Synopsis: Gov. Rauner “Verging” Illinois--How About Stop Worrying about Work Comp and Going After the 800lb. Gorilla?
Editor’s comment: As you read this, the entire Illinois political world is basically moving toward chaos. New Governor Bruce Rauner has announced bedlam, turmoil and pandemonium are going to start on July 1, 2015 which is the beginning of the new fiscal year for Illinois state government. He is using his ability to approve or reject the State’s 2015-2016 budget to get what we feel are minor changes to IL government.
What we are calling “verging” is the willingness of the Governor to put everything on the “verge” of non-funding many state government functions. The Rauner camp has promised they won’t agree to or sign off on a new state budget unless he gets what he wants for workers’ comp changes, term limits and a local property tax freeze. Lots of Il WC players, particularly doctors and health care givers feel Gov. Rauner’s reforms haven’t been carefully vetted and are being thrust on them. Looking at a projected lack of funding or at least lots of delays, our contacts/readers across the state indicate there is dramatic unrest in school districts and many local governments that depend on the state for support and income.
Either way, the IL House passed and sent an IL work comp “reform” bill to the Democrat-controlled IL Senate in a 63-39 vote. The media didn’t feel it important enough to actually outline what the legislation addresses or how it would change the IL WC Act or Rules. No one has any idea whether the bill will be treated with the same disdain if passed by the Senate but it is certain the Governor won’t sign it and a veto would have to be overridden with strong support from all state Democrats.
IL Republicans blasted the work comp reform measure as being one-sided and falling far short of what the Governor was seeking to entice outside businesses to come here and local businesses to expand here. Governor Rauner labeled the bill "phony reform." He also reiterated his insistence lawmakers address Illinois' structural problems through his “turnaround agenda” before debate about taxes and new revenue sources could be negotiated.
What About the 800lb. Pink Gorilla No One Can Miss?
In our view, this is fiddle-fooling around. The major crisis facing every Illinoisan and Chicagoans isn’t workers comp, term limits or local property taxes. These issues have some relevance but they aren’t close to being game-changers. There aren’t businesses and CEO’s across our country that are petrified of any issue other than our “de-funded’ fake state and local government pensions and the staggering debt they have brought to Illinois and its biggest city. We note Chicago Mayor Rahm Emanuel needs to come up with $634M by the end of June, yes this month, to cover the inconceivably underfunded Chicago Public School fake pensions. We are certain Mayor Emanuel is going to have to borrow billions—there is no way to get a tax in place to get the money in the next 22 days. The Mayor is also going to have to fund his own City of Chicago fake pensions as well as the Chicago Transit Authority pensions. With about $3.5B in annual income, he is well over $33B in debt and that debt is spiraling as they borrow money to pay the “vig” or debt on the debt. At some point,
· Lots of new and anti-business taxes are going to be levied on lots of things;
· Some IL cities and government taxing bodies may become “bankrupt” whether it is legal to do so or not; and
· Someone on Wall Street may pull the plug on more borrowing.
Governor Rauner hasn’t done literally anything about state/local government fake pensions since our IL Supreme Court recently ruled existing pensions can’t be cut. Gov. Rauner is looking at $110B in state debt and the amount due is going up at over $20M each day of the year. If you do the same math, that means City of Chicago pension debt is also going up about $7M each day. If you want U.S. business to look favorably at our state, you have to start fighting that ugly fight right now.
Hard to Blame State/Local Gov’t Workers But Someone Has to “Correct” Fake Pensions
We are sure there are thousands of state and local workers that don’t want the free lunch or the retirement-welfare-state caused by “unfunded” or defunded fake pensions. Conservative state/local workers don’t want future taxpayers to be forced to pay them in retirement due to lack of funding on all sides of the pension matrix. They want certain and fair retirement benefits and should be entitled to it whether it be a 401K plan or something that makes monetary sense and isn’t a house-of-cards.
We hope Governor Rauner, Senate President Cullerton and House Speaker Madigan get together to either call for Con-Con or an emergency constitutional amendment to realign state and local retirement programs so they are “funded” as well as safe, fair and protect both taxpayers and the folks who receive the benefits.
If you aren’t sure why we call them “fake” pensions, please send a reply. Happy to hear your thoughts and comments. Please post them on our award-winning blog.
Synopsis: IL Appellate Court Rules LUMC Has to Spend New Money to Reimburse LTD/STD Reductions After What Was Supposedly a Final Settlement.
Editor’s comment: In Loyola University vs. IWCC, 1-13-0984WC (1st Dist. 2015), the Workers’ Compensation Division of the Illinois Appellate Court reversed the Circuit Court and reinstated an IWCC decision finding the Commission retains subject matter jurisdiction to interpret an approved settlement contract and order a payment of new settlement dollars long after the settlement was final. As an aside, we are not certain why the IL Appellate Court ruling lists Loyola University of Chicago as the party appellee when the IWCC website indicates Loyola University Medical Center or LUMC is the named respondent. They are different corporations to our knowledge.
In Loyola University, Petitioner Mikesh suffered 2003 and 2005 work injuries resulting in a later settlement contract between the parties. The settlement contract between the parties was approved by the IWCC and was paid, for the most part. The settlement contract contained a provision confirming Respondent LUMC would hold Petitioner harmless from any claim for reimbursement from the settlement by any entity which provided long term or short term disability payments. We would assume this means if the LTD or STD carrier came back at Petitioner to recover LTD or STD paid as part of the settlement, the employer or carrier would cover that cost or defend claimant—that isn’t what happened in this ruling.
After the settlement contract was approved, the long term disability carrier learned Petitioner received Social Security payments and due to such payments, the LTD carrier reduced Petitioner’s long term disability benefits. No action was taken by the LTD carrier due to the lump sum settlement contract itself. Petitioner’s counsel contacted Respondent and demanded it reimburse Petitioner for the reduction by the long term disability carrier due to the Social Security related reduction. Respondent refused to reimburse Petitioner—we are sure they asserted the claim brought by Petitioner wasn’t for “hold harmless” protection of the settlement but for fresh money outside the settlement terms.
Petitioner’s counsel filed a Petition for Penalties under Sections 19(k) and 19(l) of the Act along with attorney’s fees under Section 16. Petitioner’s counsel alleged Respondent refused to add monies to the settlement for the reduction by the group LTD carrier due to Social Security benefits. The IWCC ordered Respondent to add monies to the settlement. The IWCC declined to award penalties and attorney’s fees. Respondent sought review in the Circuit Court of Cook County. The lower court held the IWCC did not have jurisdiction to interpret the settlement contract so as to add monies to the settlement at a later time. Petitioner appealed to the Appellate Court.
The Appellate Court reversed the Circuit Court and held the IWCC had jurisdiction to interpret the settlement contract. The Appellate Court ruled the IWCC correctly concluded Respondent was liable for the reimbursement of an “overpayment” of the long term disability payments made to Petitioner by the LTD carrier. The Appellate Court held the IWCC had jurisdiction to award attorney’s fees and costs. In this case the respondent’s interpretation of the settlement contract was not unreasonable or vexatious so penalties and attorneys’ fees were not awarded.
We feel the Appellate Court effectively ruled Respondent somehow became a “guarantor” of the benefits due under the LTD plan due to the settlement contract language. When benefits under the LTD plan were cut pursuant to the terms of the plan, we have no idea why the former employer would owe new money in reimbursement of the amounts cut. We don’t agree that is what the settlement contract language says at all. We don’t have any idea how a future settlement contract should now read, based on the unusual view this Court had in its review of the contract language.
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Synopsis: The IWCC is asking for your thoughts and comments on our IL WC Arbitrators—Step Up!!
Editor’s comment: We commend new IWCC Chair Joann Fratianni on her efforts to ask members of the practicing bar and you, Illinois businesspeople, for your opinions on any Arbitrator you have appeared before. If you can’t rate an IL WC Arbitrator, we are asking you to get engaged and be ready for the same survey next year.
Please find below the link to the IL WC Arbitrator Evaluation Survey. The Commission is asking their Arbitrators are to be rated only on the basis of your personal knowledge. It is possible you will not be able to rate all of the Arbitrators or answer all of the questions for each Arbitrator on the evaluation form.
If you have specific knowledge as to the qualifications of an Arbitrator to give a fair, informed opinion as to those qualifications, please respond to the questions for that Arbitrator by answering “Y” (Yes) or “N” (No) to the questions asked. If you have no opinion on a particular question, the question should not be answered and will be tabulated as a “No Opinion” response that will not affect the arbitrator’s rating. Specific instructions on form completion and submittal are available on the link.
If you do not have specific knowledge as to the qualifications of an Arbitrator please skip that Arbitrator and move on to the next Arbitrator. Forms must be submitted to the IL WC Commission by June 12, 2015.