10-13-14; Good News for IL WC--Bad Economic News for IL Gov't; New IWCC 'Rule' with analysis by Jim Egan; Rules of Evidence in IL WC by Lindsay Vanderford and much more

Synopsis: Good News for the IL WC Industry and Bad News for the Illinois Economic Climate.

Editor’s comment: As we advised our readers, the goofy WC “advisory rates” as a measure of workers’ comp costs are a very poor metric by which to measure the success or failure of our state’s workers’ comp system. In our experience, every year WC advisory rates drop. The problem with advisory rates is they are illusory—there is no requirement an Illinois WC insurance carrier adhere to them at all. In fact, when IL WC skyrocketed under convicted former Governor Blagojevich, WC advisory rates still went down.

In our view, the much better metric by which to evaluate the success or progress of IL WC reforms is the State of Oregon WC Premium Rate Ranking. This study is published on an every-other-year basis and the stat-rats in Oregon do a very solid job of evaluating and measuring what U.S. Business needs to know. They study and report how actual WC insurance premiums change for better or worse.

The 2014 Oregon Report is online: http://www.cbs.state.or.us/external/dir/wc_cost/files/report_summary.pdf

If you take a look, you will note Illinois has gone from 4th highest in 2012 to 7th highest on January 1, 2014. We consider that a solid improvement and is pointing our system in the right direction. The WC insurance premium rate indices were calculated based on data from 51 jurisdictions, for insurance premium rates in effect as of Jan. 1, 2014. The 2014 median value is $1.85, which is a drop of 2 percent from the $1.88 median of the 2012 study. Illinois WC premium rate index is $2.35 per $100 of payroll, or 127% percent of the national median. National premium rate indices range from a low of $0.88 in North Dakota, to a whopping high of $3.48 in California. You may note California is more than a dollar per $100 of payroll higher than our state. There were 21 states that had an index rate that was within plus or minus 10 percent of the benchmark value. In the upper part of the WC premium rate distribution, 13 states had index rates higher than 110 percent of the median, while 17 states were below 90 percent of the median.

What does all this mean? Well, it means the “haircut” which the IL WC system got in 2011 is working. We also feel the reasonable and professional Arbitrators and Commissioners are following the rules, reviewing the evidence before them and doing their very best to come to the middle. Much of the cronyism of the past is gone and WC fraud is considered a problem. We salute Chairman Michael Latz and his solid staff for their hard work in bringing things down and hope he keeps working hard to continue the progress made under their administration.

Can it get even better? Sure, it can! We don’t feel the improvement is stopping--we think it may just be starting. We hope the IL WC PPP concept kicks into fifth gear soon and Illinois business gets even more savings for their WC dollars. We are also sure the tried and true WC cost reduction tools of thorough accident investigation, getting a signed HIPAA/GINA compliant release and comparing medical histories in questionable claims are being done by solid risk managers and adjusters. When you have WC claims you feel need to be fought, send KCB&A an email with details and we can give you a solid review of the strengths and weaknesses of any IL WC claim. With more hard work, we truly feel the current ranking at 7th highest can be moved down into the teens or mid-twenties in the next 3-5 years. We will be watching for the 2016 Oregon WC premium rankings to best judge future progress.

The Bad News for the IL Economy—the ALEC or American Legislative Exchange Council just issued their important economic report titled Rich States, Poor States, 2014 Edition. In their detailed and dispassionate economic analysis, they rank Illinois 48th. This report is free and you can review it or download it online at: http://www.alec.org/publications/rich-states-poor-states/

One problem with this report is Illinois may be in even worse shape following our current statewide election—as we have advised our readers, Illinois income taxes may get dramatically worse under IL State Democrats next month. Right now, the highest rate is supposed to drop to 3.75% at the end of the year. If current IL Governor Quinn wins, our income taxes are set to rapidly escalate to a maximum rate of 8%.

As gubernatorial challenger Bruce Rauner has pointed out, you can’t tax your way out of the hole created by years of bad governance, unpaid bills and multi-billion dollar deficit borrowing. For one example, the State of Maryland raised tax rates on the “wealthy” in 2007 when the politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25 percent. Since two of Maryland’s biggest counties also impose income taxes, the state-local tax rate could go as high as 9.45 percent. Maryland Gov. Martin O’Malley declared these “wealthy” 0.3 percent of state tax filers were “willing and able to pay their fair share.” Guess again.

The next year Maryland state auditors discovered one-third of the millionaires disappeared from Maryland tax rolls and had obviously and wisely moved away. In 2008, roughly 3,000 “wealthy” income tax returns were filed in Maryland by the end of April. The following year there were 2,000 such returns, which the state comptroller’s office conceded was a “substantial decline.” On those missing tax returns and departed “wealthy” citizens, Maryland State government collects 6.25 percent of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did in the year prior—even at higher rates.

As you read this, Governor Quinn and House Speaker Madigan are openly fighting and pressing anyone willing to listen to raise our state income tax rates to 8%. Next month, In the November 2014 legislative veto session in Springfield, they may rise to 8% because Democrats have majorities in both houses of the legislature and may have a Democrat governor who has already indicated he will rapidly sign this giant increase in your taxes. Please also note, following the Maryland model above, it probably isn’t going to help at all. If Bruce Rauner becomes our Governor, it will be dramatically harder for IL Democrats to enact the much higher taxes, as they will have to override his veto.

We see no efforts or open discussion by Governor Quinn or any incumbent state official to reform our state government and stop the obvious waste and redundancy in Springfield which is causing the need for these higher levies. For the entire time Pat Quinn has been our Governor, he has been a ���deadbeat” bill payer, leaving billions of dollars of unpaid bills sitting for vendors, agencies and others to wait months or years for tax money to arrive before payments are made. The practice is so common, sadly everyone has become “used” to it and knows there is no reason to complain. Our concern remain the same—is this a solid way to run government? Is Illinois ready for reform?

Please note the Illinois statewide election has already started and you can vote right now—if you don’t know how, send a reply. It will end on November 4 which is just over three weeks away. We urge our readers to make your voice known and vote.

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Synopsis: Are New IWCC Rules Being Established for IL WC Motions to Withdraw? Analysis and comments by Jim Egan, J.D.

Editor’s Comment: It was recently announced at one of the downstate status calls this week IWCC Chairman Latz had enacted a new but informal rule on Petitioner attorney’s motions to withdraw as counsel for record. It was announced that no longer would a certified mail green card be enough to have a motion to withdraw granted by the Arbitrator assigned.

Going forward the motion would have to go on the record and the motioning attorney would need to produce evidence of a skip trace to confirm all efforts had been made to locate a missing Petitioner. If you are not aware, a “skip trace” requires the attorney to hire a detective or similar licensed provider to seek out any trace of a missing claimant. The Arbitrator advised the attorneys at the call that if there was no skip trace on record there was a risk the case could be reinstated later if the Petitioner re-appeared. Attorneys questioning the new “rule” at the call were politely advised while there was not a section in the Act nor case law confirming authority for this new rule, failure to follow this directive would be done at their own risk as this is what the Chairman wanted.

We note no new announcement on the IWCC’s excellent and informative website confirming this new rule and we are continuing to monitor the situation to confirm.

This being said, we fell the defense bar will need to be diligent going forward in following counsel’s motions to withdraw. If a skip trace is made part of the record when counsel withdraws, you will want a copy of the record or the skip trace in order to confirm same when the defense motion for hearing/dismissal is filed. If no skip trace is produced and counsel proceeds with testimony that he/she “performed their due diligence” in searching for Petitioner, the defense may, in order to protect their dismissal motion/hearing request, obtain their own skip trace of a missing Petitioner.

It was also announced obligatory responses to red-line matters would no longer be accepted and Form 41s would be required going forward. Veteran downstate practitioners will note that it has always been relatively easy to continue matters by informally announcing the status during the call. We were advised six months of “negotiating settlement” or “setting deps” will no longer get the job done for a red-line continuance.

It seems the IL WC Commission is making another attempt to crack down on the red-line, this time in the downstate venues. We are continuing to monitor other status calls to see if the same announcements are made. As always we will continue to report if this practice becomes State-wide or an announcement is made in the IWCC website.

This article was researched and written by James F. Egan, J.D. Jim can be reached on a 24/7/365 basis at jegan@keefe-law.com.

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Synopsis: WCLA CLE’s for the IL WC Industry—Modernization of the Rules of Evidence and an Appellate Ruling regarding  the Statute of Limitations as it relates to Repetitive Trauma Claims Thoughts and Analysis by Lindsay R. Vanderford, J.D.

Editor’s comment: Last week, several important rules of evidence were discussed and a recent case was discussed by WCLA experts in a continuing legal education format. Some of the key issues are discussed below. This article is focused on the Commissioners, Arbitrators and attorneys at the IWCC on both sides of the bar. For risk managers and adjusters, it is fairly technical and you might want to go on to other things.

Rules of Evidence Modernized

The most current Illinois Rules of Evidence became effective January 1, 2011. They are primarily a codification of existing common law rules of evidence with some modernization. Though similar to the Federal Rules of Evidence, there are a few unique respects which Illinois chose not to adopt. These rules govern proceedings in the courts of Illinois. (Rule 101 – Scope). Illinois common law rules of evidence apply to proceedings before the Commission, except to the extent they conflict with the Act or Commission Rules. (Comm. Rule 7030.70).

Rule of Completeness? Rule 106, Remainder of Related Writings or Recorded Statements

If part of writing or recorded statement is introduced into evidence, an adverse party may require any other part of a writing or recording or any other writing or recording which “ought in fairness” be considered is also admissible. Previously, only another part of same writing or recording was admissible. This applies both to substantive evidence and impeachment evidence. Mere mention of a conversation or statement (casual reference) does not require completion. Notably, this modernization will help to admit earlier records showing like complaints.

Habit or Routine Practice? Rule 406

Evidence of the habit of a person or the routine practice of an organization, whether corroborated or not and regardless of the presences of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice. Previously, some cases required evidence of corroboration. The modernized rule has clearly abolished the need for corroboration. Similarly, some cases forbade habit evidence if there were eyewitnesses to an occurrence. Now, evidence is admissible even if eyewitnesses were present. An individual with personal knowledge must lay the foundation the practice was sufficiently “routine.”

Prior Inconsistent Statement ? Rule 613(a)

When examining a witness with a prior statement, the statement need not be shown to the witness. However, on request, the statement must be shown to opposing counsel.

Statement by an Agent ? Rule 801(d)(2)(D)

A statement is not hearsay if the statement is a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment. The statement does not need to be against the interest of the declarant. An admission of a party is substantive evidence (not just for credibility/impeachment). The declarant need not hold a position of authority in the company and need not be authorized to speak on behalf of the company. The statement just has to concern a matter within the scope of employment during such employment.

Statements for Purpose of Medical Diagnosis or Treatment ? Rule 803(b)(4)

“Statements made for purposes of medical treatment, or medical diagnosis in contemplation of treatment, and describing medical history, or past or present symptoms, pain, or sensations, or the inception or general character of the cause or external source thereof insofar as reasonably pertinent to diagnosis or treatment but, subject to Rule 703, not including statements made to a health care provider consulted solely for purpose of preparing for litigation or obtaining testimony for trial.” This exception does not apply to an examining physician seen solely for purpose of litigation or testimony at trial. Statements of causation are only admissible if they are reasonably pertinent to medical diagnosis and treatment.

Self-Authenticating Documents ? Rule 902

Some documents are self-authenticating, including (1) public documents of a government or governmental agency filed under seal and (2) public documents not under seal if signed by an official in an official capacity. In Craig v. Prairie Material Sales, Inc. (13 IWCC 1040) Respondent attempted to submit PubMed document entitled “Rheumatoid Arthritis” into evidence. The Arbitrator and Commission found the document was not self-authenticating. The document was not issued by public authority. Furthermore, it did not describe activities of agency or matters of which agency had duty to report. In Aragon v. Around the Clock Food Store and IWBF (13 IWCC 0118), Petitioner submitted a letter from an investigator at the IWCC Insurance Compliance Division to demonstrate the employer was uninsured. The Arbitrator excluded the document, but the Commission reversed. The document was self-authenticating because it contained the seal of the IWCC, an agency of the State.

Section 6(d) Application to Admissible Evidence

In PPG Industries v. Workers’ Compensation Commission (2014 IL App (4th) 130698WC) Petitioner brought a repetitive trauma claim before the Commission. Petitioner worked for her employer for thirty-eight years prior to claiming the repetitive trauma injury. The Arbitrator awarded compensation, basing the decision in large part on the testimony offered by Petitioner of a development of pain over a period of time. The Arbitrator also considered and rejected a statute of limitations argument raised by the employer regarding the admissibility of evidence from more than three years prior to the claim. This argument relied on Section 6(d) of the Act, which states in pertinent part:

In any case, other than one where the injury was caused by exposure to radiological materials or equipment or asbestos unless the application for compensation is filed with the Commission within 3 years after the date of the accident, where no compensation has been paid, or within 2 years after the date of the last payment of compensation, where any has been paid, whichever shall be later, the right to file such application shall be barred. 820 ILCS 305/6(d).

The employer appealed to the Commission, which slightly modified the PPD award but otherwise affirmed and adopted the Arbitrator’s ruling – including the rejection of the statute of limitations argument. The employer appealed to the Macon County Circuit Court, which was persuaded by the statute of limitations argument. The Circuit Court vacated, directing the Commission to consider only evidence of activities three years prior to the filing of the application. The Circuit Court then entered an order granting a motion for certification of an interlocutory appeal, namely to challenge the court’s application of Section 6(d) to exclude evidence. The certified question to the Appellate Court of the Fourth District was, “does section 6(d) of the *** Act, which sets forth a three[-]year statute of limitations for the filing of worker’s [sic] compensation claims, act as a bar  to the presentation of evidence of work activities that took place more than three years prior to date of accident, or manifestation date, of a repetitive[-]trauma injury?” (PPG at ¶12). The Appellate Court held no such evidentiary limitation existed stating, “It stands to reason that a claimant's work history may be necessary and relevant to determining whether she sustained a work-related, gradual injury.” (¶19). And further noting, “a claimant’s work history has been routinely considered in repetitive trauma cases, including work history that extended beyond three years prior to an alleged manifestation date.”  (Id.) Logically, the bar of such evidence would preclude Petitioner from testifying to any causation issues prior to a claim on which the three year statute is about to run. In our opinion, the Appellate Court reached the proper conclusion.

Though it seems incredible this question was granted an audience of such esteem, it is good to see the issue of evidence coming to the forefront of workers’ compensation litigation. The Administrative Procedure Act relaxes the standards of evidence in our forum, but its statutory constructionists hardly contemplated allowing proceedings to run amok, allowing clearly inadmissible evidence entrance to the record and denying admissible evidence its rightful consideration.

This article was researched and written by Lindsay Vanderford, J.D. Lindsay recently passed the IL Bar and will be sworn in as a licensed IL attorney and become the newest member of our defense team shortly. She can be reached at lvanderford@keefe-law.com for questions, comments and congratulations.