Act
The Director of Insurance for the State can prepare and implement a plan to purchase Workers’ Compensation insurance for the State.
We note individual State agencies will be compelled to fund TTD payments themselves in the event that light duty is not accommodated once the light duty release is issued pursuant to the treating doctor and the IME physician. This appears to be an effort to contain lost time benefits for State employees and we find it to be a positive provision to contain costs for the State of Illinois.
The Department of Central Management will develop an advisory body known as the State Workers’ Compensation Program Advisory Board designed to review, assess and make recommendations to improve the State workers’ compensation program. The Governor is to appoint one member of the Board with the Speaker Of The House and Minority Leader to appoint other members. Members of this board shall serve three year terms.
We note the Code of Civil Procedure was amended whereupon Section 8-802 declares that physicians are to maintain the privacy of patients however, along with other civil and criminal legal actions, the issuance of a subpoena pursuant the Workers’ Compensation Act shall compel physicians to release records however, the Mental Health And Developmental Disabilities Confidentiality Act will override any such subpoena.
This memorandum was prepared by John P. Campbell, J.D., Arik D. Hetue, J.D. and Eugene F. Keefe, J.D. of Keefe, Campbell & Associates, LLC. It has been forwarded for your personal use only and redistribution is prohibited without written permission. Copyright© 2011, Keefe, Campbell & Associates.