5-1-12; Can this level of WC claims mismanagement in a sitting President’s home state affect the November Election?

Illinois Auditor General provides their scathing audit report documenting the smoking mess that is the Illinois WC program for our State Workers. Will all this government bungling rub off on the President?

Our President is an interesting and somewhat charismatic man—we know he is very popular in some quarters but we also feel he will be asked to take responsibility for our economy and general outlook moving forward. His opponent is clearly a solid businessperson who is going to make a strong pitch that you can’t run government on charisma and we would be better suited to look at the bottom line in these difficult economic times. We are sure the challenger is going to be able to point at Illinois’ troubled and chaotic government and tell U.S. voters our country can’t afford to go down the path the current President came from.

Right now, as loyal Illinois citizens and businesspeople, we have never seen any state in the United States so poorly administered. This state has problems with long-unpaid bills to its vendors, spiraling debt that is soon to be in the tens of billions of dollars, unfunded pensions, a Medicaid program they simply can’t seem to cut and a state government workers’ compensation program that is a model for how not to run a workers’ comp program. Taxes and tolls are jumping in cost and we probably will soon have speed cameras on every corner to help raise even more money on the taxpayers’ dime. Our new state motto may soon be—“Illinois, be sure to drive slow and enjoy the taxes!”

In the midst of all this, the Illinois Auditor General has released his department’s scathing review of the State of IL WC program. If you want the link to the report, send a reply. We find the results, for lack of a better term, revolting. The situation is so bad, it is hard to imagine how anyone can dig out of it. Even someone as upbeat as the President has to be shaking his head in disgust.

According to the report, for the four-year period January 1, 2007, through December 31, 2010, IL State workers filed a total of 26,101 workers’ compensation claims—to our understanding there are about 50,000 such state workers so that may be roughly one WC claim for every two workers. As of July 2011, over $295 million was paid in workers’ compensation for IL State employees on claims filed during the four-year period. We assume that amount doesn’t include WC benefits paid to state university/college workers. If you do the math, you can see the WC cost per employee is about $6,000 per worker, injured or not, over that four-year period. As we have told our readers, no private business on the planet would ever survive paying that much in WC benefits.

The audit of the IL State government workers’ compensation claims handling/adjusting program found:

Ø  Their data was incomplete, inaccurate, and inconsistent.

Ø  State adjusters handled claims and made decisions regarding compensability without appropriate investigation forms being submitted.

Ø  The claims managers and adjusters did not have caseload standards and could not always provide adjuster caseloads.

Ø  They have eight or nine adjusters who handle or “mishandle” about 1,500 claims each!!! We assure you it is not possible to actually adjust that many Illinois WC claims—in our view, they have to be overpaying and/or double-paying benefits on a routine basis. Please note it is much easier for an adjuster to endlessly pay benefits than take the many steps needed to cut them off.

Ø  The claims managers and adjusters needed to establish clearer policies regarding settlement contracts and approval limits.

Ø  The claims managers and adjusters did not seek legal counsel and negotiated settlement contract terms directly with the injured employee’s legal counsel—as we have told many of our clients and potential clients, it is a terrible claims mistake to “rely” on claimant attorneys to handle settlement contracts language as their ethical duties are to their clients and not you.

Ø  State adjusters do not have formal policies for conflicts of interest for adjusters or other employees who process workers’ compensation claims.

The audit of the Workers’ Compensation Commission found:

Ø  Their data was incomplete, inaccurate, and inconsistent.

Ø  They do not conduct annual reviews to evaluate Arbitrator performance. We feel the reason for this is how highly politicized and secretive the Commission has been under past regimes—we actually think the current administration is much more open than most.

Ø  There are no true guidelines for Arbitrators regarding permanency awards. We do feel this may change if/when impairment ratings come to general use as required by the statute.

Ø  Someone finally noticed the IWCC Review Board responsible for conducting investigations of complaints against Arbitrators and Commissioners did not meet for 3 1?2 years.

Ø  The agency did not have a formal policy or specific procedures to identify and prevent WC fraud. We feel this is because the many ITLA members who quietly seek to influence IWCC policy-making want to keep WC fraud a “secret” in the hopes no one will notice it.

What the state auditors couldn’t have pointed out because it is almost impossible to find is how many times the IWCC “penalized” the state adjusters and claims handlers for their mismanagement. We are confident penalties and attorneys fees are routinely awarded against the State by the State to the tune of millions. The problem with finding out how much it is points out how comically bad CMS’s database is. This startling feature of our impossible-to-comprehend WC system means one state agency, the IWCC is “penalizing” another state agency, Central Management Services to the benefit of Illinois State workers and to the wild detriment of taxpayers. Please note the reason we put “penalizing” in quotes is the penalties don’t truly mean anything because the state’s managers and adjusters aren’t disciplined about it in any meaningful way.

Like the City of Chicago, we consider it comical to note some state claims are handled by outside defense counsel as the result of a random and secretive RFP process—the lead State of IL WC defense attorney in the Chicago area is a Plaintiff attorney who has the State of Illinois as his sole defense client. We feel confident his main problem is getting the State to pay him for his defense work within a couple of years of providing the services.

The Auditor General’s report identified numerous shortcomings in both the structure and operations of the workers’ compensation program as it applies to State employees. These problems led to a program ill-designed to protect the State’s best interests as it relates to processing and adjudicating workers’ compensation claims for State employees.

As we indicate above, these sort of systemic problems may invariably “rub off” on the President as he faces numerous challenges in seeking re-election. We hope he will quietly tell the Illinois politicians who supported him during his first run to get their ship back into shape to avoid the embarrassment we are all starting to feel as citizens of this disorganized and anarchic state.

We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.