7-11-2016; IL Appellate Court Shocks the WC Industry with "Benefit Stacking"; Central IL WC Doc Hit With Contempt Order in Federal Court; OSHA Max Penalties to Skyrocket and more

Synopsis: Hard For the IL WC Defense Industry to Disagree More—IL Appellate Court, WC Division “Stacks” Wage Loss Differential and T&P Benefits.


Editor’s comment: As we advised our readers in this past year or so, the IL WC system is fighting to bring our benefits to the middle of U.S. systems. We expect the results of the State of Oregon every-other-year analysis of workers’ comp premiums to come this November or in four short months. We are certain the folks at the IL WC Commission are doing their level best to make WC decisions/awards and settlements reasonable and fair for all sides. We are also certain our reviewing courts might seem to have missed this message.


We just read what we feel is a somewhat shocking and unprecedented ruling. In Chlada v. Illinois Workers' Compensation Comm'n, decided July 8, 2016, Claimant filed for workers compensation benefits for injuries to his low back sustained in a 1999 work accident. The Arbitrator ordered the employer to pay temporary total disability, temporary partial disability or “maintenance” benefits during rehab. Claimant was working as a beer truck driver when injured and then took a lower-paid job as a warehouseman.


The IL WC Commission affirmed the Arbitrator's decision, but vacated temporary partial or maintenance benefits and awarded wage differential benefits. Claimant sought judicial review of Commission's decision. The Circuit Court affirmed the award but made a mistake in setting the wage differential rate by about $30 a week. The mistake was later corrected.


By 2002, Petitioner suffered another injury to his spine and later became an “odd-lot” total and permanent claimant. The IL WC Commission panel allowed for wage loss during the initial periods of disability and return to work as a warehouseman. When Claimant was adjudicated to be entitled to an “odd-lot” total and permanent award, the IWCC panel cut off the wage loss and allowed only T&P benefits going forward.


Just Because You Can Do Something New Doesn’t Mean It Is A Good Idea


The IL Appellate Court, WC Division ruled the wage loss differential provision in Section 8(d)(1) was created with the purpose of compensating a Claimant for diminished earning capacity caused by a work-related injury. They ruled the fact Claimant subsequently suffered unrelated and more disabling work injury to his neck in 2002 did not alter fact the 1999 back injury reduced his earning capacity. By cutting off wage loss differential benefits and substituting T&P benefits, the Appellate Court ruled the Commission's decision failed to “adequately compensate” Claimant for his first economic injury. For any number of reasons, we strongly dislike when our reviewing courts discuss and judicially enact their version of “adequate compensation.”


The Appellate Court noted Claimant’s wage loss benefits, capped at $485.65 a week plus the “odd-lot” total and permanent disability award, calculated at the lower warehouseman pay, combined to provide what they felt was “reasonable compensation” for Claimant. For the first time in IL WC history, with an WC Act created in 1909, the unanimous majority opinion held nothing prohibits awarding both PTD and wage differential benefits simultaneously and “indefinitely” under these circumstances. In our respectful view, common sense prohibits awarding Section 8(d-1) wage differential benefits to someone who unquestionably isn’t going to have a “differential” to make up on a weekly basis. In our view, the Court’s members are focusing on some altruistic version of “disability” being locked in without focusing at all on the legislative purpose of making an employer pay this benefit. We also feel any academic or legal scholar would appropriately criticize the majority’s use of the term “indefinitely” as it might be viewed as requiring continuing benefits be paid even after Claimant had passed.


It appears Claimant will receive $485.65 plus $862.80 or we can calculate a “base” combined $1,348.45 per week or $70,119.40 on a tax-free basis for life (please remember the word “base.”) Please also note this relatively middle base-amount is due to the fact this decision arises from injuries occurring more than a decade ago in the late 1990’s and 2002. The same award today could require an IL employer to pay as much as the current max of $1,005.80 per week for wage loss and $1,341.07 for a total and permanent disability award. The combined maximum base benefit could be $2,346.87 per week or $122,037.24 on a tax-free basis a year.


So What Happened to ANY Discussion of the RAF or Rate Adjustment Fund?



  Rate Adjustment Fund  



The Appellate Court, WC Division’s unanimous majority opinion was written by Justice Holdridge who we felt was a conservative Republican—we don’t consider this unprecedented decision to be conservative. What it appears may have been missed is any mention indicating Justice Holdridge or the other distinguished members of this appellate body knew there was a “Rate Adjustment Fund” in this state for total and permanent disability claimants. That Fund costs self-insured employers, carriers and local governments millions of dollars each year because it pays out lots of money to eligible workers.


The Rate Adjustment Fund was created to pay cost-of-living increases to individuals who are either permanently and totally disabled or the survivors of fatally injured workers. Individuals who receive awards for permanent and total disability or death benefits are eligible. Benefits are paid each month, beginning on July 15 of the second year after the award is entered by the Commission. Recipients are given an amount equal to the percentage increase in the statewide average weekly wage, as calculated by the Department of Employment Security. Twice each year, self-insured employers, insurance companies, and governmental units pay 1.25% of all workers’ compensation payments, excluding hospital, surgical, or rehabilitation payments, made in the six-month period preceding the payment date.


For our readers who are not familiar with Illinois’ unusual WC “Rate Adjustment Fund,” in this claim, it appears Claimant Chlada will also receive this added and ever-spiraling benefit that is currently going to bump up his weekly T&P benefit about 40.58%. You can find that calculation by looking here http://www.iwcc.il.gov/RAFCALCFY16.xlsx. The weekly T&P benefit of $862.80 above will actually be increased from the fund to the tune of $350.12 per week. To our understanding, this will bring the T&P award to $1,212.92 a week. The combined compensation for a T&P along with the RAF would bring Claimant to almost the amount this appellate decision felt would be “adequate compensation.” When adding that higher amount to the new wage loss diff amount, Claimant will get $1,698.57 a week or $88,325.64 on a tax-free basis. We consider that “more-than-adequate” compensation and remember the weekly amount will continue to go up and up, solely on the dime of Illinois business and local taxpayers.


As we outline above, please note the RAF or Rate Adjustment Fund bumps/increases don’t stop during a T&P Claimant’s lifetime—we assure you they will continue for the rest of Claimant Chlada’s life. If you search the link above, you will note a T&P claimant who started getting such benefits in 1987 or just 29 years ago is now getting double benefits!! That math isn’t going to stop. We note Claimant Chlada is 61 years old as you read this so while the Rate Adjustment Fund is already bumping up his T&P benefits at a current 40% clip, you can reasonably expect he will be at double in another 15 years and triple or more tax-free benefits if he lives to his nineties. We don’t feel any state in the United States provides such WC benefits. We also feel the IWCC panel knew of the RAF and their decision to award just a T&P in this case was predicated on that knowledge.


Don’t Wage Loss Benefits Assume One Has “Wages” That Are Being “Lost?”


As a final thought, we also feel the unanimous majority’s assertion their unprecedented view of this “benefit-stacking” issue needs to be addressed by the legislature is also a proper subject of respectful academic criticism. We feel the IWCC panel noted Claimant Chlada, once being provided total and permanent disability benefits would no longer have wages. To award “wage loss” benefits to someone who is never going to work again but live off the insurance carrier or self-insured employer makes literally no sense to us in a setting where the same benefactor is paying the worker tax-free benefits for the rest of his/her life and also contributing lots of money to the RAF to insure the benefit levels stay even with inflation.


What is Coming Soon to Serious IL WC Claims Near You


Now we hate to tell you but we are sure you can assume the entire Plaintiff-Petitioner bar is going to teach/coach and educate all current and future claimants to try to take advantage of these new and unprecedented “stacked” wage loss/total and permanent disability awards. Every guy or gal who is getting TPD is going to want wage loss and then “stacked” T&P benefits.


If you want thoughts on how to stop/defend such claims, send a reply. We appreciate your thoughts and comments. Please post them on our award-winning blog.




Synopsis: A federal judge in Springfield holds a Normal, IL doctor in contempt of court for misleading testimony about his credentials during a May federal trial.


Editor’s comment: The trial ended with a $300,000 jury verdict in favor of a prison inmate who claimed he received poor medical care at Taylorville Correctional Center. The case, however, has lived on as U.S. District Court Judge Sue Myerscough is demanding answers from Dr. Dru Hauter, a defense expert who presented himself as board-certified during the jury trial and filed a curriculum vitae with the federal court stating he held board certification.


“Are you board certified in any areas?” Michael Kokal, defense attorney, asked Hauter at the beginning of the doctor’s testimony.


“I’ve been board certified in internal medicine,” Hauter answered. “I’ve also been certified by the American Board of Independent Medical Evaluators.”


However, Dr. Hauter’s board certifications expired – records at the Illinois Department of Financial and Professional Regulation show his board certification for internal medicine ended in 2013. Judge Myerscough grew suspicious during a lunch break midway through the doctor’s testimony. When court reconvened, she announced outside the jury’s presence she’d been told by an attorney not connected with the case Dr. Hauter wasn’t currently certified as a medical evaluator and asked the doctor if that was true. Hauter answered he didn’t hold board credentials as a medical evaluator or in internal medicine.


Under questioning from Judge Myerscough during last month’s trial, Hauter said he had once been board certified in internal medicine but twice failed board exams, once in 1991 and again in 2013. The federal judge called Hauter’s testimony about his credentials misleading, “if not an outright lie,” and she warned both the doctor and Michael Kokal, attorney for the defense, they were both in trouble.


After the verdict came in, Judge Myerscough ordered Kokal to file an accurate resume for Dr. Hauter that included all current certifications for the physician as well as the dates of any lapses. Kokal subsequently filed a resume, but Myerscough wasn’t satisfied with the document, which included years but not specific dates showing when board certifications were granted and when they ended. The new resume also didn’t include dates showing when certifications had lapsed. Myerscough ordered the lawyer to file an updated resume with that information prior to the hearing set for July 7 in which she will hear testimony on whether the doctor should be held in contempt.


If you check out this link from this year, you will note it indicates Dr. Hauter continues to hold board-certification to conduct IME’s-- http://www.iwirc.biz/staff/dr-dru-hauter-md-cime-mro/


We were advised Judge Myerscough held Dr. Hauter in civil contempt of court. He was given ten days to respond to her finding. We will continue to report developments.




Synopsis: Gotta Love the Anti-Business Zealots at OSHA—Maximum Fines to Go Up 78% in Three Weeks.


Editor’s comment: The U.S. Occupational Safety and Health Administration on Aug. 1 will increase the maximum penalty for serious violations from $7,000 to $12,471. The maximum penalty for willful or repeated violations will increase from $70,000 to $124,709. The maximum penalties have not been increased since 1990, and the U.S. Department of Labor said the move is intended to modernize penalties that have lost ground to inflation.


“Civil penalties should be a credible deterrent that influences behavior far and wide,” U.S. Labor Secretary Thomas Perez said in a statement. “Adjusting our penalties to keep pace with the cost of living can lead to significant benefits for workers and can level the playing field (for) responsible employers who should not have to compete with those who don’t follow the law.”


But the Center for Progressive Reform wants OSHA to take things a step further. This anti-business organization has asked OSHA to establish national guidelines to discourage the agency’s area offices from informally settling cases by slashing penalties. They assert the practice has resulted in a substantial reduction in the amount of fines assessed. In 2012, for example, penalties resulting from fatality investigations at private companies were reduced by a total of $1.28 million from the original citation amounts, the organization said in a report released June 30. The group is especially concerned about reduced-fine settlements in cases involving what it calls “unconscionable violations,” such as those involving trench collapses, machine guarding, or hospitalizations or fatalities.


OSHA’s area offices routinely negotiate with employers to reduce penalties assessed on safety citations in exchange for the employer taking prompt action to correct the safety hazard. In the absence of a settlement, the employer can contest the citation and delay abatement of the hazard, the organization said. The organization also would like to see OSHA use the settlements to encourage employers to take steps beyond abating specific safety violations, for example by developing safety plans or undergoing third-party safety audits. CPR also wants workers to be more involved in the settlement process, and suggested OSHA reach out to them using modern communication methods such as email or text messages rather than just citation notices posted in a break room.


Many employers have been expecting OSHA to increase its maximum penalties and aren’t overly surprised by this move. Veterans know even though the maximum penalties are increasing, OSHA doesn’t necessarily assess the maximum fines for safety violations. OSHA’s increased maximum penalties may apply to citations for alleged violations occurring as far back as Feb. 1, under a six-month statute of limitations.


Our KCB&A law partner Brad Smith heads our OSHA team and recommends employers immediately begin correcting any safety violations or hazards identified during an inspection, even if they plan to challenge the citation. Doing so shows your company is acting in good faith and failure to correct the hazards could result in higher penalties, all the way up to the new maximum.


If you need advice and counsel on OSHA issues, send a reply or contact Brad directly at bsmith@keefe-law.com.



Synopsis: Need WC Training? Learn from the KCB&A Experts about New WC Rules and Decisions from 2015 and Beyond                                    .

Editor’s comment: In our view, training and expertise in new work comp developments is critically important for you to keep ahead of your competition in claims and risk management. We have culled out the important decisions and changes to law for the last year to add to our 2016-17 IL WC Law Textbook. We can present the most important of them for you and your adjusting/risk management staff in a complimentary onsite lunch and learn at your office. We can also “webinar” your remote workers who want to keep pace with the office staff. Let us know if you are interested in a lunch hour presentation that we assure you will be informative and entertaining.