Synopsis: Ghost Payrollers—How “Pensions,” Poorly Managed Workers Comp Programs, “Disability” Claims and Paid Administrative Leave are Bankrupting Illinois and the City of Chicago.
Editor’s comment: It is hard to imagine what a mess things are in our State and the City of Chicago. The main problem we have is paying thousands of workers as if they are working when they are not.
Ghost Payrollers, part I--The first concept is the idea of “pensions” for government workers. We assure you public employee “pensions” aren’t at all what your mom and dad think pensions are supposed to be—most folks think when you, as a participant, contribute to your “pension,” the government you work for matches your contributions and when you retire, that money pays for your retirement. Sounds simple, doesn’t it? Well, we assure you most government workers across Illinois contribute about a fiftieth or less of what they actually later receive for what can be millions in “pension” dollars. And please don’t blame the workers—the governments they work for also don’t contribute what is due—choosing to spend the money elsewhere and hang the pension system out to dry.
For a single example, the City of Chicago just settled a strike with their teacher’s union. If you don’t know it, Chicago public schools teachers make on average about $75,000 per year. They only contribute 2% of their salary each year to their “pension” program. If you do the math, after twenty years as a teacher, they have contributed about 40% of a single year’s salary or $30,000 to their “pension.” When they are eligible, they will receive about 80% of their highest year’s salary for the rest of their lives—80% of $75,000 is $60,000. Again, if you do the math, the retired school teacher easily spends their entire “pension” contribution before the end of the first year of their retirement. Thereafter, they are back on our payroll. If they live for 30 years in retirement, they will receive 30 years times $60,000 or $1,800,000 for their investment of $30,000!!! This amount doesn’t include their current guaranteed increase of 3% per year for every year of retirement. If you aren’t sure, this is why the City Public Schools pension program is wildly in hock.
Why are we calling government pensioners “ghost-payrollers”?? We assure you the retirees of the State of Illinois and the City of Chicago who haven’t contributed enough to justify the growing pension costs are back on your dime or worse—your borrowed dime. The State of Illinois had to borrow $4 billion, yes, billion to spend $3 billion to pay the outstanding pension obligation for a single year and $1 billion to pay the note on the first $3 billion. That isn’t sustainable, folks; it is going to have to end before we hit bankruptcy. We have advised many government observers of our objection to the term “unfunded pension liability” which is the accounting term for saying we are again simply paying retirees as if they were again on our payroll. The retirement parties for such workers should truly be fun—they don’t have to work anymore while we pay them for the rest of their lives!!
Please also note literally thousands of state and other government workers are rapidly retiring—one news source indicated the State has over 1,000 new job openings. The reason such workers are leaving government service in droves is to try to insure they have ERISA protections for the pension rights they are vested in.
Ghost-Payrolling part II; Illinois odd practice of providing “odd-lot” total and permanent disability benefits and rotten WC claims management for State and City of Chicago workers.
As we have told our readers on numerous occasions, “odd-lot” total and permanent disability for government workers should be a crime—you get the benefits only when our governments won’t accommodate an injured worker’s restrictions. Hundreds of such workers receive these high benefits and get paid tax-free monies well into the tens of millions of dollars. They get regularly COLA increases managed and paid for by Illinois business. Again, they are “ghost-payrollers” because they can and should be working with restrictions—you could cut any and all of them off tomorrow, if we found them jobs.
Please also remember sixteen months ago, on June 28, 2011, our plucky Governor signed the 2011 Amendments to the IL WC Act. In the new Amendments, it says
· The Director of Insurance for the State of Illinois was to prepare and implement a plan to purchase Workers’ Compensation insurance for the State.
· Individual State agencies were to be compelled to fund TTD payments themselves in the event that light duty was not accommodated once the light duty release is issued pursuant to the treating doctor and the IME physician.
· The Department of Central Management was to have 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.
Other than to name the “Advisory Board,” nothing has happened since the Amendments were signed on behalf of the State of Illinois to improve its comically bad WC program. They will pay over $100M in WC benefits again this fiscal year.
The City of Chicago also has the worst WC claims municipal management program on the planet, in our estimation, leaving hundreds of workers out on TTD for endless paid leaves. We are told something like 25-30% of their workforce is on TTD on any given day of every year. Their WC claims costs have skyrocketed from about $35M a year five years ago to what will be over $115M or more this fiscal year. A year ago this month, Mayor Emanuel confirmed they were going to start using voc rehab to bring folks back to work—that process has been starting and stopping and starting and stopping.
Ghost Payrollers, Part III—“Disability”
On top of that, please remember City of Chicago police officers and firefighters are not covered by workers’ comp. Their “disability” claims are now part of a federal grand jury investigation. A disabled City of Chicago police officer was discovered on “disability” for over two decades. He had already received $700,000-plus in disability pay and was seeking a retirement pension. Turns out, he put himself through law school, graduated in 1997 and was now a criminal defense lawyer in the south suburbs. Turns out the basis for his disability claim was pain due to firing police firearms; turns out, he goes big game hunting in Africa and fights through the pain to shoot rifles while on safari.
In a similar vein, police and firefighters across Illinois don’t have to be disabled from all work. If they run into a condition that medically blocks them from being police officers or firefighters, they get line-of-duty disability pensions for the rest of their lives. In the right circumstances, they may also get lifetime family health insurance. All of that costs Illinois taxpayers millions. Our favorite example of this was the firefighter with rhinitis—he is getting lifetime line-of-duty disability benefits for life from getting a runny nose and teary eyes.
Ghost Payrollers, Part IV—Paid administrative leave
On top of all the other folks being paid not to work, the Chicago Tribune found our State government regularly pays employees not to work when they are being investigated for wrongdoing. Between 2007 and September 2012, 2,033 state employees on paid administrative leave have cost the state $23 million. Paid administrative leave prevents an employee from going to work — typically, during an investigation into alleged wrongdoing and is considered a sanction. However, it is an administrative decision—for example, the Tribune investigation found a mental health technician was put on paid administrative leave for allegedly driving her car too fast in her agency's parking lot.
The State of Illinois declined to provide specific reasons for employees being placed on leave or details on their cases. But, using confidential documents and interviews, the Chicago Tribune learned the process can be slowed by communication problems, staff shortages and lengthy investigations.
As we approach Hallowe’en, we have to hope this sort of scary government management will stop and someone will start to see how wrong things are being done in both government settings. We appreciate your thoughts and comments; please do not hesitate to post them on our award-winning blog.
Synopsis: Is the Attorney General of Illinois starting to do something about claimant fraud in IL workers’ compensation??
Editor’s comment: The State of Illinois historically has been less than ambitious when pressed for prosecution of claimants for fraud. However, the AG’s office recently announced the arrest of Tracy Williams of McHenry based upon allegations the woman had attempted to defraud several Chicago area employers out of nearly $90,000 in workers' compensation payments. Williams was arrested late Wednesday October 17 on charges of workers' compensation fraud, aggravated fraud, insurance fraud and perjury.
The criminal complaint alleges Williams concocted phony injuries suffered at work and filed fraudulent claims for workers' compensation benefits at three employers: Mastertek Auto Repair, in Algonquin; Thornton's Gas Station and Store, in East Dundee; and Johnson Controls Inc., in Geneva.
The Illinois Department of Insurance Workers' Compensation Fraud Unit referred the case to Madigan's office for prosecution after investigation apparently revealed Williams filed four workers' compensation claims over nearly three years, each for thousands of dollars in benefit payments for injuries that never happened. In one instance, it is alleged Williams lied about an injury to her left shoulder when she falsely claimed a customer punched her while on the job.
Based upon our independent research, Williams appears to have been a Christmas day arrival in 1968 and almost since she was of appropriate working age, she has filed claims. We located additional claims outside the claims against Respondents listed in the charges including past claims against Squeeky Kleen, Wal-Mart, Sam’s Club, Motorola, Plastic Decorators, Electronic Specialties, Wendy’s, Eaton Corp, Harting Inc, and PA Staffing.
While the case pends, it is unclear what exactly triggered the investigation—there appears to be ample evidence in the public record of Williams’ familiarity with the Illinois Workers’ Compensation system. In this writer’s experience, it takes almost certain fraud to convince the AG to prosecute so we will keep our eyes on this case and determine future strategies which may be created based upon the final result. Look for future updates as the case is prosecuted.
This article was researched and written by Shawn R. Biery JD, MSCC and you can contact him directly with any questions at email@example.com.
Synopsis: Tough UR/IME question--in Illinois WC, if medical treatment is approved or certified by UR, can an adjuster override this approval?
Editor’s comment: In our reasoned legal opinion, the short answer is yes. The only truly “binding” determination on a medical treatment issue is from an Arbitrator after a hearing and/or Commission panel after an appeal. Or when you settle and close the claim in that fashion.
The problem with an IL WC adjuster contradicting or “overriding” UR or an IME is you are hanging yourself out to dry on defending the need for such care—your adjuster may not have a defined basis or backup for denial.
· In non-litigated claims, it may push a cooperative claimant to obtain counsel and start litigation.
· In litigated claims, in not having a defined basis for denial of care recommended by a treater and approved by UR/IME, you may then get hit with penalties/fees on unpaid TTD while figuring out if you can defend the position.
Penalties/fees can be significant, depending on how long it goes before you get a hearing and a ruling. For all these reasons, we don’t typically recommend an adjuster override approval of care by UR or an IME. While it isn’t “illegal” to do, it isn’t a strong claims practice.
We also aren’t fans of “gamesmanship” in utilizing medical experts like UR/IME providers—why select, pay for and ask them for a decision if you aren’t going to agree with them? Claimant lawyers and some Arbitrators get upset to hear such games are being played.
If a WC claims adjuster contradicts UR or an IME, they had better have a strong reason that supersedes the medical advice you have asked for/paid for from the medical experts. So, if an adjuster can provide the specific reasons for overriding UR or an IME in a specific claim, the defense attorneys at KCB&A are happy to provide further advice and counsel.
We appreciate your thoughts and comments; please do not hesitate to post them on our award-winning blog.