Synopsis: Clock Ticking to Noon Today on Possible IL WC Reforms; WC Expert Mike Lucci Joins Governor Rauner’s Team.
Editor’s comment: Governor Rauner on Friday gave IL Senate Democrats a deadline of noon today to end a procedural maneuver and send him Senate Bill 1 for signature so he can sign an amendatory veto that would allow Illinois’ public schools to open in August 2017.
Our IL State budget that passed last month appropriates money for K-12 schools but did not include a legislative mechanism or formula to distribute school funds. Senate Bill 1 contains the mechanism, but it also includes an amendment that says the state will pick up the annual employer contribution for Chicago Public Schools’ pensions and the Chicago Public School’s unpaid pension debt.
Yes, if you haven’t been sleeping for the last six months, you might notice our IL General Assembly has already created massive state debt and is now adding even more billion-dollar debt to take over the existing and future debt of the Chicago Public Schools and their de-funded gov’t pensions. When it comes to debt, there doesn’t appear to be anyone in Springfield that doesn’t want more and more until the financial rubber-band on unlimited gov’t borrowing breaks and they can’t borrow any more, forcing punitive taxes on you and me.
Governor Rauner, who has line-item veto power, wants the CPS pension provisions removed from the bill and placed in separate legislation to ensure all IL schools open as taxpayers expect.
Business advocates say they have renewed optimism for reforms because Rauner recently replaced most of his staff with solid, knowledgeable candidates, including Mike Lucci, a Notre Dame grad and a workers’ compensation policy expert. Mr. Lucci, who was a vice president of the Illinois Policy Institute, a conservative think tank, joined Rauner’s staff as deputy chief of staff for policy and legislative affairs. Mr. Lucci advocated
· Modest reductions in indemnity payments;
· Better wage-replacement ratios;
· a stronger IL WC medical fee schedule and
· Abolition of physician dispensing of opioids.
I support the majority of his efforts. I also point out we can bring IL WC to the main stream by simply tweaking the system mildly. I also feel sure Mr. Lucci doesn’t want to win “the race to the bottom” to be hilariously cheap to leave IL widows/widowers and seriously injured workers on welfare in a few years after being killed at or disabled from work, as our cheap-o neighbors in Indiana WC do.
Per the 2016 State of Oregon WC Premium Rankings, Illinois is tied with Oklahoma for the nation’s seventh-highest premiums, at $2.23 per $100 of payroll. The Alabama WC system is smack dab in the middle at $1.85 per $100 of payroll—using simple math, we need to cut about .40 cents per $100 of payroll to win what I call the “race to the middle” of U.S. WC Premium rankings. We can do it or something close to it, if we feel growing better jobs and enticing new business to this State is important.
The Democratic majorities in the IL House and Senate passed two workers’ compensation bills during recent regular and special sessions, but I join with business and insurance spokespeople to characterize their efforts “fake reforms.” Governor Rauner has vowed to veto both bills but hasn’t yet. Under the state’s Constitution, the governor has 60 days to either sign or veto a bill, or it automatically becomes law.
House Bill 2525 calls for a drug formulary and would stop insurers from charging “excessive rates” that produce “unreasonably high” profits and to submit their rates to regulators for prior approval. That bill was delivered to Governor on June 29, so he has until Aug. 28 to sign or veto it.
HB 2622 would require the Workers’ Compensation Commission to take $10 million from its operations fund to create the comical and tiny “Illinois Employers Mutual Insurance Co.” to supposedly get started as a mono-line carrier at some future date and then immediately compete against multi-zillion-dollar global WC insurance carriers. We are sure everyone in the WC insurance industry is enjoying a wonderful belly-laugh to consider that effort as “real.” You might note that bill, if signed by the Governor would require cutting the IL WC Commission’s budget by about 1/3, generating the need for as many as 50 IWCC workers being fired. That bill was delivered to Rauner on June 23, so he has until Aug. 22 to sign or veto it.
Neither bill outlined above contains provisions sought by IL Republicans — a Medicare-based fee schedule instead of a charge-based formula, and a four-year freeze on maximum weekly benefits at $775.18.
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Synopsis: Wassup with “Loss of Trade” in Reserving/Settling IL WC Claims?
Editor’s comment: We were asked by a reader about the concept of “loss of trade” and how to reserve/settle IL WC claims using it. We wanted to provide a couple of thoughts.
“Loss of trade” as a permanency concept in IL was first used to provide large amounts of PPD to police officers and firefighters who would receive line of duty disability pensions under the Pension Code. When a police officer or firefighter can no longer do their job due to life-changing injuries, they can’t simultaneously receive both the line of duty disability pension and a total and permanent disability award or wage loss benefits under the IL WC Act—the Pension Code bars that double recovery. I agree with that approach.
What I feel liberal hearing officers did it cook up the concept of “loss of trade” to justify large “going away presents” to seriously injured police officers or firefighters where they suffered life-changing injuries to then receive only a line of duty disability pension. I remember one claim where a now retired firefighter was seriously burned and it was felt the lifetime benefit wasn’t “enough” so the very liberal Arbitrator added 80% BAW or about $200,000 as a going away present for the seriously injured firefighter.
The problem with this concept as it relates to police and firefighters is our silly State doesn’t require them to be catastrophically injured to be entitled to a line of duty disability pension. All that is required is someone confirming then can no longer work as a police officer or firefighter. For a simple example, there is an IL firefighter who had poor hearing and was surprised to have the siren/horn on a fire truck go off. He suffered significant hearing loss and everyone agreed he would be a danger to himself, his co-workers and others to be unable to hear commands during a live fire or medical emergency. Rather than have a law that would require the fire district to find him other work where he could have hearing augmentation and actually do something for his pay, he was pensioned off. In my view, that approach directly violates the intent and coverage of the Americans with Disabilities Act but no one is going to bring a claim for it because the worker is getting so much money to not work.
So on top of being paid a line of duty disability pension, how much would you give such a worker for “loss of trade?” In my view, he hasn’t lost his trade, we are simply allowing him amazing largesse to be paid and never have to work again, unless he wants to. In fact, he can find lots of other jobs or start his own business with the money from his pension. Please note lots of firefighters and police do so—happy to provide examples on request.
Does this same “loss of trade” phenomenon apply to other IL workers?
Well, I am sure the term “loss of trade” doesn’t appear and isn’t defined in the IL WC Act. When and if you start to use it, you can give it any meaning or value you like. Let’s take a construction worker who undergoes cervical fusion surgery resulting in lifetime restrictions of no lifting over 50lbs. His employer agrees to accommodate the restrictions and he or she is successfully returned to regular work.
In my view, such a claim has a value between 15% to 30% LOU of the body. What I feel liberals around us will start arguing is the worker is “locked” to that employer as other employers won’t hire him. Please note anyone that won’t hire him with such restrictions is almost certainly violating the federal ADA. Either way, if you start increasing reserves to 40%, 50% or up to 80% BAW, what is that supposed to be formulated on? Why would loss of trade make a claim worth triple its ordinary PPD value?
In summary, my law partners tell our entire team, we have to let you know of litigation/insurance issues like this right or wrong. You have to decide what is best in setting reserves—we only make legal recommendations.
In my view, I routinely fight “loss of trade” as a negotiating concept and trial technique. Again, in my view, to have Claimant attorneys and IL WC Arbitrators start adding language to the IL WC Act that isn’t there and making awards in reliance on such concepts, they are violating the Due Process and Equal Protection provisions of the IL Constitution. As I outline above, they are also ignoring the ADA, as if you can “wish away” federal law.
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Synopsis: IS IT MID YEAR ALREADY??--NEW IL WC RATES ARE POSTED—UPDATED RATE SHEETS AVAILABLE SOON FOR ILLINOIS WC RATE INCREASE!!!
Editor’s comment: Illinois WC Rates Jump Again So Please Be Aware Of The New Rates or Your Claims Handling Will Suffer and Penalties May Ensue.
We like to hope it’s a sign of a growing economy—even though rates continued to increase almost every cycle as we continue to watch the growth of IL WC rates. As we have mentioned in the past, since in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing WC rates continue to climb.
We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is $775.18. However, this rate is only through June 30, 2017 and the new max PPD will be published in January 2018. When it will be published in January 2018, this rate will change retroactively from July 1, 2017 forward. If you don’t make the change, your reserves will be incorrect--if this isn’t clear, send a reply.
The current TTD weekly maximum has risen to $1,440.60. A worker has to make over $2,160.09 per week or $112,366.80 per year to hit the new IL WC maximum TTD rate.
The new IL WC minimum death benefit only increased by about $5 but we have now cracked the $700k ceiling. That amount is now 25 years of compensation or $540.23 per week x 52 weeks in a year x 25 years or $702,299.00! The new maximum IL WC death benefit is $1,440.60 times 52 weeks times 25 years or a lofty $1,872,780.00 plus burial benefits of $8K. IL WC death benefits also come with annual COLA increases which we feel can potentially makes Illinois the highest in the U.S. for WC death claims.
The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. AGAIN—If you want just one or a dozen or more, simply reply to Shawn at firstname.lastname@example.org and Marissa at email@example.com They will get a copy routed to you once we get laminated copies back from the printer—hopefully before they raise the rates again! Please confirm your mailing address if you would like laminated copies sent to your home or office!