1-15-13; IL Law Refresher on Two-Party Consent in Recordings; SMART Act and Impact on You; Bumping Boats Don't Bring Maritime Liability; IL Sup. Court Limits Venue in Asbestos Claims and more

Synopsis: Refresher on IL Law about Two-Party Consent to Smart-Phone Recordings in Illinois. Is there a double standard from the Petitioner bar? Analysis by Shawn R. Biery, J.D., MSCC

Editor’s comment: We recently had an inquiry regarding a Petitioner, at the request of his counsel apparently, surreptitiously recording the interaction and discussions during an IME exam. It is unclear to the writer if the M.D. didn’t put 2 and 2 together until after the exam as he did not object and there was clearly no discussion of the recording of the exam by Petitioner before or during the exam.

We have had numerous discussions with opposing attorneys over the years regarding obtaining recorded statements from claimants as part of the initial or follow-up accident investigation. The majority of the members of the Plaintiff/Petitioner bar in IL WC advise their clients to avoid voluntarily providing recorded statements, even if counsel is on the call or recording. For our readers and claims handlers from other states, we have no Rule or portion of our IL WC Act that can “force” a claimant to provide a written or recorded statement, even if they have counsel present on the recording. It is one of the factors leading to what we call “trial by ambush” in our IL WC system—we don’t truly know what a claimant is going to say until they testify under oath.

While we understand and share an overall general dislike of being recorded, there have been multiple occasions where a simple and relatively brief recorded statement, as part of an accident investigation, would have cleared up numerous questions regarding the claim. In some instances, a refusal to participate in a recorded statement appeared in this writer’s view to be nothing except a refusal to be held to one version of events regarding a claim. Arguably the refusal to allow complete investigation should justify a subsequent refusal to issue WC benefits if questions regarding the claim cannot be answered alternatively. In our view, a claimant should participate in a short and simple records with their counsel on the agreed call/recording to “protect” them if they were to stray too far afield. Everyone should then receive a copy of the recording.

There was also the question of legality and as a refresher to the M.D. performing the IME referenced above and our readers, a reminder serves to confirm Illinois is a two-party-consent state to recordings so Illinois makes it a crime to use an "eavesdropping device" to overhear or record a phone call or conversation without the consent of all parties to the conversation. The law defines an "eavesdropping device" as "any device capable of being used to hear or record oral conversation or intercept, retain, or transcribe electronic communication whether such conversation or electronic communication is conducted in person, by telephone, or by any other means." 720 Ill. Comp. Stat. 5/14-1, -2. In our view, cell/smart phones are included. In addition to subjecting you to criminal prosecution, violating the Illinois wiretapping statute can expose you to a civil lawsuit for damages by an injured party.

You may have noticed recent articles in the news regarding recording public activities and this article is not purported to cover general public activities as you generally are permitted to photograph or record video of people without permission in most public places as part of an overall right to take photos or videos/recordings with sound in public places. Any attorney who suggests their client record a private meeting should make sure their advice follows the prevailing state law and confirms the need for consent.

A simple reading of Section 12 of the WC Act provides no guidance on recording an IME exam so it is simply based upon the agreement of the parties—we would argue an individual who refuses to consent to an IME if the physician performing it does not agree to recording is subjecting themselves to denial of the right to ongoing WC benefits due to the refusal to reasonably submit to the exam as stated under Section 12 of the Act. How our IWCC might rule on the issue is anyone’s guess but isn’t worth the time and delay needed to fight. On the other side, we could foresee doctors wanting to protect themselves if claimants all start routinely doing this—the IME doc might want to start recording the IME also as protection against an edited version of the exam.

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

                ----------------------------------------------------------------

Synopsis: MEDICARE UPDATE: President Obama Signs SMART Act into Law. More analysis from Shawn R. Biery, J.D., MSCC.

Editor’s comment: As we reported recently, provisions from the SMART Act were added to other legislation and passed both the House of Representatives and Senate as the legislative sessions were ending. On January 10th, 2013, the legislation was signed and becomes law. In a press release, the White House Press Office indicated the new law in part amends certain rules under which Medicare is a secondary payer to specified third-party payers. While the law being signed is only the start as it will require the drafting of Federal Regulations and some Administrative Procedures in order for it to take effect, it will now be created to clarify specifics, in general we should have some additional certainty in handling for some areas of concern including with:

• New Conditional Payment Process
  • Creates a New Conditional Payment Resolution Process which requires Notice to the Secretary of Health and Human Services advising the Secretary of a potential Settlement, Judgment, or Award. The claimant or applicable plan may, at any time beginning 120 days before the reasonably expected date of a settlement, judgment, award, or other payment, notify the Secretary of HHS that a settlement is reasonably expected and the expected date of that settlement.
  • The Secretary of HHS will allow access to information on the items and services provided by Medicare to interested individuals, authorized family, representatives, and to applicable plans through a website which requires a password to gain access.
  • By obtaining a statement of reimbursement amount from the website during the protected period (a period of 65 days, except that such period may be extended by the Secretary for an additional 30 days if the Secretary determines that additional time is required to address claims for which payment has been made), as long as the related settlement, judgment, award or other payment is made during such period, then that last statement of reimbursement amount which is downloaded during such period shall constitute the final conditional amount subject to recovery.
    • If there is a disagreement as to the amount of a conditional payment requested, the individual, representative, or plan must provide documentation explaining the discrepancy and a proposal to resolve the discrepancy and the Secretary must then act within 11 business days. Otherwise the initial proposal must be accepted. The Secretary shall determine whether there is a "reasonable basis" to include or remove claims on the statement of reimbursement.
    • Secretary must also promulgate regulations establishing a right of appeal and appeals process under which the applicable plan involved, or an attorney, agent, or third party administrator on behalf of such plan, may appeal such a determination. The individual furnished such an item or service shall be notified of the plan's intent to appeal such determination.

• There will be a Threshold for Exemption from Conditional Payment Reimbursement
  • An annual single threshold amount for a given year shall be set by the Agency. This amount shall equal the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance). Conditional payment amounts below the threshold will not be pursued by Medicare.
  • Reimbursement of conditional payments and mandatory reporting shall not apply with respect to any settlement, judgment, award, or other payment by an applicable plan arising from liability insurance (including self-insurance) and from alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) constituting a total payment obligation to a claimant of not more than the single threshold amount calculated by the Secretary for the year involved.

• Mandatory Insurer Reporting Fines and Penalties
  • The Bill replaces Mandatory Insurer Reporting penalties language requiring fines and penalties for non-compliance with a discretionary standard. Thus insurers and reporting entities ”may" be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.
  • The HHS Secretary must publish a notice in the Federal Register soliciting proposals for the specification of practices for which sanctions will and will not be imposed, including not imposing sanctions for good faith efforts to identify a beneficiary under an applicable entity responsible for reporting information.

• Three Year Statute of Limitations to File Claim for Reimbursement
  • Instead of the current unknown, now there will be definable Statute of Limitations to the Medicare Secondary Payer Act and an action may not be brought by the United States with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made.

This new legislation will at the very least give some stated guidelines with regard to Conditional Payments and I would argue from the legislative discussions regarding the implementation of the changes, the fact that the Federal Government is agreeing there is some sanity in having statutes of limitations, this may be the first step in bringing sanity to closure of cases with very limited arguable future medical and hopefully the fight continues to gain some additional sense in the need for full MSAs on claims where prospective medical care may be years if not decades away and the six-figure MSA proposals create an enormous barrier to final settlements.

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.

            ------------------------------------------------

Synopsis: Dangling Foot Didn’t Bring General Maritime Liability for Bumping Barge/Boat Owners. Research and review from James F. Egan, J.D.

Editor’s comment: In a Rule 23 decision in Ballard v American Commercial Lines, Inc., et al,  our Appellate Court affirmed no duty of care was owed to longshoremen when injured from routine bumping barges and boats under general maritime law.

Plaintiff Ballard was employed by R & G Maintenance and Welding Services, Inc. Among Ballard's job duties was to inspect the hulls and decks of barges for cracks or holes, patching and welding them as needed. On the date of injury he suffered injuries while repairing a docked barge. Plaintiff Ballard was lying on his stomach on top of a walkway area with his head, right shoulder, right arm and foot, hanging over the side of the barge while welding. His right foot was crushed when the stern of the barge he was repairing came into contact with the bow of another barge when moving water caused the barges to shift position.

Plaintiff filed a complaint seeking damages for the injuries he allegedly suffered, alleging Defendants were negligent under Illinois common law and under the Longshore Harbor Workers’ Compensation Act (LHWCA). Plaintiff also named the owner of the barge he was working on American Commercial Barge Lines, Inc.; the owner of the tugboat which disturbed the water, Louisiana Dock Company, LLC and its crew; Louisiana Dock Company in its capacity as the owner of the dock and American Commercial Lines, LLC, claiming each of the defendants were negligent for various reasons.

Defendants filed a motion for summary judgment, arguing they owed no duty of care to Ballard under the LHWCA or under general maritime law. The trial court granted defendants' motion for summary judgment, finding the defendants did not participate in the repair operations, nor did they control the repair operations and that Ballard had failed to identify the defendants' duty under the LHWCA or general maritime law. Also, the defendants did not supervise Ballard, his employer R & G, or the repair work being performed. Evidence revealed Ballard was injured because he was acting in an unsafe matter and R & G was an independent contractor which was therefor was responsible for Ballard’s supervision.

Ballard’s motion for reconsideration was denied and Ballard appealed the court’s judgment. In his notice of appeal, Ballard stated he was appealing from the trial court's order granting summary judgment for Defendants in count I, the general maritime law. Ballard affirmed he waived any claims against Defendants under the LHWCA, because the Act is a longshoreman's exclusive remedy for negligence claims against a vessel. While Ballard acknowledged the exclusive remedy provisions of the Act precluded an action against the barge owner under the general maritime law, he alleged he may bring a general maritime action against the towboat and its owners because he was not working on the towboat when he was injured and the statute contemplates the exclusive remedy provisions apply only to vessels a longshoreman was working on.

The Appellate Court found, however; Ballard did not cite any authority in support of his claim and found the exclusive remedy provisions of the Act applied equally to the towboat involved in the incident, as well as the barge, citing Bongiovanni v. Howlett as well as Section 905(b) of the Act. Since the towboat was a vessel connected to the injuries suffered by Ballard, the Appellate Court held the LHWCA was the exclusive remedy provided by Congress for Ballard's claims against the owner of the towboat and the towboat personnel. As a result, the Appellate Court concluded it did not have jurisdiction for claims against the owner of the towboat, or jurisdiction over the towboat crew under the general maritime law and the trial court's judgment for defendants must be affirmed.

Plaintiff did not appeal from that judgment and therefore forfeited any claims against the owners of the barge and their employees, any claims against owner of the towboat, as well as the towboat crew. The Appellate Court further found Ballard had failed to present any evidence that towboat owner or its employee had a duty to moor the barges or monitor mooring lines in a manner to avoid them from bumping during repair operations. Instead, the record showed barges at the dock regularly come in contact with one another. Based on de novo review of the record, the appellate court held Ballard had failed to establish the dock owner or its employee had a duty to monitor mooring lines during repair operations to prevent barges from bumping into each other. The judgment of the trial court was affirmed in all respects under the general maritime law, holding Defendants did not owe a duty of care to an injured longshoreman to monitor mooring lines during repair operations.

This article was researched and written by James F. Egan, J.D. Please feel free to contact our maritime defense specialist at jegan@keefe-law.com.

            --------------------------------------------------

Synopsis: Will Illinois Courts Stop Pulling in Claims from All Over the World? Analysis by Sean C. Brogan, J.D.

Editor’s Comment: From what we can tell, the Illinois civil justice system keeps lots of law firms from all over the U.S. busy working here. We don’t feel that is a good thing for any number of reasons, the first of which is the highly political atmosphere present when these state judges run for office and get lots of donations from folks who have nothing to do with our state other than to win favor in court. If you were to Google®-search the Madison County Asbestos Docket right now, you would find that county has several thousand asbestos claims currently pending each month. If all those claims were to be tried during a single year, every adult in the county would sit on several jury panels.

In a 2010 report, the U.S. Chamber’s Institute for Legal Reform started its study of this county’s courts by noting:

The Madison County asbestos litigation story involves the creation of a national clearinghouse for asbestos malignancy claims by first suspending normal rules about which courts should hear these cases, and second, by adopting procedures to facilitate the “processing” of large numbers of those claims. These factors combine to facilitate the process of extracting maximum value from the defendants. The resulting economics, in turn, drive a litigation perpetual motion machine where, so long as the rules are relaxed, more and more cases will be drawn to the jurisdiction. Whether Madison County asbestos litigation will continue along its current course is an unwritten chapter; but, as it stands now, the story is a cautionary tale about the power of procedural “innovations,” the ability of a judge or judges in one location to impact the entire national system of litigation, the extreme mobility of asbestos claims and the tyranny of economic incentives.

For the first time, we have seen our Illinois Supreme Court take action to enforce traditional venue rules and make Plaintiffs bring their claims where they arose. In Walter Fennell v. Illinois Central Railroad Company, No. 113812, issued December 28, 2012 various plaintiffs sought recovery for injuries they allegedly sustained as a result of alleged exposure to asbestos while employed by a railroad company. They filed suit in Mississippi and the matter was dismissed without prejudice. Several years later, Plaintiffs filed suit yet again but this time in the Circuit Court of St. Clair County, Illinois—please note St. Clair County is right next door to Madison County, IL. Via interrogatory, Plaintiff was asked to identify the specific locations where he was exposed to asbestos to which he replied “Plaintiff was mostly in and out of Jackson, Mississippi to Gulfport, Louisiana and McComb Mississippi.” Defendant filed for dismissal contending Mississippi and not Illinois was the most convenient forum to try the case. The St. Clair Circuit Court denied the motion and Defendant appealed.

The Court noted jurisdiction was proper in both Mississippi and Illinois pursuant to the Federal Employer's Liability Act as it was undisputed Defendant did business in both states. However, the Court invoked the doctrine of forum non conveniens, and held the Circuit Court of St. Clair County abused its discretion in denying Defendant's motion to dismiss.  

The doctrine allows a court to decline jurisdiction over the subject matter and the parties if it appears another forum can better serve the convenience of the parties and the ends of justice. The Court analyzed several private and public interest factors noting the following: Plaintiff resided in Mississippi; the alleged exposure occurred in Mississippi; the vast majority of identified witnesses were located in Mississippi and the residents of Mississippi would have a greater interest in having the matter resolved in their state.

Ultimately, the balance of factors favored dismissal in favor of a Mississippi forum. We hope to see more such rulings and perhaps Madison County can go back to being a venue for claims that arise in that area and not an arena to decide claims from across the country.

This article was researched and written by Sean C. Brogan, J.D. He can be reached for questions or comments at sbrogan@keefe-law.com.

1-7-13; DOI "Offshoring" Prohibition for UR/TPAs Won't Affect IL WC; Cook County is a Model for IL Gov't WC Programs; Appellate Court "Dents" An IL Employer For More WC Care and much more

Synopsis: The IL Dep’t of Insurance Issued Confusing and Unprecedented Memo Threatened to End Out-of-State UR and TPA’s;Then…

Editor’s comment: You have to love this nutty State. A source sent us a December 20, 2012 edict issued by Andrew Boron, Director of the IL Department of Insurance. It appears to indicate you can’t conduct utilization review or UR or run a third party administrator or TPA outside our state boundaries. That would be a seminal change in the IL WC system. When we received it, we started our research and also sent it to a number of confidential contacts for their thoughts.

From what we could tell in a simple reading, the Director of the IL Department of Insurance was suddenly requiring all TPA’s and UR providers to move their offices/operations into Illinois or be barred from doing business here. This unusual Memo can be reviewed on the IWCC website’s News section:

Dept of Insurance issues UR memo

The Department of Insurance has issued a memo on utilization review services. To read it, go to http://www.iwcc.il.gov/CB2012-12.pdf

To clarify, the memo speaks to both UR and TPA services and their licensure. We did diligent research and reviewed the statutes listed in the memo. As veteran defense lawyers, we don’t agree at all with Director Boron’s legal position on what the Managed Care Reform and Patient Rights Act says and how the IL DOI now appears to want to enforce it. That said, for a number of reasons, we don’t want UR and TPA’s to be “offshored” or situated in foreign countries. On the opposite side of the same debate, we don’t think of UR’s or TPA’s in Indiana, Tennessee or California to be “offshored” work. One also has to wonder about what the IL DOI will do if you have an Illinois office with UR reviewers or claims adjusters “remoting in” from across the U.S.

We then sent an email inquiry to IL DOI Director Boron and asked for the specific language in the Managed Care Reform and Patient Rights Act to which he referred. We are confident our various sources/contacts also sent similar inquiries. At the time you read this article, we assure our readers he hasn’t officially replied directly to our inquiry. The whole thing was then reported to the entire country inwww.workcompcentral.com and their intrepid Central Bureau Chief, Bill Kidd. He quoted your editor on our thoughts and he also quoted one of the top Plaintiff/Petitioner attorneys in IL WC, David Menchetti who indicated he felt UR providers should practice in the state where they are performing reviews. Mr. Menchetti was quoted as comparing UR and medicine in Indiana to India—with respect to this solid lawyer and advocate, we are fairly sure there may be some distinct differences between the practice of medicine in those disparate and distant venues.

We later got a “semi-official” response from the IL DOI sent to one of our contacts. The response is from an analyst with the IL DOI—we don’t have her permission to use her name so we aren’t going to publish it. To the extent her reply is from a state official in response to an official inquiry from whatever source, here is what it says (in pertinent part):

After receiving several calls and emails from your contracted companies this morning I felt it would be beneficial for me to intervene and attempt to clarify the intent of the company bulletin.  At this time, the above referenced bulletin does not include worker’s compensation or independent review organizations registered with this Department. All URO’s providing health utilization reviews will be required to have an Illinois office and hold contracts with Illinois licensed physician reviewers. Going forward all companies registered to perform UR (health) will have at a minimum of 1 year to comply with this bulletin. Our staff is currently working on a Q&A reference page to address all of the questions/concerns we have received.

We have no idea why or how this distinction can or should be made by our state administrators. We point out it is almost impossible to tell when medical care is going to be “workers’ comp” versus non-work-related healthcare; that status may change or morph on a minute-by-minute basis.

From the perspective of the workers’ comp industry, we assume from the official response above, the IL Dep’t of Insurance isn’t coming after you for either out-of-state WC UR or TPA services now or in the future. To our readers in the healthcare industry apart from workers’ comp, this memo will clearly affect your operations. If would appear you have a decision to make—if the DOI is going to require an Illinois office/presence, you can add one, if you don’t have one. If you don’t have one and don’t want to get one, you may have to sue the Department to block enforcement of this concept. Again, it is our strong perspective they don’t have a strong legal basis for what they are doing.

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

            ---------------------------------------------

Synopsis: Cook County’s WC Cost Containment Program Success – A Shining Example of Good Government That Should Be A Paradigm for Others.

Editor’s comment: As WC healthcare costs continue to rise employers in both the private and public sector are looking for ways to reduce workers’ compensation costs. The second largest county in the nation, Cook County Government is no different.

In 2008, the Cook County Risk Management Dep’t in collaboration with a leading provider of integrated managed care GENEX Services Inc. developed and implemented a customized cost containment program. This was an ambitious endeavor which has become a comprehensive program that has expanded in phases over the past 5 years. Their medical cost containment program includes

v  Medical Bill Review (MBR)

v  Preferred Provider Organizations (PPO)

v  Case Management

v  Medical Diagnostic Testing and

v  Utilization Review (UR).

These initiatives continue to yield to impressive results for Cook County. Combined savings from program inception in August 2008 through fiscal year 2012 is over $47 million. Savings in 2012 alone reached a staggering $17 million. Medical Bill Review is the largest contributor with over $30 million in savings with $3.8 million realized from PPO discounts. The Return on Investment by this government body continues to grow year over year. As predicted, 2012 delivered an impressive ROI of $52.07 to 1, up from the 2008 ROI of $10.76 to 1.

The biggest surprise in savings was Utilization Review or UR. In 2005, the Illinois legislature passed Amendments to the IL WC Act which brought UR to our state for the first time. UR legislation was not widely accepted and often criticized in some quarters. The IWCC slowly and surely has accepted the UR claims tool to the point it has become commonplace. As we told our readers when it started in 2005-6, if you use it in non-litigated WC claims, you can’t miss on savings while also insuring your claimants receive quality care.

As IL employers in the public and private sector began to use this effective claim tool it became more understood, accepted and respected. Cook County has realized over $8 million in saving since implementing UR in 2008. The UR program was expanded in phases as the success began to impact costs and influence treatment patterns. By using the IL UR Guidelines the County of Cook has reduced unnecessary and excessive Physical Therapy by 26,000 visits. The more recent 2011 Illinois Work Comp reform strengthens the UR provisions giving additional consideration and credibility to UR determinations. The new provisions offer support for the program and contributed to increased medical cost savings opportunities.

Since 2008 Cook County’s workers compensation spend has averaged $20M and their team manages about a thousand claims a year. They also contribute their success to an increased effort on early intervention, improving overall communication, and a focus on Return to Work.

From their success, we urge our readers to get moving on the facets that have worked so well for this large organization. Their WC program successes are easy to quantify. If you need consultation and assistance on implementing UR, Medical Bill Review, PPO’s (with PPP’s to follow later this year), Nurse Case Management and Medical Diagnostic Testing, please send a reply.

            -----------------------------------------

Synopsis: “Dent” Minimus, Non Curat Lex?? Is There No Imperfection So Tiny In IL WC That Our Reviewing Courts Won’t Demand Illinois Employers Fork Over Even More Money in WC Benefits?

Editor’s comment: Again, we don’t feel you can make this up, folks. In what we consider an astounding IL WC ruling in Dye v. IWCC, No. 3-11-0907WC, December 31, 2012, a divided 4-1 Appellate majority considered a claim for an infinitesimal “dent” on the side of an injured worker’s forehead. This microscopic “dent” was described by a physician as being one centimeter high and two centimeters wide—if you aren’t sure how metric measures translate, those measurements indicate the “dent” was .39 of an inch high by .78 of an inch wide. We consider that eenzy-teenzy facial imperfection, as described, to be a miniature issue to deal with; unworthy of appellate concern. Our headline above is a play on the Latin saying de minimus non curat lex which means little things can’t or shouldn’t be “cured” in law.

Claimant was asking for prospective medical care to refine the tiny dent into something less than a dimple. She was also asking for penalties and fees against her employer for their refusal to voluntarily offer additional medical care to render her “dentless.” The claim for penalties/fees was denied from the first request to present; the endless fight over medical care endured.

From our review of the various arbitration, review, circuit and appellate court decisions, it appears the employer paid for a hospital visit, a CT scan and two different visits to family doctors. After hearing the case, the Arbitrator found claimant already saw enough doctors under Section 8(a-3) of the IL WC Act. The Commission didn’t follow that view, as the two doctors legally provided to an injured worker under Section 8(a-3) were in the same clinic. However, the Commission didn’t award prospective “dent repair” as there wasn’t evidence of an observable disfigurement.

Our Appellate Court majority would have none of it. They reversed under the “manifest weight of the evidence” standard. As we have advised our readers on numerous occasions, we feel the “manifest weight” standard exists only to insure claimants receive benefits because it is almost never employed by our reviewing courts to deny benefits. If you carefully read their ruling, we have no true idea why the appellate majority didn’t feel either the Arbitrator or Commission didn’t fully and carefully consider the facts before them and rule this miniscule facial blemish didn’t need additional expensive medical attention. We also point out innumerable appellate rulings join to summarily find resolution of workers’ comp medical issues are within the sound province of the IWCC. We also read with chagrin the dissent by Justice Turner who pointed out the record before the Appellate Court didn’t have any photographic or other competent evidence of visible disfigurement.

Finally, we point out the relative madness of a claimant and her attorney taking a case for a “bumps and bruises” injury from January 2007 for a blemish the size of this capital letter O through four different levels of litigation to now have it remanded back to the IWCC for further findings. We have to wonder if the six years that have passed and the normal aging process have resulted in the complete disappearance of this tiny blemish since its “born-on” date. One has to wonder what the Commission will do on remand if the dimple has completely disappeared!

The ruling is on the web at: http://www.state.il.us/court/Opinions/WorkersComp/2012/3110907WC.pdf. We appreciate your thoughts and comments.

1-1-13; Can Someone Find a Lobbyist for IL Taxpayers?; Jim Egan, J.D. Reviews 12-year-old IL WC Claim Going Backward; Joseph B. Moore, J.D. on Unemployment Denial and much more

Synopsis: If “Kids Need Lobbyists,” In Relation to Illinois and Chicago’s Nutty “Pension” Crisis, So Do Illinois Taxpayers and Businesses, Folks.

Editor’s comment: We were mildly surprised to see our Illinois Workers’ Compensation Commission’s website weigh in on Illinois and Chicago’s impossible-to-fix public employee “pension” crisis. The IWCC’s excellent and newsworthy website athttp://www.iwcc.il.gov/news.htm#mw2 points to two different www.youtube videos on the web they feel are worth watching. We ask our readers to take a look if you have the time and interest to do so. Our problem with Illinois government-employee “pension” programs match the same concerns we have about most things with Illinois government—embedded chaos, disarray and turmoil on numerous levels of state and city government. We have long-time, decades-old leaders like Illinois House Speaker Mike Madigan, a member of the Illinois House since 1971 and City of Chicago Finance Committee Chair Ed Burke, first elected in 1969 who know precisely how we got there and appear to care less about the mess they have supervised. They are clearly not openly accountable for any of it. The last thing we hate about all of this is the answer to any government issue in this state is unlimited borrowing because no one has the guts to raise taxes to pay for government commitments. Simply put, instead of new taxes, the multi-zillion-dollar government borrowing is starting to inexorably bob to the surface, like flipping over a giant iceberg.

Illinois Government Pensions are the Best Investment on the Planet for Government Workers and the Worst Deal in History for Taxpayers and Businesses

If you owned and operated a hot dog stand, a shoe-shine booth or a law firm, would you ever hire a worker who could work for you for twenty years, pay something like 5-6% of their salary into a so-called “pension” fund and then force you to pay their salary and health care benefits for up to fifty more years, long after they had departed from your employ? Would you offer that impossible-to-finance benefit for all your workers over the years and have more folks on “pensions” than on your active payroll? Could any business survive in doing so? As you read this, the State of Illinois and City of Chicago may have as many as a million workers who are receiving or will be certain to receive “pensions” during their lifetimes. Some of them will use the “pensions” to live, thrive and survive; some of them will use the “pension” as a generous second income source from which to make a tidy profit. If you want the poster child for triple-dipped post-government income, former Chicago Mayor Rich Daley gets a City Pension, a State Pension and doesn’t “need” either pension from the way-past-broke government pension funds because he is working at a law firm making solid money as a consultant.

For an example of the above financial model, about ten years ago, some misguided bureaucrat who worked with Finance Chairman Ed Burke agreed to allow Chicago Public School teachers to only contribute 2% of their annual pay into that CPS teacher “pension” fund. Right now, Chicago Public School teachers make about $75,000 on average. If you do the math, 2% of $75,000 is $1,500. After twenty years of contributing, a Chicago teacher would put only $1,500 times 20 years or $30,000 into the kitty for their future lifetime pension rights. When that teacher is fully vested, they would get about $60,000 a year until their passing. To our understanding, they also get 3% COLA increases too. For a career investment of only $30,000, they will go through that career “pension” contribution in half a year and may receive $60,000 each year for twenty, thirty, forty or fifty years! The incredible but certain payout over that time could be more than $3,000,000 based upon career contributions of $30,000!!! We consider that an amazing return for the worker unlike any in the history of the planet and an awful shot to city taxpayers who are truly funding this financially incomprehensible mess. We want to emphasize you can’t blame the teachers who are taking what they are being given—there is enough blame to go around for everyone in Chicago government. Our city fathers are now trying to sell Midway Airport to put a tiny patch on the monster and spiraling problem.

For another example, Circuit Court judges in this state make between $155,000-$180,000 in annual salary. They contribute a little bit more to their judicial pension kitty that Chicago teachers—judges contribute about 8% for single judges to 12% for married judges. The problem with judicial pensions is it only takes six years to be fully vested. Starting at the end of their sixth year, a sitting judge hasn’t contributed one-half of a single year’s salary into the “pension” fund but can sign up for a lifetime payout of about $120,000 a year with COLA increases. Again, they may receive that money for 10-50 years. For their short-career “pension” contributions of as low as $75,000, a retired judge might get $5-10 Million in return plus lifetime health care coverage. We consider that an amazing deal for the jurists involved and an unbelievable bad deal for Illinois taxpayers and businesses who don’t even know it is happening. Again, you can’t blame the judges who work hard and put their lives on the line every day of every year but six year’s “pension” contributions to get millions and millions after you are off the front lines seems unsustainable.

The point we are making isn’t to fix blame or fault upon pensioners; our point is you can’t create a sensible “pension” program where the pensioners don’t contribute at least 3, 5, 10 years’ salary into the program to then receive guaranteed and substantial lifetime income. In our view, the current programs can’t be maintained as they are today—they have to be dramatically revised to make any sense.

Will The Media and Everyone Else Stop/Cease/Desist on Using the Term “Unfunded” When It Comes to Illinois/Chicago Government Pensions? Please!!!?

Another thing about state/city “pensions” that we despise and dislike is the continued use of the blurring accounting term “unfunded” to refer to Illinois “pension” shortfalls. No one other than an accountant or actuary truly knows what it means—for the inside scoop, you have now come to the right place. We assure you right now Illinois state pensions are “funded” at about 40% of the annual payout.

What does “funded” versus “unfunded” mean? It is simple—“pensions” in state governments across the country are “funded” with three apparent sources and one hidden and confusing “unfunded” source.

1.    One is employee contributions—as we outline above, the employees are putting in a certain level of money from their paychecks as contributions. That level varies from government pension to pension.

2.    The next source of “pension” income is investment income from wherever the State or City of Chicago put the money to obtain a safe investment return. Returns on investments are down across our country since about 2008 when the current recession started.

3.    The final source of “pension” income is taxpayer dollars. The problem at both State and City levels came from politicians not putting enough money in to meet the requirements of the pension funds to pay out what is owed to the government workers.

The hidden and confusing “unfunded-funding” source is again from taxpayers—it is billions of dollars being borrowed to pay the shortfall in pension contributions from all sources. Right now, Illinois state pensions are less than 40% “funded” meaning they can’t pay even half of what is owed from the three “funding” sources--employee contributions, investments and government/taxpayer-matching funds. There are about 750,000 workers who are in these pension systems and billions and billions are needed to make up the 60% that isn’t in the kitty. What does government do when they don’t have money? Sadly, no one has even slightly suggested levying a new tax to pay what they have tied us into—instead they borrow it which means we have to eventually pay both principal and interest on billions we admittedly don’t have.

Guess who has to pay back the billions being borrowed—YOU DO!! This is why the Illinois Workers’ Compensation Commission and our Governor are putting out www.youtube.com videos about your kids needing lobbyists. They are letting us know we are all basically smoked; we can’t keep borrowing money to pay the interest and principal on the whopping debt that is building up. We don’t think your kids have to worry about it—in five to ten years, this State and the City of Chicago are going to be so deeply in hock, “pensions” may cause government bankruptcies.

The Final Camel-Back-Breaking Straw in Illinois/Chicago “Pension” Reform That We Hate—Everyone Points to the Illinois Constitution As Requiring Government Bankruptcy!!!

The last thing we heard from the Chicago Tribune® report today on “pension” reform are statements like this:

Few states have enshrined pension protections in their constitutions quite as emphatically as Illinois. The charter's so-called pension clause — which states that pensions cannot "be diminished or impaired" — was written at a time when the financial condition of many retirement systems in Illinois was nearly as bad as now. The difference back then was that courts in Illinois considered pensions a "gratuity" that could be reduced in a financial pinch, and actually had been in other states with similar legal standards. The pension language was added to the constitution to address state workers' fears about benefit cuts, records of the 1970 Constitutional Convention show.

In response to such silliness, we tell our fellow members of the media and everyone in state/city government the simple phrase “Darn the Torpedoes, Full Speed Ahead.” We are facing the mega-crisis of all crises in this state. In our view, we need to start fresh with a new Constitution and new laws on “pensions” that make simple financial sense. The State Constitution was drafted by Illinoisans and can be changed by Illinoisans. If that is a lot of work; well, get started. If we don’t make better sense of what we are doing, we are certainly going to face more giant budget cuts in non-pension government needs and unquestioned bankruptcy that will require others to make those decisions for us.

Simple Financial Solutions That No One Will Consider to Fix State/City “Pensions?”

·         Limit the post-employment “Pension” payout to a fixed period, say 5, 10 or 20 years?

·         Match “Pension” contributions/investments to what the pensioner receives? We understand this is how the State of Wisconsin offers their pensions.

·         Make “Pensions” only for folks who are not working at all after leaving government service—if a pensioner has a post-government job, have the State/City money be set off by that amount until they stop the other job and actually retire?

·         Right now today; move everyone to a 401K style retirement system, like the rest of the U.S. in the private sector.

·         Hold a symposium or three and listen to all sides including kids, pension experts, rabid union members, local governments, businesses and everyone interested.

We salute IWCC Chairman Weisz and our Governor for their work to bring these issues to the forefront. We hope everyone who cares about our State and its biggest City start to get involved and find a fix for this looming financial disaster. We appreciate your thoughts and comments. Please post them on our award-winning blog.

                ----------------------------------------

Synopsis: Twelve Years of Litigation and Back to Square One—thoughts by James F. Egan, J.D. on New and Unprecedented IL WC Appellate Ruling.

Editor’s comment: The Illinois Appellate Court, Workers’ Compensation Division in a relatively rare situation involving claimed injuries stemming from a 1999 date of loss, ruled as two commissioners who found claimant was entitled to receive WC benefits did not agree as to a specific permanency award, a majority of the commissioners did not approve the PPD award, and the Commission's decision was therefore not final as it did not dispose of claimant's request for permanent disability benefits per Section 19(e). In absence of a final determination by the Commission, the Circuit Court lacked requisite subject-matter jurisdiction to enter an order confirming the Commission's decision.

We note Section 19(e) of the Workers' Compensation Act provides, in relevant part, that "a decision of the Commission shall be approved by a majority of a panel of 3 members of the Commission.” In University of Illinois Hospital v. Illinois Workers' Compensation Commission, 2012 IL App (1st) 113130WC (December 21, 2012)  Claimant presented evidence regarding her 10-year employment with University of IL Hospital and her condition of carpal tunnel syndrome. She also presented opinion evidence to support her claim that she was permanently and totally disabled under the supposed “odd-lot” category. We remind our readers the term “odd-lot” doesn’t appear in our Rules or Act.

The government employer presented evidence and indicating Claimant's injury and current condition of ill-being were caused by a systemic disease not related to her employment, Claimant was not permanently and totally disabled and was capable of performing the necessary functions of a clerical-assistant, a position that had been offered to Claimant in December 2005, but which she had rejected.

The Arbitrator found Claimant sustained a work-related injury which aggravated a pre-existing condition, and the current condition of ill-being in the claimant's wrists and hands was causally connected to the employment onset. The arbitrator determined Claimant was entitled to temporary total disability (TTD) benefits for 179 4/7 weeks from February 14, 2000, through July 29, 2003 and also found Claimant sustained a permanent partial disability (PPD) to the extent of 25% loss of use of the right hand and 22.5% loss of use of the left hand.

Both parties sought review of the Arbitrator's decision before the Commission. In a sense the IWCC panel proceeded to muddy the waters with their decision. The panel, with one Commissioner dissenting and one Commissioner concurring in part and dissenting in part, corrected and clarified certain portions of the Arbitrator's decision, but affirmed and adopted the Arbitrator's decision as to causation, TTD, and medical expenses. The Commission's decision also sought to award Claimant 90 1/7 weeks of PPD benefits, based, in part, on the determination Claimant was not permanently and totally disabled under the odd-lot category and, therefore, was not entitled to PTD benefits. However, only one Commissioner expressed the view Claimant was entitled to PPD benefits and was not entitled to PTD benefits under the odd-lot theory. A second Commissioner dissented in part concluding Claimant had proven she was permanently and totally disabled under the odd-lot category and was entitled to PTD benefits. The third Commissioner dissented from the entire decision determining Claimant had failed to prove that her injury and current condition of ill-being were causally related to her employment.

The Circuit Court of course did nothing at all to clarify the confusion and merely rubber-stamped the Commission decision, which then wound its way to the  Appellate Court.

Jurisdiction was not raised on appeal, however; the Appellate Court considered subject matter jurisdiction sua sponte and ultimately held, correctly we feel, that as the IWCC review record affirmatively demonstrated there was no approval by a majority of the 3-member panel of commissioners with regard to Claimant's entitlement to a permanent disability award and in the absence of a final determination by the Commission, the Circuit Court lacked the requisite subject-matter jurisdiction to entertain this matter and enter its order confirming the Commission's decision. Therefore the Circuit Court decision was vacated and the matter punted back to the Commission for a determination on permanency.

Clearly upon receipt of the Commission decision, the parties should have motioned the matter immediately to stay further appeal timelines and bring the matter back before the Commission panel for a majority decision. This article was researched and written by James F. Egan, J.D.,please feel free to contact him about it at jegan@keefe-law.com.

                --------------------------------------

Synopsis: Denial of Unemployment Benefits Affirmed Following HIPAA Misconduct by Health Care Worker; Analysis by Joseph B. Moore III, J.D.

Editor’s comment: In Pesoli v. The Department of Employment Security, 2012 IL App (1st) 111835 (December 19, 2012), Plaintiff Pesoli was denied unemployment benefits by the Illinois Department Employment Security (IDES) following her termination for misconduct after improperly accessing patient records. Appeals to the Compensation Board, Circuit Court, and finally the Appellate Court, all affirmed the denial of benefits. 

Plaintiff-Appellant Pesoli worked as a secretary in the radiology department at Advocate Lutheran General Hospital for more than a decade. She was terminated after accessing secure patient files on the hospital computer network. The IDES adjuster initially found her eligible for unemployment benefits. Advocate Hospital appealed, assert Pesoli was discharged for “misconduct,” and ineligible under the Illinois Unemployment Insurance Act. The appeal referee agreed with Advocate Hospital and Pesoli appealed but the Board affirmed denial of benefits. A further administrative review action was filed in the Circuit Court of Cook County, who again affirmed the Board's denial.

In the Illinois Appellate Court, Pesoli argued the facts in her favor were not properly introduced and her actions did not constitute “misconduct” under the Act. The Appellate Court disagreed with Pelosi and affirmed the denial of benefits was not contrary to the weight of the evidence. Furthermore, Pelosi failed to request testimony from her co-worker or any additional evidence regarding unauthorized access of records in violation of HIPAA. During her administrative hearing, these issues were procedurally defaulted and therefore waived. Pelosi also argued unsuccessfully hospital human resources testimony was hearsay and should not have been admitted. Lastly, Pesoli's termination for “misconduct” was found to be proper, meeting three basic elements: (a.) deliberate and willful violation (b.) of a reasonable rule (c.) causing harm to the employer. 

On its face, this Appellate opinion confirms an employee terminated for misconduct shall appropriately be denied benefits. However, the opinion touches on a few other key issues, especially for health care employers. 

First, the court rejects efforts to make new factual arguments at the Appellate level. A failure to make appropriate objections to factual issues at the administrative review level shall deem them “procedurally defaulted.” Hospital rules and procedures to comply with HIPAA, a federal health care law, were found to be reasonable. Lastly, while Plaintiff's actions did not specifically harm the patient whose records were accessed, the court held that breaking HIPAA laws could expose the hospital to potential lawsuits or loss of business. 

An employee may break rules or laws without causing “actual harm.” Keep in mind the “potential harm” demonstrated in this case. When evaluating the actions of a terminated employee, answer these questions. Was the violation deliberate or intentional? Was the employee properly trained and aware of the reasonable law, rule, or regulation? Did the violation expose the business to actual or potential harm? Employers should keep these issues in mind when dealing with instances of employee misconduct. 

This article was written by attorney Joseph B. Moore III, J.D. He is licensed and representing defense clients in both IL and IN. If you have thoughts and comments, please send a reply to jmoore@keefe-law.com or post them on our blog at www.keefe-law.com/blog.