5-11-15; Let's Have Our Administrators Move IL WC To The Middle and Not "Race" Anywhere; IL Fake Pensions Need Constitutional Congress for Reform; Shawn Biery, JD, MSCC on CMS Update and much more

Synopsis: IL Speaker Madigan Urges Our Legislators Not To “Race to the Bottom” in the Illinois Work Comp Arena.

Editor’s comment: In what some commentators view as a legislative publicity stunt, Illinois House Speaker Michael Madigan called a rare “Committee of the Whole” to allow testimony from folks all across the United States in what may have been an effort to slow or block proposed changes to our workers’ comp system by folks loyal to Governor Rauner. As much as Speaker Madigan argued Illinois shouldn’t “race to the bottom”  or get  too cheap when it comes to work comp reforms, the other side says they want Illinois to continue to work to the middle of all the United States to be competitive and business-friendly. Epitomizing the approach of Illinois labor, Democratic Jay Hoffman agreed everyone wants Illinois to be more competitive in the WC field but, in his words, “not on the backs of injured workers.” We hope the sore backs of injured workers also survive all the public relations fluff coming from our Capitol.

The Committee hearing featured a former Indiana work comp official who is now a Plaintiff/Petitioner attorney highlighting how several injured Illinois workers would have been less happily treated if injured in Indiana and subject to that state’s second-lowest-WC-costs-in-the-U.S. benefit structure. In response, Greg Baise, the current president of the IMA or Illinois Manufacturers’ Association asserted he didn’t want Illinois WC to turn into a copy of the Hoosier state’s WC program. Greg indicated “….what we’re looking for is a fairness in the system.” Baise felt the number one WC complaint his organization regularly hears is the growing cost of workers’ compensation in Illinois in relation to our sister states.

The Committee as a Whole testimony included lots of workers injured on the job in other states, including Oklahoma as well as Indiana. The testimony wasn’t specifically directed at the current proposed WC changes from the Rauner administration. Instead the focus of the endless and somewhat boring testimony was implicitly directed at keeping IL benefits moderate to higher than other states.

A group of employer associations indicated they don’t want to reduce workers comp benefits for injured workers, but they do want to root out what they asserted was work comp “fraud” by increasing the causation standard to insure an actual injury occurred at the workplace before any benefits were due. Just before the full-day joint House-Senate hearings, several Illinois business groups held a press conference applauding the focus on reforming workers’ comp in Illinois. However, many were critical the legislative hearings were too one-sided.

Stephen Schneider, the American Insurance Association (AIA) Midwest region vice president testified on the effects of the 2011 workers’ compensation reforms and urged further reforms might be needed.  Mr. Schneider represented a coalition of insurers which includes AIA, the Illinois Insurance Association (IIA) and the Property Casualty Insurers Association of America (PCI). His testimony outlined a 2014 report by the Illinois Department of Insurance which ranked Illinois as the most competitive state in the country for workers’ compensation insurance. The study indicated there are 333 insurers authorized to compete for WC insurance business. Schneider also indicated further reforms may improve the system for both employers and employees. He feels additional WC reforms should include addressing abuses associated with the practice of dispensing prescription drugs by doctors or in non-pharmacy settings. He also indicated there is a need for a renewed examination of the present IL WC medical fee schedule, suggesting as an alternative the use of a Medicare rate-based schedule, as many other states use.

Our vote on all of it is stop worrying about the legislative branch of government and focus on WC administration and our administrators. We feel the IL WC system needs to allow the current IWCC Arbitrators and Commissioners to lead our  troubled state and its WC claims to rank in the mid-teens or twenties in the Oregon WC Insurance Premium report that will be posted next year. Solid professionals like Josh Luskin, Mike Brennan, Kevin Lamborn and Ruth White are knowledgeable and moderate WC veterans who will require “real” accidents and disability/impairment to be demonstrably present before they consider significant awards. They can’t do so unless and until we give them the chance to show us their stuff. As we told you last week, we don’t need new legislation, we need better thinkers to implement the IL WC Act as written.

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

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Synopsis: Couldn’t IL House Speaker Madigan Paid for Coffee at Starbucks® or Panera® and Informally Learned How the IL Supreme Court Would Rule on the Fake Pensions Speaker Madigan Helped Create and Now Can’t Change?

Editor’s comment: Speaker Mike Madigan has been around the IL General Assembly for almost half a century. He is also the Chairman of the Democratic Party of Illinois. He has been a member of the Illinois House since 1971. If you do the math, he has been around for everything financially bad that has happened in our state government for 44 years and still counting. He is an honest man and strong personality but you will never see or hear him take credit or blame for anything. If you think we are overstating this and being unfair, we ask—how do you justify being the long-time and dominant leader of a state government that is over $100,000,000,000 in debt?

The silly thing that just happened is a bill passed in 2013 by Speaker Madigan to “reform” Illinois’ fake pensions was just knocked out by a unanimous IL Supreme Court. The august members of our highest Court affirmed the IL Constitution’s “Pension Clause” that we call the “stick-it-to-the-taxpayers” clause. Basically, if the legislature, in Madigan’s wisdom, wants to give billions to state workers when they retire, taxpayers are stuck with that decision and can’t change it without a change to the IL Constitution.

You might recall the IL Supreme Court recently ruled the lifetime healthcare benefits paid to any IL state government worker who is vested in their fake pension cannot be changed by the legislature. Retired IL State workers don’t have to pay a nickel for full and lifetime group health coverage; only you and I do. The legal fees for fighting the bill to try to change the lifetime cost of healthcare for IL government workers is $1.5M to the attorneys for the government workers. Guess who has to pay the legal bills on both sides? You and I do.

Despite watching his daughter completely lose that debate, in 2013, Speaker Madigan supported and passed a bill to slightly reform IL government pensions. Lisa Madigan, our plucky IL Attorney General fought to have both the earlier healthcare reforms and the current pension “reforms” stick and was basically hooted out of court on both occasions. The combined cost of Plaintiff legal fees in the dual losses for IL taxpayers is going to be around $3M. Ouch.

One of the many problems with this morass is IL Democratic Party Chair Mike Madigan has met, vetted and clearly knows the Democratic Justices on the IL Supreme Court. We ask the rhetorical question—couldn’t he have sprung for coffee to ask them the informal question about how they felt about the “Pension Clause” and what the chances of getting the fake pensions reigned in? Did we really have to fight this through the Circuit and now Supreme Court and blow $3M of the taxpayers’ dough to summarily lose?

IL Legislative Fake Pensions Can’t Truly be “Funded”—Can We Dump Them?

For everyone who is interested enough to read it, let’s look at just one fake pension that you can’t and won’t ever make sense of—legislative pensions. Right now, IL legislators make about $80K a year. Their pension contribution for a married legislator is about 10% of that income or $8K a year. They only have to be a legislator for 4 years, yes, 4 years to be fully vested. That means they only have to put in $32K in the fake pension program to be fully vested. When they reach the right age, their pensions start at 85% of the highest pay or $68K a year. You may note they get their entire contribution back in six months of retiring. They also get 3% compounded increases each year guaranteeing within four or five years, they are getting as much as they made working as an IL legislator or more. After something like 20 years, their pensions will be double.

How about we pay legislators when they legislate and stop paying them when they stop working for us? Does that seem too hard to understand? Can we consider a constitutional amendment to protect taxpayers so we only have to pay government workers when they are working in government and not the rest of their lives? What rhymes with welfare?

When you hear anyone complain IL State Government doesn’t pay enough to contribute to such pensions, please note such pensions are almost unfundable—by that we mean, our state government would have to pay their legislative salaries at $80K a year and probably add $400-500K a year for the four years to have enough of a kitty to pay them the amount they would be due on an annual basis following retirement. The math on those amounts cannot be challenged—it is immutable. We don’t feel Illinoisans understand how much these pensions truly cost. The current annual cost of funding these “unfunded” pensions is around a quarter of a billion dollars and continues to increase. We assert no state pays that much to its legislators and Illinois shouldn’t either.

In our view, all IL state fake government pensions need to be completely retooled. In our further view, as the IL Supreme Court has found the “Pension Clause” to be the irresistible force or the immovable object, the entire IL Constitution has to be reconsidered on the issue of fake pensions. We appreciate your thoughts and comments.

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Synopsis: CMS Appeal Rights Webinar Breakdown—What We Learned With Regard to Medicare Second Payer Appeals.  Analysis by Shawn R. Biery, J.D., MSCC.

Editor’s comment: As reported several weeks ago, the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing certain provisions of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART ACT). With this final rule, a formal appeals process is established for applicable plans (liability insurance—including self-insurance, no-fault insurance, and workers’ compensation laws or plans) in situations where Medicare Secondary Payer (MSP) recovery is sought directly from an applicable plan. TO REITERATE—the rule is effective now and applies to demand letters issued on or after April 28, 2015.  

Again recapping, the appeals process established in the final rule parallels the existing process for claims-based beneficiary and other appeals for both non-MSP and MSP, and will be used for appeals involving both pre-payment denials as well as overpayments.

PROVISIONS OF THE FINAL RULE: 

The formal appeals process applies to MSP recovery demand letters issued directly to applicable plans as the identified debtor on or after April 28, 2015. Receipt of a courtesy copy (“cc”) of a MSP recovery demand letter by an applicable plan does not necessarily mean the applicable plan has the ability to file an appeal.

There will be a formal multilevel appeal process for applicable plans where MSP recovery is pursued directly from the applicable plan. The MSP recovery demand letter and any subsequent appeal determination will specify any timeframe or other requirement to proceed to the next level of appeal. There are six steps in the new appeals process and at each level you access, there will be a letter of instruction on procedure to move to the next step if there has not been some level of satisfaction with the result of the prior level of appeal.

The appeal process will be formally applied to the “Demand Letter”, and is not applicable to the initial determination or conditional payment letter because that letter is technically not a demand letter. We correctly noted the six levels in our prior update as:  

Ø  An “initial determination” (the MSP recovery demand letter),

Ø  A “redetermination” by the contractor issuing the recovery demand,

Ø  A “reconsideration” by a Qualified Independent Contractor,

Ø  A hearing by an administrative law judge (ALJ),

Ø  A review by the Departmental Appeals Board's Medicare Appeals Council, and

Ø  Judicial review.

Some other important details covered in the call include:

Ø  Monthly interest will accrue—so we recommend you issue payment for any undisputed amounts so you avoid interest being assessed (assuming you prevail on the appeal of the disputed amounts). Interest would accrue on the amounts being appealed if you do not prevail.

Ø  You need to make a swift decision on whether you wish to appeal—the timing starts rapidly and you are out of luck 120 days from initial determination. If you fail to respond in the time frames given, you lost your right to appeal.

Ø  You must have Proof of Representation if you are representing the plan and it must be current within a year of the appeal. The POR must be submitted with the appeal if not submitted prior to the appeal.

Ø  You must also submit a cover letter and specify the exact issues you are appealing such as relatedness of services, amounts alleged, verification of payments already paid the provider, etc.

Ø  Causation is not CMS’ concern so they don’t care if there is not a determination of liability in a disputed settlement. We interpret that to mean that if you dispute the conditional payments in a case you settled on a disputed basis, you should expect to be liable for the conditional payments because “causation is not CMS' concern” and they only want their money back.

It was also highlighted the applicable plan is the only entity with appeal rights/party status when Medicare pursues recovery directly from the applicable plan. The beneficiary is not a party to applicable plan appeals, however CMS is required to provide notice to the beneficiary of the applicable plan’s intent to appeal and will provide such notice if the applicable plan files a request for a redetermination.

It remains the applicable plan may appeal:

Ø  the amount of the debt and/or 

Ø  the existence of the debt. 

The regulation does not permit applicable plans to appeal the issue of who is the responsible party/correct debtor. Requests for appeal on the basis the applicable plan is not the correct debtor will therefore be dismissed. Medicare’s decision regarding who or what entity it is pursuing recovery from is not subject to appeal.

While the process was fleshed out somewhat, we still believe the process has pitfalls and gaps and how well the appeals process will work is still to be determined. We will follow the process closely and identify those cases in our office in which an appeal may be appropriate and test the process aggressively. If you have any cases which may have the potential, KCB&A has several MSCC certified attorneys to consult with. This article was researched and written by Shawn R. Biery JD, MSCC who can be reached at sbiery@keefe-law.com with any comment or question.