2-10-14; Mystification Personified in IL WC Fraud Conviction by Joe Needham, JD; Sean Brogan, JD on Where to Litigate WC Referral Fees; When Do You Have to Encrypt PHI and more

Synopsis: IL WC Fraud Mystification Personified-Big News, Sparse Details in the Story of a Normal, IL Man Sentenced to 8½ Years for IL Workers Compensation Fraud. Analysis by Joe Needham, J.D.

Editor’s Comment: As defense practitioners we are happy to see our IL WC fraud law growing some teeth, but lament the IL WC Commission’s secrecy continues. We also like to point out to readers, clients and the entire IL Workers’ Comp community the person who demanded our state have a WC Fraud provision in our Act was none other than our former-Gov-Behind-Bars, you guessed it, Rod Blagojevich. Most folks think Crooked Blago was grandstanding when he demanded a provision on WC fraud be added to get his hairdo into the headlines, as the 2005-6 IL WC Act amendments were being finalized.

Similar to that sort of grandstanding, veteran observers have to wonder if there are political motivations behind this conviction, as it comes in the middle of a gubernatorial campaign. Perhaps this stinging and lengthy jail term is going to herald our current administration being “tough on WC fraud” when it involves a single claimant in a state with hundreds of arguably similarly fraudulent WC claims.

For our readers who are familiar with the odd 1st District Appellate Court ruling inCountry Financial v. Roberts, you may note the State of IL had no problem initiating and completing criminal investigation and conviction without any requirement the Commission first hear the claim and find claimant to be a WC fraud. In Country Financial, the Appellate Court judicially created a condition precedent where the Commission has to first decide a given claimant is a WC fraud before you can sue them for WC fraud in our Circuit Courts. Assuming there is strong evidence of WC fraud, we see no reason a company/employer might have to wait to try to get their money back from a scammer. We also have yet to see Cook County State’s Attorney Anita Alvarez office aggressively prosecute a WC fraud claim.

The recent Illinois Department of Insurance prosecution and conviction of erstwhile claimant Elbert Rayford Jr.has quickly become big news in the Illinois Workers’ Compensation community for its unprecedented prison sentence of a man ruled guilty of workers’ compensation fraud. Remarkably little details remain known about the substance of the fraud or the evidence against him. Rayford pled guilty to a charge he defrauded his employer in an attempt to secure $45,000.00 in Workers Compensation benefits to which he wasn’t entitled. He will also be required to pay the trivial sum of $585.38 in restitution and serve two years of supervised release. Take a look online at:

http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=1&RecNum=11911

The details remain shrouded, and all articles located on the internet rehash the same story without elaboration or investigation. Reports reveal Rayford “exaggerated his complaints” to treating physicians in order to secure medical treatment and disability benefits to which he wasn’t truly in need and therefore not entitled. We have literally no idea what “exaggerated complaints” might be or how and when you are going to be tossed into jail if you do so. It is not clear how strong the evidence was against Defendant Rayford, but surveillance efforts must have been fruitful. Reports indicate Rayford pled guilty based on surveillance evidence revealing his deception insofar as the unknown activities he was performing were contrary to his undefined abilities claimed to medical professionals to secure unstated benefits. We have seen numerous instances in the past where IL WC Arbitrators and Commissioners have not given strong weight to surveillance evidence—we hope this new conviction may herald a new era where our administrators now give it the value and impact it deserves. It would also be nice to have more than one WC Fraud conviction each decade.

Our intense investigation into the substance of Rayford’s case yields little information. The only active claim on file with the IL WC Commission between Elbert Rayford and TG Gum Trucking lists case number 11 WC 19644, filed May 23, 2011 alleging a date of loss of April 16, 2011. Attempts to confirm this filing through a search of the Commission’s physical file revealed an almost empty file jacket—it would appear this public record has been surreptitiously erased. The IWCC Case Information computer screen shows this filing to be continued at arbitration, while computer records reflect a motion to dismiss this Application September 7, 2012, but the case remains active. Copies of the pending motion were absent from the court file. Curious but not uncommon is this lack of information concerning actions by and before the IWCC. The case remains active, and yet the Commission’s physical file is purged of all pleadings.

Efforts to reach TG Gum Trucking’s attorney for verification of the claim and details on the substance of the evidence were also unsuccessful as of the time of this writing. Efforts to reach TG Gum Trucking for comment turned up an internet publication with contact information including a telephone number no longer in service. We can’t find almost any information about this trucking concern which appears to be tiny and may be situated between Bloomington and Champaign IL. Rayford’s WC attorney was not contacted due to anticipated privilege preventing the attorney’s disclosure of facts harmful to his client’s interests.

Because of the inability to view the pleadings filed before the Commission or to discuss the matter with the informed parties, the specific evidence against Rayford is not well delineated. As practitioners we would like to know the exact degree and quality of video surveillance evidence which so clearly established Rayford’s fraud, as defense practice before the IWCC often reveals a different view of surveillance evidence when interpreted by our Commission. What is known is whatever was revealed by the video, it showed Rayford performing activities that impeached deceptive statements made to his treating physicians and therapists concerning the degree of his injury and the level of resultant disabilities. In short, his statements made to secure WC benefits were proven deceptive by the surveillance video; the definition of WC fraud. Easy enough, right?

But the case is curious in two further respects: the length of Rayford’s sentence and the fact he was prosecuted at all.  An 8½  year sentence is reportedly the harshest penalty doled out by the Illinois courts for workers compensation fraud since the 2005 enactment of a special unit within the Illinois Department of Insurance dedicated to WC fraud cases. Research into recent criminal prosecutions reveals Illinois has secured convictions on at least 10 workers’ compensation claimants in addition to Rayford, with the next longest sentence being four years. With the exception of one 10-day jail term, every other sentence involved probation without jail time. See:

http://insurance.illinois.gov/WCFU/condata.asp

But to this author and perhaps the defense community at large, the greater curiosity is – Why Rayford? While we see absolutely nothing wrong with this prosecution as reported, we have to wonder why Rayford was hit with such a harsh sentence despite pleading guilty, knowing Illinois had routinely overlooked and even rewarded similar deception. It begs the question; Is the current Commission going to start coming down harder on individuals who are clearly lying about the extent of their ability? We’ve reported for years in seminars on a multitude of cases wherein surveillance revealed a claimant’s deception and benefits were swiftly awarded:

For some brief examples we are aware of

·         In 09 WC 16718 Petitioner secured medical restrictions from lifting overhead greater than 20-pounds due to a shoulder injury, while video surveillance showed claimant performing some pretty impressive recreational weightlifting, including overhead incline bench-presses drastically exceeding 20-pounds. Denied benefits for his deception in securing unnecessary medical restrictions? No. Prosecuted for fraud? No.

·         In case number 06 WC 8939 Petitioner provided sworn testimony in which he volunteered the statement he was incapable of lifting so much as a case or drinking water, immediately after which surveillance video was aired to show him repeatedly lifting cases of drinking water. Petitioner admitted it was him on the video lifting cases of water, revealing his admittedly perjured testimony, yet our Commission at the time awarded full benefits on the finding the video did not reveal activities contrary to his claimed disability.

However, our more recent litigated claims have seen the Commission take a far more sensitive view of video surveillance and appreciate the glaring contradiction between what the claimant says he can do and what he demonstrates on film. For example, we have a more recent claim where Petitioner was caught secretly driving a truck for a different employer while off work as a truck driver for our client. Surveillance caught him curling 55lbs. in each hand. The Arbitrator denied the claimed TTD accordingly. The Arbitrator did not find him to be a WC fraud or seek prosecution and years of incarceration for his actions. Is this the job of the arbitrator who does not have the protections and in-court security of a Circuit Court judge?

So if Petitioners in other cases wherein video establishes claimants’ deception are not prosecuted, why 8½ years in jail for Rayford? Is it that we must go to central Illinois to find prosecutors willing to work a WC fraud case? Or is it simply easier to establish fraud beyond a reasonable doubt in criminal court than it is to get our Commission to take an honest view of defense evidence by the preponderance standard? For more information about Workers’ Compensation Fraud, including matters that may involve fraud perpetrated by a claimant, visit the DOI website at http://insurance.illinois.gov/WCFU/default.asp.

We appreciate your thoughts and comments. This article was researched/written byJoe Needham, J.D. and his staff.

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Synopsis: IL WC Appellate Court holds the IL Commission does not have authority to resolve cases involving breach of attorney referral agreements in workers’ compensation cases. Analysis by Sean Brogan, J.D.

Editor’s comment: In Ferris, Thompson, and Zweig, LTD v. Anthony Esposito, 2014 IL App (2d) 130129, Plaintiff law firm referred two workers’ compensation cases to the defendant by written agreement whereby Plaintiff was to receive 45% of all attorney fees recovered in the cases and Defendant the remaining 55%. The cases were resolved in November 2010 for a total of $4,554.19 but Defendant refused to pay Plaintiff. Accordingly, Plaintiff sued Defendant in Circuit Court for breach of contract. Defendant moved to dismiss, arguing the claim should have been filed with the IL WC Commission and not in the Circuit Court relying primarily on Section 16a(J) of the Workers’ Compensation Act which provides   

[a]ny and all disputes regarding attorneys' fees, whether such disputes relate to which one or more attorneys represents the claimant or claimants or is entitled to the attorneys' fees, or a division of attorneys' fees where the claimant or claimants are or have been represented by more than one attorney, or any other disputes concerning attorneys' fees or contracts for attorneys' fees, shall be heard and determined by the Commission after reasonable notice to all interested parties and attorneys.

820 ILCS 305/16(a)J (West 2012)

Essentially, Defendant argued, because the case concerned a dispute about attorney fees owed in a workers’ compensation case, the matter had to be resolved by the Commission, not the Circuit Court. The Circuit Court denied the motion to dismiss and, following a trial, awarded Plaintiff the fees it was owed plus interest ($4,965.25). Defendant appealed the Circuit Court decision arguing the Court lacked subject matter jurisdiction over the case.

The Appellate Court, Second District, affirmed the Circuit Court decision. Interpreting pertinent provisions of Section 16 of the Act, the Court noted the Commission has the power to determine the amount of fees that should be awarded to an attorney who represents or formerly represented a claimant in a case that was brought before the Commission and to resolve disputes regarding the amount of those fees. Here, Plaintiff never represented the workers’ compensation claimants before the Commission; therefore, the Commission’s authority did not extend to the issue concerning a breach of a referral agreement delineating the percentage of the awarded fee that should be allotted to the attorney who represented the claimant before the Commission and the attorney who referred the claimant to that attorney.

This article was researched and written by Sean C. Brogan, J.D. Please feel free to provide your thoughts and comments to Sean at sbrogan@keefe-law.com.

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Synopsis: When Are WC Claims Handlers, Attorneys, NCM’s and Risk Managers Required to Use Email Encryption for Electronic Transmission of PHI or Personal Health Information?

Editor’s comment: We were asked this question by a reader and wanted to share our thoughts and research. We also have dealt with numerous balky encryption systems and frankly, can’t stand any of them. The need to implement encryption of PHI appears to require an assessment of risk. If you don’t feel there is a risk, following an assessment, it doesn’t appear required by the feds. We ask how many

Ø  Medical records/charts,

Ø  Nurse’s notes,

Ø  Voc rehab reports,

Ø  IME reports and

Ø  Medical background letters containing PHI

are sent to and from you, your company and your vendors every day, year, month? Have you ever had one hacked? Do you have any indication anyone you work with or for has been hacked? It is hard to imagine your firm or our firm has to move to the troubled and truly clunky nature of encrypted email unless and until we have any concerns about being hacked.

Here is the applicable law:

Security Standards for the Protection of Electronic PHI: Technical Safeguards, Section 164.312 As Contained in the HHS HIPAA Security Rules, HHS Security Regulations as Amended January 2013, Security Standards for the Protection of Electronic PHI: Technical Safeguards - § 164.312

A covered entity or business associate must, in accordance with § 164.306:

Standard: Access control. Implement technical policies and procedures for electronic information systems that maintain electronic protected health information to allow access only to those persons or software programs that have been granted access rights as specified in § 164.308(a)(4).

Implementation specifications:

Ø  Unique user identification (Required). Assign a unique name and/or number for identifying and tracking user identity.

Ø  Emergency access procedure (Required). Establish (and implement as needed) procedures for obtaining necessary electronic protected health information during an emergency.

Ø  Automatic logoff (Addressable). Implement electronic procedures that terminate an electronic session after a predetermined time of inactivity.

Ø  Encryption and decryption (Addressable). Implement a mechanism to encrypt and decrypt electronic protected health information.

Standard: Audit controls. Implement hardware, software, and/or procedural mechanisms that record and examine activity in information systems that contain or use electronic protected health information.

Standard: Integrity. Implement policies and procedures to protect electronic protected health information from improper alteration or destruction.

Implementation specification: Mechanism to authenticate electronic protected health information (Addressable). Implement electronic mechanisms to corroborate that electronic protected health information has not been altered or destroyed in an unauthorized manner.

Standard: Person or entity authentication. Implement procedures to verify that a person or entity seeking access to electronic protected health information is the one claimed.

Standard: Transmission security. Implement technical security measures to guard against unauthorized access to electronic protected health information that is being transmitted over an electronic communications network.

Implementation specifications:

Integrity controls (Addressable). Implement security measures to ensure that electronically transmitted electronic protected health information is not improperly modified without detection until disposed of.

Encryption (Addressable). Implement a mechanism to encrypt electronic protected health information whenever deemed appropriate.

http://www.hhs.gov/ocr/privacy/hipaa/faq/securityrule/2001.html

Again, from HHS: Is the use of encryption mandatory in the Security Rule?

Answer: No. The final Security Rule made the use of encryption an addressable implementation specification. See 45 CFR § 164.312(a)(2)(iv) and (e)(2)(ii). The encryption implementation specification is addressable, and must therefore be implemented if, after a risk assessment, the entity has determined that the specification is a reasonable and appropriate safeguard in its risk management of the confidentiality, integrity and availability of e-PHI. If the entity decides that the addressable implementation specification is not reasonable and appropriate, it must document that determination and implement an equivalent alternative measure, presuming the alternative is reasonable and appropriate. If the standard can otherwise be met, the covered entity may choose to not implement the implementation specification or any equivalent alternative measure and document the rationale for this decision.

In our view, if you aren’t getting hacked and don’t know of vendors or others you work with that are at risk to be hacked, you don’t need to encrypt/decrypt emails with PHI in them. If that changes, we may all have to go to encryption.

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

2-3-14; Illinois Government--Corrupt, Crazy or Clunky?; Chris St. Peter Analyzes Your Duty to Remove Snow/Ice; Shawn Biery Outlines MSA Thresholds and more

Synopsis: Is The Current State of Illinois Government Corrupt, Crazy or Clunky? We Ask Our Readers to Decide.

Editor’s comment: Here are three completely odd scenarios that we encourage our readers, clients and other observers to consider. We feel they demonstrate why Illinois government is

ü  Corrupt—in short, stuff that appears crooked, questionable or criminal in nature; 

ü  Crazy—things that simply don’t make common sense and can’t be made to make sense; or

ü  Clunky—things that sort of make sense but are inefficient, ineffective and should clearly be greatly improved.

Scenario No. 1 – Giving $56,345.69 to Claimant and Her Attorney for a Workers’ Comp Claim Where OurAppellate Court Ruled She Isn’t Entitled to WC Benefits.

It is hard to write this stuff, folks. In Illinois State Treasurer v. Illinois Workers’ Compensation Comm’n, 2013 IL App (1st) 120549WC, our Appellate Court, WC Division considered a claim where Petitioner injured herself tying her own shoes. We don’t have any idea how that can be a workers’ comp “accidental injury” as it clearly is a risk common to the public. We don’t even know why an attorney would take such a claim. Petitioner was a home health care worker who was placed at the job by a service but the subject of her work passed during the pendency of the claim and the matter was taken up by the State Treasurer and AG Lisa Madigan’s office on behalf of the Injured Workers Benefits Fund that collects money for claimants injured working for uninsured employers.

The Arbitrator found accident for reasons we simply cannot understand. The IWCC affirmed without further comment. The Attorney General’s office filed an appeal to the Circuit and then Appellate Court, WC Division. On January 7, 2013, our penultimate reviewing court reversed the award of benefits and denied the claim. We salute them for adhering to well-established tenets of Illinois WC law. Sort of.

What then happens is Petitioner’s attorney files a petition for rehearing. In our experience, Petitions for Rehearing are granted by this panel about once every generation. It may have helped that Petitioner’s counsel is the Treasurer of the Working Forward PAC that legally donates substantial monies to Governor Quinn’s campaign.

On rehearing, the main issue appeared to be whether the Illinois State Treasurer needed to file an appeal bond. For reference, the unanimous opinion noted the statute says this about the need for an appeal bond:

Section 19(f)(2) provides…“[e]very county, city, town, township, incorporated village, school district, body politic or municipal corporation against whom the Commission shall have rendered an award for the payment of money shall not be required to file a bond.” 820 ILCS 305/19(f)(2) (West 2012).

With respect to the august members of this appellate panel, we feel there was lots of room for the Appellate Court, WC Division to rule the State Treasurer is a “body politic” and therefore exempt from filing an appeal bond. To the extent we treat all vendors and creditors poorly in IL government, the State would appear good for the money. We also point out the members of the Court are supposed to evaluate jurisdictional issues on their own—well-settled Illinois case law mandates our Circuit, Appellate or Supreme Courts are supposed to dismiss appeals on a sua sponte (or on their own motion) basis if there is no jurisdiction. We note this claim was pending before the five-member Appellate Court for around two years before they decided they should have had nothing to do with it.

What this ruling also points out is our IL legislature, in their infinite wisdom, grabbed/latched onto/snatched about $3.8M from the Insured Workers’ Benefit Fund basically leaving claimants who work for uninsured employers hung out to dry—claimants are only entitled to a pro rata share of benefits due when there isn’t enough money for them in the Fund.

So is this ruling:

ü  Corrupt?—While we don’t agree with the decision, we cannot view the decision as “corrupt”. We point out the members of this Appellate panel have the highest ethical, moral and legal standards. They are beyond reproach. The IL legislature, on the other hand, should be castigated for “stealing” money from this fund created for injured claimants to provide protection when their employers don’t have WC insurance coverage.

ü  Crazy?—We feel this appellate ruling is, for lack of a better word, odd. If Claimant truly isn’t entitled to these monies based on the January 7, 2013 ruling of this panel, it is wildly baffling to see her receive $56,345.69 as a gift from our State fund.

ü  Clunky?—On behalf of parties litigant on both sides of the WC matrix, we wish our Illinois state courts in situations such as this would first and foremost insure they have subject matter jurisdiction. For the claim to pend for two years to then find out nothing needed to be done on the merits of the appeal is, again in our respectful view, clunky.

Scenario No. 2 — Taking Money from the Poor to Benefit the Rich? Only in Illinois government!

As we have advised our readers on numerous occasions, Governor Quinn and state government unions unquestionably have a love-hate relationship. If you aren’t sure the impact of this tortured relationship caused government union workers to boo our Governor off the stage during his speech at the Illinois State Fair. In clear and almost immediate retaliation, Governor Quinn summarily fired an IL WC Arbitrator who was married to one of the state government union leaders involved in this embarrassing debacle. Ouch.

However, Governor Quinn repeatedly seeks IL government union support whenever and however he can. We recently heard Crooked Blago and later Governor Quinn penned executive orders relating to payment of Illinois State Medicaid benefits. If you or I were to have to quit our jobs and seek state aid to allow us to care for a seriously ill family member, these executive orders require you to join the union to pay dues or pay matching dues, even if you won’t be a union member.

From what we have read, there are about 20,000 Illinois citizens in this situation. The amount they will have to pay if the executive orders aren’t stricken by the United States Supreme Court is about $50 per month—if you do the math, the executive orders will effectively require these indigent Medicaid beneficiaries to kick $1,000,000 every month to the union that is the beneficiary of the orders. So let’s be clear, some of the poorest members of IL society who need state aid to care for their sick family members will now have $50 less each month—we ask you the rhetorical question “Isn’t that stealing from the poor to benefit wealthy union leaders?”

So are these executive orders:

ü  Corrupt?—From our perspective as government observers, it is hard to call this one. What do you think?

ü  Crazy?—Without question, we consider them crazy—should every IL citizen seeking money from our state be forced to join a union or make matching dues payments. Should unemployment compensation beneficiaries? How about the spouses of IL WC total and permanent disability claimants? How about college kids on scholarships? What is the conceivable basis to force Medicaid beneficiaries to give up their benefits and have to pay any portion to a union that does nothing for them?

ü  Clunky?—At a minimum, this is another example of clunky, junky, dysfunctional IL government. We are furious to see our Governor using our taxpayer dollars to fight for this silly concept all the way to our highest court.

Scenario No. 3 – As you read this, over a five-year period, 2,000 Illinois state government workers were off work with full pay awaiting decisions on their work status. Paid administrative leave for state employees in Illinois is supposed to be an "expeditious" process, according to the Governor's office. The Chicago Tribune reported how nutty the HR situation is by highlighting a state boxing official was paid to stay home for nearly 30 months while investigators examined allegations he used his position to benefit himself and his family. During this time, he received seven salary increases while not even working!

His case — highlighted in a Tribune investigation that showed the high cost to the state of such drawn-out cases — appears to be over. The state lost its fight to fire this official who returned to work in December 2013. You don’t have to be Warren Buffett or Donald Trump to figure if the State didn’t need this worker for 2-1/2 years, they probably don’t need that job at all and could eliminate it completely to save taxpayers the dough.

However this issue is exponentially bigger and demonstrates what a mess our state government is in. TheTribune reported in October 2012 that more than 2,000 state employees had been put on paid leave in the previous five years, collecting $23 million in wages. Nearly 70 employees spent more than a year on paid leave to the tune of $5 million in wasted taxpayer dollars. If you are doing the math, right now, about 1 in 30 Illinois government employees may be off work on full pay, awaiting resolution of interminable employment disputes. Can there be anything that more clearly demonstrates featherbedding and the fact we have way too many state workers?

What we also don’t understand is why/how any number of IL WC Arbitrators were summarily sacked when the IL WC Act supporting them was amended—when and how do the “paid leave” rights arise and why didn’t the Arbitrators get that magic bubble with pay?

When one considers there are lots and lots of state government workers’ comp “odd-lot” total and permanent disability claimants who could be returned to work at alternative jobs along with police/firefighters who are paid lifetime line-of-duty disability pensions despite being able to work other jobs along with thousands of state workers on indefinite paid leave, you start to see why things under this administration are

ü  Corrupt?—This one isn’t truly corrupt that we can tell but it stinks like it is.

ü  Crazy?—We consider these sorts of shenanigans to be impossibly crazy. Our effectively-bankrupt state has to have a better system for handling HR. No private organization and most governments across the U.S. would pay for 1 in 30 workers to remain off duty with full pay indefinitely.

ü  Clunky?—See “crazy” above.

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

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Synopsis: Do Illinois Businesses Have a Duty to Remove Snow and Ice? An overview of premises liability law by KCB&A’s general liability team leader Chris St. Peter, J.D.

Editor’s comment: The snow just keeps falling in the Chicagoland area. Accordingly, we thought it would be a good time to inform our readers of some basic elements of premises liability law, particularly when snow and ice are involved. This analysis focuses on businesses open to the public—that is, businesses that allow customers, contractors, vendors, and others to lawfully enter their premises.

I.              Overview of Illinois Premises Liability Law

As a general matter, slip and fall cases are governed by the Illinois Premises Liability Act. See 740 ILCS 130/1 et seq. (West 2000). Under the Premises Liability Act, the owner or lessee of a premises owes a duty of “reasonable care under the circumstances” to those lawfully on the premises. Simmons v. Am. Drug Stores, Inc., 329 Ill. App. 3d 38, 43 (1st Dist. 2002). In other words, a business must maintain its premises in a reasonably safe condition, or it could face liability for any injuries caused by those conditions.

II.            Snow and Ice Removal

A.   Natural-Accumulation Rule

Illinois law is generally favorable to businesses when dealing with snow and ice. For example, under what is known as the “natural-accumulation rule,” a business does not have a duty to remove natural accumulations of snow or ice from its property. This rule was adopted by the Illinois Supreme Court in the 1931 case ofGraham v. City of Chicago, 346 Ill. 638 (1931). In Graham, the plaintiff sued the City of Chicago when she slipped and fell on a patch of ice that had formed on a city sidewalk. The Illinois Supreme Court held it would be “unreasonable to compel a city to expend the money and perform the labor necessary to keep its walks reasonably free from ice and snow during winter months.” Id. at 643.

The natural-accumulation rule has been expanded over the years to provide broad protections to Illinois businesses, as well as cities and municipalities. For example, even if the snow and ice remain on the property for an “unreasonable” length of time, it has been held that no liability will be imposed as long as the snow and ice is a natural accumulation. See, e.g., Kellerman v. Car City Chevrolet-Nissan, Inc., 306 Ill. App. 3d 285, 288 (1999). Thus, snow that has fallen and collected, sleet or freezing rain that forms ice, or melting snow that re-freezes into ice may remain upon a business’s premises without liability for falls.

In addition, Illinois courts have applied the natural-accumulation rule to all types of businesses (e.g., gas stations, hotels, restaurants, shopping malls, etc.), as well as all areas of a business’s property (e.g., on the sidewalk, in the parking lot, inside the store, or on the step of an entranceway).

It should be noted that a contract or a lease agreement requiring snow removal can create a duty to remove natural accumulations. See, e.g., Schoondyke v. Heil, Heil, Smart & Golee, Inc., 89 Ill. App. 3d 640 (1st Dist. 1980). However, while such a contract may create a duty of snow removal, it does not establish a strict liability standard. In other words, the plaintiff must still prove the business knew or should have known of the dangerous condition and failed to take proper steps to guard against it.

B.   Unnatural Accumulation

As outlined above, Illinois businesses have no general duty to remove natural accumulations of snow and ice on their property, nor will they face liability for falls resulting from such natural accumulations. However, if there is an "unnatural accumulation" of ice or snow created by the snow removal process—for example, a mound where the ice or snow was pushed—then there may be liability for the fall. Stated differently, in order for a business to be liable for a slip and fall on snow or ice, the business must be shown to have in some way caused an unnatural accumulation of ice or snow, or to have somehow aggravated a natural condition. Further, notice of an unnatural accumulation of snow or ice is required to impose liability upon the landowner or occupier.

Recovery for falls on icy sidewalks or parking lots can also be based on negligent design or maintenance of the underlying pavement which causes an unnatural accumulation to form. For example, a business can be liable for falls caused by the sloping surface of a parking lot which alters the normal runoff and creates an icy surface.   

Of note, Illinois courts have repeatedly held that application of salt by a business, causing ice to melt and refreeze, does not aggravate the natural accumulation already present. See, e.g., Harkins v. System Parking, Inc., 186 Ill. App. 3d 869, 873 (1989).

C.   Residential Landowners

As an aside, Illinois law holds that residential landowners are only liable for willful and wanton misconduct in the removal of ice or snow. The relevant Illinois statute states:

Any owner, lessor, occupant or other person in charge of any residential property . . . who removes or attempts to remove snow or ice from sidewalks abutting the property shall not be liable for any personal injuries allegedly caused by the snowy or icy condition of the sidewalk resulting in his or her acts or omissions unless the alleged misconduct was willful or wanton.

745 ILCS 75/2. This “willful or wanton” standard makes slip and fall cases against residential landowners difficult to prove.

III.           Conclusion

To summarize, a business that allows the public to lawfully enter its property does not have a duty to remove natural accumulations of snow and ice, but if you voluntarily choose to do so, you better do it right or you could face liability. This means being cautious not to create any “unnatural accumulations” that did not exist prior to the removal process. Of course, the question of what constitutes an “unnatural accumulation” is a difficult one and is often the key inquiry in any resulting litigation.  

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: Losing Your Mind over Medicare Issues related to litigation? A primer by Shawn R. Biery for knowing when to report the claim and when CMS will actually tell you if your MSA is appropriate.

Editor’s comment: We remain inundated with questions regarding Medicare issues as settlements are being completed and even now as small mostly medical claims are opened and closed. The rules continue to change and in an effort to keep up with the changes, we again remind you, first and foremost—ALWAYS CONSIDER MEDICARE’S INTERESTS.

In that regard, you must always consider whether Medicare may be asked to make some payment which could be considered related to your claim.

• If you have a strong end of care statement from a primary treating MD, mention that in the settlement documents as the reason you are not adding value for future medical.
• If there is no definitive end of care confirmation, identify a value to allow the injured individual to cover potential costs and include that value in your settlement.
• CMS will only review your proposal if:
  • The settlement exceeds $25,000 and the individual is already eligible for Medicare, or
  • The settlement exceeds $250,000 and the individual has a reasonable expectation to be eligible for Medicare within the next 30 months
    • Reasonable expectation can include being over 62.5 yrs of age, having already applied for SSDI, having end-stage renal failure/

Please remember that just because a threshold for review by CMS as noted above is not met—it does NOT mean you don’t have the obligation to consider the “reasonable expectation” of future care payable by Medicare.

How you ask will Medicare know if the claim exists?  Section 111 Medicare Secondary Payer (MSP) reporting requirements make you tell them! 

They use terms such as TPOC (Total Payment Obligation to Claimant), ORM (Ongoing Responsibility for Medicals) and NGHP (non-group health plan).

• The total payment obligation is defined by CMS as "...the Total Payment Obligation to the Claimant without regard to ongoing medical services," but it is probably easier in many disputed cases to think of it as the final settlement amount regardless of what had been paid up until that point. (THAT DOESN’T HELP MUCH IN DECIDING WHAT TO REPORT, DOES IT?)
• If you are a workers’ compensation plan, a liability plan, or a self-insurance plan, you are a NGHP.
• If future medical care is necessary,  there is Ongoing Responsibility for Medicals.

When do you need to report the claim for liability claims (not WC)?

• For dates between October 1, 2012 and September 30, 2013, reporting should have taken place if the cumulative TPOC Amount was greater than $5,000.
• Currently if a claim has a total payment obligation to the claimant (TPOC) over $2,000, you should be reporting that claim. This will continue for dates between October 1, 2013 and September 30, 2014 where you have a cumulative TPOC Amount greater than $2,000.
• As of October 1, 2014, reporting must take place if the cumulative TPOC Amount is greater than $300 and that threshold is currently set out indefinitely.
• Responsible Reporting Entities are required to report workers’ compensation ORM which exists on or through January 1, 2010, regardless of the date of an initial acceptance of payment responsibility. The interim thresholds do not apply to workers’ compensation ORM. However, certain workers’ compensation ORM claims are excluded from reporting if they meet ALL of the following criteria:

• the claim is for “medicals only”;
• the associated “lost time” for the worker is no more than the number of days permitted by the applicable workers' compensation law for a “medicals only” claim (or 7 calendar days if the applicable law has no such limit);
• all payments have been made directly to the medical provider;
• and the total payment for medicals does not exceed $750.

Please note—once a workers’ compensation ORM claim is excluded from reporting, it does not need to be reported unless the circumstances change such that it no longer meets the interim exclusion criteria listed. (Basically the claim does not need to be reported unless something other than medicals is included, there is more lost time, a payment is made to someone other than a provider, and/or payments for medicals exceed $750).

The best way to make sense of all of this is to err on the side of caution and report the claim if you are unsure and as noted above ALWAYS CONSIDER MEDICARE’S INTERESTS and make sure you confirm in any settlement documents how you protected their interests. 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 J.D., MSCC at mignoffo@keefe-law.com  are certified MSA consultants in our office who are prepared to field any questions you may have.

1-27-14; Update Your IL WC Rates With Shawn's Great Sheet; Big Appellate Win, Analysis by Arik Hetue; Lemon Law Analysis by Chris St. Peter and more

Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need Retroactive Updating. Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: We remain chagrined to continue to watch the endless spiral of IL WC rates. Starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $721.66. When it was published, this rate changed retroactively from July 1, 2013 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.If you have a claim with a date of loss after July 2013 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. If this isn’t clear, send a reply. 

The current TTD weekly maximum has risen to $1,336.91. A worker has to make over $2,005.36 per week or $104,278.98 per year to hit the new IL WC maximum TTD rate. Do such folks truly need full TTD value? Does any state in the United States have a TTD maximum that high?

The new IL WC minimum death benefit is 25 years of compensation or $501.34 per week x 52 weeks in a year x 25 years or $651,742.00! The new maximum IL WC death benefit is $1,336.91 times 52 weeks times 25 years or a lofty $1,737,983.00 plus burial benefits of $8K.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com and he will get a copy routed to you before they raise the rates again!

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Synopsis: KCB&A gets a big win at the IL Appellate Court, Workers’ Comp Division; with an in-depth look at the form and function of the IL Supreme Court Rule 23 Order.

Editor’s comment: You have heard us discuss what we feel is the dreaded Rule 23 Gag or “Unpublished” Appellate Court Order in the past with some harsh criticism, but most of the time, and especially in recent courtroom opinions, we feel it is used the right way. We provide a little detail over one of our most recent victories, and a bit of exposition on the status of the court’s use of the Rule 23 order.

In Glass v. YRC, this firm defended one of the nation’s largest trucking organizations. At the initial Arbitration hearing, Petitioner was awarded benefits and a prospective lumbar fusion surgery. The facts of the claim were not wholly one sided though, and on appeal at the IWCC, the Commission agreed with a multitude of arguments made by Arik Hetue in his appeal of the Arbitrator’s decision. Ultimately, the IWCC Commissioners ruled Petitioner suffered a temporary aggravation of a pre-existing condition, and confirmed the prospective surgery was not causally related to the work injury. On appeal at the Circuit and Appellate Courts, the IWCC decision was affirmed. If you would like to review a copy of the recent Appellate Court order, send a reply and we can forward you a copy. It sounds a bit like a run of the mill case, but we assure you there was a lot of medical care and a potential wage differential award hanging in the balance. What the case lets us do however is explore two very important concepts – the manifest weight of the evidence standard, and the Rule 23 Order.

In Glass the facts were up in the air and the case really could have gone either way – as evidenced by the Arbitrator awarding benefits and the Commission reversing and awarding some benefits but confirming the medical care at issue was not related. While all defense victories are a joy to a defense attorney, in this line of business, the Commission appeal level is the one you want to win. As we have discussed ad nauseum in the past, the Commission gets to look at everything with a fresh set of eyes and draw its own conclusions – it is not required to give any weight or deference to the Arbitrator’s findings. The legal term of art for this standard is “de novo”, and it allows the Commission to revisit the facts and come to a different conclusion than the Arbitrator did.

Why is this the level we are so pleased to win at? Once a case moves from the IWCC to the Circuit Court – the facts are “locked in” and any reviewing court can only come to a different factual finding if the facts are “against the manifest weight of the evidence.” That means the opposite conclusion has to be clearly apparent – it’s the kind of thing that happens rarely, or that is supposed to happen rarely. InGlass the Circuit Court judge clearly outlined his opinion that while the facts in a case can go either way, he is forbidden to substitute his view of them for the Commission’s. We agree and feel that is right in line with the appropriate legal standard. We were extremely pleased to see the IL WC Appellate Court agree and issue a simple ruling in the form of the Rule 23 Order.

A Rule 23 Order is an unpublished opinion – it’s meant to be used in cases like this one, where there is no significant controversy or groundbreaking ruling that may require publishing the opinion such that others could rely on the Court’s statements in other similar circumstances. We have complained bitterly in the past in this KCB&A Update over cases that were decided under this type or order which had what seemed like far-reaching impactive statements by the court.

Well, it appears they got the message, as we have recently performed a review of all of the Rule 23 orders from the past 6 months. Not a single such order was used in a case where there was what we feel to be a statement or ruling that should have been published. Bully for you, Appellate Court Justices! We hope they continue to keep using this order in the manner it was intended for, and continue to publish those rulings that have more far reaching statements. 

This article was researched and written by Arik D. Hetue, J. D. who can be reached at ahetue@keefe-law.comfor comment.

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Synopsis: Warranty Law—What Can You Do If You Bought a Piece of Junk? Analysis by KCB&A’s top GL/Warranty defense team member Chris St. Peter, J.D.

Editor’s comment: We want our readers to know what rights are available to consumers who purchase any new products that don’t work as intended or otherwise fail to comply with an express warranty. Our readers should also be aware of these laws from a defense perspective, as these consumer protection cases can be difficult and costly to defend due to statutory fee-shifting provisions and a strong public policy favoring consumer rights.

To this end, below is an overview of breach of express warranty claims under both federal and Illinois law.Please note that while these protections can apply to vehicles, Illinois also has a separate “Lemon Law” statute, 815 ILCS 380/1 et seq., which is not analyzed here.

I.              Federal Magnuson-Moss Warranty Act

A.   Background

Breach of warranty claims are governed by the federal Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq. (1994)). The Magnuson-Moss Act allows consumers to file a lawsuit to recover damages resulting from a breach of a written warranty. As an Illinois court explained, “The Act provides a private right of action by a consumer purchaser of a consumer product against a manufacturer or retailer failing to comply with the Act or the terms of a written warranty arising therefrom.” Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 793 (1st Dist. 2001). A consumer alleging a violation of the Act may file a lawsuit in any state court. 15 U.S.C. § 2310(d)(1)(A). If the amount in controversy is over $50,000 (exclusive of interest, fees, or costs), the consumer may file suit in federal court. Id. § 2310(d)(3)(B).

The Act applies to the sale of any written warranty on a consumer product (or services in connection with that product) costing more than $10. See 16 C.F.R. § 700.1(g), (h). The definition of “consumer product” includes automobile-related products. Id. § 700.1(a). The Act defines a “written warranty” as:

(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, or

(B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking.

15 U.S.C. § 2301(6). Thus, for example, the Magnuson-Moss Act can apply to written warranties guaranteeing the consumer’s “satisfaction“ or that  the product “will be free from defects in materials or workmanship” for a certain time period.

B.   Elements of a Claim

To state a claim for breach of written warranty under the Magnuson-Moss Act, a plaintiff must prove: (1) there was a defect in the product; (2) the defect was covered by the warranty’s terms; (3) a demand for cure was made; and (4) the defendant either refused or was unable to cure the defect.  Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 794 (1st Dist. 2001).

C.   Available Damages

The measure of damages in a breach of warranty claim are calculated based upon the sum of money that would put the plaintiff in as good a position as he or she would have been in if the defendant had performed all its promises under the warranty, as well as any reasonably related incidental and consequential damages. See Ill. Pattern Jury Instructions, IPI 185.09, 185.12 (2007). These damages can include the cost of repairs, aggravation and inconvenience, and diminished value of the product. See, e.g., Razor v. Hyundai Motor Am., 222 Ill. 2d 75, 83  (2006) (awarding $5,000 in warranty damages for the diminished value of Plaintiff’s car and $3,500 in consequential damages for aggravation and inconvenience and loss of use).

In addition—and most notably—the Act permits recovery of attorney’s fees. See 15 U.S.C. § 2310(d)(2). Moreover, attorney’s fees can be awarded which are not proportionate to the amount at stake. See, e.g., Cannon v. William Chevrolet, 341 Ill. App. 3d 674, 686 (1st Dist. 2003) (“the award of attorney fees does not depend upon a plaintiff's recovery of substantial monetary damages nor does it need to be proportionate to an award of money damages”). Thus, a relatively small warranty claim can result in a large award due to the amount of attorney’s fees incurred.

II.            Illinois Breach of Warranty Claim under Uniform Commercial Code

A.   Background

Illinois has a separate cause of action for breach of warranty claims, which is governed by the Uniform Commercial Code (“UCC”). See 810 ILCS 5/1-101, et seq. As a threshold matter, however, the UCC only applies to the sale of goods, not the sale of services.  Id. § 5/2-102. Where there is a mixed contract for goods and services, the UCC only applies if the sale is predominantly for goods and incidentally for services.  Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 352-53 (2002). When presented with a mixed contract, the court will make a finding of whether the sale is predominately for goods or services, thus determining coverage under the UCC. See, e.g., Brandt v. Boston Scientific Corp., 204 Ill. 2d 640, 654 (2003) (transaction between hospital and patient involving surgical implantation of medical device was predominantly for services, and incidentally for purchase of goods, such that UCC did not apply).   

B.   Elements of a Claim

The elements of a breach of express warranty claim under the UCC are effectively the same as the elements under the federal Magnuson-Moss Act. See Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 794 (1st Dist. 2001). However, under the UCC, a plaintiff must also show the seller’s warranty formed part of the basis of the bargain. Wheeler v. Sunbelt Tool Co., 181 Ill. App. 3d 1088, 1100 (1989). Stated differently, the warranty must be a basic assumption of the parties’ agreement.

C.   Available Damages

A buyer may recover all losses “resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.” 810 ILCS 5/2-714(1). This includes incidental and consequential damages.Id. § 5/2-715(2)(b). Thus, the damages are the same as those available under the federal Magnuson-Moss Act, with the notable exception that attorney’s fees are not recoverable under the UCC.  

In summary, the above two warranty statutes provide strong protections for consumers—and in the case of the federal Magnuson-Moss Act, a fee-shifting provision—that can make defense of such lawsuits challenging and costly. There are also a myriad of other potentially applicable consumer protection, product liability, breach of contract, and other laws that are outside the scope of this analysis. We ask our readers to contact us with any questions or concerns about how these laws might apply to them as a consumer or to their business as a manufacturer or retailer.  

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.