4-7-2011; On the legislative front, Governor Quinn weighs in with his two bits on WC reform

We are being constantly bombarded with questions about pending WC reform. We are certain there are about five different bills, all of them confusing and have mild to moderate chances of passing. We are certain the various forces of Illinois labor are fighting to stop whatever change might occur. From our perspective, they are trying to build a horse and more likely will create a camel. On April Fool’s Day, Governor Quinn released his serious outline of a workers' compensation reform package—it sounds good but we don’t see it passing. His staff asserts Illinois WC is the second most expensive state WC program in the nation, after Alaska. We are not sure how we passed Montana who we were told used to be No. 2.

The plucky Governor claims his reforms would reduce magically costs by about $700 million with the vast majority of that savings, almost $500M would come from cutting the current Illinois WC medical fee schedule by 30 percent. Even with that huge medical fee cut, Illinois would retain its high ranking among all states. And the problem with cutting medical costs is the Illinois Hospital Association and Illinois State Medical Association are steadfastly opposed. It is weird to understand Illinois labor unions and the Illinois Trial Lawyers Ass’n have joined ranks with representatives of the Republican-dominated medical community, creating a bi-partisan “plug” on anything the Governor or legislative leaders might want to pass.

We are now advised the forces of Illinois business are fighting hard for a new standard on causation and we being told they want a “standard” requiring work injuries being magically “50 percent related” to the work. As we have advised in the past, there is a major “steam around” factor present, as we expect the most liberal of the Arbitrators and Commissioners will simply find any condition to be at least “50% related.” Unless and until the Commission gets the news, you can pass all the legislation you want, it won’t matter a whit.

Other provisions from Governor Quinn and our thoughts:

* Personal claims made by Arbitrators and Commission employees will be heard by the Illinois Court of Claims, instead of other friendly Illinois Workers' Compensation Commission arbitrators. Yawn—when did the Court of Claims have any idea how to dole out WC benefits? Should CMS claims adjusters who have claims before the Arbitrators still be able to adjust and settle the claims?

* Arbitrators must, by statute, be licensed attorneys, act in an unbiased, impartial manner and adhere to the Code of Judicial Conduct. We recommend this apply to everyone in our WC systems but hard to imagine it will happen as this is Illinois, right? Who is supposed to objectively measure “unbiased, impartial”—the Governor; the Legislature; the reviewing courts; Illinois employers?

* When the six-year terms end for current Arbitrators, they must receive a suitable evaluation in a process to be established under the control of Workers' Compensation Commissioners before they can be reappointed. New terms will be three years. Same “yawn” as above—they are trying to legislative “ideals.” If Governor Quinn wants Commissioners and Arbitrators in his image and likeness, he has the power to locate and appoint them right now.

* Carpal tunnel total disability payments, or weekly tax-free paychecks equal to two-thirds of salary, be capped at 20 weeks. We are back-flipping to hear such a proposal about CTS but the chances we are back-flipping into a pool without any water in it are high—it won’t happen or it will later be magically declared unconstitutional. While you are limiting CTS, limit cubital tunnel syndrome also—our WC benefit system “causes” more CuTS surgery in Illinois than any other state in the U.S.

* Claims by intoxicated workers injured by their inebriation be denied. Again, nice try in “legislating ideals” and we expect a high “steam around” factor following the enactment of such legislation.

* A special assistant attorney general will be assigned to investigate fraud and assist the Department of Insurance, which will be given more authority to investigate and prosecute workers' comp fraud. Sounds fine to us, if it passes.

* Insurers must accept cheaper electronic billing from medical providers. Not sure who cares but if it saves money, go for it.

* Attorneys who appear before the Commission must adhere to the same rules as they do when they appear before a court. No idea what this means or where it came from but if they are trying to say you can’t buy “face-value tickets” for Arbitrators we already thought that was a law or at least a guideline.

* The state can consider the use of outside companies to operate all or part of the state's self-insurance workers' compensation program. See the first article above—we don’t think this has to be in legislation but if it does, we can’t pass it fast enough.

4-7-2011; It has to be an April Fool’s Month in the workers’ comp system in this State

Here is a mix of Illinois WC topics for your consideration.

The State of the State’s WC System—A Smoking Mess along with a sidecar problem at the City of Chicago

To get the best sense of how messed up State of Illinois and City of Chicago workers’ compensation claims programs are, try to imagine the State having a fleet of 1,294 airplanes of every size, shape and model. Assume the fleet of planes are supposed to be used for government purposes. Now, further assume they have just one mechanic whose job it is to keep all of them fueled, oiled, checked out, cleaned up and otherwise functional. What would you next assume would happen? Well, either the one mechanic would work overtime on a night-and-day basis to keep a handful of planes functional and safely flying or one would assume planes would start crashing or locking up and all of them would be grounded faster than a cat can wink its eye. If you are going to have a fleet of planes, trains or automobiles, you have to take care of them right? If you can’t/don’t or won’t take care of them, get rid of them, right?

Continuing with that analogy, please note last week, we have learned from several very good sources the State of Illinois has approximately 25,000 pending workers’ compensation claims brought by State of Illinois workers. Many of these claims appear serious and involve lots of medical care and lost time. Lots of them have claimant lawyers and the State of Illinois CMS Department sends about 5,000 of them to the Attorney General’s office and some private firms for what we feel is lackluster defense.

Penny-wise and Pound-ridiculous

How many adjusters would you think the State has right now to manage 25,000 pending claims? The winning answer is just 17—the simple math means each and every adjuster is supposed to be handling 1,294 pending Illinois workers’ compensation claims. Each!!! You can’t make this stuff up, folks. To compare that math to the private sector, we feel a solid veteran Illinois WC claims adjuster should be able to handle about 150-200 claims if he/she works hard and keeps their nose off the internet. When you exceed 250 or more claims, even the best and move efficient adjusters have to “cut corners” and/or start to pay monies their accounts may not owe. In thirty-plus years of watching claims handlers in this state, the only private sector claims handlers we ever saw who tried to handle more than 500 claims were at the now-defunct Fremont Insurance—they went broke almost as fast as they entered the market because their troops were paying claims they shouldn’t pay and fighting claims they couldn’t fight. We feel that is precisely what the State of Illinois and City of Chicago are doing. They will continue to do so until they get “religion” and stop saving nickels to pay out millions. They need to spend the money, add staff, improve their computers and start to make dramatic cost-saving changes.

Solid WC claims adjusters have a tough and demanding job. They need to do at least a dozen things on each claim to be effective:

1.     Initiate contact with claimant and their supervisors following a claim being reported;

2.     Set up the claim in their systems;

3.     Get an accident investigation underway quickly and preliminarily concluded in about 72 hours (or the accident may never be adequately investigated, as evidence starts to scatter);

4.     Set reserves to include claims targets for medical care, lost time and eventual permanency, as appropriate.

5.     Start paying benefits;

6.     Manage the flow of benefits including TTD and medical care;

7.     Push closure with

a.     IMEs

b.    UR

c.     Surveillance

8.     Drive the claim to targeted MMI

9.     Induce the treaters to release to light work;

10.  Push the worker back to full work

11.  Then, the claims handler should focus on closure via settlement or hearing.

12.  Having closed the claim, the claims handler should try to figure out how to avoid such claims and litigation moving forward.

Overwhelmed claims adjusters basically do one thing—keep everyone quiet by paying, paying and typically overpaying benefits. You can’t truly “blame” them—in Illinois WC claims, a quiet file is a file you are paying on. If the claims handler stops paying, the file gets noisy with claimant’s and claimant’s spouses and claimant attorneys and motions and emergency petitions and petitions for penalties and fees. That mess can be “avoided” at a high cost to the taxpayers by simply paying and paying. The problem is the taxpayers are starting to notice.

State of Illinois claims handlers at Central Management Services define “overwhelmed” and from the outside-in, we assure our readers they are doing what all overwhelmed claims managers do—they pay and pay and pay to the annual tune of something like $133,000,000 and more. We are told by claimant attorneys across the state, one aspect of dealing with the State of Illinois on WC claims is you never know what they are going to do. They fight the simplest and most patent claims and pay the most dubious, as if they are completely lost in a sea of uncertainty. When one contemplates the State of Illinois claims handlers not only are overwhelmed, they are on enforced furloughs and therefore can’t work as hard as they might like, one can see the problem is chronic and getting worse on a daily basis.

To our knowledge, an annual WC payout of $133,000,000 is by far the highest of any employer in the state and exceeds the national WC budgets of almost every private company in this country. We challenge anyone to find a private company that pays more than $133M on a national basis and let us report their name. We are fairly confident there is no private company, none, that pays $133M per year in WC benefits for operations occurring solely within this state.

Remembering we are also analyzing the City of Chicago’s WC mess, if you look on the web at: http://illinoisissuesblog.blogspot.com/2010/12/workers-comp-reform-swimming-in-data.html, you will note in December 2010, they quote Eugene Munin, budget director for the City of Chicago who said the City has seen workers’ compensation costs rise while the number of city employees decreased. Munin said the city has eliminated around 6,000 positions in the last 10 years because of budget cuts. He said the City had 2,000 workers’ compensation claims in 2005 and had 1,350 in 2009. But workers’ compensation cost Chicago $61 million in 2009 versus $38 million in 2005—again, they are making the same “penny-wise, pound-ridiculous” claims approach the State of Illinois is.

We assure our readers the City of Chicago has about 1,350 pending WC claims right now and just one adjuster. They have one defense attorney. Both are totally and completely swamped. They are paying and paying and paying. Their overall annual payout exceeds the national budget of hundreds of major U.S. employers. And there is no true end in sight—it is going to keep on rising until they stop doing the goofy political dance and get some specialists in who aren’t forced to make heavy political donations to do their jobs, get needed staff and confusers (yes, that is a joke) and save the taxpayers millions.

We hope this email reaches Governor Pat Quinn, Senate President John Cullerton (who actually looked great last Friday at the Chicago Cubs’ opener holding the 9/11 flag), House Speaker Mike Madigan and Chicago’s Mayor-elect Rahm Emanuel (who was also nobly holding up the 9/11 flag). They are not the cause of this amazing mess but at some point, they are all going to be measured by it. We hope they will start to contact the experts and consultants and find a solution that isn’t blowing millions in taxpayer dollars.

We appreciate your thoughts and comments. You can post them on our award-winning blog tomorrow.

3-29-2011; After reviewing all the web traffic on the WC issues at the Menard Correctional Center, we want everyone to know they aren’t breaking the law, we feel our law is broken and...

We reviewed an article written last week about the Menard C.C. “scandal” in Risk and Insurance Online written by Maddy Bowling and titled “Stand Up and Be Counted.” Please feel free to review her excellent article that is online at http://www.riskandinsurance.com/story.jsp?storyId=533334515&query=Maddy. If you don’t know it, Ms. Bowling is a long-time observer of the Illinois Workers’ Compensation Commission and is actually an employer representative on the Illinois Workers’ Compensation Medical Fee Advisory Board. On a number of occasions, she indicates what may be happening at Menard C.C. is workers’ compensation fraud. As attorneys, we want everyone to know it is our view the incomprehensible mess that is happening in workers’ compensation across Illinois should be subject to intense criticism but it isn’t fraud. In fact, what is so completely galling is everything going on is completely and squeaky clean—it is “legal.” Perhaps that is precisely what is so wrong about all of it; millions of dollars in workers’ compensation benefits are being paid out and just about everyone in the state wants to sign up for it. We assure all of you it isn’t going to stop until the IWCC smells the coffee and stops it.

We note the Menard C.C. prison warden signed up and received time off and about $75,000; his lieutenant is laughing all the way to the bank about his six-figure settlement while bass-fishing with high school kids in tournaments; the Arbitrator assigned to hear all the claims and approve all the settlements got a nice deal himself along with the state-employee adjusters at Central Management Services and the Assistant Attorney General handling defense. Every part of every one of these claims is clearly “legal.”

Sort of. Now, we are seeing more news from the troops at the Belleville News Democrat indicating they have looked at more official government emails between the Menard C.C. workers’ comp coordinator and the CMS adjuster, using words like "pandemic" and "flood" to describe hundreds of repetitive trauma claims filed by guards at the prison. We point out it isn’t “illegal” to file hundreds of claims. In December, the News-Democrat reported that since 2008, taxpayers paid almost $10 million to employees at Menard for various workers' compensation injuries. In all, more than 500 claims were filed and about half remain pending. Again, this is all legal and above board.

According to emails obtained under the Illinois Freedom of Information Act, Barbara Fink, the workers' comp coordinator at Menard C.C. chillingly wrote to Sue Zellers, the state’s workers’ comp adjuster: "Sending nine new claims your way -- most are carpal tunnel. The trickle has become a FLOOD! It's not 'Beware the Ides of March' but rather, 'Beware the Carpal Tunnel!'" (emphasis added).

You may or may not be chagrined to hear Barbara Fink is now riding the self-described “flood” and has her own pending workers' compensation case. She said she slipped and fell but declined further comment. We are betting she is making the same claim the Arbitrator made to legally get $48,000 in settlement. Guess what, the person who is going to adjust Ms. Fink’s pending claim and decide to try, send it out for defense or settle it would be Ms. Fink’s co-worker at CMS.

What Beth Hundsdorfer and George Pawlaczyk of the Belleville News Democrat have also learned is only one in five of 25,000 workers' compensation claims involving state employees have been referred to the Illinois’ attorney general for lackluster defense. You probably can’t blame the AAG’s though, they get routinely hit with penalties and attorney’s fees if they pick the wrong claim to fight. You may note the State of Illinois has about 132,000 workers in agencies and the University system so that 25,000 number is about 20% of the workforce with pending workers’ comp claims. And it is all completely legal.

One of the main concerns expressed in the emails was about temporary total disability or TTD at the prison, which according to Illinois Department of Corrections policy had no provision for light-duty (as if all the supervisors including the warden needed light duty):

·         On Sept. 28, 2009, Zellers wrote to Fink --"GEEZ! Are there any people left working at Menard? We get a few back to work and a boatload go off of work!"

·         On April 30, Zellers wrote to Fink, "We do have a HUGE problem ... 82 people off work at Menard and NO ONE on light duty! That is a BIG HUGE issue!"

·         On June 18, Fink wrote to Zellers, "We both know that the officers in some cases know what to tell the doctor when he writes the light-duty and they stay off." Zellers replied, "I know TTD at Menard is out of control. ..."

At the time of the April 2009 email mentioned above, if 82 workers were off work, it represented 16% of their workforce—this means the facility had to have 582 workers to fill 500 spots. This is what we have called the “ghost” workforce, created due to the way the State runs its workers’ compensation system.

It appears they have now set up 25 light-duty positions and only two have been filled. Right now, 27 Menard C.C. employees or about 5% of the work force at the facility are off work on temporary total disability. So they need 527 workers to fill 500 jobs. Expanding on the “ghost workforce” phenomenon, the reporters learned a lot of Menard employees already on temporary total disability leave recuperating from surgery to correct a repetitive trauma injury were also getting elective surgery while off work for such things as hernia repair or lap-band surgeries to lose weight. All of that contributes to lost time and more costs to the taxpayers. And all of it is legal.

In our view, the Illinois Workers’ Compensation Commission stopped requiring an accidental occurrence years ago—we feel this is what makes decent and hard-working folks like Maddy Bowling, Beth Hundsdorfer and George Pawlaczyk smell a skunk. And the medical community in that part of the state has wholeheartedly signed up and is routinely providing CTS surgeries where the same neurologist is finding mild to moderate findings which justify surgeries in patient after patient. When you don’t need to have one of those unpredictable “accidents” to get benefits or when every unwitnessed fall-down uniformly causes carpal tunnel with five-figure settlements, it may be “legal” but it smells like old limburger cheese to the uninitiated.

While we assure our readers what is going on is “legal,” we don’t feel it is a sustainable situation in a state that is swimming in red ink. That said, there is a reason the warden, prison lieutenant, Arbitrator, various court reporters, CMS adjusters and assistant attorneys general are all filing WC claims. They are all signing up for easy and “legal” money. We ask the rhetorical question “wouldn’t you?” This smelly mess isn’t going to stop regardless of the embarrassment, discomfiture and humiliation of the managers riding herd on this mess—there is just too much at stake. Please note a workers’ comp settlement of $50-100K paid on a tax-free basis in Menard or anywhere else in Illinois goes a really long way. Is there any adult in the entire state who wouldn’t get a half-inch cut on both wrists for mild to moderate carpal tunnel to get $50K? As foretold by Barbara Fink’s email above, the “trickle” is going to remain a flood until it is stopped up.

We also point out the public sector situation poisons the private sector—one reason long-time Illinois manufacturer Olin Winchester is no longer in Illinois was a claimant who worked there about a month and went off for six months to get one wrist cut on, then six more months off to get the other wrist cut on, followed by six months for one elbow and six months lost-time for the other elbow. Yes, he had the same claimant attorney who is handling all these state claims. Yes, he went to the same doctors cutting on all these state workers. This claimant worked for about a month and cost the former Illinois employer over a quarter-million dollars in “legal” WC benefits. Yes, it is completely “legal” and not fraud to do this.

Finally, we don’t think the legislature actually has the power to change it because whatever they do, it still has to be left to our hearing officers and reviewing courts to enforce the law as written. If the legislature increased the legal standard to “primary cause,” the IWCC could simply “steam around” the legislation and find every cause to be primary. We are now told the legislative reform on the issue of “primary cause” has been dropped—we feel administrative analysis is dramatically simpler and just needs common sense to avoid the complaints of rampant but-not-actually-WC-fraud in the media.

We hope the State isn’t going to waste too much money auditing all this silliness—their audit isn’t going anywhere but back to the IWCC to decide if they will take the tough steps necessary to stop it and fix this broken system. While they are at it, we hope someone starts to look at the similarly rambling and stinking mess that comprise wage loss differential benefits in this system. Illinois residential construction may never return with the specter of wage loss claims blocking any chance at profit. If you are not sure what the smelly problem is with wage loss, send a reply and we will be happy to elaborate.

In summary, we feel Illinois government and private workers should have to “legally” prove an “accidental injury” to be entitled to medical care, lost time and permanency. It is our hope the decent and hard-working folks at the IWCC understand the importance of “legally” demanding a clear and defined link between the work and a condition causing disability and surgery. The only way to stop surgeons from cutting when a claimant has mild to moderate finding in an EMG/NCV is to start “legally” denying such claims. And possibly the best way to stop all the questionable but “legal” shenanigans is to stop “legally” awarding 15-30% LOU of the hand for a half-inch scar to the wrist from CTS that most reasonable doctors outside Illinois opine causes no measurable disability. When and if the Commission starts to end the “legality” of all these embarrassing claims, we hope the reviewing courts will get the same message and let these sort of questionable claims dry up.