5-12-2011; Aaaaah, the little Irishman speaks and everyone’s ears perk up. Workers’ compensation reform is clearly afoot—Illinois business, keep your eyes peeled on what is about to happen this week

It is crunch-time, folks. On Friday, Illinois House Speaker Mike Madigan basically gave the signal for the Illinois Trial Lawyers/Illinois Medical Society and Illinois Hospital Association to “man/woman-up” and stop clowning around on reforming Illinois’ workers’ compensation system. He told reporters Friday afternoon if he doesn't see rapid progress this week on workers' compensation reform he'll allow a floor vote on Rep. John Bradley's bill to pull the plug and eliminate the entire workers’ compensation system in this state. Observers report Speaker Madigan has almost 60 votes in his caucus for the bill, and some Republican votes are reportedly ready to join in flushing it all down the nearest drain.

Please remember this silly idea was started by a noted claimant attorney who is the Section chief of the Illinois State Bar Ass’n’s workers’ compensation section. As you read this, there is a chance that If the Trial Lawyers, Doctors, Business lobby and the Republicans can't come together to support a real bill Speaker Madigan thinks can pass, then the nuclear option may be used. It will almost certainly happen during this week to allow it to be finalized and presented to the Governor next week for enactment.

We have repeatedly made our recommendations for WC reform and most of it has fallen on deaf ears. We truly hope the Illinois workers’ compensation system isn’t ended by our legislators and Governor but one never knows. Our continued recommendations to the other side of the practice is you are either going to participate in meaningful reform or the reform is going to happen to you. We would prefer the claimant bar rapidly try to find a reasonable middle ground and stop fighting to keep Illinois WC as expensive as it clearly is.

Please note most of the major IL WC defense firms aren’t actively involved in this process, so whatever happens in Springfield, we aren’t invited to the table so please don’t shoot your defense lawyer. We are happy to consult with either side to insure they don’t mess it up, as they did in 2005 to require a “correction” of the legislation. Most of us are out in chilly Las Vegas, NV trying to out-position each other at blackjack tables and the National Council of Self-Insurers Annual Conference and Shin-Dig. Former IWCC Chairman Robert Malooly is out here and doing quite well in a software concern in the State of Washington. Every national risk manager we have talked to is strongly interested to see reforms that may allow Illinois WC return to the middle of the pack on their cost charts.

As we have done in the past, below we have reviewed another proposed bill amending the Illinois Workers Compensation Act, 820 ILCS 305, and provide a synopsis of all changes proposed therein follows. There are quite a bit of new amendments in the proposed bill, some minor, some major.

Please note – this is the working proposal, and although it is our understanding this may be put to a vote as early as this Friday, there is a good chance some of the enclosed changes may be modified or redlined. We note the current legislative session runs through May 31, 2011, so if there is any action this year, it will be probably be taken by that date because after this session, future changes have to be approved by a super-majority.

The following are moderate changes; most of these are changes that will not significantly affect the bottom line choices for Illinois employers:

·         Employment Leasing Companies will have to confirm their clients are listed as named insureds on their WC policies.

·         A “preponderance of the evidence” standard is written into the act, confirming existing law that a Petitioner must prove by a preponderance of the evidence an accident must arose out of employment and occurred  in the course of employment before a claim can be found compensable.

·         Ethical rules are written into the act for Arbitrators and Commissioners. Essentially the judicial canons, with other articles confirming Arbitrators will dispose of matters promptly, officially and without bias. Unprofessional behavior becomes sanctionable.

·         Employers/insurers now have 30 days to dispute or otherwise explain non-payment of medical charges as opposed to 60 days.

·         Investigators may, at their discretion, issue fines to companies operating without WC insurance.

·         Employers and Insurers will have to implement means to accept electronic billing from medical providers.

·         Medical bills sent to collections will still be subject to employers negotiated rates of reimbursement.

·         All Arbitrators and Commissioners will require more detailed training in ethics.

·         All newly appointed arbitrators must be licensed Illinois Attorneys, and all appointments will be made by the Governor with counsel from the Senate.

·         At close of business on July 1, 2011, all sitting Arbitrators will be terminated, but will continue to work until re-appointed or until their replacement is appointed.

·         All Arbitrators will sit for terms of appointment form 1-3 years, at the end of which their performance will be reviewed by the Chairman who will make recommendations to the Governor.

·         Three Arbitrators will be appointed to each hearing site, with two arbitrators sitting at each site at any given time. No Arbitrator will sit at the same site for more than two consecutive years.

·         It is now a Class A misdemeanor for an Arbitrator or Commissioner to accept gifts, which are defined fairly broadly to exclude only meals under $75.00 per person on a single calendar day.

·         The Department of Insurance will have to issue and annual report detailing extensive reporting on the state of IL WC claims. This provision also requires hefty reporting measures to be imposed on the Insurers.

The following are the major changes, which have the potential to significantly impact overall costs to employers:

·         An entire new section devoted to Collective Bargaining Agreements and how the Commission shall recognize the provisions of such an agreement creating ADR, medical provider lists and various other measures. Our focus on this concept is unions and union employers that want out of the Commission should stay out of the system and lose voting rights relating to Commission appointments and boards.

·         TPD calculations are derived from the gross amount of the modified duty pay, as opposed to the net amount.

• For awards and settlements entered after 9/1/2011, wage differential awards will be capped at either 5 years or Age 67, whichever is greater – essentially tying them to retirement age.

·         An entire section devoted to creation of Preferred Provider Networks for the purposes of obtaining medical care under the Act, effective January 1, 2014.

• PPD will now need to be determined by a physician stating the level of impairment in writing. The physician must consult AMA guidelines in determining the level of impairment, but there are numerous factors they can address to raise or lower the level beyond that of the AMA guidelines, and the hearing officer can take many other factors into account to modify the physician’s suggestion.

·         Carpal Tunnel claims are statutorily capped at 20 weeks of PPD, or roughly 9.75% of the hand – we note this appears to apply to operated and unoperated claims alike. We vote Cubital Tunnel claims should be treated in the same fashion to end the thousands of such money-making surgeries in Illinois which are extraordinarily rare everywhere else on the planet.

·         Major Fee Schedule changes are included in the proposed bill – essential aspects include streamlining the geo-zip concept, covering “implants” and other medical products at 25% above cost plus reasonable shipping fees, and covering prescriptions under the Medical Fee Schedule. We applaud these significant cost saving mechanisms.

·         Medical providers will not be able to hold Petitioner liable for medical billing deemed excessive or unnecessary by the Commission.

·         UR implementation in medical care is further regulated and will now create a rebuttable presumption if the proper procedures of notice and reporting are followed.  

·         Intoxication will become a defense with threshold amounts of toxicity for Alcohol, Cannabis, and other drugs.  For instance, .08% blood alcohol level will create a rebuttable presumption intoxication was the cause of the injury.

·         Section 25.5 of the Act is expanded to include presentation of a fraudulent medical bill as a criminal act, and the penalties are tiered as opposed to a Class 4 felony violation for each instance. Also – offenders shall have to pay restitution to the injured insurer or employer.

·         The WC Fraud Unit will have to make an annual report to the Governor of their actions.

The following are State-specific changes, which have the potential to significantly impact claims for State of Illinois workers:

·         A provision specific to the State, there is a new section allowing the State of Illinois to consider obtaining WC insurance and/or getting a new TPA involved in State claims.

·         A State WC program advisory board would be created, which might annually suggest cost-saving measures to the Gov’s office in regard to the State’s unconscionably expensive WC management system.

·         All claims by current or former employees of the IWCC are to be handled by a certified independent arbitrator not employed by the IWCC; appeals from these decisions will be handled in the courts.

All in all there are quite a few cost saving measures, but also a fair amount of changes which may have no net effect. As noted above, it remains to be seen whether this bill will change in whole or in part in the next coming weeks.

This article was researched and written by Arik D. Hetue, J.D. If legislation is enacted, Arik and the troops at KC&A will provide a free webinar to explain what the heck happened to everyone’s lives and jobs. Watch this space for news and scheduling.

5-12-2011; Illinois WC Reform Update—things may be rapidly moving to a close in Springfield

Following up on last week’s KC&A Update, we continue to carefully watch what is happening with our legislature. If we get a final WC reform bill which is passed and enacted, we will rapidly offer a webinar to tell you what just hit your Illinois claims. Here are some further thoughts on reform we feel are outside-the-box:

Causation in Illinois WC

We note the Illinois Trial Lawyers, docs and unions have circled the wagons and they appear willing to fight to the last horse, carbine and cavalryman/woman to avoid any restriction on the concept of “causation” in Illinois workers’ compensation. On the other side of their circle of wagons, we have literally every Illinois business, employer organization and the defense lawyers at KC&A telling them they are in an unsustainable position. While we feel the main issue of causation in Illinois WC has to be changed to a more sensible standard; we don’t feel that can and will happen in the legislature. Legal history buffs should always remember one of the biggest cases in the history of the U.S. Supreme Court is named Marbury v. Madison. Every newbie law student is told about this landmark case which effectively held reviewing courts trump the legislature because they have the final say on interpreting what the legislature does. Whatever the Illinois legislature does on the issue of causation can be “trumped” by the Illinois Supreme/Appellate Courts—we defy anyone to write a law they can’t judicially “steam around” to find causation.

Please also remember the Illinois Workers’ Compensation Act hasn’t been legislatively changed in any way to modify causation in about 100 years of workers’ comp law. In the last decade, our courts have drastically changed it to the point even a casual observer cannot overlook how sweeping and shocking the changes are. In discussions, we don’t even feel many veteran claimant lawyers understand what has happened to this concept in our state.

To exemplify the problem of the current causation standard being unsustainable, we point to the 270 correction workers at Menard C.C. who are bringing repetitive trauma claims after the facility has already paid about $10,000,000 in our tax dollars for similar claims over the last three years. The Arbitrator previously handling such claims got a CTS settlement along with the CMS adjuster handling claims for the facility. No business is going to look at our state as a favorable place to do business when they see such broad interpretation of “causation” in this state. While we have told you the claims are “legal,” they cannot be defended by sound logic or reason. We are also telling all of our readers and everyone else who will listen, that due in part to the current causation standard, the State of Illinois is annually paying more in WC benefits to its workers at approximately $150 million per year than just about every major U.S. employer pays on a national basis!!!

As you read this, we assure our readers every adult in this state who has a full-time job and wants $20-50,000 on a tax-free basis for carpal tunnel syndrome or lots of other conditions-of-life could be quickly and quietly taught how to legally do it. All of our readers on the business side of the WC matrix in this state consider that a travesty. Similarly, it is our view the rulings in Sisbro, ABF Freight and Barrington Orthopedics by our Supreme Court and Appellate Court, Workers’ Compensation Division currently force Illinois employers to pay unlimited six and seven-figure benefits for what are ostensibly non-work-related problems. We are certain claimants on many repetitive trauma claims can be carefully and quietly coached by their attorneys on how to make pre-existing, longstanding and chronic medical problems “work-related” without having to have one of those unpredictable “accidents.” Trust us, the coaching doesn’t take long and isn’t complex. If you aren’t sure what we mean, send a reply and we will send you the published and “non-published” rulings listed above and more fully explain.

As veteran trial lawyers, we want the Illinois State Chamber of Commerce, the Republican legislative leaders and all of our readers to understand there is no chance, none, that causation standards are in your control and can be modified solely by legislation. Whatever you legislate, as we indicate above, the hearing officers and reviewing courts can “steam around.” For example, if legislation requires an accident to be the “primary cause,” the hearing officer or Commissioner or Appellate Court considering a claim for a Menard corrections officer turning a key in a lock can readily find that work is the “primary cause” of their claimed CTS or shoulder pain or whatever deleterious condition is alleged. We don’t feel the legislature effectively change a concept that is wholly “created” by the courts and subject to their final interpretation—our justices have the final say.

If We Are Serious About Changing the Causation Standard, Call Out the Clans

We aren’t telling you to give up. We also don’t think the members of the reviewing courts truly understand Illinois business, government and jobs are suffering mightily under their new causation standards. We assure our readers we need to fairly change the WC causation standard in this state. We feel it should and must be done. We strongly urge our business leaders to reach out to the other side. Start with Illinois Supreme Court Chief Justice Thomas Kilbride and the august members of the Workers’ Compensation Division of the Appellate Court. We are sure they have met Speaker Madigan, Senate President Cullerton and Governor Quinn once or thrice. See if they will come to the table for a secret or open confab. If they don’t sign up to at least discuss it, you have lost the war before fighting any battle because they can and will reverse anything which happens at the Commission and reviewing courts below, as they did in their rulings in Sisbro, ABF Freight and Barrington Orthopedics. We feel those claims outline an unsustainable standard for work-related causation in any number of ways.

If you can get our top justices to the table, contact the leaders of the Illinois Trial Lawyers, the docs and the unions. On the business side, bring the “usual suspects” to include our top legislative and business leaders and defense lawyers. Then meet and discuss some sort of limit or concept on causation in Illinois workers’ compensation everyone will accept. Consider televising some of the discussions and taking public comment.

Call us crazy but we feel there has got to be a fair and reasonable middle ground which makes sense and is sustainable. We assert the basis for causation cannot be the fact one has a job while having a deleterious medical condition of whatever source. If you aren’t sure, that is where we are at right now and we assert the causation standard in this state and/or any state can’t be kept there. Conversely, we do not suggest setting the causation standard so high that legitimate, serious injuries are denied coverage due to any pre-existing condition or some distant prior surgery. We believe a reasonable middle ground can be found if truly sought by the respective sides of the issue.

5-12-2011; Beware the Mulligan--the stakes are going up on claims adjusters “holding on” to litigated Illinois files. If you are following that practice, be sure your E&O coverage is paid in full...

If you haven’t read our KC&A Update from two weeks ago on Mulligan v. IWCC, try reading this one. In that decision, the main dispute was the disclosure requirement in Section 12 of our WC Act. If you aren’t aware of the requirement, when either party gets a Section 12 medical evaluation of a claimant, they have to disclose it 48 hours prior to the “hearing” of the claim or it is potentially inadmissible. In Mulligan, the defense attorney sought to present two physicians as experts. The first was an IME doctor. Although proofs were left open after the first hearing, the defense attorney requested the right to depose his expert and the Arbitrator conducted a hearing and granted the request. The deposition was then conducted.

The second expert for Respondent was retained after the first hearing started. This second expert simply reviewed records and provided a peer-to-peer medical opinion.

In their ruling our Appellate Court, Workers’ Compensation Division looked at Section 12 which clearly relates to independent medical examinations or what are called by many veteran WC practitioners “Section 12 examinations” and expressly found the “48-hour rule” for disclosure also applies to medical record reviews by an expert. We don’t agree with that new and unprecedented ruling but whether you like it or not, peer-to-peer medical record reviews now have to be conducted and disclosed within 48 hours in advance of the first hearing of a claim or this ruling precludes their admission as evidence. This may be applied to UR, life care plans, discharge evaluations and all expert medical evidence of any nature.

The Appellate Court majority’s latest finding on this issue further outlines the start of any arbitration “hearing” cuts off the ability of either party to offer further medical evidence even if there is no dispute between the parties “proofs remain open” at the end of any given arbitration hearing. Based upon the fact the Mulligan second expert was retained after the first hearing, the Appellate Court majority struck his opinions from the record. We assert there is nothing in this decision to indicate claimant’s counsel was not fully apprised of his report and didn’t have a full and fair opportunity to cross-examine this witness in front of the Arbitrator to his heart’s content. It made no difference to our reviewing court.

What does this mean to day-to-day WC claims handling? In our view, many IL WC adjusters and some TPA’s play a “brinkmanship” game of holding onto litigated files even when there are trouble signs. Our firm gets lots of assignments on a last-minute basis and we like to advise clients we are similar to firefighters, send us a file anywhere in Illinois at any time and we will cover your interests. The problem with that perspective is the stakes are now incredibly higher—if you have a claim with either a trivial or complex medical dispute and hold a file to the last minute, we may not be able to get an examination or even a record review to defend you and/or your account. If we receive the file within 48 hours of the hearing, we are certain to be blocked.

What if claimant counsel agrees to allow you to hold the file from defense and get an exam or record review, as you see fit? We just got a file in last week that a very relaxed claimant attorney was handling for some time. The first attorney sent it to a much more aggressive attorney who wants to try it this week and won’t agree to a continuance for any purpose. If we weren’t already rocking and rolling to get needed medical evidence to defend the claim, we assure you the new claimant attorney might be successful in blocking our medical defenses. Effective with the issuance of Mulligan, if a hearing is started, defense medical evidence is blocked.

We are telling everyone who will listen, don’t “trust” claimant attorneys under this new rule for any number of reasons. We aren’t saying claimant attorneys would lie or mislead you; we are simply asserting things in this industry constantly change and you are taking a major risk not to do the ground work to have needed medical evidence to protect yourself and your account. Claimant attorneys are ethically bound to do what is in their clients’ best interest and that interest may not align with protecting adjusters.

Similarly, a claim which is the subject of an ex parte hearing, in which the adjuster doesn’t send it out until after a hearing has already started, should also fall under the aegis of the Mulligan ruling. Even if the ex parte hearing was continued, the late-selected defense attorney may be forced to “defend” the claim without any medical evidence. The new “block” on medical evidence announced in the Mulligan rule might result in six or seven figure losses and clear E&O exposure for the Illinois claims handler or your employer. While we don’t agree with it, we assure you it is now the law in this state and we are all going to have to adjust.

We remind our readers motions for hearing only require 15 days advance notice for a hearing to be set and begin. Cases 2-1/2 years old and older are set for hearing without further notice. If you are managing older claims, be absolutely certain you have appropriate defense medical evidence in the file in case a hearing is set.