7-2-12; Did the State of Illinois just “fire” several veteran Arbitrators?

For reasons we don’t know and still don’t understand, last year the law was drafted to give Arbitrators one to three year “terms” of office. Due to the date of the legislation creating the terms, the one-year terms actually ended in way less than one year. This group were put in the lucky status of randomly getting one-year terms that ended yesterday.

Ø  Peter Akemann of Kane County;

Ø  George Andros of Cook County;

Ø  Gerald Granada of Cook County;

Ø  Doug Holland of LaSalle County;

Ø  Nancy Lindsay of Morgan County;

Ø  Jacqueline Kinnaman of Cook County;

Ø  Stephen Mathis of Sangamon County;

Ø  Neva Neal Mundstock of Sangamon County;

Ø  Peter O’Malley of DuPage County;

Ø  Brandon Zanotti of Jackson County and

Ø  Maureen Pulia of Cook County.

Understanding we don’t agree with the politics of some of these folks (and they don’t necessarily agree with ours, as is their right), we assure our readers they are knowledgeable, honest and professional hearing officers. We think their job situation is now completely blurred.

A reader advised Section 13 of the Illinois Workers’ Compensation Act contains a holdover clause allowing Commissioners to continue sitting until a successor is appointed. Section 13 has this language:

The term of office of each member of the Commission holding office on the effective date of this amendatory Act of 1989 is abolished, but the incumbents shall continue to exercise all of the powers and be subject to all of the duties of Commissioners until their respective successors are appointed and qualified.

On June 29, 2012, Governor Quinn signed HB 1084 which says no “Commission” appointee can sit longer than 60 calendar days after their term expires or until a new appointment whichever comes first. Most legal observers feel this means Commissioners serve until a successor is appointed with a 60-day limit. No one is sure if “Commission” appointee might include or implicitly exclude the Arbitration staff because they aren’t specifically mentioned.

In contrast to Section 13 of the IL WC Act, Section 14 setting up the appointment of Arbitrators has no such “holdover” clause as the bolded language above—the language clearly was omitted by Illinois legislators. The Arbitrators have “terms” and the terms are up based on a simple reading of the legislature. Therefore, if the Arbitrators listed above have terms that ended yesterday and they are not reappointed and confirmed by the IL Senate by Monday, we have any number of important questions:

1.    Will they have jobs or an official position?

2.    Will the State keep paying them?

3.    Do they have statutory authority to do anything if they don’t hold an official position?

4.    Are their decisions void, as being without authority?

5.    What about the decisions for claims they heard before July 1, 2012?

6.    Do they have authority to sign them or does another arbitrator have to review the record and write the decision?

We were advised the IWCC Chairman and the Governor’s Office believes these Arbitrators still have jobs. We view that as misleading. There is no one who can answer these questions other than a judge who is reviewing the legislation in response to a claim filed before them. At present, all Arbitration decisions by these hearing officers may be “voidable” if a judge or judges were to find they have no statutory authority to decide a claim. Please also note our Illinois legislature isn’t in session and would have to be brought back to session to change the legislation for the Governor to consider. We assure all of you that isn’t going to happen.

We aren’t thrilled to report this uncertainty to our readers but we do consider it an important development for all of you to understand. This article was researched and written by both Matthew A. Wrigley and your editor. Matt can be reached any time at mwrigley@keefe-law.com. We appreciate your thoughts and comments.

7-2-12; How will ObamaCare Affect State Workers’ Compensation Systems?

The Affordable Care Act, colloquially referred to as ObamaCare, includes in its new mandate virtually all American companies with over 50 employees have to have or buy group health insurance or pay a penalty to not do so. This Act was held constitutional by the U.S. Supreme Court on June 28, 2012 in its final opinion of their term.

The Court did not uphold it on the ground the U.S. Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. Instead a majority of five of the nine Justices agreed the penalty to be paid if one were to refuse to buy group health insurance is a kind of “tax” Congress can impose using its taxing power. Under that theory, Congress could legally force us to all purchase licorice gum if our Congress were to set a penalty for not buying it. Civil libertarians and folks who don’t like to be told by government how to run their businesses will be debating this one for some time.

Pay for Group Health Care, Pay a Penalty or Divide to Conquer?

The problem this new law creates for small businesses including law firms, some adjusting companies, nurse case management companies and other smaller players in our industry who may have been against the Obama administration’s health care law was it would increase costs and make their companies less competitive. Now that our highest court has upheld it, small companies could opt to go a route that will save them thousands of dollars each year. Under the law, companies with more than 50 workers must provide health insurance the law magically defines as affordable, or pay a penalty. Paying the penalty may be cheaper and many small business owners are considering doing just that.

The penalties or what the Supreme Court called a “tax” are set according to a complicated formula and start at $2,000 per worker, with the first 30 workers excluded from the calculation. Small employers will now be forced to decide whether to pay for coverage, accept penalties or find creative ways to avoid the law. We are confident no one is going to want to hire “unhealthy” workers because the cost of healthcare for such workers is typically higher. We also expect to see more fitness-for-duty evaluations to potentially screen out folks with pre-existing problems. We do hope employers will get more involved in health care by encouraging good diet habits and regular daily exercise.

Smaller employers will be faced with deciding whether to grow to a size where they are faced with the problem, pay for coverage, accept/pay penalties or find ways to avoid the law. Another simple way to avoid the issue would be to divide into two or more companies as your company grows close to the threshold of 50 workers. With key issues like what the group health care plans will cost still unanswered, many owners still have a long list of questions.

Some group health care experts say business owners will find more insurance alternatives will soon be available. This is because the law provides for the creation of state-based exchanges to sell insurance to companies and individuals. We understand Illinois and most states are now scrambling to create these mandates health care coverage exchanges. While the jury is out on this concept, we are unimpressed—it is hard to imagine group health care insurance brokers have been hiding lots of low-cost options that will only come to light with state government help.

Illinois WC claims are trending way down and may drop even further under ObamaCare—What are we prepared to do about it?

How will it impact workers’ compensation in Illinois and other Midwest states? Well, if more companies follow the intent of the law and buy/offer group health care coverage, it is much less likely for workers with medical problems to try to “create” accidents to seek WC coverage of medical care. This may lead to fewer and fewer medical-only or litigated WC claims across our country.

The trend toward less WC litigation is being demonstrated by the fact the IL WC Commission only had about 22,000 claims filed in the first half of 2012—this should mean this state will have less than 45,000 new claims being filed at our Commission this year—ten years ago, there were almost 70,000 new claims filed each year before the Commission. Ten years ago, there were over 200,000 pending claims at any given time—shortly, there may be less than 100,000 pending. Some speculate the lower claim count is due to fewer jobs, better safety, litigation avoidance techniques and workers being afraid to lose their jobs. We are not aware of any metrics to prove any factor is more effective than any other but we are certain ObamaCare will be another hit to the overall number of claims.

However one views it, the IL WC claim count may be down for any number of reasons but there is no question, WC claims in this state are down by almost half and the numbers continue to drop. As you may note in the next article, many Arbitrators’ jobs are now up for grabs but whatever the State does, it is going to be hard to justify a $30 million dollar annual budget for the IWCC in a state that is hemorrhaging red ink when our administrators simply don’t have as much to do in years past. The Illinois WC Commission has about 32 Arbitrators along with 9 Commissioners who each have two full-time lawyer assistants, the Chairman and his staff—in all we have something like 60 administrators. In stark contrast, Indiana to our east has less than ten similarly situated administrative hearing officers. While we don’t know if we will ever hit the Indiana WC administrative model, the cost of all the Illinois administrators has to be looked at moving forward.

The problem with talking about IL WC administrative budget cuts is Illinois business pays literally every nickel of the annual budget of the IWCC but has literally no say in how their money is spent. We don’t hear clarion calls from the great folks at the Illinois State Chamber of Commerce, the Illinois Hospital Association, the Illinois Manufacturers Association or the Illinois Retail Merchants to cut administrative hearing costs in our state. For example, if they could cut the IWCC budget by 1/3 or $10,000,000, one would think they might be happy to tell their members they saved each of them thousands of dollars by forcing the Commission to get more efficient, effective and cut their budget to insure they match changing needs, such as fewer claims caused by outside factors like ObamaCare.

We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.

6-25-12; PPP’s continue to move forward in IL WC and the IL State Chamber Remains on the Point of the Spear

In response to the Illinois Department of Insurance's proposed rules to implement the preferred provider program or PPP, the Illinois State Chamber finalized their thoughts and comments earlier this month. The PPP concept may provide sweeping savings to Illinois employers if/when the concept comes out of JCAR or the Rules Committee. The PPP provisions are important to helping employers provide quality healthcare to injured workers in order to lower disability/impairment, reduce future medical care and allow for quicker return to work which leads to better care for injured workers and lower costs for Illinois employers.

The IL State Chamber asserts our Illinois legislature intended the PPP addition to our IL WC At to benefit injured workers, encourage participation by competent medical providers and assist large and small employers by finding a balance between quality of care with access to post-injury care. We have told all of our clients to consider signing up with folks like HFN, Inc. that are very knowledgeable about the PPP concept and are sure to provide solid value—if you need information about HFN, Inc. send a reply or go to their website at http://hfninc.com/

During meetings with the Department of Insurance in 2011, our State Chamber leadership expressed concern the proposed rule's structure of coupling existing non-work-related healthcare PPP regulation with the new workers' compensation PPP creates extensive confusion and may lead to inconsistencies for how the Workers' Compensation Act applies to medical benefits for injured workers.

State Chamber leaders remain concerned critical issues remain that require further revision to recognize the distinct differences between medical provider networks for healthcare and medical networks for workers' compensation. Their written comments on the proposed rule identified where issues continue to exist and how the proposed rule fails to recognize those differences. Without revisions, they believe it will be very difficult for employers to realize

·         The intent of the law:

·         Quality healthcare services to injured workers and

·         Cost savings for employers.

June 11, 2012 ended the Joint Committee on Administrative Rules (JCAR) 45 day comment period to DOI. A second 45 to 90 days is required for review of the rule by JCAR. Following JCAR review, JCAR can allow the rule to proceed as proposed; recommend revisions or prohibit the rule from being adopted. A prohibition motion requires 3/5ths vote (8 of the 12 JCAR members). Either way, it may be moving to implementation by September 2012.

We continue to support the Illinois State Chamber and strongly recommend our readers consider joining this organization that remains on the point for your business’ interests. You can get more information on their website at www.ilchamber.org.