1-29-2018; Shawn Biery on New IL WC Rates With Free Rate Sheet!!!; Lilia Picazo on Tax Concerns about Confidential Harassment Settlements and more

Synopsis: Illinois WC Rates Jump Again—even with jobs leaving the state, there was a significant and regular jump in the Statewide AWW and Your existing PPD Reserves May Need To Be UPDATED RETROACTIVELY(!).

To any of our readers and/or fans, Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. Please don’t shoot the messenger for telling you how to get them right.

As mentioned before, twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our IL WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $794.56 (up from $775.18!!).

When it was published, this PPD Max rate changed retroactively from July 1, 2017 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.

If you have a claim with a date of loss after July 2017 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies.

If this isn’t crystal clear, send a reply to Shawn for clarification at sbiery@keefe-law.com.

The current TTD weekly maximum has risen to $1,463.80.

An IL worker has to make over $2,195.70 per week or $114,176.40 per year to hit the new IL WC maximum TTD rate.

We still don’t believe any state in the United States has a TTD maximum that high? If you know of one, let us know.

The new IL WC minimum death or T&P rate also went up.

The IL WC minimum death benefit is 25 years of compensation or $548.93 per week x 52 weeks in a year x 25 years equaling a staggering $713,609.00! Yes, if Claimant makes $100 a week in a part-time job and dies in a work-related accident, the benefit is over $700K.

The new maximum IL WC death benefit is $1,463.80 times 52 weeks times 25 years or a lofty $1,902,940.00 plus burial benefits of $8K.

On top of this massive benefit, Illinois employers/governments have to pay COLA increases under the Rate Adjustment Fund that may double that already-high benefit, depending on the CPI.

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.

If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa at mpatel@keefe-law.com and include your mailing address if you would like to be mailed a laminated copy and he and his great team will get a copy routed to you before rates rise again.

Shawn remains your go-to defense source on any issue relating to IL WC rates!

Synopsis: Tax Cuts and Jobs Act – Important Provisions for Employers to Understand About Tax Deductions in Sexual Harassment and Sexual Abuse Claims. Research and Analysis by Lilia Y. Picazo, J.D.  

Editor's Comment: On December 22, 2017, the Tax Cuts and Jobs Act was signed into federal law. It is a seminal change to U.S. law that is required reading for all HR managers.

Within the Act is a provision that significantly impacts confidential settlements in connection with the settlement of sexual harassment or sexual abuse claims.

Under Section 162 of the prior Tax Code, employers were generally allowed to deduct as a business expense, settlement or attorney's fees incurred in defense of confidential settlements reached in sexual harassment and sexual abuse cases.  

Section 13307 of the Tax Cuts and Jobs Act dramatically modifies Section 162 of the Tax Code adding:

"No [Tax] deduction shall be allowed under this chapter for --

(1) Any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or

(2) Attorney's fees related to such a settlement or payment."

See 26 USC 162(q). 

The amendment applies to all covered settlements paid or incurred after December 22, 2017. 

The IRS has not provided any additional regulations or guidelines leaving many questions unanswered, including potential double taxation.

For one, the amendment does not clarify if a tax deduction can be allocated to other portions of a settlement where a confidential settlement is reached for multiple and varying claims, inclusive of sexual  harassment or sexual abuse claims.

Based on the plain language of Section 13307, employers may still request confidential provisions as part of a settlement agreement; however, they will need to decide between a confidential settlement or a non-confidential settlement to insure they are getting a tax deduction. 

Additionally, employees previously able to deduct the portion of the confidential settlement apportioned for their attorney’s fees to avoid taxation of monies they didn’t receive would no longer be able to deduct such fees.  

Again, based on the plain language of the amendment, settlements obtained by the employee, including the portion allocated to attorney’s fees would be taxed to the employee receiving the settlement, and to the defending attorney.

KCBA encourages ongoing trainings and seminars to prevent such claims.

We are happy to provide additional thoughts to assist with the development of reporting policies and ongoing training.

We will continue to monitor Section 13307 and provide you updates should the IRS develop additional regulations or guidelines.

This article was researched and written by Lilia Y. Picazo, JD. Lilia can be reached with any questions related to workers’ compensation defense and employment law defense at lpicazo@keefe-law.com.

1-22-2018; IL Employer/WC Carrier Can Pay the Lowest Medical Rate; Do Undocumented Workers Get WC Benefits?; Matt Wrigley Reports on New Michigan Magistrate and more

Synopsis: Illinois Employer Saves Money on Medical Costs by Legally Using Lowest Rate Negotiated by Injured Worker's Insurance Carrier. 11-year-old Knee Injury Claim May Finally End!!

Editor’s comment: The Illinois Appellate Court, WC Division ruled the Illinois employer’s liability for an injured worker’s medical benefits was limited to the amount actually paid to the treatment providers, even if they were paid at a discounted rate negotiated by the worker’s personal health insurance carrier.

In Perez v. IWCC, issued 1/9/2018, Claimant Perez worked as an assistant manager at a Wendy’s restaurant. She allegedly injured her left knee in June 2007 when she slipped on a wet floor at work. She received medical care, including surgery, which was paid for by her private healthcare insurance.

The insurance carrier made payments of $17,597.96 for Perez’s care, and she made copays of $260, but Counsel for Wendy’s conceded the IL WC Medical Fee Schedule would have required payment of $37,767.32 to the healthcare providers and surgeons.

In April 2011, former Arbitrator Kinnaman found Claimant Perez’s knee injury was not work-related. The Illinois Workers’ Compensation Commission agreed, as did a circuit court judge.

Claimant Perez sought review by the Appellate Court, WC Division. In March 2014, the Appellate Court reversed in one of their unusual and controversial “secret” or “non-published” rulings, finding Claimant Perez’s injury was compensable.

Having reviewed that 20-page “sort-of-unpublished” ruling, the Court’s members made all sorts of important evidentiary findings and legal determinations that, in my respectful opinion, should always be published.

On remand, the IWCC determined Claimant Perez was entitled to about four and a half weeks of temporary total disability benefits, as well as 43 weeks of benefits in the amount of $288 per week for the permanent loss of use of her leg.

The Commission panel also ordered Perez’s employer to pay her medical expenses but did not specify the amount. An appeal followed and a circuit court judge later ordered the Commission to determine the amount of medical benefits due to Perez.

After the case was remanded again, the IWCC ordered the employer to pay Claimant Perez’s medical providers $17,857.96. The circuit court upheld the Commission’s decision.

In their second ruling on this never-ending knee claim, the Appellate Court, WC Division explained the Illinois Workers’ Compensation Act obligates an employer to pay a care provider’s negotiated rate, if applicable, or the lesser of the provider’s actual charges, or the IL WC Fee Schedule amount.

Claimant Perez’s care providers accepted a low negotiated rate from her private health insurance carrier. The Court said that meant the employer was liable only for the amount of medical expenses actually paid, pursuant to the negotiated rate, even though it hadn’t been involved in the negotiations.

The Court’s ruling said “there is no limiting language that requires the employer to pay the negotiated rate only when it is negotiated by the employer or the employer’s own insurance carrier.” Had the legislature intended to limit negotiated rates and agreements to those between the employer or the employer’s own insurance carrier, the court posited, it could have included the restriction.

To read the decision, click the protected link: Perez v. IWCC.

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

Synopsis: Do Undocumented Workers/Illegal Aliens Get U.S. State and Federal WC Benefits?

Editor’s comment: This is a very active political football, particularly under the current federal administration. We had a client who found out an injured worker got the job under fraudulent circumstances with fake identification and a false social security number. Our client learns after the injury their former employee fraudulently submitted a dead guy’s personal info when hired. The client now wants to deny the WC claim, confirming the employer wouldn’t have hired the employee because it appears the employee wasn’t legally in the US. If you face such issues, send a reply or contact any defense lawyer at KCB&A. If we can’t help you because you are out of our five states, we will locate someone who can in your state.

By way of background, the U.S. Supreme Court in a claim known as Hoffman Plastics v. NLRB ruled the act of becoming a “phony employee” stripped the worker of the protections of the National Labor Relations Act. It was felt this same sort of proscription would apply to other benefits/protections like workers comp.

Remember one of the preliminary aspects of any WC claim in any state or country is “employer-employee.” The parties have to agree or the hearing officer has to take evidence and find the worker is a “valid” employee under a valid employment contract with the employer to obtain benefits.

In Hoffman Plastics, the U.S. Supreme Court appears to indicate a worker can’t be a fake or fraudulent employee and be entitled to the statutory benefits of being an employee.

Many states, particularly those with liberal legislatures, don’t agree and don’t cite the federal ruling in Hoffman Plastics when they rule. If they want to award benefits, they simply call the worker an employee and write/affirm an award.

I am fairly confident there is an IL Appellate Court ruling where a woman who was not properly or legally employed injured her shoulder, had permanent restrictions and returned to a foreign company. As a U.S. worker she could make as much as $10 an hour or more. In the foreign country, she might make a dollar and change a week. In short, under some state work comp plans, such a worker would get very substantial benefits due in part to the fraud being perpetrated on the employer.

In the claim I am referring to, I believe the IL WC Appellate Court awarded lifetime “wage loss differential benefits” at the highest possible rate. In my respectful view, the Court’s members were unconcerned about the fact the worker was illegally employed in this country and could not legally be placed in other work in the U.S.

The award was almost certainly worth more than a million dollars—I believe the IL WC Commission and reviewing courts wanted such a ruling to make clear the risk IL employers face in trying to save a couple of buck to hire an undocumented or illegal worker.

From my perspective, I can also see a federal or state RICO action being brought to counter the WC claim. The damages could be the benefits awarded. I have no idea how that would come out.

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

Synopsis: Governor Rick Snyder has announced the appointment of attorney John M. Sims to the State of Michigan’s Workers’ Compensation Board of Magistrates. Reporting by Matt Wrigley, J.D.

Editor’s Comment: Magistrate Sims was admitted to the State Bar of Michigan in 1977 and has 40 years of experience in the field of workers’ compensation law representing both Claimants and Defendants. Magistrate Sims has practiced before all tribunals from the Magistrate level to the Supreme Court of the State of Michigan.

The 17-member Board of Magistrates resolves disputes and hears administrative claims for workers’ compensation disability benefits, survivor benefits, and occupational diseases arising under the Michigan Workers' Disability Compensation Act.

New Magistrate Sims holds a bachelor's degree in political science, history, and literature from the University of Michigan and Juris Doctor from Wayne State University Law School. He fills a vacancy and will serve a four-year term expiring Jan. 26, 2021. His appointment is subject to the advice and consent of the Senate.

Matt Wrigley, J.D. is one of our top veteran Michigan Workers’ Comp Defense lawyers. Feel free to reach out to Matt for assistance and counsel on your toughest MI WC claims at mwrigley@keefe-law.com.

Learn how to protect your company and your employees from the dangers of Workplace Violence!

Date: This Wednesday, January 24th

Time: 10:00 A.M. - 11:30 A.M. CST

Join us!

Workplace violence is a growing concern for employers and employees nationwide. Corkill Insurance Agency, Inc. is hosting a complimentary webinar followed by a Q&A on Workplace Violence. 

You will not want to miss this event!  Our speakers will bring you the knowledge and tools you need to reduce your exposure to liability and Worker's Compensation Claims.  Topics to be addressed include:

OSHA on Workplace Violence

Although there are no specific Federal OSHA standards to address workplace violence, the Occupational Safety and Health Act (OSH Act), in Section 5(a)(1), provides that "each employer shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." 

What actions must I take to be in compliance with OSHA?

What liabilities do employers face by allowing guns in the workplace?

-Employer's right to control its property and workplace vs. the right to own and bear firearms
-Additional potential liability for employers allowing guns at work
-Possibility of claims based upon unsafe work environments or even OSHA safety violations
-Negligent hiring, retention, or supervision claims
-Potential liability remains unknown because the laws are new and untested
-Litigation costs and costs of settlement to avoid the unknowns of trial
-Vicarious liability for the wrongful acts of employees under common law principles

Strategies to prevent Workplace Violence, including - 

-The importance of conducting comprehensive safety and security audits,

-Setting up a zero-tolerance policy toward workplace violence,

-Implementing workplace violence emergency protocols,

-Training employees on how to respond to incidents of violence and how to identify risk factors which may lead to violence

-Practicing active shooter emergency drills.

Our Speakers

Eugene Keefe and Bradley Smith

To register for the Workplace Violence webinar, contact:

Christina Anderson, ARM, Safety Manager

Corkill Insurance Agency, Inc. | Website: www.corkillinsurance.com  

Direct: 224-239-6762 | eMail: CAnderson@corkillinsurance.com

25 Northwest Point Blvd. Suite 625 | Elk Grove Village, IL 60007

There is no cost to attend this program.  

1-15-2017; Subrogation--Difficulty Increases when Claimant Doesn't Take the Initiative by Shawn Biery; Lindsay Vanderford on the Importance of Documenting Absences and more

Synopsis: Subrogation--Difficulty Increases When Claimant Doesn’t Take the Initiative!! Research and Analysis From Shawn Biery, J.D., M.S.C.C.

Editor’s comment: We advise our clients, law students and seminar attendees to always pay attention to subrogation issues and to insure close awareness, sometimes even intervening after Petitioner files a third party claim. It is even less common when a Petitioner in a WC claim has a potentially viable third party claim which isn’t pursued until the employer files the third party action. In a recent case, the Illinois 1st District Appellate Court has sent the question back to the Cook County trial court to determine whether an injured worker would be adequately represented in a subrogation case if she were not allowed to directly intervene.  

In A&R Janitorial v. Pepper Construction Co., 2017 IL App (1st) 170385 (December 27, 2017) (HOWSE) the appellate court reversed and remanded a matter finding the hearing court erred in denying employee's petition to intervene in action filed by her employer against Defendants as employee's subrogee pursuant to Section 5(b) of Workers' Compensation Act.

Factually, Teresa Mroczko was working for A&R Janitorial at a Blue Cross Blue Shield building in Chicago when a desk fell on her. Pepper Construction Co. was hired to replace carpeting as part of a renovation project, and it is alleged an employee of its subcontractor, Perez & Associates, moved the desk that fell on Mroczko.

Mroczko filed a WC claim against her employer for which she has received more than $342,000 in benefits to date of the initial decision, according to the appellate court’s decision. In June 2015, Mroczko filed a personal injury claim against Pepper Construction, Perez & Associates, Interface America Inc., and the Blue Cross and Blue Shield Association. The claim was dismissed as untimely in December 2015 as she had not filed within the applicable WC two year statute of limitations. Her  argument was the injury was the direct result of construction work, and said the four-year statute of limitations for bringing such a claim was applicable. However the circuit court said the two-year statute of limitations under the Workers’ Compensation Act applied to her third-party claim for liability.

Her employer however timely filed a complaint to protect its subro rights against Pepper Construction Co. and Perez & Associates in August 2014. So Mroczko, in November 2016, petitioned the court to intervene in her employer’s claim, saying she would not be adequately represented by attorneys for A&R Janitorial—arguing they would only seek their recovery for amounts paid in workers’ compensation benefits. She argued she should still be entitled to additional damages for pain and suffering.

The trial court in December 2016 denied the petition to intervene under the doctrine of res judicata (or claim preclusion to some) which prevents a party from filing the same claim against the same party after a court has already ruled on the merits in an identical case.

Mroczko filed an appeal, and while the case was pending, her employer filed an amended complaint seeking damages to cover pain and suffering, which the circuit court allowed. The underlying case settled for $850,000 while the appeal was pending.

The appellate court said whether Mroczko’s interests would be adequately protected if she were not allowed to intervene is a threshold issue the trial court neglected to answer. As such, the trial court abused its discretion by applying an improper legal standard in denying the petition, the appellate court said. The appellate court said Mroczko clearly has an interest in her employer’s case, because the employer was seeking to recover damages for her pain and suffering.

The court in part noted “Appellant contends plaintiffs cannot adequately represent her interests based on her argument that plaintiff has an incentive to settle for an amount less than, or equal to, what plaintiff paid in the workers’ compensation claim”. “On appeal, plaintiff contends it will adequately represent appellant’s interests because plaintiff may not be fully indemnified if it does not pursue maximum damages.”

Mroczko also argued her employer’s attorney had a conflict of interest—and the employer argued to refute the allegations of a conflict by arguing it never represented Mroczko, a statement the appellate court said was “incongruent” with its argument that it has every incentive to pursue maximum damages in the third-party liability case. In short, the appellate court said the statement called into question whether Mroczko’s employer was adequately representing her interest in the subrogation case.

The appellate court remanded the case for the trial court to reach a decision on whether Mroczko’s rights will be adequately represented if she is not allowed to directly intervene in the case.

We will report on any follow up decision as it becomes available. The takeaway for interested observers regardless of the final decision in this particular case, is how important it is to ensure timely filing of any third party claim when subrogation is potentially viable. We track the subrogation deadlines in claims with any potential viability and report same to our clients on all claims we defend to ensure any potential recovery is not lost due to a lack of filing.

This article was researched and written by Shawn R. Biery, JD, MSCC, who also testified as an expert witness in the underlying claim. You can reach Shawn with any questions about subrogation issues or any other employment or workers’ compensation related questions at sbiery@keefe-law.com.

Synopsis: A Recent Federal District Court Decision Echoes Our Recommendation – Document, Document, Document. Thoughts and Analysis by Lindsay R. Vanderford, JD. 

Editor’s comment: On October 31, 2017, the USDC for the Middle District of Pennsylvania granted summary judgment against an employee claiming age-based harassment and a hostile work environment after being terminated for an overabundance of non-FMLA related absences.

Mary Beth Bertig was a nurse’s aide working for a hospital named Julia Ribaudo Healthcare Group. She suffered from cancer and asthma. In a one year period from 2013 – 2014, while she was certified for Family and Medical Leave Act (FMLA) leave for her cancer and asthma, she incurred thirteen intermittent absences. Though some of these absences were related to her cancer and asthma, several others were unrelated. Due to the employer’s diligent documentation of these absences, litigation ended at the summary judgment level, well before major ongoing litigation and its related costs would be realized.

Under the hospital's policies, employees were subject to termination when they accrue seven absences in a rolling twelve month time frame. When Claimant Bertig reached and exceeded this allowance, the hospital terminated her employment.

The question before the court, and a consistent issue for employers, is whether an employee can lawfully be terminated for non-FMLA absences while others are authorized under the FMLA. Employer concerns include whether an employee will later claim they reported leave under an FMLA basis, so termination should not have been a consideration.

The Ruling

The USDC for the Middle District of Pennsylvania (Judge James Munley) summarized its reasoning as follows:

Bertig was entitled to take leave under the FMLA; however, by her own admission, most of her absences between April 2013 and April 2014 were unrelated to her cancer and asthma. Setting FMLA approved absences aside, Bertig still missed ten days of work for unrelated reasons, three absences more than allowed by employees prior to consideration of termination. (Bertig v. Julia Ribaudo Healthcare Group, 3:15-cv-2224-JJM).

Thoughts for Employers – Document, Document, Document

Judge Munley’s decision to dismiss Bertig’s claims was largely facilitated by her employer’s diligent policy for documenting absences and discipline. Therefore, three critical strategies are:

Document Absences In Detail

Bertig’s supervisor documented each absence and the reasons for the absence on an endorsed one-page report. These reports became the key to later consideration of termination and central to the court’s grant of summary judgment, as the employer had an actual document explaining why the employee was absent on any of the thirteen occasions discussed supra.

We at KCBA would be happy to provide thoughts and documentation to help you document absences in detail and gain success should a similar situation ever arise for your business. Just send a reply to Lindsay at her email below.

Audit Absences Prior to Making a Decision on Termination

While termination is being considered, be sure its basis is supported by those detailed reports. Confirm the pertinent absences serve as the basis for the termination decision, and verify neither approval under the FMLA or the Americans with Disabilities Act (ADA) could have been involved.

Conduct Ongoing and Interactive Discipline Processes

Unfortunately, some employers have not had sufficient dialogue with an employee to advise of expectations and whether or not they are being met. Engaging in “progressive discipline” and supporting an argument the employer did all it could to help the employee succeed leading up to termination adds a strong defense against an FMLA or ADA claim.

This article was researched and written by Lindsay R. Vanderford, JD. Lindsay can be reached with any questions related to workers’ compensation defense and employment law defense at lvanderford@keefe-law.com.