11-26-13; Shocking Statement From IL App. Court--IL WC Now Has Two WC Systems; Solid Rule-Making on Repackaged Drugs; Insurer to Pay Defense Costs in "Groundless" Claim and much more

Synopsis: Shocking Words in a “Traveling Employee” Semi-Secret Ruling for the Illinois-You-Don’t-Have-To-Be-At-Work-To-Get-Workers’-Compensation Commission. Is Illinois Really Going to Have One WC Act for Some Workers and Another Act for Whatever Traveling Employees Are?


Editor’s comment: We join with the Chicago Tribune editorial team when they ask In Illinois, it's 'Where's the Labor?' DayTheir editorial is online at http://www.chicagotribune.com/news/opinion/editorials/ct-edit-laborday-20130902,0,7810420.story


The Chicago Tribune editorial points to the five border states and confirm they have an average unemployment rate of 7.12 percent. In contrast, Illinois is looming at just under 10 percent with everything pointing towards our state soon reaching all-time record high unemployment. Unlike our neighbors across the country, Illinois raised personal and corporate income taxes just as other states cut their tax burden. To pay for government workers who are retired and no longer work for their respective governments but still get paid, Illinois borrowed and spent its way into massive government debt.


It is hard to imagine any national or international employer that doesn't know Illinois has worst-in-the-nation credit ratings and multi-billion dollar unfunded pension obligations? Many Illinois political leaders don't openly welcome employers and foolishly dictate terms to companies like Wal-Mart and Ford Motor Co. who might otherwise bring jobs here. Having looked at those issues, we now see this new anti-jobs WC “parallel universe” that is certain to further infuriate longstanding business people across our country.


The Chicago Tribune editorial team clearly doesn’t know what is happening in our reviewing courts and the IL WC system. We received a comment from an influential Plaintiff/Petitioner attorney in response to earlier KCB&A Updates about the new “traveling employee” concept indicating ITLA or the Illinois Trial Lawyers Association not having much influence before the IL legislature to the extent they were unable to block legislative amendments like impairment ratings in the last IL WC Amendments in 2011. The implementation of impairment ratings has caused permanency awards to drop and the bankrolls/fees of ITLA members to go down. All of the hard work from the 2005-6 and 2011 IL WC Amendments were causing costs to be more reasonable. But that is soon ending, folks.


In our view, where the IL Trial Lawyers Association may have limited sway in the legislature, they have strong influence in the reviewing courts. We truly feel they are the behind-the-scenes force on this new anti-jobs WC duality and coverage expansion. If you don’t know, along with massive government debt and unfunded pension chaos, the five men who compose the IL WC Appellate Court, Workers’ Compensation Division have moved to a new WC standard where most Illinois workers don’t have to be working or anywhere near work to be entitled to our generous workers’ compensation coverage. In our view, the most shocking statement we have read as WC lawyers is the Court’s willingness to completely ignore or “not address” the IL WC Act in making rulings. In another of those controversial “unpublished” rulings under IL Supreme Court Rule 23 that only appear on the IL Appellate Court’s website, we read the ruling in Admiral Mechanical Services v. Illinois Worker’s Compensation Commission, No. 02-12-0694WC, filed May 31, 2013. In that ruling, this language indicates:


Respondent next argues that, using a traditional analysis, claimant’s injuries neither arise out of or occurred in the course of his employment. See Illinois Bell Telephone Co. v. Industrial Comm’n, 131 Ill. 2d 478, 483 (1989). However, we have determined that claimant was a traveling employee. Therefore, we need not address these arguments.


What we find shocking and unprecedented about the language in this ruling is the clear indication from our penultimate reviewing court they don’t have to follow or, in their words, “address” the mandatory statutory WC coverage language given them by the legislature. Most legal scholars state the IL legislature provides the enabling law for the IL WC Commission and our courts to review and enforce—in this simple statement, this Illinois court has made it clear they are not limited by nor do they even have to address the statutory coverage scheme and are free to create their own laws and rules. In so doing, we have new and impossible-to-ascertain court-created definitions of things like “traveling employee” and “street risk” and “reasonable and foreseeable” activity. As we indicate above, this new theory creates a dual WC system. What we feel the bottom line is IL Plaintiffs get money in ways no other state provides and jobs are certain to suffer as this judicial trend continues to grow and take hold. We are certain lots of trucking/construction/staffing and other companies with this Court’s definition of “travelers” are going to seriously consider moving out of our state due to this confusion along with added WC/OD coverage and certain-to-increase insurance premiums/costs.


In Admiral Mechanical Services, claimant was an HVAC worker who was going to drive from his home to a place where he was going to work. He was in a car wreck miles and miles away from his eventual workplace. It is a classic “going to and coming from” ruling and, since he wasn’t working and wasn’t yet on the clock, our sister states and every state/country that we know of doesn’t provide WC benefits, as the worker picks the place you put their home, picks their route to and from work and spends what they need to get to work. When the worker arrives at the job site, the traditional law confirmed they are then covered under WC. Seems simple, doesn’t it?


Why Do We Feel this New Judicial Creation is a Disaster for Jobs and Labor in our State?


Well, the “traveling employee” concept means IL business is now covering folks on the way to work, on breaks, at lunch, on the way home for just about anything that befalls them. The admission by this court confirming in this somewhat hidden “traveling employee” ruling that “arising out of and in the course of” no longer has to be addressed by our Commission and reviewing courts “reverses” hundreds, if not thousands of prior IL WC judicial rulings. For one example, in the Caterpillar Tractor v. IIC ruling, our Supreme Court denied benefits for an off-work worker on his way to his car who tripped on a typical street curb. The Court majority found Claimant had “no increased risk” from that of the public in crossing a typical street curb and outlined that as the basis for denial. Now, if the worker was a “traveling employee” under about six different bewildering court-created definitions of the new term, he would have received benefits, as tripping on street curb is reasonable and foreseeable.


Almost all traditional WC defenses are now stripped away to allow compensation for millions of workers.


·         AOO/ICO is the biggest IL WC accident defense and this ruling now tosses that on the rocks and says the IWCC and courts can now ignore it or not “address” it.

·         Horseplay is no longer a defense for traveling employees—for example, two Illinois firefighters got into a school-boy wrestling match, as they were found to be “traveling employees” benefits were awarded. Horseplay was stripped out by our courts as a defense to this personal risk.

·         Idiopathic conditions that are somehow “reasonable and foreseeable” are compensable and this defense is now ended for such workers.

·         Fights—the “Aggressor” rule is no longer a defense for “reasonable and foreseeable” fights.

·         Intentional injuries to self/suicide would covered when “reasonable/foreseeable.”

·         Alcohol/drug abuse causing or contributing to injury is no longer a defense for the intrepid “traveling worker.”

·         Safety violations—probably gone for intrepid “travelers” with jobs.

·         Fall-downs without proof of increased risk—Mlynarczyk claimant received compensation without having to prove an increased risk; this defense is gone for all “travelers.”


In effect, we now have two different IL WC/OD Acts—there is the traditional IL WC Act for some workers and the new “hybrid” Act that wildly expands coverage for benefits.


When should IL Business, the Defense Bar and the IWCC Take Action to Address This New and Unprecedented Uber-Concept?


What do we mean the IWCC has to take action? Well, the IWCC hearing, decision forms and handbook all continue to remain in the traditional mode—like the IL WC Act, the term “traveling employee” isn’t mentioned anywhere in IWCC documentation but now should be. After jurisdiction and coverage of the Act, the “traveling employee” finding is the single most important thing in determining when WC/OD coverage would immediately apply. There are now four Appellate Court rulings that adhere to it--isn’t it kind of odd it isn’t mentioned anywhere at the IWCC? Maybe a news flash?


From the perspective of the defense bar, right now, we think our competition is ignoring it and hoping (as we do) that it will go away. Please also note for hundreds of so-called “traveling workers,” you may not need defense attorneys in the future and should do what you can to keep “traveling employees” away from Petitioner’s/Plaintiff’s lawyers—it is going to be very, very hard to win claims involving anyone who is first found to be a “traveling employee.” The IWCC may turn into one big “pro se” settlement place. If your defense attorneys aren’t telling you what has happened to IL WC/OD law, we are certain they aren’t fully advising you.


What should IL Business do? Well, we join with all of our friends and colleagues to hope and pray the IL Supreme Court hasn’t already made their minds up on this one. We hope this fall or early next year, we will see a favorable ruling on the Venture-Newberg-Perini claim that doesn’t throw the whole IL WC/OD system that has been in place for 104 years down the tubes. Like higher taxes and pension debt and unpaid government bills, this new WC/OD legal mess and lasting uncertainty can’t be good for jobs and IL labor.


Does the Media Know about This? Does the Legislature?


In our view, everyone is confused by the term “traveling employee” and thinks there is some sort of hubbub about people who are traveling abroad and getting hurt. We again point out Claimant in Venture-Newberg-Perini would have gotten benefits if he had a bad dream and rolled out of bed and broken his harm. He was an hourly worker that was not on the clock, not being paid to travel and was at least 20 miles away from the worksite when injured; he has been awarded over $1M in benefits currently pending on a final appeal before the IL Supreme Court.


We feel the IL legislature isn’t yet aware of all of it due to the pension fights that are raging across our state. They may take this issue up when that settles down. If the Supreme Court doesn’t flip Venture-Newberg-Perini, we hope the legislature returns our state to the traditional WC/OD format.


We don’t think the Chicago Tribune or Crain’s Chicago Business or WorkCompCentral or the various TV stations across our state know about the new dual system for IL WC/OD benefits. Feel free to send this article to them or provide your own thoughts and comments to us and the media. Please!!




Synopsis: Finally! The IWCC implements new “combo-drug” price-fixing rules, bringing some sanity back to the world of IL WC/OD medication pricing. We applaud all those involved for a rare instance of rapid and reasonable reform in Illinois.


Editor’s comment: We have previously advised you of the egregious practice of “repackaging” medication and selling it out of a doctor’s office. As discussed in previous law updates, the 2011 Amendments to the IL WC Act had this tiny provision snuck into the legislation that was unassuming and innocuous, however it ended up potentially costing Illinois business millions of dollars. The provision has at long last been modified.


Repackaging drugs is a process by which a pharmaceutical shop essentially comes in and sets up a dispensary in a doctor’s office. They will take a 10 cent medication, put it in a new bag, and slap a 75 cent price tag on it, then have the doctors hand out the medication at that price at patient visits. Meanwhile, the outside vendor will issue charges to the payor without complicating the doctor’s practice. It is a clear price gouge, but unfortunately the practice was written into law by unwitting or uncaring politicians.


The proposed rules were published in the Aug. 17 issue of the Illinois Register, and according to the IWCC website, they took effect as of November 20, 2012. The amendment that took effect reads as follows:


If a prescription has been repackaged, the Average Wholesale Price used to determine the maximum reimbursement shall be the Average Wholesale Price for the underlying drug product, as identified by its National Drug Code from the original labeler.


What this does is essentially eliminate the increase in price that could have been created by the repackaging process. We applaud our legislators and the Commission for recognizing a problem, and moving rapidly to resolve it in a very reasonable manner.


Per the IWCC website notification, the final text of the rule will be published in the December 7, 2013 edition of the Illinois Register. This article was researched and written by Arik D. Hetue, J. D. who can be reached for question or comment at ahetue@keefe-law.com.




Synopsis: The Seventh Circuit Court of Appeals rules an excess insurer must pay an employer’s defense and settlement costs consistent with broad terms used in policy, even though the underlying lawsuit was “groundless.” Analysis by Chris St. Peter, J.D.

Editor’s comment: We feel the Federal Seventh Circuit Court of Appeals correctly took an insurer to task and required coverage consistent with the broad terms of the policy at issue. Any other result would allow an insurer to dispute coverage based upon an exception that does not exist in the plain language of the policy itself.      


In TKK USA, Inc. v. Safety National Casualty Co., Nos. 12?1988 and 12?2091 (7th Cir. Aug. 21, 2013), Safety National Casualty Corporation sold an excess liability insurance coverage policy to TKK USA, Inc., (formerly known as The Thermos Company). The policy covered excess losses resulting from liability imposed on TKK “by the Workers’ Compensation or Employers’ Liability Laws” of Illinois. The dispute centered on whether the policy covered TKK’s costs to defend and settle a “groundless” lawsuit brought under Illinois common law by the widow of a former TKK employee alleging TKK’s negligence caused the employee to become ill with and eventually die from mesothelioma. The common law negligence claim was subject to a “rock?solid” affirmative defense under the Illinois Workers’ Occupational Diseases Act, which bars common law claims by or on behalf of an employee against a covered employer “on account of damage, disability or death caused or contributed to by any disease contracted or sustained in the course of the employment.” 820 Ill. Comp. Stat. 310/11.


TKK filed suit after Safety National denied TKK’s claim for coverage of losses above the policy floor. The U.S. District Court for the Northern District of Illinois granted summary judgment in favor of TKK for its costs in defending and settling the widow’s suit. The District Court found the policy’s reference to “Employers’ Liability Laws” included the widow’s negligence claim even if it ultimately could not prevail. The district court denied, however, TKK’s claim for attorney fees and costs in the coverage lawsuit itself.


In a decision issued August 21, 2013, the Seventh Circuit Court of Appeals affirmed the District Court’s decisions in all respects. The Seventh Circuit explained the key policy term—“Employers’ Liability Laws”—was broad enough to include claims brought under the common law, even if the claims are “wholly groundless, false, or fraudulent.” The Seventh Circuit also found no error in the district court denying plaintiff’s motion for attorney’s fees in the coverage lawsuit, holding Safety National took a reasonable position on an unsettled issue of law.


As noted above, we feel this is the correct result. The policy at issue broadly covered any losses incurred as a result of “Employers’ Liability Laws” with no exception based upon the type or merits of the claim. Where a policy uses such broad policy language, the insurer should not be able to dispute coverage by asserting an exception that does not exist in the policy itself. This should also remind our clients to pay close attention to the language used in an insurance or any other contract—if the language purports to provide unlimited coverage, it probably does.     


This article was researched and written by general liability and employment practices liability law specialist Chris St. Peter, J.D. Contact him at cstpeter@keefe-law.com or (312) 756-3714 and ask him to review your insurance policies and other contracts.