12-16-13; If You Haven't Starting Using Impairment Ratings for IL WC Claims, Do!; Important Firefighter Pension Ruling-Analysis by Jenn Maxwell, J.D.; Basketball Isn't WC in IL Law and much more

Synopsis: Note to IL Claims Handlers, Risk Managers and Other WC Administrators—Only Use Impairment Ratings For IL WC Claims If You Want to Save Money!

Editor’s comment: The 2011 Amendments to the IL WC Act statutorily changed the criteria for evaluating permanent partial disability for injuries that occur on or after September 1, 2011. We feel impairment ratings should be admissible for WC claims arising from injuries prior to that date—the call on allowing/considering a pre-statutory impairment rating is up to the Arbitrator assigned and the Commission, if the matter is administratively appealed. In simplest terms, an impairment rating is valid medical evidence of permanent loss consistent with Section 8(c), (e) and (d-2) of the Act. In our view, impairment ratings are admissible for all pending IL WC claims but have to be considered for claims for DOL’s after 9/1/2011; the weight such evidence is given is up to the sound discretion of the hearing officers.

The IL WC Act now indicates:

Pursuant to 820 ILCS 305/8.1(b), permanent partial disability for accidental injuries that occurred on or after that date shall be established using the following criteria:

(a) A physician licensed to practice medicine in all of its branches preparing a permanent partial disability impairment report shall report the level of impairment in writing. The report shall include an evaluation of medically defined and professionally appropriate measurements of impairment that include, but are not limited to: loss of range of motion; loss of strength; measured atrophy of tissue mass consistent with the injury; and any other measurements that establish the nature and extent of the impairment. The most current edition of the American Medical Association’s “Guides to the Evaluation of Permanent Impairment” shall be used by the physician in determining the level of impairment.

(b) In determining the level of permanent partial disability, the Commission shall base its determination on the following factors:

(i) the reported level of impairment pursuant to subsection (a) (e.g.; the AMA rating)

(ii) the occupation of the injured employee

(iii) the age of the employee at the time of the injury

(iv) the employee’s future earning capacity

(v) evidence of disability corroborated by the treating medical records.

No single enumerated factor shall be the sole determinant of disability. In determining the level of disability, the relevance and weight of any factors used in addition to the level of impairment as reported by the physician must be explained in a written order.

What is the Debate over “Disability” versus “Impairment?” How Does That Impact the IL WC Act’s requirement of “Permanent Partial Disability?”

AMA Guides to the Evaluation of Permanent Impairment, Sixth Edition indicate:

1.    “Impairment” is a significant deviation, or loss of use of any body structure or body function in an individual with a health condition, disorder, or disease.

2.    “Disability” has been defined as activity limitations and/or participation restrictions in an individual with a health condition, disorder, or disease.

3.    “Impairment rating” has been defined as a consensus-derived percentage estimate of loss of activity reflecting severity for a given health condition, and the degree of associated limitations in terms of activities of daily living (“ADL’s”).

4.    “ADL’s” Basic self-care activities performed in one’s personal life such as feeding, bathing, hygiene and dressing.

Impairment and disability in IL WC are disparate concepts. The AMA impairment rating is a component of the PPD percentage loss of use assessment, but our new statute doesn’t necessarily equate the impairment rating and the Arbitrator’s determination of the proper value for permanent partial disability.

Why Were the AMA Guides Included In the 2011 Amendments to the IL WC Act?

1.    During the crooked Blagojevich years, PPD awards were completely random, way higher than previous administrations and appeared dishonest.

2.    AMA Guides provide source for greater uniformity in permanency awards.

3.    AMA ratings are typically much lower than the traditional PPD award for the same injury.

Who Can Prepare an AMA Rating Report?

1.    See above--Section 8.1(b) of the IL WC Act requires the report be prepared by a physician licensed to practice medicine in all of its branches. Accordingly, non-physicians such as chiropractors, osteopaths, allopaths or registered physical therapists are not permitted to provide impairment ratings in IL WC.

2.    Please note the IL WC Act, as amended does not, require the physician be “certified” or participate in any particular training to perform an AMA rating.

3.    Please further note there is no requirement the physician providing the rating be licensed in the State of IL—several Plaintiff/Petitioner lawyers have outlined objections to out-of-state physicians providing ratings.

Can/Should a Treating Physician Perform an AMA Rating?

AMA impairment ratings are provided by lots of treating physicians who handle work injuries in other jurisdictions. However, the AMA Guides themselves indicate treating doctors should not provide AMA impairment ratings as they are not independent and can be are biased in favor of the patient. The IL WC system considers even patient-biased AMA ratings to be so much lower than traditional IL WC PPD values, treaters are encouraged to provide them, regardless of bias.

Can/Should the Workers’ Compensation Insurance Carrier/TPA Request an AMA Rating From the Treating Physician?

In our view, we have no particular concern about an NCM, insurance carrier or TPA asking a treater for an impairment rating. Some of our colleagues consider the request for an impairment rating from a treater to potentially violate the silly, evidentiary ruling in Hydraulics, Inc. v. Industrial Commission. Win our view, the Hydraulics ruling was trumped by HIPAA anyway. We don’t have a problem with an insurance carrier/TPA letting the unrepresented worker know they want an impairment rating, asking if it is okay to seek such a rating from the treater and then translating it into cash and offering it to the worker in settlement of their claim.

In contrast to this advice, we are advised some petitioners’ attorneys advise they may:

·         Never request an AMA rating from a treating physician;

·         Routinely object to any request by the insurance carrier/TPA for an AMA rating by the treating physician;

·         Object to any AMA rating provided by a physician retained for that purpose.

·         Find extraneous and odd reasons to object to confuse Arbitrators and Commissioners in considering impairment ratings.

Can a Physician Performing an IME Pursuant to Section 12 of the WC Act Provide an AMA Rating?

There appears to be no reason an IL WC IME physician cannot provide an impairment rating as part of an IME. Where a rating is provided by an IME physician or any other physician retained for that purpose, it is important they be provided with the requirements of the statute and specifically address not only the AMA rating but the other factors specified, including loss of range of motion, loss of strength, measured atrophy of tissue mass consistent with the injury, and any other measurements that establish the nature and extent of the impairment.

How Much Does an AMA Rating Cost?

You can’t rely on the IL WC Medical Fee Schedule for pricing. We have several great doctors who can provide them—we are happy to provide projected costs. Send a reply.

When Do You Want to Get the AMA Rating?

In short, you want to thing rating at maximum medical improvement. This has been defined by the AMA Guides as “a status where patients are as good as they are going to be from the medical and surgical treatment available to them.”

IWCC Use of Impairment Ratings When Presented

When you present them, the current three IL WC Commission panels are considering an AMA rating in any and all permanency awards. The Commission voted “unanimously” to provide the following recommendations to the Arbitrators regarding impairment ratings:

·         An impairment rating report is not required to be submitted by the parties with a settlement contract;

·         IL WC Arbitrators are considering impairment ratings and approving pro se settlements in reliance upon the;

·         If an impairment rating is not entered into evidence, the arbitrator is not precluded from entering a finding of permanent partial disability consistent with traditional and higher metrics.

In our reasoned legal view, the concept of impairment ratings is a very solid claims tool that all insurance carriers/TPA’s need to use, when they want to save money. Please remember the debate over what Petitioner/Plaintiff attorneys are going to agree to or disagree about in relation to impairment ratings won’t ever hit the majority of your IL WC claims—there are tens of thousands of nonlitigated IL WC claims where a zero or low rating might keep claimant from even going to an attorney. If you don’t start asking for ratings or getting them, we assure you that you are falling behind your competition. If you want KCB&A to get a pro se settlement approved in IL for the rating at a flat rate, send us the file.

If you need help better understanding the role of impairment ratings or information on who to use for them, send a reply.

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Synopsis: Firefighter/paramedic’s Sensitivity to Latex Gloves Doesn’t Equal Lifetime Benefits. Analysis by Jennifer J. Maxwell, J.D.

Editor’s comment: The Illinois Appellate Court (2nd District) in Kim L. Edwards v. The Addison Fire Protection District Firefighters’ Pension Fund affirmed the decision of the Board of Trustees of the Addison Fire Protection District Firefighters’ Pension Fund and in doing so denied a firefighter’s application for lifetime line-of-duty disability pension benefits under the Illinois Pension Code.

In the application, her disability was described as “latex allergy worsening over the past two years due to exposure at Addison Fire Dept.” and her cause of illness was repeated exposure to latex through gloves being used on ambulances/engines. The Appellate Court noted in order to establish a firefighter’s entitlement to line-of-duty disability benefits, the following elements must be proved: 

1.    Claimant is a firefighter;

2.    Claimant is suffering from a sickness, accident, or injury;

3.    Such sickness, accident, or injury was incurred in or resulted from the performance of an act or duty or from the cumulative effects of acts of duty;

4.    The firefighter is physically disabled for service in the fire department; and

5.    The disability renders necessary the firefighter being placed on a disability pension.  

There is no requirement that an act of duty be the sole or even primary cause of the applicant’s disability; it is sufficient that an act of duty was an aggravating, contributing, or exacerbating factor (sound familiar WC folks?).

The Court concluded the Board’s decision was not against the manifest weight of the evidence and the Board found the following:

• Edward’s own testimony, examinations and discussions with various examining doctors demonstrated a lack of severity of her allergy and nondisabling nature of the reaction to latex;  
• Edwards did not discuss such an allergy with any of her treating physicians between December 2003 and September 2008;
• Edwards never noticed any problems with latex until July 2008; and
• Edwards never missed any work because of it.

The Board also noted Firefighter Edwards’ concomitant filing before the IL Department of Human rights in which Edwards alleged her duty was unrelated to her ability to perform the essential functions of her job. The Court specifically noted the Pension Board acknowledged the sensitivity to latex exposure but determined it was not severe enough to constitute a disabling sickness within the meaning of the Pension Code and she failed to prove she was permanently disabled within the meaning of the Code. 

The Court further noted while “it might seem incongruous that [she] could be found unfit for duty because of latex sensitivity yet be found ineligible for a pension based on the same physical infirmity” the Court was quick to state it had previously considered this issue and found no conflict—the bar is set lower for a municipality seeking to discharge an unfit firefighter than for a firefighter to obtain a lifetime line of duty disability pension.

Edwards was denied her disability benefits under the Pension Code, but would she have been denied the generous workers’ compensation benefits in IL?  No. There are cases in which Petitioners have received permanent partial disability benefits for work related allergic reactions to latex. Does this seem incongruous? We anticipate the Court’s answer would be “No” and then it  would explain in so many words that the bar is set even lower for a firefighter or any employee to obtain worker’s compensation benefits under the Illinois Work Comp Act. 

We appreciate your thoughts and comments. This article was written by Jennifer Maxwell, J.D. who can be reached at jmaxwell@keefe-law.com Please feel free to reply with any comment or concern.

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Synopsis: The Challenge of Predicting When the IWCC Will Follow the Law.

Editor’s comment: We read a recent IWCC ruling that we consider hard to understand. Read the following, consider what they did and give us your thoughts.

In Campbell v. Taylorville Fire Dep’t, the IL WC Commission panel was considering a set of facts we are asked about all the time. In this claim, the Fire Department has a basketball hoop for its sometimes idle firefighters. As a rapid aside, we encourage Taylorville and all similarly situated towns/villages and cities to consider starting “public safety” departments where you have combined fire and police departments to avoid having idle government workers, particularly firefighters.

Trust us, you truly don’t need lots of expensive firefighters sitting around the station waiting for fires that never happen at your expense. Trust us, building codes and fireproofing homes and other buildings has dramatically cut the number of fires faced by your local fire department and you haven’t done the needed research about how many fires hit your district every year. If you need more information about how to move your municipality to a combined “public safety” department and save millions for your taxpayers, send a reply.

In this ruling, Claimant Campbell sprained his ankle playing B-Ball; not much of a shock there. There was no question he wasn’t ordered or assigned to play round ball. This claim comes under the aegis of Section 11 of the IL WC Act that is crystal clear. For you history buffs, the genesis of Section 11 was two different claims against Jewel Food Stores© exactly one year apart. In both claims, a Jewel employee was playing in a softball game while off work. Both workers were injured sliding into second base. In what was something of an embarrassment to the WC “wise guys” of the day, one worker received WC benefits and the other had the claim denied.

Thereafter, the IL legislature enacted Section 11. Paragraph 2 of this section doesn’t require a masters’ degree to understand it:

Accidental injuries incurred while participating in voluntary recreational programs including but not limited to athletic events, parties and picnics do not arise out of and in the course of the employment even though the employer pays some or all of the cost thereof. This exclusion shall not apply in the event that the injured employee was ordered or assigned by his employer to participate in the program.

In our view, basketball is by definition a “voluntary recreational activity” for anyone other than members of the Chicago Bulls. If this firefighter wanted to fit into the “exclusion, he has to demonstrate he was “ordered or assigned” to play. In the Campbell v. Taylorville Fire Dep’truling above, the parties effectively stipulated the firefighter wasn’t ordered to play basketball. To get around the statute, it appears to us fire department management of Taylorville agreed to testify they wanted the firefighter to participate because it was good for “exercise, team building and recreation.”

In our respectful response, we want to confirm our position is “who cares?” There is no question, none, that Firefighter Campbell was not ordered or assigned to play round-ball. He did so at his own risk. There literally hundreds of potentially silly reasons his bosses may have conjured up as a reason for him to participate—weight loss, bone density, heart health, a strong neighborhood presence, pretty hook shots or whatever you like. None of it has anything to do with the statute or its requirement that “voluntary recreational programs” are not covered under IL WC. We send kudos to Commissioner Kevin Lamborn who filed a solid dissent pointing out this simple statutory requirement to the other Commission members.

Please also note decisions like this are infuriating to IL business. No one has any idea when they can allow workers to go to company-owned gyms or aerobics classes or any other exercise. As we have told our readers many times, the laxity with which some IWCC commissioners provide benefits outside the statute to public sector workers poisons the well for private sectors employers. Lots of companies want to provide work out facilities and classes for their workers—decisions like this make that concept very challenging.

We do have a form for your workers to consider and sign that confirms their participation in voluntary recreational activity is voluntary. We can’t guarantee it will work but it does make it even harder for our hearing officers to ignore the law. If you want to see it and implement it for your team, we are happy to send you a sample. Please just sent a reply. We also appreciate your thoughts and comments.

12-9-13; When Can an Employer Sue an Employee?; Simple, Clear Thoughts on the Illinois “Pension Reform”; Understanding How a Concomitant Release/Resignation Works and more

Synopsis: When Can an Employer Sue an Employee?

Editor’s comment: Following up on our KCB&A Update article of last week about when an employee can sue an employer, we wanted to provide the counterpoint—when can you sue one of your workers?

Employee Negligence Causing Damage or Injury to Others

As a practical matter, employees are generally not held liable to their employers for ordinary negligence or carelessness in the performance of their duties. Instead, an employer accepts the risk of employee fallibility/negligence and may be forced by the courts to take that into account in the costs of doing business.

Practical considerations aside, however, the common law does not necessarily bar negligence actions against an employee. For example, the Washington State Supreme Court explained the following:   

Common law property damage actions by an employer against its negligent employees are uncommon. . . . [I]n cases where there is no insurance coverage, suing an employee who negligently causes extensive property damage is ordinarily a useless act because of the limited funds and income available to the employee. Further, as noted by the trial court, employees are often included within an employer's insurance coverage, thereby barring litigation between the two.

Nevertheless, unless otherwise barred, it is well settled that an employer has a common law right of action against its own employees for property damage arising out of ordinary acts of negligence committed within the scope of employment.

Stack v. Chicago, Milwaukee, St. Paul, & Pacific Rail Road Co., 94 Wash. 2d 155, 158 (1980) (citing supporting cases from various jurisdictions); see also Restatement (Second) of Agency § 401 (1958) (“[I]f a paid agent does something wrongful, either knowing it to be wrong, or acting negligently, the principal may have either an action of tort or an action of contract. This is true when an agent negligently harms a chattel of the principal, or, by negligence or fraud, causes a principal to be liable to a third person, exceeds his authority in selling goods, or violates a duty of loyalty.”)

Please note this might be a way to counter repeated safety violators who cause damage to equipment or property. In the Interstate Scaffolding v. IWCC claim, the worker on light duty allegedly was spray-painting slogans on scaffolds in the workplace. If the employer were to have both fired and then sued the employee for the cost of remediation of the graffiti, the WC litigation may have settled more favorably or been dropped. We are not aware of any legal rule or statute that would block such a lawsuit against the worker.

In our view, employers should consider being much stronger about countering WC claims involving unsafe or negligent acts, causing injury or death with civil suits. There was a famous ruling in Oklahoma where a truck driver picked up a hitchhiker and may have been romantically distracted by the hitchhiker and, without slowing, ran right into a moving train. The crash resulted in a complete loss of the tractor-trailer, customer load and massive destruction of the moving train, including a six-figure environmental clean-up. In our view, the trucking company should have considered countering the WC claim with a civil action against the estate of the decedent who violated many safety rules and several laws in causing the damages.

Other Civil Actions by an Employer Against an Employee

In addition to negligence actions, there are several other scenarios where an employer can sue an employee, including causes of action for indemnity, breach of contract, and intentional torts. For example, some permissible causes of action an employer can bring against an employee are outlined below (please note this list is not exhaustive or all-inclusive):  

• Claims for indemnification: Where a third-party sues an employer for damages caused by an employee’s negligence (i.e., under the doctrine of respondeat superior), an employer can bring a counterclaim against an employee for damages to be paid to a third-party as a result of the employee’s negligence.

• Breach of contract: An employer can sue if an employee fails to perform his or her obligations under a contract—for example, by breaching a non-compete or non-solicit agreement.

• Breach of duty of loyalty: Employees have a common-law duty to act solely for their employer's benefit regarding all matters within their employment. This duty exists regardless of whether there is an employment contract. Please note this duty is distinct from an officer’s or director’s heightened fiduciary duty to the employer.  

• Conversion/Theft: An employer may sue an employee for the intentional wrongful possession or disposition of the employer’s property. The employer may sue to recover the property itself or for the value of the property. Conversion also covers the intentional destruction of property.

• Intentional interference with contractual relations and/or advantageous business relationship: This includes actions against a former employee for interfering with an employer’s relationships with current employees.

• Defamation: To win, the employer must prove the statement harms the employer's reputation, is false, and was publicized with the requisite degree of fault.

Of course, even if an employer is successful in any of the above actions, some employees may lack the assets to satisfy a judgment. Then again, a successful lawsuit against an employee may be valuable even if no money is recovered—for example, by sending a message to other employees and by deterring similar wrongful acts in the future.

This article was researched and written by Chris St. Peter, J.D. and your editor. Please feel free to provide your thoughts and comments to Chris at cspeter@keefe-law.com.

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Synopsis: Simple, Clear Thoughts on Illinois “Pension Reform” of Last Week.

Editor’s comment: We have never seen so much misinformation and misdirection from all sides of a multi-billion dollar issue. We don’t think any news source got it completely right. We are sure the state government unions continue to foster a combination of public relations spins, fabrications and propaganda for all to read. We ask our friends, clients and readers to please stop using the word “pensions”—it is just post-employment income. Let’s try to dumb this down a bit.

1.    Illinois Taxpayers are now forced to guarantee lifetime income for all state government employees and local teachers who make the requisite “contributions” during their required employment tenure. There may be as many as 800,000 such folks.

2.    We don’t have any problem with the concept, we just want the three sources of this form of “lifetime income”

a.    Contributions from the participants;

b.    “Matching contributions” from taxpayers and

c.    Investment income

to come from those three sources while a worker is working. Right now, the system is “unfunded” to the tune of about 60% which means 60 cents of every “pension” dollar paid is coming from you and me, as taxpayers, to pay the post-employment income of people like former Governors Jim Thompson and Jim Edgar. Those folks haven’t worked for the state in over a decade but they are again being paid, as if they were active employees.

3.    Right now, the three sources in letters a-c above don’t meet the requirements of current system participants by about $100B! We don’t feel current system participants should be shorted matching contributions while they are working for the state or local governments. We also don’t feel the state should be allowed to borrow money/issue bonds to silently fill the gaps. If you don’t have enough money to pay your bills, cut staff until you have enough money.

4.    The reforms of last week are designed to end the “unfunded status” of our “pension” programs in year 2044. Please note the government unions are fighting in court to stop even that from happening and basically continue to rip-off taxpayers indefinitely. What Senate President Cullerton promised in opposition to the reforms was more and more taxes, as he confusingly but accurately asserted our State government can’t file for bankruptcy. In response, we point out any business that can’t timely pay its bills is arguably “bankrupt” and, by that definition, our State government under Senate President Cullerton has been bankrupt for at least a decade because we are always several billion behind in payments to hundreds of state vendors and everyone other than government union and salaried workers.

5.    All aspects of the so-called “pension” plans have lots and lots of continually moving parts that are just about impossible for busy taxpayers to follow—by that we mean our legislators and governor constantly change how much participants contribute, how much government matches, how much participants are paid, how long participants have to be in the system to qualify or “vest”, how much they have to contribute and various other parts.

6.    Please note only 4 out of 5 Illinois government pension programs were “reformed” in last week’s legislation. The Judicial Retirement System can’t be “reformed” by the legislature—this plan is contained in the IL Constitution. Our Judges/justices continue to have “pensions” or post-employment income that requires them to pay as little as $100,000 over a very short eight-year vesting period and, upon retirement, they can receive post-employment income well into the millions. For one example, Justice Tobias Barry, who penned the landmark ruling in Edward Hines Lumber v. Industrial Commission, contributed less than $100K during his years of service and has cashed “pension” checks for over $2,000,000 to date and still counting.

7.    When you hear “pension” proponents arguing they contributed “their fair share,” please remember the math above. Please also remember some state government workers do contribute a “fair” amount, if they work for years and years. In contrast, lots of them contribute a mere fraction of the overall lifetime cost of their pension and the gap has to be made up by taxpayers in current tax dollars. This anomaly and uncertainty is the main issue we have with the whole government “pension” concept.

8.    For that reason, we assert the whole thing should be the subject of a constitutional amendment. If we are going to stay with this overall “reform” concept, we feel the current reforms along with a concomitant reform to the IL Judicial Retirement System should all be sent to voters in the form of a constitutional change that will clearly withstand any court challenge.

9.    We watched in horror to see a recent television report where IL government workers qualified for their pensions, left employ to get their pensions and later returned to the same job at what is then 180% of pay. To our understanding, that may be legal if you follow the rules to do so. We feel the legislators who created such rules should be tarred and feathered. If you don’t feel that potential is akin to stealing from taxpayers, you don’t need to read the rest of this article.

10. Illinois state government has not one but five different, duplicative and redundant “pension” systems. There are five different boards of trustees, five different “independent” auditing groups, five different websites and five different staffs. We hope some day they may buy one of those new-fangled “computers” and bring that number down to, duh, one.

11. Please also note one of Governor Pat Quinn’s toughest battles has been his strident efforts to bring this goofy “pension” concept into line in the face of fierce union opposition. He was booed off the stage at the Illinois State Fair by government unions. AFL-CIO President Michael Carrigan was quoted in the Chicago Sun-Times as claiming “Mr. Quinn can’t win in 2014 until he makes peace with public-sector unions.” We hope Governor Quinn tries to make peace with all IL taxpayers first. We salute our plucky Governor for not caving to the threats and personal attacks he has faced.

Or our state should cut all this silliness and simply phase in a 401K plan. In doing so, government workers would make contributions and own them. Their investment choices would not be run by crooks; oops, we mean people that donate to politicians. As the government workers’ 401K plan assets grew, they would know what they would get when finished. We feel this is the only predictable and fair way to provide retirement programs for these workers. Trust us, this won’t happen unless and until all IL taxpayers/voters get together and see the financial mess our government is in from years or out-of-control “pensions.”

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

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Synopsis: Understanding How a Concomitant Release/Resignation Works in the Workers’ Comp Setting.

Editor’s comment: Of great concern to the workers’ compensation professional is the legal effect of resolution of the workers’ compensation claim when the employee simultaneously resigns at the time the workers’ compensation claim settlement is approved. Coincidental resignation by an employee can occur as a combination of a multitude of factors including a personal decision not to return to work, the effects of the workers’ comp injury, labor disputes with the employer, fellow employees or the union or loss of job due to plant or company closing.

A prudent workers’ compensation professional must understand workers’ compensation benefits are only one of a variety of benefits or claims which an employee might have as part of the employment relationship. If one resolves only the worker’s compensation claim, you may be leaving all of the employee’s other rights, benefits or claims ‘unresolved.’

An excellent example of this concept occurs when an employee resigns as ‘part’ of claim settlement. Your concern is the employee might later claim they were was ‘coerced’ into the resignation to receive any settlement at all. While we have not yet seen a reported case on a claim for retaliatory discharge as a result of a coincidental resignation, your organization does not want to have to litigate the issue as a matter of first impression in the Illinois courts.

Second, an employee may have labor disputes of any nature pending. These disputes might be pending at the local grievance level or at a national level as a result of an appeal of local determination. Obviously, a resignation as part of a workers’ compensation settlement leaves such labor disputes ‘pending’ without a proper resolution.

Also, it is important to recognize workers’ compensation benefits arise from state statutes. The settlement of a state workers’ compensation claim has no direct impact on the employee’s federal rights. There are a plethora of federal statutes which impact an employee’s rights while working and the employee’s rights at the time of termination and resignation. These include the American with Disabilities Act, Title VII of the Civil Rights Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employment Retirement Income Security Act and the National Labor Relations Act, to name a few.

The obvious response of the WC professional when presented the above list is to remark, “what does that have to do with my claims?” The reply has to be that your organization pays you to recognize and anticipate claim-related problems and to forestall them, if at all possible.

Therefore, it is our recommendation you do not ignore an employee’s claim or rights with regard to any common law or statutory claim whether it is a federal or state statute. When the employee resigns as part of a workers’ compensation settlement, we recommend you obtain a common law release as part of that resignation which specifically outlines both federal and state rights and ‘terminates’ (or in some instances, reserves) rights at the time of resignation/settlement. Use your knowledge and expertise to control the situation as much as possible.

An appropriately drafted general release, based upon appropriate consideration (in lay terms, money), should effectively defeat or block an employee from maintaining any suit or claim following resignation. We do not feel that you are sufficiently protected in obtaining a resignation with a release if it is not supported by consideration.

There may be rights which you want to survive the resignation

At the time the employee resigns, there are three major issues which you should certainly address as you may want to work with the employee and not extinguish all of the employee’s rights when he or she resigns.

The most important of these rights are pension benefits. An employee may be part of a pension or profit sharing plan which he or she should certainly be entitled to due to contributions by your organization and the employee. We have generally advised there is a West Coast decision which ruled a general release blocked an employee’s pension claim--a result which may have been unintended by either employee or employer and which would certainly result in a fountain of litigation. Where an employee has pension rights or benefits available to him, it would seem appropriate to preserve such rights at the time of resignation. The general release should be tailored to cover the possibility.

A more delicate issue is unemployment benefits. With the recent changes in this law, such benefits may provide substantial benefit to an employee who has left employment. However, such benefits allow the employer to dispute such a claim following application by the employee.

If you are willing to allow the employee to make such a claim and not contest the question of resignation versus termination, you are placing your organization in a contradictory position. If you want the employee’s unemployment benefits to be treated as if he or she resigned and thereby render the employee unable to obtain benefits until after the waiting period for a resignation, it should be clearly outlined in the general release. Therefore, it is our suggestion that such a determination be made in conjunction with counsel and all matters should be covered in settlement negotiations. Be certain to confirm the final decision on unemployment benefits is up to the applicable state agency.

When should a general release/resignation be utilized?

Any time an employee is leaving your employ for any reason and is simultaneously entering into a workers’ compensation settlement, we recommend that a combined general release/resignation strategy be considered. As a workers’ compensation professional, even if you settle a “small” claim where a petitioner is changing jobs, it is a prudent idea to consider obtaining a common law release and resignation. The worst nightmare of any workers’ compensation professional would have to be resolving a total and permanent disability claim with a coincidental resignation.

Immediately following completion and payment of the settlement, petitioner indicates he/she is withdrawing the resignation and seeks accommodation consistent with the Americans with Disabilities Act, claiming he or she was unaware of disabled status and the requirement the employer accommodate them. Even worse would be a claim the employer coerced them into the resignation as part of settlement to take advantage of his disabled status and thereby retaliatory discharged him.

These are just two of the examples which might conceivably occur. There are a variety of other potential scenarios which could just as easily develop which might leave the workers’ compensation professional in an embarrassing or annoying position.

Your highest priority must be to insure once you have settled the workers’ compensation claim with a coincidental resignation, every effort is made to insure the resignation ‘sticks.’ You do not want petitioner to return with any sort of litigation or benefit claim which you have not contemplated and have ‘allowed’ him or her to make (such as the claim for pension benefits outlined above). Every possibility should be considered as part of settlement negotiations. It is our recommendation the only way to insure this has taken place is to obtain a general release/resignation with appropriate consideration to support same.

One caveat: workers’ compensation lawyers may not be well-versed in employment law

One interesting aspect of utilizing a general release in conjunction with a workers’ compensation settlement is the workers’ compensation attorney is not typically retained to provide advice with regard to the wider range of employment law issues and may be ill-informed with regard to same. Workers’ comp attorneys are retained by their clients pursuant to a specific statutory language on a Commission approved form. This form sets out the narrow scope of the attorney’s retention and limits the fee to the workers’ comp claim only. It is an open question as to the amount of the fee that the attorney might receive on monies paid to support the general release/resignation. Many workers’ compensation lawyers will balk at being asked to review the broader employment law issues if you tender a general release and resignation at the time of the worker’s compensation settlement. It becomes incumbent upon you to insist the attorney provide the client/employee with appropriate legal advice or refer the matter to an employment lawyer competent to advise the employee.

Remember the workers’ compensation lawyer when settling a total and permanent disability claim typically receives a hefty fee. As part of the services which earn that fee, the lawyer should be equipped to fully and properly advise the client with regard to the bundle of rights which may be affected by the settlement of the workers’ compensation claim along with relinquishment of employment coincidental thereto.

If the attorney gives you any indication they are unable or unwilling to properly advise the client, you should insist it is their responsibility to do so to avoid any claim by the employee that he/she did not receive effective representation by counsel. Do not allow the workers’ compensation lawyer to claim ignorance or apathy and utilize it to the benefit of his client. You have to insist and insure that the attorney has fully advised petitioner of the rights he is preserving or giving up to avoid later confusion or litigation.

A note of caution in setting up the settlement with a release/resignation

When you present the settlement to opposing counsel, it is our suggestion you do so by first splitting the workers’ compensation settlement and monies reserved to support the general release. For example, if it is your intention to settle the case for a total of $150,000 to include monies to support the release/resignation, present the settlement to counsel by indicating you will pay $145,000 to settle the workers’ compensation case. You should also indicate you will provide an additional $5,000 to support the general release and resignation.

The purpose of bifurcating the finds in advance is to avoid the suggestion that you are intimidating or coercing the employee to settle the worker’s compensation case and that part of that plan was that you would not pay any monies in settlement unless petitioner was forced to resign. You want to present the monies to give legal effect to the resignation and release to be “fresh money.”

Your overall goal in obtaining a release/resignation

The goal of the workers’ compensation professional in settling a claim where petitioner/plaintiff has left the employ of respondent is to be certain the employee does not come back. You also want to be similarly satisfied you have no exposure to litigation or administrative claims subsequent to the resolution of the employment status.

We strongly suggest that you consider a strategy employing a general release/resignation in conjunction with the workers’ compensation settlement to insure this necessary result. We also strongly caution you should always discuss this with counsel whether petitioner is represented by an attorney or not.

We appreciate your thoughts and comments.

12-2-13; When Can IL Employers Get Sued by Employees for a Work Injury?; IL WC--When Is It Fingers vs. Hand?; WC Ain't Pawn Stars and much more

Synopsis: When Can an IL Employer Get Sued in Circuit Court by an Employee for a Work Injury? How Does That Impact Claims?

Editor’s comment: We were recently asked this question and have to admit we needed to research further. Please note the IL WC Act has an apparent conflict where one Section says an injured worker can’t sue in Circuit Court--other Sections of the Act that outline the right to sue in tort.

It appears the accurate answers are:

1.    An injured worker can sue their employer in Circuit Court for injuries resulting from intentional acts;

2.    An IL worker can sue their employer in Circuit Court for work injuries when the employer does not have valid workers’ compensation insurance in place on the date of injury.

3.    Where the injury is not compensable under the IL WC Act;

4.    Where  the injury involves an illegally employed minor (upon the minor’s waiver of his or her rights under the Act);

5.    Where the employer acts in a dual capacity, i.e., when the employer also maintains a second and separate legal relationship with the injured party, the employer may be sued in the second, non-employer capacity if it is this separate relationship or entity that is responsible for the injury.

Number 1 above is mildly controversial but only in the sense that it may be challenging to accurately define an intentional injury or wilful act by an “employer.” In our view, if an employer sets out to injure a worker for whatever reason and is successful, there is no defined reason to “protect” such an employer with the provisions of the IL WC Act. We also don’t feel typical WC insurance can or should cover intentional acts leading to insure—such coverage would typically be considered a violation of public policy. Our advice to all clients and readers—if you get hit with a claim for intentional actions leading to a workers’ comp injury, seek advice from a KCB&A defense counsel and report it to your WC and GL carrier--let the pros handle it.

Failure to have Valid WC Insurance Now Opens the Circuit Court Box!

The legal concept outlined in Number 2 above took us mildly by surprise. When reading about recent amendments to the IL WC Act, we didn’t notice this seminal change to our law. That said, we assure our readers on both sides of the IL WC matrix that a lack of WC insurance provides the injured worker or their counsel the right to sue in Circuit Court to recover for the injuries suffered. The applicable provision in the IL WC Act is Section 4(d) which now says:

Employers who are subject to and who knowingly fail to comply with this Section [requiring WC insurance] shall not be entitled to the benefits of this Act during the period of noncompliance, but shall be liable in an action under any other applicable law of this State. In the action, such employer shall not avail himself or herself of the defenses of assumption of risk or negligence or that the injury was due to a co-employee. In the action, proof of the injury shall constitute prima facie evidence of negligence on the part of such employer and the burden shall be on such employer to show freedom of negligence resulting in the injury. The employer shall not join any other defendant in any such civil action. Nothing in this amendatory Act of the 94th General Assembly shall affect the employee's rights under subdivision (a)3 of Section 1 of this Act. Any employer or carrier who makes payments under subdivision (a)3 of Section 1 of this Act shall have a right of reimbursement from the proceeds of any recovery under this Section.

An employee of an uninsured employer, or the employee's dependents in case death ensued, may, instead of proceeding against the employer in a civil action in court, file an application for adjustment of claim with the Commission in accordance with the provisions of this Act and the Commission shall hear and determine the application for adjustment of claim in the manner in which other claims are heard and determined before the Commission.

This is a fairly sweeping provision and provides lots of challenges for risk managers, claims handlers, attorneys and safety folks to be aware of. While it is an ostensibly simply statutory provision, it may create literally hundreds of legal concerns and is something of a “Gordian Knot” that may be endlessly unraveled.

Trust us, a Plaintiff lawyer or a group of Plaintiff lawyers wrote these provisions and the defense side monitoring such legislation missed them:

§  An employer shall not avail himself or herself of the defenses of assumption of risk or negligence or the injury was due to a co-employee—this strips out most major defenses in a Circuit Court claim for work injuries for uninsured employers;

§  Proof of the injury shall constitute prima facie evidence of negligence on the part of such employer and the burden shall be on such employer to show freedom of negligence resulting in the injury. From our reading, this makes for strict liability in a Circuit Court claim against an uninsured employer.

§  The employer shall not join any other defendant in any such civil action. This provision leaves the uninsured employer basically “hung out to dry” for the negligence of any other employer, product manufacturer or arguable tortfeasor in such claims.

This Legislative Provision Looks Simple But Is Fraught with WC Claims/Coverage Land Mines

How would that happen? Well, let’s try to look at the definition of “employer” and what it means to be “uninsured.” We assure most plant managers and other fixed-site employers it isn’t too exciting—you either have WC insurance for your workers or you don’t. However, you have to then take a very careful look at your vendors and support team. If you have a work site and you hire a company or vendor to come to your facility to perform any work at there, you want them to be truly “independent” of your workers’ comp coverage. The only method to insure they are “independent” is to be certain they have WC coverage for every single worker that crosses your door.

However construction and real estate risk managers have the ability to create a legal status known as “statutory employees.” Statutory employees are folks who build, remodel and maintain commercial properties. If you don’t have WC insurance to cover them, they are your employees and it would appear they can now sue you directly in Circuit Court for unlimited damages.

Let’s assume you hire Sam and Sara Sample’s Lawn Service to mow your lawn for the entire year of 2014. Sam and Sara Sample provide you with a COI or certificate of insurance for their workers. Their company is now required to insure they have appropriate workers’ comp coverage for all of his employees. There are three concerns crucial to good claims management, in light of the changes to Section 4(d) of the IL WC Act we highlight above.

v  First, Sam and Sara Sample can “opt out” of WC coverage for themselves as principals or owners of the company and save the premiums needed to cover their own WC injuries. Right now, they might be considered “uninsured employees” of yours and might—note we said might—be able to sue you in Circuit Court for injuries they cause.Never, ever let anyone who works for you “opt out” of WC coverage. You can always expect litigation if such folks are seriously injured or killed at work—the risk and cost of defense are not worth the risk.

v  Second, who are the employees of Sam and Sara Sample that are covered by their COI—can they have two employees or twelve doing work for you? What if they have four workers cutting down one of your trees and then bring four more due to the size of the project? Without any question, if Sam and Sara don’t have valid WC coverage for all of them, they can sue you—we don’t know and can’t predict what a court will do about the lack of WC insurance coverage in this setting. Don’t let your subcontractors bring unknown workers onto your property, ever.

v  Third, what about independent contractors of Sam and Sara Sample? What if they have a lawnmower break down and they bring a different repair contractor onto your property to fix it and the lawnmower repair person doesn’t have coverage, cuts off a finger by mistake and sues you??? In our view, vendor auditing take on a whole new look when you start to consider this new exposure. Don’t let your subcontractors bring unknown subs onto your property, ever.

We strongly suggest you don’t allow any vendor on your premises unless and until you have certain they have full WC coverage for themselves and all their employees that may work on your sites. Please understand lack of valid WC coverage may now result in multi-million exposure for significant injuries, resulting in disability and death of workers that may not be yours!

We appreciate your thoughts and comments. This article was researched and written by Chris St. Peter, J.D. who can be reached at cspeter@keefe-law.com and Eugene F. Keefe, J.D. Please feel free to reply to either of us with any concern.

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Synopsis: Okay, IL WC Adjusters—When Is It LOU Fingers and When Is It LOU Hand?

Editor’s comment: We received a question from one of our clients who was confused when a Plaintiff/Petitioner Attorney was working with her on a claim involving undisputed and severe injuries to two fingers. She was trying to best understand why counsel wanted 60% of each of the affected digits along with 30% LOU hand.

What is mildly confusing is the IL WC Act says injury to two or more fingers can be treated as LOU hand:

The loss of 2 or more digits, or one or more phalanges of 2 or more digits, of a hand may be compensated on the basis of partial loss of use of a hand, provided, further, that the loss of 4 digits, or the loss of use of 4 digits, in the same hand shall constitute complete loss of a hand.

In our view, the language provided above doesn’t mean you treat the claim as LOU hand AND LOU fingers. It was also our view, Plaintiff/Petitioner’s attorney was not treating the adjuster with a lot of respect to make such a demand. We felt the attorney may have been trying to take advantage of the confusion that comes from the way the IL WC Act is written.

Please don’t be fooled. You may note the IL WC Act provides 205 weeks for complete loss of use of the hand for injuries after Feb. 1, 2006. The combined values of 76 weeks for the thumb, 43 weeks for the index finger, 38 weeks for the long finger, 27 weeks for the ring finger and 22 weeks for the little finger equal almost the same value—the combined number of weeks is 206.

I am not in a great spot to do the math but let’s say you can settle the claim for

v  60% LOU index finger or 25.8 weeks and

v  60% LOU long finger or 22.8 weeks.

The combined value is 48.6 weeks, by our calculation. This combined value of 48.6 weeks is the equivalent of 23.71% LOU hand. In our view, you can enter into a settlement for the fingers OR the hand would work and such a settlement would be approved. It is also our reasoned legal view, putting them together or paying 60% LOU of each finger AND 23.71% LOU hand would be double-paying the claim. Don’t pay for the fingers AND the hand.

If you got an impairment rating, you would probably get a lower value for settlement than traditional values. Our vote for the top northern and central IL doctor to obtain a solid and reproducible impairment rating for finger/hand injuries is Dr. Michael I. Vender of Hand to Shoulder Associates. http://www.handtoshoulders.com/ For central and southern IL claims, we are happy to make recommendations—send a reply.

Please also note one important thing—never rely solely on legal advice you receive from Plaintiff/Petitioner attorneys. As we have told numerous innocent claims adjusters and other risk managers over the years, their ethical responsibilities are not to you; they have to aggressively represent their clients and get the most money from you possible. On a 24/7/365 basis, if you aren’t sure the information or legal advice you are receiving is 100% accurate, send any KCB&A lawyer an email, like this wise adjuster did. We will give you solid research and accurate answers that you need as rapidly as we possibly can. This service is free--you do not have to send us the entire file to get rapid responses to intricate WC or GL claims questions in IL, IN, WI and MI.

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Synopsis: Workers Comp Ain’t Pawn Stars®, Folks. Don’t Ask for Settlement Demands—Make Offers!!

Editor’s comment: We love the hi-jinx at the World Famous Gold and Silver Pawn Shop in Las Vegas, NV, featuring patriarch Richard "Old Man" Harrison, his son Rick Harrison, Rick's son Corey "Big Hoss" Harrison, and Corey's childhood friend, Austin "Chumlee" Russell. Lots of our readers and clients have seen the way they negotiate. Their approach is to review the product for sale or pawn and then ask the customer what they are looking for.

There is a major league problem with using that negotiation approach in workers’ comp claims across the United States. What Rick or Corey or Chumlee are doing in asking for a demand or inquiring as to what the customer is “looking for” is to see if they will accept a lot less than the claim is worth. In our view, that approach to negotiation doesn’t work in the workers’ comp arena.

The reason that won’t work in almost all states of which we are aware, along with federal WC claims handled by the OWCP, you have to get the settlement approved by a hearing officer. If the other side asks for much too little money, the friendly Arbitrator or hearing member won’t approve the settlement. This makes it much more important to do your homework and come up with a reasonable settlement value.

Therefore, unless an adjuster or risk manager tells a KCB&A lawyer to do so, we don’t ask for demands. We also don’t want to wait endlessly to the response requesting a settlement demands. In our view as veteran defense lawyers, asking the other side to make a settlement demand is lazy and counterproductive.

Please understand if you are selling an old car, antique gun or widget and you ask the buyer what they will pay, they won’t offer much. That is human nature—they are assuming you might be stupid and will hold the cards close to the chest.

On the other side of negotiations, if you are buying an old car and you ask the seller what they want for it, they will almost always ask for too much. In doing so, they are setting the “bracket” high to move the negotiations in their favor.

In any negotiation of any kind, the party that makes the first offer or demand sets the bracket and has a large advantage. The person that responds to the offer or demand is always at a disadvantage. Don’t let the other side have the advantage—as adjusters, claims handlers and for us as your defense lawyers; do your homework, figure out a reasonable value and where appropriate, make the first offer.

If you really want to move the matter along, do your homework and have your defense lawyer draft the settlement paperwork and send it to you and the other side. That way, all the other side has to do with a fair and reasonable offer is to have their client sign it. If they want a little more money to close quickly, your admin team should be able to rapidly modify the settlement contracts and then resend.

From the perspective of IL workers’ comp claims handling, IL WC Arbitrators love to hear you have made a reasonable and fair offer to the other side. In our view, it is one of the strongest tools to move claims forward and avoid delays.

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