1-20-14; When Do We Reach Out to Bruce Rauner?; GL Settlements Move to the Fast Lane, Analysis by Chris St. Peter; Federal Magistrate's Ruling May Herald Change in Attorney-Client Privilege and more

Synopsis: When Does the IL WC Community Reach Out to Bruce Rauner?

Editor’s comment: We met with IL Gubernatorial candidate Bruce Rauner last week to discuss the role workers’ compensation will hold for his administration if he is elected governor—we were greatly impressed with this political neophyte and hard-working businessman. As you read this, Mr. Rauner has a commanding lead over the other three candidates for the Republican spot in the general election. The primary is set for March 18, 2014 and barring some major change, Rauner is almost certain to swamp his other primary rivals.

In a head-to-head battle with incumbent Governor Quinn, Bruce Rauner also appears to compare very favorably. Pat Quinn’s current voter approval rating is at a record low. We strongly suspect any Republican opponent will repeatedly point out Pat Quinn was Blago’s Lieutenant Governor and apparently didn’t know or perhaps want to know or care about what was happening in Springfield during those dark years. The recent circus about IL gov’t pension reforms is completely unpredictable and only addressed 4 of the 5 state pension programs. The proposed pension changes don’t start until June 2014 and even that may be delayed/rejected, as no one has any idea if the courts will uphold the law. IL Judges/justices pensions weren’t touched and their “pensions” or lifetime post-employment income from you could pay them as much as $1M per year of service, if they plan it right (if you don’t believe this one, send a reply and we will explain). The only things you can be sure of are Pat Quinn has been in IL state government since 1990, our current pension deficit is over $100B and the deficit keeps inexorably rising by several million dollars every day. While we applaud our Governor for his work to get whatever slim and slippery reforms that might stick in the face of staunch union opposition, none of it sounds like much in the way of effective and lasting “pension reform” to us. Only in Illinois can you see the absurd paradox of IL state government unions fighting, screaming and suing the Governor over these reforms while simultaneously giving him millions in campaign cash to avoid a great manager like Bruce Rauner!

The Illinois Governor Has to Worry about Three Different WC Issues

A.   Illinois Workers’ Compensation Benefits, B. The IWCC—Our State Agency That Administers Them and C. State Government Workers’ WC Claims

On the workers’ compensation front, in 2002 Blago traded control of the good ole Industrial Commission to the Plaintiff bar from Madison County, IL. As fast as they got in, they changed the name and funding of the place and the cost of Illinois WC benefits went out of sight—IL went from the middle of the U.S. to the top five. As our second-in-command in state government at the time, one would have thought Quinn would have voiced at least some concern about the enormous change this caused in our business climate. At the time, we don’t remember Pat Quinn making a peep about the drastic changes to the IWCC. It is difficult for us to believe the Governor is now suddenly more concerned about Illinois’ competitive advantage (or lack thereof) as it relates to the Workers’ Compensation Commission. We do agree Governor Quinn got involved and was part of the genesis of the 2011 Amendments to the IL WC Act.

Illinois Workers’ Compensation Benefits

In covering the 2011 Amendments to the IL WC Act, we note they have been in place for about 28 months from the September 1, 2011 effective date. The jury is still out on the overall WC benefit savings. It seemed to take years to put the biggest cost-saving tool, WC PPP’s into place. We consider the delays inexcusable. WCRI and national sources do indicate enormous savings have been made in cutting rising IL WC medical costs but the total savings are still in question. On the judicial side, we have watched our “activist” reviewing courts issue many odd, unprecedented and arguably inexplicable WC rulings that one can’t blame on the Governor or his team. However, some of these controversial appellate rulings were affirmations of earlier decisions from the IWCC Commissioners who are appointed by the Governor.

The IWCC—Our State Agency That Administers WC Benefits

While we feel the Workers’ Compensation Commission remains somewhat “creative” or controversial and appear to sometimes circumvent the statute in relation to the facts, we must acknowledge, as Governor Quinn began to take an active role at the IWCC, we do agree Chairman Latz, the nine Commissioners and our Arbitration staff have become more middle-of-the-road and now reach high professional standards. We don’t agree the IWCC’s rising budget at a cost of about $30M per year matches the dramatic drop in Illinois WC claims. It appears no matter how many or few hearing officers are at the IWCC, IL WC claims still move at a relative snail’s pace in relation to our sister states. In our view, while professionalism is much stronger, there have been few demonstrable cost-saving administrative efficiencies at the IWCC under Governor Quinn.

State Government Workers’ WC Claims

Please also remember State of IL government is one of the biggest employers in the state. In our view, our state governments’ own workers’ compensation claims handling system remains a complete mess and is still paying something like $100M per year in runaway workers’ comp benefits. The 2011 Amendments to the IL WC Act created the State Workers’ Compensation Advisory Board that you can find online if you dig a little. In our view, this Board is another one of those IL Gov’t boards created solely for outward appearances and to hand out nifty board membership plaques. We were recently advised there is an ongoing feud between the CMS managers who were “sort-of” replaced by the West Coast TPA brought in to handle State Employee claims. From a management perspective we consider it comical to replace the state adjusters with outside private adjusters and not get rid of the state employees who you have replaced! Both sides are now fighting over control of the WC claims, including battles about choice of vendors and when to cut off and dispute benefits. We still note the U. of IL Hospital in Chicago is still being “defended” by a successful Plaintiff lawyer! None of these changes have resulted in efficiencies or lower payouts that we can tell. We are sure many of the silly carpal tunnel claims by key-turning prison guards have been routinely denied and that is a good thing. In the bigger picture, all of appears ineffective and appears embarrassing to our Governor and his administration.

We were also advised thousands of state workers still enjoy “odd-lot” permanent and total disability benefits that are effectively “pensions” with guaranteed COLA increases paid for by Illinois business. We were advised the cost of those lifetime benefits on an annual basis is well over $10M that could be immediately saved if the state would locate sedentary or light work when they have openings for the claimants. The reason no one beefs about it is because the workers love to get paid as if they are working but don’t have to—they aren’t going to complain. Like lots of things with our state government, no one is watching out for taxpayers, particularly if the media doesn’t know enough to beef about it. We would applaud a state-wide investigation similar to that executed in New York, where dozens of government workers were nabbed for their disingenuous and similarly specious claims for total disability.

Anyone Remember AG Madigan’s and State Auditor Holland’s Blistering Critiques in 2012?—In Our View, There Was No Effective Response/Reform from the Current Governor or His Administration To Most of the Issues

Please note these problems were chronicled to some extent in a blistering WC report in March 2012 by IL Attorney General Lisa Madigan. The Attorney General's report contained a raft of policy recommendations aimed at tightening up the claims process to make it more straightforward and consistent. IL State Auditor General William Holland's office also threw its weight behind the idea of reform, revealing from 2007-2010, Illinois paid out $295 million on the advice of claims adjusters with caseloads exponentially higher than the industry standard. In our view, Governor Quinn has done almost nothing in what is almost two years to effectively address AG Madigan’s or Auditor General Holland’s many valid concerns. AG Madigan’s report is online here:http://ilchamber.org/wp-content/uploads/2012/05/Workers-Compensation-analysis-and-recommendations-4-12.pdf

Either way, from the most impartial of perspectives, the main metrics of record high taxes and highway tolls, billions in unpaid state bills, 48th worst among all states’ unemployment stats and a generally rotten business climate aren’t going to bode well for candidate Pat Quinn. As we indicate above, his main support is from our wealthy state government union leaders who want to keep your taxes and highway tolls sky-high and appear unconcerned about a bad business climate so long as their union members keep getting a hefty cut of the pie. We were also stunned to hear IL Senate President Cullerton tell the media last October our state can’t go “bankrupt” despite not being able to pay bills timely but we are certain to raise and raise taxes—most taxpayers don’t like to hear that news, particularly after being hit with the highest income tax increase in IL history when many better-run states don’t even have an income tax.

We Don’t Recommend the WC Community, Particularly Business Participants Ignore Bruce Rauner

He may be the immovable force or the irresistible object. The current administration enacted legislation to give our Governor full control of all IWCC positions and whoever gets the Governor job this fall should get control of the CMS team that is managing the State Workers’ Compensation Board. With that power comes a strong ability to change things for the better.

Our concern for IL workers’ comp participants is insuring candidate Bruce Rauner has some strong idea of what he is getting into and where he can take the three facets of this important system. We don’t want him to “throw out the Commission with the bath water” if he ends up taking over the reins of IL government in early 2015. We hope Bruce Rauner will be in touch with IL State Senator Matt Murphy along with DuPage County Board Chairman Dan Cronin who are both veteran and knowledgeable workers’ compensation system members. Outgoing IL Chamber President Doug Whitley and his legislative gurus should be another important stop for candidate Bruce Rauner. We also support the candidacy of Attorney Dan Ugaste who is a long-time IL WC defense lawyer who is running on the Republican side for state rep in the 65th District—we hope Dan is able to provide input to candidate Bruce Warner later this year. If you want to help Dan with his campaign, as we have, please send a reply.

We are sure our IL Plaintiff Bar is going to side with the incumbent and treat the challenger as a pariah. Our advice to them and all of our readers, clients and business leaders is we will be much better served to at least reach out to Bruce Rauner to insure he understands the nuances and needs of our WC system and brings the needed efficiencies to the debate and possibly, his future administration. Everyone’s goal should be having better state government in Illinois.

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

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Synopsis: Illinois GL Settlements Move to the Fast Lane—What Every Illinois Defendant and GL Claims Adjuster Needs to Know. Analysis by Chris St. Peter, J.D.

Editor’s comment: Claims and risk managers can’t ignore this one! A new Illinois law effective January 1, 2014 requires certain types of general liability settlements to be finalized and paid in a short timeframe. We want to ensure our clients are prepared to comply with the new law and avoid the statutory penalties. At a minimum, every Illinois general liability, WC and Employment Practices defendant and adjuster needs to know the following:

1. The new statute applies to settlements reached in cases involving personal injury, property damage, wrongful death, or tort actions involving claims for money damages.
2. The settling defendant or its adjuster must tender a release to the plaintiff within 14 days of written confirmation of the settlement.
3. The setting defendant or its adjuster must pay all sums due to the plaintiff within 30 days after the plaintiff tenders the necessary settlement documents (e.g., executed release, dismissal order, and/or signed release of liens).
4. If the settling defendant or its adjuster fail to comply with the statute, a judgment will be entered for the amount of settlement, with interest from the date the settlement was reached.
5. Settling parties may contract around the statute by agreeing to other terms. We strongly recommend every applicable settlement agreement include alternative deadlines and/or an express waiver of the new statute.

If you want to learn more about this important new law, read on.

Background: 735 ILCS 5/2-2301 (eff. Jan. 1, 2014) Requires Rapid Payment of Certain Types of Settlements

On August 26, 2013, Gov. Quinn signed into law Public Act 098-0548, which creates a new statutory section addressing settlements and liens in civil cases other than workers’ comp. The new statute, 735 ILCS 5/2-2301 (Section 2301), provides deadlines for exchanging settlement documents with rapid payment after a civil matter is “settled.” The section imposes penalties upon settling defendants and their adjusters, including entry of judgment and costs, if the settling defendant does not comply with the deadlines set forth in the statute.

The statute went into effect for settlements on or after January 1, 2014. Your GL claims handling has to adjust to avoid unhappy surprises.

Section 2301 applies to settlements reached in cases involving personal injury, property damage, wrongful death, or tort actions involving claims for money damages. The statute does not apply to certain entities, such as the State of Illinois, state agencies, state employees, municipalities, and local governments. Additionally, the statute does not apply to class action lawsuits. We also note the statute does not apply to workers’ compensation settlements, and it is unlikely to apply to release/resignations negotiated as part of workers’ compensation settlements, as such agreements involve the plaintiff forgoing any civil cause of action related to the work injury. However, the contours and applicability of the new statute have yet to be addressed by the courts.

Section 2301 creates two main requirements for settling defendants and their adjusters:

First, it requires a settling defendant or its adjuster to tender a release to the plaintiff within 14 days of written confirmation of the settlement. Written confirmation includes all communication by written means. “Tender” is defined as “personal delivery or delivery by a means providing a return receipt.”

Second, the settling defendant is now required to pay all sums due to the plaintiff within 30 days after the plaintiff tenders certain settlement documents. These include:

• The executed release,
• A copy of the order approving settlement (if applicable), and
• Signed releases of liens or other writings addressing handling of liens.

Penalties: Immediate and Collectible Judgment Against Defendant for the Amount of the Settlement Plus Interest and Costs

The new rule provides if, after a hearing, a court finds timely payment has not been made by the defendant or its adjuster, “judgment shall be entered against that defendant for the amount set forth in the executed release, plus costs incurred in obtaining the judgment,” plus interest, calculated from the date of tender. This means that if the defendant or its adjuster provides the settlement draft one day after the 30-day deadline, 31 days’ interest is added to the settlement amount, plus any costs the plaintiff incurred in obtaining the judgment.

Interestingly, while the statute imposes deadlines upon Defendants, no deadlines for the execution of signed releases and other documents are imposed upon Plaintiffs. For example:

• If a settlement requires court approval, or if a lien-adjudication hearing is necessary, the plaintiff has no deadline to schedule these hearings.
• If additional time is necessary to negotiate with a lien holder, the plaintiff has no deadline to complete these negotiations.

The statute also addresses how a settling plaintiff can protect a third-party’s right to recovery or subrogation interest, including liens by attorneys, healthcare providers, and insurance companies. In such cases the plaintiff may protect the third-party's interests by tendering to the defendant one of several different kinds of written communications putting the defendant on notice of the third-party claims. The communications named in the statute include a signed release of a lien held by an attorney or healthcare provider; a letter from the plaintiff's lawyer agreeing to hold the full amount of the settlement funds in a client trust account pending final resolution of the lien; an offer that the defendant hold the full amount claimed by the third party pending resolution on that matter; or several other written promises with how the parties will handle the money properly.

While the new statute is designed to expedite payment of settlements, the statute will likely have the unintended consequence of creating additional litigation related to settlement enforcement. For example:

• Issues may arise if the settlement must be allocated to multiple plaintiffs or amongst various types of damages. Because the statute is silent as to these specific issues, the settling defendant should include all such conditions and terms in the release so as to avoid alleged violations of Section 2301.  

• Issues may arise when the settling defendant or its adjusters have not received all information necessary to issue a settlement draft. For example, a tax identification number and/or a W9, a signed release of any liens, and proper documentation from Medicare regarding any MSA or satisfaction of Medicare’s lien are often requested by the defense as part of settlement. A prudent adjuster or its defense counsel should request such documents early in the settlement process, and well before a settlement is reached. If, while nearing a settlement, the defendant does not believe the plaintiff has submitted all necessary documentation or documentation is insufficient, the plaintiff’s counsel should be advised in writing what documents or information is still required prior to payment. That writing should also advise the plaintiff has not complied with the statute, and the 30-day deadline has not begun to run.

In summary, defendants, their adjusters, and defense attorneys must now pay close attention to deadlines surrounding a settlement’s completion. Any delay in the settlement process, such as a delay in requesting the check or a delay in obtaining the necessary information to request the check, has the potential to put the defendant up against the 30-day deadline.

In plaintiff-friendly Cook, Madison, and St. Clair counties, plaintiffs’ attorneys will be aware of this new statute and we are sure they have told their friends on the bench. We are sure hyper-aggressive plaintiff attorneys in these venues will seek costs and request judgment be entered against you and then immediately initiate collection proceedings.

Of particular note, the statute expressly states it applies to all personal injury, property damage, wrongful death, and tort actions involving a claim for money damages, “except as otherwise agreed by the parties.” We feel this language allows settling defendants and their adjusters to contract around the statute if an agreement can be reached to modify or waive the deadlines set forth in Section 2301. We strongly recommend considering such alternative terms in all settlement negotiations and can offer sample language upon request.

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 cstpeter@keefe-law.com.

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Synopsis: Concerns Raised In Federal Ruling About Attorney-Client Privilege When Attorneys are Involved Early in Your Investigation.

Editor’s comment: We have a number of top-notch clients who want us, as their defense counsel, to be involved early and often in accident or claims investigation. Their thinking, and we agree with them, is to make some or most of the investigation privileged. As court watchers and legal observers, we want our clients and readers to understand possible changes to this concept.

In a recent Federal court decision from Massachusetts, the U.S. Magistrate cast some confusion and/or uncertainty about this concept. In Koss v. Palmer Water Department, et. als., the Federal Court did not uphold the attorney-client privilege, effectively finding the attorneys were involved too much in determining the nature of the claim and forming defenses to allow their work to remain wholly privileged.

The ruling demonstrates why employers should give careful consideration to the attorney-client privilege before conducting an investigation in the workplace.?This U.S. Magistrate in Massachusetts held the employer had waived the attorney-client privilege because its outside counsel actively managed another attorney’s investigation of a sexual harassment complaint and had discussions with an outside investigator which directly impacted whether the privilege could be upheld.

Koss should serve as a cautionary reminder to employers, risk managers and claims adjusters to consider the boundaries of the attorney-client privilege, at the outset of every claim, when deciding how to best manage the investigation, so as to minimize the risk of having to disclose what you might feel is confidential information. Please note this isn’t an appellate ruling and we don’t know if the concept will gain more traction or acceptance across the country, particularly in WC or personal injury litigation. We still strongly recommend defense counsel be involved as early as possible in important accident and other claims investigations to minimize risk, assist in forming defense, move claims to rapid settlement or closure and best define reserves. The ruling is online at:?http://pacer.mad.uscourts.gov/dc/cgi-bin/recentops.pl?filename=neiman/pdf/koss%2010%2013.pdf.

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

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Synopsis: Correction—we thought we were perfect but we were wrong. New IL WC Arbitrator Jessica Hegarty is not the wife but the daughter of Attorney Terrence K. Hegarty. We sincerely apologize for any confusion this may have caused.

1-13-14; If It Smells Like Politics--IL WC Gets a New Arbitrator; Shawn Biery, JD with a Medicare Update; Important Medicare Ruling with National Implications from Matt Ignoffo, JD and more

Synopsis: If It Smells Like Politics, Tastes Like Politics and Feels Like Politics, It Probably Is Politics—IL WC System Gets a New Arbitrator.

Editor’s comment: Exactly ten months to the date of the next gubernatorial election, Governor Quinn surprisingly appoints a complete unknown to be an IL WC Arbitrator. On January 7, 2014, the IWCC announced Jessica Hagerty’s appointment to take a position as a workers compensation hearing officer.

Jessica who, you might ask? Newly appointed Arbitrator Hegarty is a licensed IL lawyer and appears to be a very good one. She has worked as a successful Plaintiff Attorney for a number of years. However, to our understanding she has never handled a workers’ compensation claim. Ms. Hegarty joined the Hegarty & Hegarty Plaintiff personal injury firm in 2004. Prior to working as a Plaintiff personal injury lawyer, she spent nearly four years at the Cook County State’s Attorney’s Office handling criminal cases. The Hegarty & Hegarty website indicates Ms. Hegarty generated millions in settlements and verdicts for injured persons and their families. What the law firm website doesn’t mention is anything to do with workers’ comp.

So how did Ms Hegarty get the nod to become a workers’ comp hearing officer? Well, it appears her hubby is Terrence Hegarty of the same firm. Mr. Hegarty is a big hitter Plaintiff lawyer who is a past president of the Illinois State Bar Assn. His website describes him as “one of the most … feared personal injury attorneys in Illinois.” His website also describes him as a “personal injury titan.”

It is no secret that powerful Plaintiff attorneys commonly donate generously to major Democratic campaigns. You must remember as well that Governor Quinn stripped out the civil service protections afforded IL WC Arbitrators during his past administrations. Arbitrators now basically serve solely at the Governor’s whim. This major job opening wasn’t posted on the IWCC or CMS website. As you read this, IL Arbitrator candidates don’t have to take a WC class, you don’t have to pass a competitive Arbitrator’s test anymore; you don’t have to know anything about the system. Candidates need only be licensed attorneys to qualify. Therefore, Governor Quinn is free to appoint virtually any licensed attorney in the State to this post.

While we would typically prefer to see a veteran workers’ compensation attorney fill such a vacancy, we cannot forget that until recently, Arbitrators were not even required to be attorneys at all! Anyone could be appointed to the post. In our view, the appointment of a veteran attorney is far preferable to a non-lawyer. We only hope that Ms. Hegarty brings the requisite impartiality to her position and sheds any Plaintiff/Petitioner-oriented tendencies of her former practice. Only time will tell; we will continue to watch and report.

On a related note, former Arbitrator Steve Mathis is now Commissioner Mathis. We congratulate him and wish him well in the new post.

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

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Synopsis: Update on Medicaid Provisions in recent legislation….forewarned is forearmed! Analysis by Shawn R. Biery, J.D., M.S.C.C.

Editor’s comment: Recently passed Federal budget legislation included several provisions with regard to Medicaid which are likely to have some relevance for our readers and clients. HJ.Res.59 passed Congress and was signed by the President on December 26th and includes:

Three important changes to Section 202 with regard to Medicaid third-party liability law (which affirms Medicaid’s position as payer of last resort) with three changes to be effective October 1, 2014.

• There is an amendment to section 1902(a)(25)(E) which will allow a state to delay payment for prenatal and preventive pediatric care for 90 days after the date the provider initially submitted a claim to the third party payer, if the state determines doing so is cost-effective and will not adversely affect access to care.
• An amendment to section 1902(a)(25)(F) will allow a state to delay payment for 90 days for services where child support enforcement is being carried out. The state could continue to make payment within 30 days, if it found that to be cost-effective and necessary to ensure access to care. (This modifies mandatory exceptions to the requirement that State Medicaid agencies reject medical claims when another entity is legally liable to pay the claim.)
• There are also changes to sections 1902(a)(25), 1912 and 1917 which gives states the ability to recover costs from the full amount of a beneficiary’s liability settlement, instead of only the portion of the settlement designated for medical expenses, and it establishes an option for states to place liens against Medicaid beneficiaries’ liability settlements. In our view, this is a big deal—they have access to the entire settlement now to recover.

Section 1201 provides for a temporary extension of the Qualifying Individual (QI) Program which will now extend the QI program through March 31, 2014 and allocates $200 million for that period. (This program helps pay Medicare Part B premiums for certain low-income beneficiaries.)

Section 1202 provides a temporary extension of Transitional Medical Assistance (TMA) which extends section 1925 TMA through March 31, 2014. TMA provides continued medical coverage for certain families who become ineligible for medical assistance because of increased earnings.

For the extension of QI and TMA, Congress will need to act to continue them beyond March 31st.

Section 1204 makes two changes to Medicaid Disproportionate Share Hospital (DSH) payments by delaying Affordable Care Act DSH reductions for two years. (DSH reductions were to have gone into effect on October 1, 2013; instead, the legislation delays the reductions until October 1, 2015). However it also doubles the reduction which would otherwise have applied. The legislation also creates another special rule for calculating DSH allotments in FY 2023 which will match the statute which spells out special rules for calculating the FY 2021 and FY 2022 allotments.

The full text of the legislation can be found here: http://beta.congress.gov/113/bills/hjres59eah3/BILLS-113hjres59eah3.pdf

This article was researched and written by Shawn R . Biery J.D., MSCC and he can be reached at 312-756-3701 or sbiery@keefe-law.com. Both Shawn and Matt Ignoffo at mignoffo@keefe-law.com  are certified MSA consultants in our office who are prepared to field any questions you may have.

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Synopsis: No Medicare Set Aside Money for Undocumented Immigrant per Oklahoma Court—Similar Legal Approach Would Apply to IL, IN, WI and MI. Analysis by Matthew Ignoffo, J.D., M.S.C.C.

Editor’s Comment: The facts in the case of Ramos v. Becco Contractors, Inc. involve an accepted ankle injury of Jose Ramos. Ramos eventually sought benefits for permanent total disability and in doing so included a nine-digit number in the blank for his Social Security number on a form. The parties eventually reached an agreement where the employer, Becco, would pay Ramos $125,000.00 and:

[I]n addition, the [Employer] agrees to fund [a] [Medicare Set Aside] in the amount of $12,361.18. In the event the [Medicare Set Aside] as approved by [the Centers for Medicare and Medicaid Services, hereinafter CMS] exceeds this amount, the Claimant agrees to provide additional funding from the settlement proceeds.

At a hearing to approve the settlement Ramos testified through an interpreter his understanding of the MSA issue and duty to pay for future treatment from such funds. The trial court approved the settlement on June 1, 2009. Ramos subsequently became a naturalized U.S. citizen on December 18, 2011.

The employer paid the principal amount of $125,000.00, but refused to fund the Medicare Set Aside or pay the amount to Ramos because upon submission of the Medicare Set Aside to CMS, as it was discovered Ramos was not Medicare eligible. The number reported by Ramos as his Social Security number was only a taxpayer identification number and Ramos was not Medicare eligible until he became a naturalized citizen in December 2011.

Becco argued because Ramos misrepresented his status as a holder of a valid Social Security number and was ineligible for Medicare benefits at the time he filed his claim and at the time of settlement, the provision of the settlement agreement calling for funding of a Medicare Set Aside was unenforceable on account of Ramos’ misrepresentation of Social Security and Medicare eligibility.

The trial court held the MSA provision of the settlement agreement was unenforceable noting the incorrect social security number was a material misrepresentation of fact by Ramos and the employer was relieved of any requirement to fund the MSA or pay the equivalent sum to Ramos.

On appeal Ramos argued he did not appreciate the requirements for Medicare eligibility and the parties were mistaken in this regard with there being no intentional misrepresentation on his part. The Appellate Court sustained the order of the trial court noting the parties settled the case based upon what appears to be, at best, a mutual misapprehension of Ramos’ eligibility for Medicare benefits. However, at the hearing on approval of the settlement agreement, Ramos acknowledged his understanding:

(1)  the Medicare Set Aside provision would be submitted to CMS for approval, and

(2)  he would not receive the payment of the Medicare Set Aside funds unless or until CMS approved.

Due to the fact Ramos agreed the Medicare Set Aside would not be paid without CMS' approval, and CMS' approval of the Medicare Set Aside provision was not obtained, the Court held Ramos may not now complain of the employer’s failure to pay the Medicare Set Aside.

Essentially the court found a condition precedent, CMS approval, and because this condition was not met the MSA did not need to be funded. Without such language it is possible the employer would have had to fund the MSA, or pay the additional money directly to Claimant, even though Claimant was not eligible for Medicare at the time of settlement.

We can take away two main points from this case. First, we recommend the proper investigation into a Claimant’s eligibility for Medicare be performed prior to settlement. Second, the settlement agreement language used is always crucial and especially so when MSAs are involved. A thought we had when reading this case is the situation in which the carrier or employer agrees to keep medical open until the approval of the MSA by CMS. If such language was included in the settlement contract language here it appears Ramos would be entitled to continued medical treatment indefinitely because the MSA was never approved by CMS. The attorneys at KCBA deal with these issues on a daily basis and are more than happy to assist you with your MSA and settlement questions.

This article was researched and written by Matthew Ignoffo, J.D., M.S.C.C.  Please feel free to contact Matt at 312-756-3729 ormignoffo@keefe-law.com. Both Matt and Shawn R. Biery at sbiery@keefe-law.com are certified MSA consultants in our office who are prepared to field any questions you may have on a 24/7/365 basis.

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Synopsis: IL Appellate Court Justice Patrick J. Quinn, rest in peace.

Editor’s comment: We are sad to report the second most senior justice in the First District Illinois Appellate Court died last week in his chambers. Justice Patrick J. Quinn, 60, was found unresponsive inside his chambers. Quinn was elected to the Appellate Court in 1996. He was a member of several committees, including the district's executive committee.

The condolences and prayers from the defense team at Keefe, Campbell, Biery & Associates goes out to his family and friends.

1-6-2014; New "Repetitive Working" Ruling Analyzed; No Phones-to-the-Ear While Driving WC People!; IWCC Fee Schedule and WCRI Indicate IL Med Costs Dropping and more

Synopsis: Where’s That Dictionary??—“Activist” IL Appellate Court, WC Division Redefines the IL WC Act So Workers Don’t Have to Suffer an ‘Accident’ and No Longer Need an ‘Injury.’

Editor’s comment: As we advised last week, the IL State Chamber recently issued a report about 19 “activist” rulings from our IL reviewing courts that change or modify the legislative scheme to, in some instances, provide benefits outside the expected language of the Illinois Workers’ Compensation Act. We are sad to report to our clients, readers and business observers the 20th such ruling was issued on New Year’s Eve 2013 or just 12 days after the IL Supreme Court knocked out the Venture-Newberg-Perini Webster & Stone v. IWCC “traveling employee” decision. We hope this new ruling is also sent to our highest court for their consideration.

In the ruling in Village of Villa Park v. The Illinois Workers' Compensation Commission, issued December 31, 2013, a
Village employee suffered from spontaneous knee failure while simply walking down stairs at work. He was going from a meeting to the employee locker room. The unanimous appellate ruling found the employee’s occasional use of the ordinary staircase somehow was an “accident.” The ruling does not describe any safety failure, defect, foreign substance, poor lighting or other issue with the stairs.

We would love to see the dictionary where it says it is an “accident” to occasionally walk on a safe and ordinary staircase. In our view, Illinois is the only state among the United States that now has such a definition. There are numerous IL Supreme Court rulings that define “accident” and it typically means something unforeseen, some unexpected defect that led to a slip, trip or fall with an actual traumatic injury.

We Feel This Unexpected Ruling Reverses Numerous Past Fall-Down Decisions

Numerous IL Appellate rulings from First Cash Financial all the way back to theChicago Tribune v. IC ruling in the early 1980’s all require the employee show a defect or problem in the area of their fall. All of those rulings appear to have been implicitly or explicitly reversed by this new standard. It would appear all a worker now has to demonstrate is they were at work and occasionally had to walk around their workplace before suffering a personal problem that has literally nothing to do with work, other than the coincidence of their body breaking down from typical actions.

Tell us, if you will, how to effectively defend claims such as

·         A school teacher who writes on a whiteboard with a marking pen and suffers a spontaneously dislocating shoulder;

·         A nurse pushing an infant patient on a hospital cart whose hip unexpectedly fractures;

·         A secretary walking to get paperclips whose ankle gives way at work without any known cause.

We don’t feel spontaneous knee failure or any of the problems in the examples above should ever be called an “injury.” Claimant in the Village of Villa Park ruling unquestionably suffered from a non-work-related problem that failed due to the routine progression of his problems. If you have a dislocating shoulder or torn meniscus or avascular necrosis, the body part is going to continue to cause problems of a spontaneous nature; your body gives you some warning but eventual failure can be both unpredictable but also certain. When that failure coincides with your work, it isn’t an “injury” it is the expected presentation of your underlying problem. It isn’t an “aggravation” or “injury.”

We don’t think this new idea makes much sense and it is going to lead to hundreds of new and indefensible “repetitive working” claims where our aging workforce suffers the effects of getting older and can “blame” their problems on their employers to get IL WC high permanency awards. Please remember the word “indefensible” means no one needs go to a lawyer or have a hearing before an Arbitrator—globally covered WC claims that are considered indefensible must be picked up by the insurance carriers and TPAs and benefits paid. In our view, it will be much easier to get WC benefits if our Commission and reviewing courts eliminate the messy requirement of the employee having to suffer an unpredictable accident, as our IL WC Act used to require.

To justify the determination the actions of walking on an ordinary staircase is an “accident,” the appellate ruling cites the Commission decision which we feel laughingly claims the worker was continually “forced” to use the stairway as part of his work and breaks. From that nomenclature, it appears the severe and demanding taskmasters/slave-drivers at the Village of Villa Park compelled, coerced and drove this otherwise innocent man to actually traverse the stairs as much as 6 times per day, both for his personal comfort and to complete his work-related activities. We don’t feel climbing stairs maybe as much as 10-15 minutes in a 480-minute or 8-hour work shift is a whole lot of stair-climbing. There are lots and lots of breaks from stair-climbing in between. That said, the appellate majority found the frequency with which the employee was “required” to traverse stairs was an increased risk compared to general public. In our view, climbing stairs six times every eight hours would only be an increased risk as compared to people who live in homes that don’t have stairs. We have literally no idea how to litigate or defend the level of supposed frequency of stair climbing or walking or normal actions of daily life while at work. Would this claim have been denied if the worker only walked on stairs twice a shift and not six times??

Causation-Schmausation??

As we have advised our readers and clients, the main issue the legislative leaders for IL business are trumpeting is making causation in Illinois workers’ comp clearer and potentially stricter. As we have advised IL State Rep. Dwight Kay and outgoing IL State Chamber President Doug Whitley, we don’t feel you can change causation unless and until the jurists considering the issue will follow the statutory intent. This ruling basically ends any concept of “causation” because the Court’s majority isn’t truly requiring an accidental injury—unless you agree it is an “accidental injury” to walk on a safe and ordinary staircase six times in an 8-hour shift. If you add language to the IL WC Act requiring work to be the “primary cause” of the medical condition, this court will certainly rule this ordinary and occasional work task was the primary cause.

Consider Fitness for Duty Evals, Folks

The appellate ruling also points to the fact the employer knew the employee had suffered a non-work-related injury to the knee and still allowed him to return to work. This brings up a constant problem for IL and U.S. employers—when do you allow such a worker back into your workforce? This ruling clearly outlines it may be the employer’s responsibility if the off-work injured worker’s problems appear at all while they are at work. In our view, court decisions such as this enhance the need for FDE’s or Fitness for Duty Evaluations. You may want to consider Accelerated Rehabilitation or Athletico for such evaluations if you are faced with this issue moving forward.

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

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Synopsis: IL WC Participants Need to Adjust to No-Hand-Held-Cellphones-To-The-Ear-While-Driving.

Editor’s comment: We are sure the new IL state law banning the use of hand-held cellphones while driving a car or other vehicle raises problems for claims handlers, brokers, attorneys on both sides and our hearing officers, all of whom rely on their phones to keep in touch for business and family. It is our understanding there is no problem using cellphones while driving but you can’t put them to your ear.

Should you or your firm buy a hands-free device to allow legal cellphone use by your drivers?

Our firm is going to offer it for our defense team. It simply makes good common sense. We also are concerned to the extent our lawyers are officers of the courts of this state and can’t break the law. We are encouraging all of our readers to get hands-free devices and use them regularly.

Is your company liable if an employee using work-provided equipment causes an accident?

In our view, the liability comes from having an employee working while driving—use of the phone is secondary. It is also going to be challenging to prove the phone was being used in the proscribed fashion. You can’t simply look up phone records to confirm there was a call ongoing, as that will not provide any information about how the phone was being held.

The new law went into effect Jan. 1, 2014 making Illinois the 12th state to prohibit drivers from using hand-held phones. Chicago, Winnetka, Evanston and other towns already had banned use of hand-held phones by drivers. The law creates a maximum $75 fine for a first offense of using a hand-held phone while driving. Doing so in construction and school zones in Illinois was already illegal, as is texting while driving. Please note the law creates an exception for emergency calls.

We appreciate your thoughts and comments.

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Synopsis: IL WC Commission’s 2014 Medical Fee Schedule Posted and Combines with the October 2013 WCRI Study to Confirm Solid Savings for IL Employers.

Editor’s comment: The 2014 Illinois Workers’ Compensation Medical Fee Schedule rates, increased 1.52% as of January 1, 2014. They are online at https://iwcc.ingenix.com/IWCC.asp

The Commission asserts if the Illinois Medical Fee Schedule had tracked medical inflation, rates would be 30% higher than in 2006; instead, rates are 7% lower than 2006.

Section 8.2(a) of the Illinois Workers' Compensation Act provides that, each year, fee schedule rates shall increase or decrease by the percentage change in the Consumer Price Index-U (CPI-U) in the previous year.

The defense team at KCB&A considers this another instance where legislative reforms are bringing our WC costs into line or making them lower than our sister states.

October 2013 WCRI Study Confirms Similar Savings for Your Company in WC Medical Costs

The costs of medical care to treat injured workers in Illinois are declining, the result of regulatory change enacted in 2011, according to a study by the Workers Compensation Research Institute (WCRI). The report, Benchmarks for Illinois, CompScope™ 14th Edition, finds medical payments per claim, for claims with more than 7 days of lost time, decreased five percent in 2011. The study reports the decline likely reflected the early impact of the 30 percent reduction in fee schedule rates for medical services.  

In particular, prices paid for professional services to physicians, physical/occupational therapists, and chiropractors were directly affected by the reduction in the fee schedule rates, declining 24 percent between 2010 and 2012. Prices paid for all types of services fell in Illinois, including office visits, major surgery, physical medicine, pain management injections, and minor radiology, according to the study. The study also noted medical cost containment expenses per claim, such as the costs of bill review, case management, and utilization review, rose moderately at five percent in 2011 after little change in the prior year.

The 2011 reforms also focused on some of the large cost drivers behind wage replacement payments—indemnity benefits—particularly the duration of temporary disability, by setting limits on the duration of benefits for carpal tunnel injuries and wage differential benefits.  

In the years prior to the enactment of the reforms, the study found the duration of temporary disability rose rapidly in Illinois, from 16 weeks in 2006 to 21 weeks in 2009, propelling growth in indemnity benefits per claim. Future analysis will determine whether the reforms achieved the intended results.  

WCRI also reported that medical-legal expenses per claim grew much faster in Illinois than in most of the other states in the 16-state study, likely because Illinois does not regulate payments for independent medical examinations, which were used frequently prior to 2011 as part of the utilization review process.

Click on the following link to purchase this study: http://www.wcrinet.org/studies/public/books/BMcscope_multi14_IL_book.html.

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