Synopsis: What is a Safety Consultant Under the New Proposed Law? Will the Entire Claims Industry be on the Hook if SB 3287 Becomes IL Law??

Editor’s comment: Following up on our lead article of last week, we received a large number of inquiries about this new law that has already been passed by the IL Senate and is now pending in the House. We understand it has been referred to committee.

By way of history, on February 14, 2014, Illinois Senator Kwame Raoul introduced Senate Bill 3287, which is proposed legislation amending Section 5 of the IL WC Act and seeks to remove an existing exception in the Workers' Compensation Act providing statutory immunity to outside “safety consultants and service providers” for personal injury claims allegedly stemming or resulting from negligent services provided by those service providers. A link to the full text of the bill is here

http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=85&GA=98&DocTypeId=SB&DocNum=3287&GAID=12&LegID=80445&SpecSess=&Session

Under current law, if an employee is injured at work and files suit to pursue recovery for his/her injuries from their employer’s outside safety consultant, the outside safety consultant is immune from liability for that claim. Under the proposed legislation, the outside safety consultant would not be immune from liability for that claim, and could be held liable to the injured employee/plaintiff for any judgment rendered against it. The unquestioned impact of the legislation, assuming it passes, will be significantly increased insurance costs for outside safety consultants, and increased safety service and insurance costs for their clients.

As we advised last week, the legislation is being pursued by the Illinois Trial Lawyers Association (i.e. plaintiffs/personal injury lawyers), one of the best funded lobbying forces in Illinois. As outlined above, they are pursuing the legislation because it will allow them the opportunity to pursue civil litigation against an employer’s outside safety consultant for virtually any injury sustained by that employer’s employees.

Please note the important changes to the IL WC Act are underlined:

Sec. 5. (a) No common law or statutory right to recover damages from the employer, his insurer, his broker, any service organization that is wholly owned by the employer, his insurer or his broker and that provides safety service, advice or recommendations for the employer or the agents or employees of any of them for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act, to any one wholly partially dependent upon him, the legal representatives of his estate, or any one otherwise entitled to recover damages for such injury.

We are forecasting two major issues for the Illinois claims industry to contemplate in relation to this new bill. First, we assure all of our readers if this bill becomes law and there is a major loss/injury involving death, paralysis or amputation in your workplace, you are certain to see circuit court litigation initiated to allow discovery. The discovery requests are going to routine and will ask risk and safety managers for the names and contact information of anyone who might have provided any safety service, advice or recommendations for your company in the last five years. You are going to have to answer them under oath or be subject to the contempt powers of the Circuit Court judge.

The second major issue to contemplate is trying to define what “safety service, advice or recommendations” might be and who provides it? In our view, such “safety service, advice or recommendations” can be provided to your company by:

· Your insurance broker;

· Your insurance carrier/TPA;

· Your outside safety consultants;

· Safety trainers;

· The folks who design, maintain or update machinery or processes used in your business;

· Treating doctors;

· Physical and occupational therapists;

· Nurse case managers;

· FCE evaluators;

· IME doctors;

· CRC’s or certified vocational counselors;

· Defense attorneys; and

· Arbitrators/Commissioners at the IWCC.

All of these system participants can arguably be viewed as providing “safety service, advice or recommendations” to IL employers. Isn’t that what we all do? We are all monitoring injured workers/claims and making recommendations on how to smoothly and safely bring them back to work—what if they suffer a breakdown and our “safety advice” on return to work is arguably flawed? Solid human resources, safety, claims and risk managers ask all of us questions and learn from work injuries and modify their processes in light of all the advice they receive—now all of that advice may cause liability for these many component providers.

Have We Revived the Old Scaffold Act in a Much Expanded Form?

In our reasoned legal view, this new bill is going to be a new and improved Scaffold Act. If you don’t remember, the old Illinois Scaffold Act basically made any injury on a construction site a valid common law claim. What ITLA members would do is to sue every business on the site and the various companies would either settle for short money or complete discovery and then file motions for summary judgment to get out of the claim. All of that effort was wasted money and anti-competitive.

What may be coming to an IL Circuit Court near you is a similar situation where anyone who can arguably be responsible for “safety advice” is going to be sued and will then have to either get out for short money or slog through discovery to file a motion for summary disposition.

Illinois also now has a Last Person Standing rule where if everyone else settles and you are stuck as the last Defendant, you can be liable for the entire jury verdict. Again, this ITLA-sponsored concept is going to make this new law a major challenge for our industry to deal with.

We appreciate your thoughts and comments. Please post them on our award-winning blog.

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Synopsis: Hello From RIMS in Denver—the Highlight of the Party is Jordan Belfort, the Actual Wolf of Wall Street!

Editor’s comment: For the very first time, the U.S. risk/claims community gathered in the Mile High City to experience RIMS 2014 Annual Conference & Exhibition. This industry-leading event features three days of world-class educational sessions, inspiring keynote speakers and an energetic and resourceful Exhibit Hall. The weather is cold and windy but the conference is rocking.

Of the keynote speakers, the one with the most buzz is Jordan Belfort, who was the author of his autobiography, The Wolf of Wall Street. The book outlines his incredible rise from dental school drop-out to head of a billion-dollar stockbroking firm. His personal and financial excesses became the stuff of legend. He crashed multi-million-pound yachts and helicopters and spent millions more on illegal drugs. Chased by the FBI for years, Belfort eluded the law until 1998 when his firm, Stratton Oakmont, was closed down. In 2003 he was jailed for 22 months for securities fraud.

In prison he got clean, wrote his best-selling memoir and now makes a living out of motivational speeches as well as helping the FBI investigate financial crimes. The 51-year-old father of two claims to be “above reproach” although the US government is still pursuing him, saying the millions he has made from the book and movie rights should go to the thousands of investors he fleeced. Stratton Oakmont specialized in low-cost shares, around $5 to $10, that were generally overlooked by the established Wall Street firms and the financial authorities. What Belfort’s unwitting investors didn’t realize was that he was using their small sums to make millions for himself.

He developed what became known as a “pump and dump” system. He would persuade friends and relatives to act as “rat holes” for him — they would buy stock in their name but using his money, thereby restricting the supply and boosting the share price.

His employees, at one point numbering more than 1,000 — would then sell the shares at the top of the market. The overhyped shares would soon drop in value, leaving investors with huge losses but Stratton Oakmont and Belfort with huge gains. His presentation was clearly a hit.

Next year the RIMS 2015 Annual Conference & Exhibition will be on April 26-29 at the New Orleans Ernest N. Morial Convention Center in New Orleans, LA. The attorneys of KCB&A hope to see you there.

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Synopsis: Here is a tough subrogation test question for our readers to consider. $25 gift certificate for the first correct answer from a claims adjuster or risk manager. If any Arbitrator or Commissioner gets it right, we will donate $50 to their favorite charity with approval from IWCC management.

Editor’s comment: Claimant is a traveling salesperson who is on a lengthy business sales trip for the employer, USA Industries. There is no dispute about employment, jurisdiction, accident or coverage of the IL WC Act. The salesperson was married on the date of loss.

Her plane crashed on April 1, 2014 and she was killed. She was a max rate employee and the WC death benefit plus $8K burial is worth around $1.6M.

At-Fault Airlines settled the GL claim with the widower on April 3, 2014 the second day after the crash for $1M. A Circuit Court judge approved the $1M settlement for the estate and entered an order approving it a week ago today. The risk manager at USA Industries doesn’t want us to appeal approval of the Circuit Court settlement. The widower took the $1M check and cashed it.

The widower files a valid IL WC death benefit claim and wants us to participate in a death prove-up.

You are asked to write the agreed proposed decision. When will (or if) IL WC benefits be first due and payable to the widower? The correct answer will be a date.

KCBA Blog

4-28-2014; SB 3287 Redux--What is a Safety Consultant Under the New Proposed Law?; The Wolf of Wall Street Rocks RIMS; Tough Subro Test Question and much more