10-29-12; Ghost-Payrolling has to Stop!; Shawn R. Biery notes AG's Office Tackles Claimant WC Fraud; Tough UR/IME Question for Adjusters and much more

Synopsis: Ghost Payrollers—How “Pensions,” Poorly Managed Workers Comp Programs, “Disability” Claims and Paid Administrative Leave are Bankrupting Illinois and the City of Chicago.

Editor’s comment: It is hard to imagine what a mess things are in our State and the City of Chicago. The main problem we have is paying thousands of workers as if they are working when they are not.

Ghost Payrollers, part I--The first concept is the idea of “pensions” for government workers. We assure you public employee “pensions” aren’t at all what your mom and dad think pensions are supposed to be—most folks think when you, as a participant, contribute to your “pension,” the government you work for matches your contributions and when you retire, that money pays for your retirement. Sounds simple, doesn’t it? Well, we assure you most government workers across Illinois contribute about a fiftieth or less of what they actually later receive for what can be millions in “pension” dollars. And please don’t blame the workers—the governments they work for also don’t contribute what is due—choosing to spend the money elsewhere and hang the pension system out to dry.

For a single example, the City of Chicago just settled a strike with their teacher’s union. If you don’t know it, Chicago public schools teachers make on average about $75,000 per year. They only contribute 2% of their salary each year to their “pension” program. If you do the math, after twenty years as a teacher, they have contributed about 40% of a single year’s salary or $30,000 to their “pension.” When they are eligible, they will receive about 80% of their highest year’s salary for the rest of their lives—80% of $75,000 is $60,000. Again, if you do the math, the retired school teacher easily spends their entire “pension” contribution before the end of the first year of their retirement. Thereafter, they are back on our payroll. If they live for 30 years in retirement, they will receive 30 years times $60,000 or $1,800,000 for their investment of $30,000!!! This amount doesn’t include their current guaranteed increase of 3% per year for every year of retirement. If you aren’t sure, this is why the City Public Schools pension program is wildly in hock.

Why are we calling government pensioners “ghost-payrollers”?? We assure you the retirees of the State of Illinois and the City of Chicago who haven’t contributed enough to justify the growing pension costs are back on your dime or worse—your borrowed dime. The State of Illinois had to borrow $4 billion, yes, billion to spend $3 billion to pay the outstanding pension obligation for a single year and $1 billion to pay the note on the first $3 billion. That isn’t sustainable, folks; it is going to have to end before we hit bankruptcy. We have advised many government observers of our objection to the term “unfunded pension liability” which is the accounting term for saying we are again simply paying retirees as if they were again on our payroll. The retirement parties for such workers should truly be fun—they don’t have to work anymore while we pay them for the rest of their lives!!

Please also note literally thousands of state and other government workers are rapidly retiring—one news source indicated the State has over 1,000 new job openings. The reason such workers are leaving government service in droves is to try to insure they have ERISA protections for the pension rights they are vested in.

Ghost-Payrolling part II; Illinois odd practice of providing “odd-lot” total and permanent disability benefits and rotten WC claims management for State and City of Chicago workers.

As we have told our readers on numerous occasions, “odd-lot” total and permanent disability for government workers should be a crime—you get the benefits only when our governments won’t accommodate an injured worker’s restrictions. Hundreds of such workers receive these high benefits and get paid tax-free monies well into the tens of millions of dollars. They get regularly COLA increases managed and paid for by Illinois business. Again, they are “ghost-payrollers” because they can and should be working with restrictions—you could cut any and all of them off tomorrow, if we found them jobs.

Please also remember sixteen months ago, on June 28, 2011, our plucky Governor signed the 2011 Amendments to the IL WC Act. In the new Amendments, it says  

·         The Director of Insurance for the State of Illinois was to prepare and implement a plan to purchase Workers’ Compensation insurance for the State.

·         Individual State agencies were to be compelled to fund TTD payments themselves in the event that light duty was not accommodated once the light duty release is issued pursuant to the treating doctor and the IME physician.

·         The Department of Central Management was to have an advisory body known as the State Workers’ Compensation Program Advisory Board designed to review, assess and make recommendations to improve the State workers’ compensation program.

Other than to name the “Advisory Board,” nothing has happened since the Amendments were signed on behalf of the State of Illinois to improve its comically bad WC program. They will pay over $100M in WC benefits again this fiscal year.

The City of Chicago also has the worst WC claims municipal management program on the planet, in our estimation, leaving hundreds of workers out on TTD for endless paid leaves. We are told something like 25-30% of their workforce is on TTD on any given day of every year. Their WC claims costs have skyrocketed from about $35M a year five years ago to what will be over $115M or more this fiscal year. A year ago this month, Mayor Emanuel confirmed they were going to start using voc rehab to bring folks back to work—that process has been starting and stopping and starting and stopping.

Ghost Payrollers, Part III—“Disability”

On top of that, please remember City of Chicago police officers and firefighters are not covered by workers’ comp. Their “disability” claims are now part of a federal grand jury investigation. A disabled City of Chicago police officer was discovered on “disability” for over two decades. He had already received $700,000-plus in disability pay and was seeking a retirement pension. Turns out, he put himself through law school, graduated in 1997 and was now a criminal defense lawyer in the south suburbs. Turns out the basis for his disability claim was pain due to firing police firearms; turns out, he goes big game hunting in Africa and fights through the pain to shoot rifles while on safari.

In a similar vein, police and firefighters across Illinois don’t have to be disabled from all work. If they run into a condition that medically blocks them from being police officers or firefighters, they get line-of-duty disability pensions for the rest of their lives. In the right circumstances, they may also get lifetime family health insurance. All of that costs Illinois taxpayers millions. Our favorite example of this was the firefighter with rhinitis—he is getting lifetime line-of-duty disability benefits for life from getting a runny nose and teary eyes.

Ghost Payrollers, Part IV—Paid administrative leave

On top of all the other folks being paid not to work, the Chicago Tribune found our State government regularly pays employees not to work when they are being investigated for wrongdoing. Between 2007 and September 2012, 2,033 state employees on paid administrative leave have cost the state $23 million. Paid administrative leave prevents an employee from going to work — typically, during an investigation into alleged wrongdoing and is considered a sanction. However, it is an administrative decision—for example, the Tribune investigation found a mental health technician was put on paid administrative leave for allegedly driving her car too fast in her agency's parking lot.

The State of Illinois declined to provide specific reasons for employees being placed on leave or details on their cases. But, using confidential documents and interviews, the Chicago Tribune learned the process can be slowed by communication problems, staff shortages and lengthy investigations.

As we approach Hallowe’en, we have to hope this sort of scary government management will stop and someone will start to see how wrong things are being done in both government settings. We appreciate your thoughts and comments; please do not hesitate to post them on our award-winning blog.

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Synopsis: Is the Attorney General of Illinois starting to do something about claimant fraud in IL workers’ compensation??

Editor’s comment: The State of Illinois historically has been less than  ambitious when pressed for prosecution of claimants for fraud. However, the AG’s office recently announced the arrest of Tracy Williams of McHenry based upon allegations the woman had attempted to defraud several Chicago area employers out of nearly $90,000 in workers' compensation payments. Williams was arrested late Wednesday October 17 on charges of workers' compensation fraud, aggravated fraud, insurance fraud and perjury.

The criminal complaint alleges Williams concocted phony injuries suffered at work and filed fraudulent claims for workers' compensation benefits at three employers: Mastertek Auto Repair, in Algonquin; Thornton's Gas Station and Store, in East Dundee; and Johnson Controls Inc., in Geneva.

The Illinois Department of Insurance Workers' Compensation Fraud Unit referred the case to Madigan's office for prosecution after investigation apparently revealed Williams filed four workers' compensation claims over nearly three years, each for thousands of dollars in benefit payments for injuries that never happened. In one instance, it is alleged Williams lied about an injury to her left shoulder when she falsely claimed a customer punched her while on the job.

Based upon our independent research, Williams appears to have been a Christmas day arrival in 1968 and almost since she was of appropriate working age, she has filed claims. We located additional claims outside the claims against Respondents listed in the charges including past claims against Squeeky Kleen, Wal-Mart, Sam’s Club, Motorola, Plastic Decorators, Electronic Specialties, Wendy’s, Eaton Corp, Harting Inc, and PA Staffing.

While the case pends, it is unclear what exactly triggered the investigation—there appears to be ample evidence in the public record of Williams’ familiarity with the Illinois Workers’ Compensation system. In this writer’s experience, it takes almost certain fraud to convince the AG to prosecute so we will keep our eyes on this case and determine future strategies which may be created based upon the final result. Look for future updates as the case is prosecuted.

This article was researched and written by Shawn R. Biery JD, MSCC and you can contact him directly with any questions at sbiery@keefe-law.com.

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Synopsis: Tough UR/IME question--in Illinois WC, if medical treatment is approved or certified by UR, can an adjuster override this approval?

Editor’s comment: In our reasoned legal opinion, the short answer is yes. The only truly “binding” determination on a medical treatment issue is from an Arbitrator after a hearing and/or Commission panel after an appeal. Or when you settle and close the claim in that fashion.

The problem with an IL WC adjuster contradicting or “overriding” UR or an IME is you are hanging yourself out to dry on defending the need for such care—your adjuster may not have a defined basis or backup for denial.

·         In non-litigated claims, it may push a cooperative claimant to obtain counsel and start litigation.

·         In litigated claims, in not having a defined basis for denial of care recommended by a treater and approved by UR/IME, you may then get hit with penalties/fees on unpaid TTD while figuring out if you can defend the position.

Penalties/fees can be significant, depending on how long it goes before you get a hearing and a ruling. For all these reasons, we don’t typically recommend an adjuster override approval of care by UR or an IME. While it isn’t “illegal” to do, it isn’t a strong claims practice.

We also aren’t fans of “gamesmanship” in utilizing medical experts like UR/IME providers—why select, pay for and ask them for a decision if you aren’t going to agree with them? Claimant lawyers and some Arbitrators get upset to hear such games are being played.

If a WC claims adjuster contradicts UR or an IME, they had better have a strong reason that supersedes the medical advice you have asked for/paid for from the medical experts. So, if an adjuster can provide the specific reasons for overriding UR or an IME in a specific claim, the defense attorneys at KCB&A are happy to provide further advice and counsel.

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

9-24-12; Dr. David Fletcher Rocks the House!!

Synopsis: As always, Dr. David Fletcher Rocks the House!!

Editor’s comment: All the way from the Menard Correctional Center to a crystal ball looking at the future of the State of Illinois, the 20th Annual Work Injury Conference held on September 12th at the Lodge in Oakbrook offered the first report card after year one of the 2011 Workers’ Comp reform. Co-sponsored by the Illinois State Medical Society and SafeWorks Illinois this amazing conference featured the leading voices of the Illinois WC system from the perspective of all interested stakeholders.

Dr. Preston Wolin, an orthopedic surgeon, started off the assessment of the 2011 WC reforms with three questions:

v  Is this WC system better or worse for the reforms of last year and 2005?

v  Are WC costs any lower or higher in our state?

v  Has the quality of medical care for injured workers gotten any better?

Dr. Wolin stated access to care for injured workers from qualified physicians has been one early casualty of the 2011 workers’ compensation reforms because of the drastic reduction in the medical fee schedule that is below Medicare levels for many services, most importantly, the E&M (evaluation and management) codes. Dr. Wolin feels this drastic reduction in reimbursement levels has driven many quality Illinois physicians from taking care of injured workers. Dr. Wolin said “The cuts are particularly affecting non-surgeons. A number of E & M codes are now paying less than Medicare rates. A workers’ comp patient clearly requires more physician work than Medicare. A significant number of providers are now unwilling to see WC patients,” warned Dr. Wolin, an orthopedic surgeon in Chicago. He further complained “Was this envisioned by the legislation’s authors?”

The consensus of the medical community at the conference gave the 2011 IL WC Reforms a “F” grade so far, especially in regards to the intrusion of Utilization Review (UR). Dr. Richard Kube cited the California experience where some observers felt medical costs actually went up with the implementation of utilization review or UR.

Veteran claimant attorney Dave Menchetti outlined the impact of reform so far on IL WC costs and claims. Since the reform was enacted, Menchetti cited the fact the National Council on Compensation Insurance or NCCI has recommended the State of Illinois lower WC premiums 9.1% since 9/1/11 (8.8% decrease 9/1/11; 3.5% increase 1/1/12; and 3.8% decrease 1/1/13 = 9.1% overall) in contrast to the State of Iowa where NCCI has recommended a 5% increase. Attorney Menchetti said a 9.1% reduction in premium costs for insured employers in Illinois (95% of all employers) should save $220 million in premium costs. Attorney Menchetti complained “But show me the money, my WC premium for my law practice employees has not gone down but has gone up.” Menchetti believes the creation of a State Funded Insurance product would force the insurance industry to pass this projected premium savings onto Illinois employers.

Illinois State Chamber President Doug Whitley was called upon to bring the business/employer’s perspective to the program. Mr. Whitley said “I am reminded of my minister who often begins the sermon by referencing the Good Book and the citations he wants the congregation to pay attention to. Today, I’m referencing the ‘Book of Lisa’….as delivered to us by the office of Attorney General Lisa Madigan in the form of a white paper released earlier this year proposing reforms to the state’s workers’ compensation system.” Mr. Whitley stated: “the Office of the Attorney General’s Recommendations to Reform the Workers’ Compensation System delivers an insightful and compelling analysis of the many difficulties that employers often find overwhelming.”

Doug Whitley outlined the goal of the State Chamber to enact additional reform. He said “[t]he Legislature must address and change the causation standard that is currently applied by the IWCC and the courts. Under current Illinois law, the work accident need not be the sole proximate cause or even a primary cause of the employee’s injury,” Mr. Whitley referred to the controversial IL Supreme Court rulings in Sisbro, Inc v. IWCC.

Reflecting on the Menard Correctional Center scandal that triggered the 2011 IL WC reforms, Mr. Whitley mused: ”When I think of “Menard” I think of “the State of Illinois”. Menard is just the short-hand reference. It is the symptom…No private sector company of any size would run its workers’ compensation program like the state of Illinois does!” His speech noted our state overspends about $140 million each year on supposedly injured state workers.

The IL State Chamber’s position is the state’s economic development opportunities are severely challenged by multiple comparative business attractiveness studies. “Expansion of economic opportunity, private sector capital investment and job growth is critical to the state’s future. Yet, many employers have lost confidence in Illinois. Loss of confidence is something that cannot be turned around swiftly. It will take years of proven actions and gains that demonstrate the state is genuinely interested in changing its reputation,” stated Whitley.

A year after reform, there has been no impact felt so far regarding PPPs (Preferred Provider Programs) which are still getting organized. Your editor predicted: “next year’s 21st Annual Work Injury Conference will focus on the impact of PPPs on the IL WC system.” Your editor opined PPPs will reduce the necessity for IMEs and outside UR in the future. Robert Maciorowski, a veteran respondent’s attorney cautioned IL employers may regret what they wish for because PPPs could turn out to employers’ worst nightmare if they are not set up right and with too large of a panel of physicians to choose from.

Conference director Dr. David Fletcher opined WC PPPs will only be effective if they reimburse providers at a higher rate than the fee schedule. Dr. Fletcher opined “PPPs should value and reward elite providers, who provide the skill set to understand the nature of the work environment to effectively treat the injured worker and communicate with all parties with the uniform goal of rapidly returning injured workers back to work,” stated Fletcher, who noted the medical community is taking a very cautious look at PPPs.

Veteran downstate Petitioner attorney Todd Strong noted: “Last fall’s conference was more focused on policy whereas this year conference was more focused on the implementation of the policy. From the petitioner's standpoint you will begin seeing a lot more litigation on picking apart the statute and going after UR, limitation of choice, and use of AMA Guides.”

One of the most important statistics that may be of interest to our readers is the unquestioned fact new litigated WC claims aren’t down a little, they are down a lot. As of August 1, 2012, there were about 26,000 new claims filed. This number is pointing to an all-time IL WC low of less than 45,000 new claims hitting our IWCC during this calendar year. Please remember in 2003, just nine years ago, there were over 65,000 new claims filed in this state. There are many reasons that may account for this trend—fewer jobs in our state, better benefit flow to minimize the need for litigation, more safety training of workers from HR and risk managers along with robotization and mechanization of some work tasks. Whatever it might be, we assure our readers this trend is real.

This article was researched and reported by Dr. Fletcher with minimal editing by your intrepid editor. We look forward to next year’s challenging and controversial 21st Annual Work Injury Conference, whenever and wherever it might be. Watch this space for news. We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.

9-24-12; Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of...

Case Synopsis: Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of ADA’s requirements for a reasonable accommodation and by doing so, steps in line with the U.S. Supreme Court’s analysis of this crucial issue.

Editor’s Comment: From an employer’s perspective, this ruling imparts a more difficult burden upon companies who must now show a preference to provide a “reasonable accommodation” to a partially disabled employee seeking re-assignment. With this ruling, employers now have an infusion of affirmative-action woven into their ADA obligation for reasonable accommodation of disabled employees.

In EEOC v. United Airlines, Inc., (decided Sept. 7, 2012) our U.S. Court of Appeals for the Seventh Circuit considered whether an employee with medical restrictions must not only be considered for a reasonable accommodation, but whether that employee is entitled to preferential treatment over more qualified candidates for open positions. The case turns on the meaning of the word “reassignment” in the Act.  The ADA includes “reassignment to a vacant position” as a possible “reasonable accommodation” for disabled employees. 42 U.S.C.§ 12111(9). The EEOC contended “reassignment” under the ADA requires employers to appoint employees who are losing their current positions due to disability to a vacant position for which they are qualified. The EEOC argued the Supreme Court’s ruling in Barnett, 535 U.S. at 391 compels such a finding. However, prior Seventh Circuit rulings found that such placement was not mandatory, only that such candidates be equally considered for promotion.

In reversing their own prior Seventh Circuit rulings, the Court agreed with the EEOC, finding the Supreme Court’s analysis now compels a preferential placement of the disabled employee, even where more qualified candidates may be available for promotion. The Seventh Circuit relied heavily on theBarnett Supreme Court decision in reaching this conclusion, noting the Supreme Court found “preferences will sometimes prove necessary to achieve the Act’s basic equal  opportunity goal”.

We would be remiss if we did not point out however, the ruling by the Supreme Court in Barnett actually found for the employer, upholding the validity of their seniority system for promotions (disabled employee loses his position to a more senior employee per the seniority policy). Here, the Supreme Court held an employer is not required to give a disabled employee super-seniority to retain their job when a more senior employee invokes entitlement pursuant the employer’s seniority program.

So, what’s the difference? When is an employer supposed to give preferential treatment to the disabled and when are they permitted to adhere to their promotion policy?

As usual, the devil is in the details. The Seventh Circuit explained a promotion policy based on qualifications alone is for the employer’s benefit. Such a policy does not trump the preference to be afforded the disabled candidate for promotion (as long as the disabled candidate is minimally qualified). However, a seniority system of promotion involves the “property-rights” of the employee, whereby the most senior employee is already entitled to a particular position due to years of service. This was found to override any preference to be afforded the employee in need of accommodation.

In our view, this is a distinction without a difference, for the most part. Perhaps a seniority policy is more easily defined and measured for each employee, so there is no dispute as to who deserves the promotion (you either started before the next guy or you didn’t, regardless if he is disabled). However, it is our impression a superior worker should be recognized for his or her accomplishments and if better qualified, should be given the promotion pursuant good old fashion merit, regardless of whether another employee may or may not have a disability. To the better qualified candidate, their lost promotion is no less painful, simply because they didn’t have a vaguely-defined “property right” to the job through a seniority program.

At any rate, moving forward, U.S. employers must be sensitive to this new layer of consideration and their obligation to place employees with disabilities in available positions, even where a better qualified candidate is available. Not doing so may be perceived as a violation of the ADA.

This article was researched and written by John P. Campbell, Jr., J.D. Please send your thoughts and comments to John at jcampbell@keefe-law.com.