2-24-14; You Can Fire WC Claimant for Refusal To Drug Test, Analysis by Shawn Biery, JD, MSCC; Adjusting Company Parking Lot Slip Falls in IL WC; Three Most Challenging IL WC Claims and much more

Synopsis: U.S. Employers Can Legally Fire a WC Claimant Who Refused a Required Post-accident Drug Test. Recent Federal Seventh Circuit case confirms it is a non-discriminatory termination even when related in part to a workers’ comp claim/filing. Analysis by Shawn R. Biery, JD, MSCC.

Editor’s Comment: It will be no surprise to most of our clients, readers and others we generally support discipline for violating company policies which would normally result in suspension or termination regardless of whether a WC claim is pending. This rule is effective even if the termination may in some part be due to violation of a policy which was put into play directly due to an otherwise valid WC injury and filing. In Phillips v. Continental Tire The Americas, LLC ,(C.A.7 (Ill.)) , theFederal Seventh Circuit confirmed our advice is still sound where you have a true violation of your enforced company drug-testing policy.

This Ruling Has National Impact--It Isn’t Limited to Illinois Law

Please note this is not simply an Illinois-only WC/EPLI ruling, because it comes from the U.S. Seventh Circuit Court of Appeals. This important decision is binding law on three of the four states where KCB&A provides legal defense—Illinois, Indiana and Wisconsin. If the U.S. Supreme Court doesn’t accept this ruling for further appeal and modify it, the decision will provide guidance for U.S. and federal employers in all the federal appellate circuits across the country.

Just the Facts, Ma’am; Just the Facts

Continental Tire has a tire manufacturing facility in Mt. Vernon, Illinois. Plaintiff Phillips worked there as a general trucker for twenty-two years until his discharge. The Mt. Vernon facility has a health services department and in April 2010, Phillips visited the health services department to report his fingers went numb at work and to initiate a workers' compensation claim. At the time, Continental Tire had a written substance abuse policy that required drug testing in certain situations including initiation/reporting of a workers' compensation claim. That company policy provided “[r]efusal to submit to testing will be cause for immediate suspension pending termination.” Accordingly, any employee who sought to initiate a workers' compensation claim was required to submit to drug testing or be immediately suspended pending termination, regardless of whether he received treatment or services at the health services department.

Plaintiff Phillips was informed he had to submit to a drug test before he could initiate a workers' compensation claim. There is no dispute he was shown the Continental Tire drug testing policy. He also was advised if he didn't take the drug test, his employment would be terminated. Nonetheless, he refused to take the drug test because he didn't think that it should be a necessary consequence of filing a workers' compensation claim. Phillips was terminated from his employment with Continental Tire for refusing to submit to drug testing upon his initiation of a workers' compensation claim per their well-settled and enforced policy.

Phillips was well aware of the reason for termination, however he filed a retaliatory discharge claim. However, when asked at his deposition why Continental Tire terminated him, Phillips stated, “Because I didn't submit to a drug test.” And when asked if he was contending Continental Tire fired him because he filed a workers' compensation claim, he answered, “They fired me because I didn't submit to a drug test.” Phillips agreed he had no evidence or information there was a different reason for his discharge. It was his understanding he would still be employed at Continental Tire if he had taken the drug test. Even though he refused to submit to the test, Phillips did file a workers' compensation claim and Continental Tire’s counsel advised the court Phillips eventually received workers' compensation benefits. We checked online and it appears the underlying 2010 WC claim for “hand numbness” was eventually denied by the Arbitrator and Commission in 2013—it is currently pending on remand.

Legal Standards for Retaliatory Discharge Claims

It is clear Illinois law recognizes a cause of action for retaliatory discharge where an employee is terminated because of his actual or anticipated exercise of workers' compensation rights. To establish a retaliatory discharge claim, a plaintiff must prove:

(1)  They were an employee before the injury;

(2)  They exercised a right granted by the Workers' Compensation Act; and

(3)  They were discharged and

(4)  The discharge was causally related to pursuit of a claim under the Workers' Compensation Act.

Obviously in this claim, the only issue is whether he was discharged due to the pursuit of his WC claim. It doesn’t appear to be a difficult answer since there was a clear company policy. The Court agreed and noted proving causation “requires more than a discharge in connection with filing a claim.” Marin v. Am. Meat Packing Co. (Ill.App.Ct.1990).

The undisputed facts—including the parties' stipulation and Phillips' own deposition testimony—established Continental Tire terminated Phillips because he refused to take a drug test upon initiation of a workers' compensation claim as required by Continental Tire policy. Other facts included:

·         Phillips admitted he had no evidence or other information Continental Tire had any other reason for discharging him.

·         Continental Tire consistently has applied its drug testing policy and has discharged other employees who have refused to submit to the drug test pursuant to the policy.

·         Other Continental Tire employees have initiated workers' compensation claims and have not been discharged.

·         Phillips had filed a workers' compensation claim in the past and was not discharged.

·         Phillips agreed if he had taken the drug test, he would still be employed at Continental Tire.

Phillips argued the case of Clark v. Owens-Brockway Glass Container, Inc. (Ill.App.Ct.1998) was applicable due to the language which states: “An employer may discharge an injured employee who has filed a workers' compensation claim as long as the reason for the discharge is wholly unrelated to the employee's claim for benefits under the Workers' Compensation Act.”  The Seventh Circuit noted numerous instances where it had been determined “but-for causation” was rejected without facts to establish retaliatory discharge. They also noted Clark was unhelpful to Phillips for another big reason: the employer in that case discharged the employee because it thought her claim for benefits was exaggerated and the employer admitted the discharge was directly for filing the workers' compensation claim.

Phillips also argued the U.S. District Court erred in relying on a provision of the Illinois Workers' Compensation Act, 820 ILCS 305/11, which was not in effect at the time of his injury. This part of the statute is generally known as the “Intoxication provision” which establishes a rebuttable presumption the employee was intoxicated and the intoxication was the proximate cause of the employee's injury if the employee refuses to submit to drug or alcohol testing. The Seventh Circuit rejected this argument as well because, while the Court referred to this provision, its grant of summary judgment to Continental Tire was not premised upon it.

Finally, Phillips presented an argument the drug testing policy discourages employees from filing workers' compensation claims—the court simply referred to the provision in the IL WC Act as support for its conclusion there were valid reasons for requiring drug testing upon initiation of a workers' compensation claim and confirmed the enactment of such a provision reflected an employer is not out of step with Illinois public policy by requiring drug testing under certain circumstances. They also noted in opposition to the argument drug testing discouraged claim filings, Plaintiff Phillips was not deterred in filing his work comp claim which was the basis for this suit.

The Court also noted the recently enacted Compassionate Use of Medical Cannabis Pilot Program Act provides “[n]othing in this Act shall prohibit an employer from enforcing a policy concerning drug testing ... provided the policy is applied in a nondiscriminatory manner.” 410 ILCS 130/50(b) (effective Jan. 1, 2014). And the Illinois Human Rights Act provides “[i]t shall not be a violation of this Act for an employer to adopt or administer reasonable policies ..., including ... drug testing, designed to ensure that an individual described in [the Act] is no longer engaging in the illegal use of drugs.” 775 ILCS 5/2–104(C).

Teaching Points for HR, Safety and Claims Handlers

The Federal Court confirmed an appropriate conclusion--employment was terminated because of Phillips’ refusal to take the mandatory drug test—not in retaliation for his seeking to file a workers' compensation claim. The teaching points to take away from the claim are the same basics Keefe, Campbell, Biery & Associates attorneys espouse every day in practice when we advise our clients and potential clients to:

·         Adopt and maintain well documented policies, including a policy prohibiting retaliation

·         Provide training or documentation to employees with regard to policies

·         Do not ignore claims or claimants

·         Consider additional measures consistently such as two strike policies or written warnings

·         Closely review all employment actions

·         Document everything to show the policy is routinely and uniformly implemented

In essence, you should consider whether an unbiased observer would think the action was reasonable.

Ramp Up Accident-Reporting Protocols to Block Late Reporting

Please also consider ramping up your accident reporting protocols—one way for workers to skirt or circumvent drug testing protocols is to wait to report the problem or accident for several days or more. The idea is to avoid a positive drug test due to the passage of time. If an employer requires accident reporting to take place on a “same-shift” or same-day basis or have the employee face discipline leading to discharge, you may be able to insure you get valid drug test results. We do feel this concept would hold up in a retaliatory discharge setting because the basis for discharge isn’t the fact of the accident or injury; it would be due to late reporting.

If you want our sample drug-testing protocol to implement in your workplace, send a reply. If you have any questions with regard to employment decisions/litigation or workers’ compensation, please don’t hesitate to contact one of the attorneys at KCBA. This article was researched and written by Shawn R. Biery J.D. MSCC who can be reached at sbiery@keefe-law.com for any questions or insight on your specific situations.

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Synopsis: Analysis of Company Parking Lot Slip/Falls Remains an IL WC Dichotomy Between the Rulings in Wal-Mart and Homerding.

Editor’s comment: The winter in this part of the country during 2013-2014 has been one for the history books. While a given winter apparently has been worse, we don’t remember more ice, snow, sleet and cold. This winter has temporarily allayed concerns about global warming due to its severity. Most reports across the area indicate this is the 6th worst winter of all time in this Midwest U.S and it still keeps snowing and freezing!

We are being asked when a fall-down in a corporate parking lot in all this Illinois ice and snow is compensable. The answer is variable and is highly fact intensive. We are happy to provide a free analysis to any reader who is concerned about covering an unquestioned fall down involving one of your workers. Please understand we are certain to ask some or all of the following questions:

      Did you thoroughly investigate the accident?

      Do you have a written accident report, signed by the injured worker?

      Did you have the supervisor or someone in management confirm the report and the presence of a hazard?

      Do you have and did you carefully preserve any surveillance/security video of the event?

      What company or party owns the land or surface upon which the worker was traveling at the time of the fall-down?

      What company or party maintains the land or surface upon which the worker was walking at the time of the fall-down?

      Are the injuries serious?

From our perspective, if you have a thorough and complete accident investigation, you have completed two important things for your risk management protocols. First, you have documentation needed to accept or defend the problem. Second, you should have the ability to learn from the work injury/problem and prevent the same issue from recurring in the future. A company parking lot fall-down almost always involves a safety failure by someone in your organization.

If you don’t have a thorough and detailed accident investigation, please note the facts may “change” as you get into the claim. In IL, claimants may receive coaching from friends, family and sometimes lawyers about how to best make a claim—you want to prevent that phenomenon if possible with a strong accident review. There is also the unsettling concept where you may have the matter under-reserved and also be in a precarious position, should you decide to aggressively defend a claim that grows from being a minor problem to a major mess. Our advice to all of our readers—“lock in” the facts within the first 24 hours to avoid surprises at a later time.

If you have the facts locked in, the next battle is to accurately determine when to accept and pay and when to fight or controvert an accepted company parking lot fall-down claim for one of your workers. The IL Appellate Court set out a relatively simply analysis for how to handle parking lot fall-down claims. In the Wal-Mart v. IWCC ruling, evidence indicated the employer had a parking lot outside the workplace that was completely unregulated, other than for federally required handicapped parking set-aside spots. Basically, everyone could park anywhere they wanted. There were no assigned or prescribed spots for employees, venders, maintenance providers or the public. When someone fell down in such a parking lot, the risk clearly was the same for everyone in the area or a “risk common to the public.”

In contrast, in the Homerding v. IWCC decision, the Court reviewed facts where the employee was advised to “park out back” and fell in the area where they were directed to park. The limitation on the areas where an employee was required to park was felt to create an increased risk leading to WC coverage. Following this theory, if you have “employee-only” parking or areas of your facilities where the public, your vendors, maintenance specialists or others are not allowed to go, you are setting up a situation where the risks of ice/snow and slipping are limited to your workers. In such a setting, you probably want to accept the claim and direct your ire at your facilities’ managers for leaving areas you control in a dangerous slippery state.

Please also remember many fall-downs aren’t serious. If you are managing a minor strain/sprain situation for a worker, keep the claim minimal by paying for the first OccHealth visit. There is little need to worry about coverages and lawyers and fighting on a medical-only, no-lost-time claim. If the case grows and becomes a major issue, send an email on a 24/7/365 basis to Keefe, Campbell, Biery & Associates for our thoughts on coverage and further handling of the claim.

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

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Synopsis: The Three “Worst” or Most-Challenging Claims for IL WC Adjusters—Amputations, T&P and Death Claims.

Editor’s comment: When we provide training for adjusters, we always like to take a deep breath and confirm there are three types of claims you and your managers have to watch for. The main reason is these claims come with major surprises if you don’t know what has hit your desk.

First and probably most common are amputation losses. The reason amputations can be challenging Illinois claims comes from the mildly confusing way in which Illinois has an “amputation rate” versus normal PPD rates. By that we mean, if an adjuster becomes aware of bone loss for an Illinois worker, you have a short window of opportunity, perhaps no more than 30 days to start paying both TTD or temporary total disability and PPD or the amputation rate for the body part lost. If you don’t make the payments, the claim value can increase to include a 50% penalty and a 20% attorney fee under the 2009 IL WC Appellate ruling in Greene Welding & Hardware v. IWCC.

What is unusual is a worker who makes $250 per week and smashes a hand and loses their pinky or fifth finger will receive amputation benefits at a rate of $501.34 but the rest of the permanency for the hand at the applicable PPD rate of perhaps $250.00 per week (depending on whether they have a spouse and dependents). The weekly amputation benefit is due as soon as the adjuster is aware of the amputation. The balance of the PPD can be negotiated and pretried and even tried.

The same rate issues apply in an IL WC total and permanent disability or death claim. In blunt terms, if a worker making $250 per week is adjudicated to be totally and permanent disabled under any of the three IL WC approaches to lifetime disability, their weekly benefits start at the current minimum of $501.34 per week or $26,069.68 each year. The weekly cap on T&P benefits is $1,336.91 or $69,519.32 per year. Both of those numbers make it crucial for Illinois employers to make strong efforts to bring all injured workers back to work at the earliest opportunity and keep them working. Along with the ADA, every employer should seek to reasonably accommodate return to work efforts at both light and full duty.

On death claims, this math creates a minimum for a widow/widower of $26,069.68 each year with a 25-year undiscounted value of $651,742.00. The maximum IL WC death benefit value for 25 years is $1,737,983.00.

If you need help on setting reserves or managing a claim involving amputation, total and permanent disability or death, send an email and we will get you the right answers.

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Synopsis: Welcome Aboard, Kevin Boyle!

Editor’s comment: We are thrilled to add Kevin to head up our Indiana GL/WC defense team. He is a long-time, knowledgeable and veteran defense attorney based in Bloomington, IN and covers the entire state.

He is listed on www.linkedin.com and is now on our website. Please consider Kevin at KBoyle@keefe-law.com for your statewide IN defense needs!

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Synopsis: This Thursday!! WCRI or the Workers’ Comp Research Institute Stat Rats Document Continued Savings for IL Business in Workers’ Comp—to register, click the link below.

Editor’s comment: Please take a look. Everyone in the IL WC matrix hopes these dramatic and documented savings are going to cause IL WC premiums to proportionately drop.

New WCRI Publication:

The Effect of Reducing the Illinois Fee Schedule

In September 2011, Illinois enacted new legislation that introduced a 30 percent decrease in the fee schedule rates across all types of medical services. Important questions asked by policymakers and others after this fee schedule change are: Did a 30 percent reduction in the fee schedule produce a 30 percent change in the average medical cost of a claim? Was the 30 percent reduction too much or too little? How do the post-reform prices paid in Illinois compare with prices in other states? These important policy questions are addressed in this report.?read the abstract?order this report

Webinar - Effect of Reducing the Illinois Fee Schedule

In an effort to address one of the highest fee schedules in the nation, Illinois enacted a 30 percent reduction in their medical fee schedule in 2011. Since then many have wondered about the impact. Join WCRI researchers and co-authors, Dr. Rebecca Yang and Dr. Olesya Fomenko, for an hour-long webinar as they discuss the findings from a recently published study, The Effect of Reducing the Illinois Fee Schedule on Thursday, February 27, 2014 at 1pm ET (12pm CT, 11am MT, and 10am PT).  Click here to register.

2-17-14; State of the IWCC Report from John Campbell; To Dream the Impossible Dream--GOP Primary a Month Away; Top Ten Reasons to Ask for Outside Defense Counsel and more

Synopsis: Move to the Center? IL WC Commission’s Apparent Moderate Turn to the Middle is Refreshing for Illinois Business Community. Will the IL WC Appellate Court follow suit with support of the Commission rulings?

Editor’s Comment: It is no secret to veteran readers of this KCB&A newsletter that we have been known to wield a sharp pen over the years when it comes to our critique of the hearing officers of our Illinois Workers’ Compensation Commission. While perhaps harsh at times, much of our criticism was meant to point out some of the more challenging or arguably absurd awards and rulings, which often appeared to overlook strong evidence for the defense. Ten years ago, during the Reign of Blago, we recall joking about how our defense lawyers were like sheep going to slaughter, with little chance for victory on the business side of this industry.

We have to say, in our recent audit of IWCC decisions both internally and those reported over the past 18 months, we are noticing a distinct shift to the center by Arbitrators and Commissioners. For this, we have to applaud what we feel is a more recent “fair and balanced” approach to cases by our adjudicators. In fact, what compelled this article was receipt of four (4) decisions in one day last week which were all denials or otherwise favorable for the defense. Upon review of our trial decisions over the past year or so, we noted a similar trend as well.

Sure, on those “close call” issues over proper medical protocol or surgery, we still see administrative deference to treating doctors. And in other disputed matters, some arbitrators often have the difficult job of deciding who the heck is telling the truth and who is full of cow manure–those cases are always a bit of a coin flip. In our view, it is always challenging to try to act as a human “lie detector” and we can’t expect our sworn hearing officers to be any different. In our view, they are carefully listening to everyone and making their best call. We don’t think any WC administrative system can ask for more than that.

However, where solid evidence is presented to rebut a claim, such as surveillance video, job videos, pre-existing medical conditions/treatment or eyewitnesses to rebut claims, the current Commission members are taking a hard look at the evidence and where appropriate, dispensing denials on claims that don’t pass the smell test. We also note the Commission is looking more closely at the “repetitive trauma” concept of injuries with a far more quizzical eye than ever before–something we also feel is appropriate, as we have never been convinced “repetitive working” is necessarily an injury worthy of compensation.

In our view, this trend promotes the validity and respectability of the Commission as a judicial ruling body. It is good for IL business and good for our industry in general when a sense of even-handedness is felt by both sides of the isle. Moreover, we are noticing the same arbitrators employing use of AMA impairment ratings for the newer injuries and dispensing awards that are discounted off of traditional values, or what some prominent petitioner attorneys have described as a  “haircut” on claim values. Again, this trend is good for Illinois business, particularly as we compete with our sister states for lower WC costs and job growth.

As an example, our firm alone has seen the following in the past month or so:

• Zero award for Petitioner seeking TTD and past and prospective medical treatment in the form of bilateral carpal tunnel surgeries. The Arbitrator noted Petitioner would have been exposed to the work for a limited period of time before the asserted symptoms, the variance in job tasks actually performed by Petitioner during that time, and the treating doctor did not offer a causation opinion. He reviewed depositions of doctors involved and found our IME doctor’s opinion more supported by the evidence than that of the initial treating doctor.

• Zero award for Petitioner seeking TTD and past and prospective medical treatment in the form of knee surgery. The Arbitrator indicated Petitioner failed to prove he sustained an accident which arose out of his employment. There was an onset of pain as the day progressed, but no specific incident or trauma. The treating doctor’s opinion was speculation according to Arbitrator.

·         Zero award for Petitioner who suffered an undisputed fall with immediate emergency treatment but did not seek follow-up care for five months, eventually requiring total knee replacement.

·         Undisputed injury and full return to work resulted in award for cervical fusion at 17.5% MAW after AMA impairment rated case at 10% impairment.

·         Zero award where job description demonstrated that field worker for pest control company did not perform “repetitive-enough” tasks to contribute to what became a personal condition causing carpal tunnel.

While we would love to portray this chain of defense victories as one experienced by our firm exclusively, our discussions with veteran attorneys on both sides of the bar have confirmed this as an industry-wide trend with a notable shift to the center by the Commission. We even had one veteran Petitioner attorney in central IL tell us that he is hesitant to try any carpal tunnel cases anymore, as he has a stack of recent denials to show for his efforts. In our view, this is a win for ergonomics, safety engineering and common sense.

It compels the question, with more denials being handed down, along with the cost savings from the 2011 statutory changes in the form of WC medical fee schedule reductions and AMA impairment ratings, do we  have a Commission that is pro business? While we certainly can’t go that far, we do find the IL Arbitrators and Commissioners to be more objective and careful to weigh the evidence than ever before. Of course, as advocates in an adversarial system, we will always come across decisions that make us want to pull our hair out at the roots—we are sure the other side has similar problems which is the nature of litigation. However, all we can ask for is a fair system where our best arguments are heard and considered objectively. This appears more evident now than in the past decade and we felt it appropriate to tip our hat to the Chairman, Arbitrators and Commissioners for their efforts in this regard.

We are not as confident that this trend of the Commission will carry over to the Circuit and Appellate Court. While the Commission may have grown more centrist, we continue to see an Appellate Court that remains more Petitioner oriented with their interpretation of law and facts. We cannot forget it took an appeal to the Supreme Court to win reversal of the Venture-Newberg line of cases which had greatly expanded the “traveling employee” concept. Fortunately, the Supreme Court restored the more traditional interpretation of the law and limited what would have been an avalanche of new claims for virtually all workers driving to and from work each day. For reasons that are unclear, it also seems if the Appellate Court issues a denial, they don’t publish it but “non-publish” it under S.Ct. Rule 23.

This repeated use of Rule 23 orders keeps appellate decisions out of public scrutiny and academia but more importantly, this rule also renders the ruling non-precedential, other than in very limited circumstances. In the age of electronic data storage and on-line access to case reporters, we find Rule 23 to be an entirely antiquated concept that should go the way of the dodo  bird. The idea of Rule 23 was to make routine and mundane rulings simple and summary. What could be less mundane and routine than an IL WC Appellate denial? To the extent these “routine” decisions contain significant research, citations to numerous different prior cases and span 20 or more pages in length, it is only appropriate our industry can use them as a guide moving forward.

In our view, the last published defense ruling from that panel is Airborne Express v. IWCC where overtime was eliminated from the average weekly wage unless it was determined to be mandatory. It is hard to believe but that published pro-business ruling was way back in 2007. We have certainly experienced success before the Appellate Court since 2007 and we have written about it but are often disappointed the rulings are not published for our future reference.

As we outlined with our view of the IWCC above, we are hopeful the Appellate Court, WC Division will also move to the middle, and perhaps as important, regularly publish their detailed and well-researched rulings and help all IL citizens improve the business climate in our state.

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

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Synopsis: To Dream the Impossible Dream—The People’s Republics of Illinois and Chicago Look Over the Precipice of Massively Higher Taxes As the Republican Primary is a Month Away. What will it mean to workers’ comp??

Editor’s comment: As you read this, we see the entire State of Illinois and our nation’s third biggest city are in dire economic straits. Both governments have financial debt exponentially higher than their annual tax income, all due to government pensions. The Impossible Dream is the concept held by our government union bosses that 4-20 years of government service entitles their members to lifetime pay at the cost of Illinois and Chicago taxpayers. In our view, that can’t be done and we are all going to struggle mightily unless and until someone gets the message through the insufferably thick skulls of these union bosses that their model is unsustainable, impracticable, unworkable, hopeless, ridiculous—you pick the adjective.

Well, you might ask, didn’t the State of IL reform its government pensions? Well, that is sort of true and sort of not true. They only “reformed” four of the five state pension programs; the Judge’s Retirement System or JRS wasn’t touched and remains shockingly expensive for taxpayers. And the actual government pension reform of the four affected pensions is going to be presented to our IL Supreme Court for their approval or reversal.

The person on the point fighting against government pension reform is former Judge Gino L. DiVito. Former Judge DiVito served IL taxpayers as a jurist for 20 years and did a solid job. Your editor appeared before him on several occasions. We are certain he contributed about $200-300K to his pension over the 20 years while working for us. Former Judge DiVito’s annual state government pension is posted online. In 2012, it was $157K per year—this year, it will be about $167K. He will be receiving over $200K per year not to work as a judge in about 6-7 years. In total, by 2012, he had already received $1.8M in total lifetime pension payments—by this year lifetime pension income will be $2.1M. Here is the source of our starting numbers:

http://www.taxpayersunitedofamerica.org/wp-content/uploads/jrstop100.pdf

Former Judge DiVito’s annual pension will continue to go up 3% or about $5,000+ each year on a compounded basis. Gino DiVito is fit as a fiddle; if he lives 20-30 more years, he will receive an additional $5-8M almost all of it from IL taxpayers. That will bring lifetime pension income to $10,000,000!! Please note our view it isn’t actually a “pension” he is receiving—it is “post-government-employment” income. Gino DiVito is still working at a law firm, probably making a reasonable buck and isn’t in any way “retired.” Unlike Social Security payouts, there is no offset for an IL government worker making a lot of money; they still draw their full “pension.”

So where do you think the money to translate a $200-300K pension contribution that results in a lifetime payout of $10 million or more comes from? It comes from you and me! The media bafflingly calls the massive pension shortfall “unfunded” which is misleading—what it means is these pensioners are back on our payroll. Gino DiVito and tens of thousands of former Illinois government workers are receiving the majority of their pension income from current tax dollars. The record-high Illinois income tax increase that was supposed to end next year was completely eaten by the current cost of paying folks that no longer work for us.

The ironic aspect of what former Judge DiVito is doing is to fight before the IL Supreme Court to enforce the “pension clause” or what we call the “stick-it-to-taxpayers-clause” which he will argue won’t allow other government employees’ pensions to be trimmed to make financial sense of what is happening. If he wins, we ask the obvious question: “Then What?” If Gino DiVito is successful in that effort, the state government pension deficit by that time will probably be close to $110B and will continue to exponentially escalate. It goes up every day of every year at a rate of about $17M per day and that amount is going to keep spiraling. We have already seen IL Speaker Mike Madigan write a letter to ask Illinois public gov’t union leaders to do something about these issues and he was roundly ignored. Gino DiVito is leading the charge to fight his proffered reforms. In the last ten days, IL Senate President Cullerton openly asked the Chicago Teachers Union to see the math and problems the city is facing with their pension disaster. CTU President Karen Lewis just openly confirmed she could care less and further reiterated the union she leads is ready to fight any change with all their money, PR and power. Trust us, the State and City of Chicago are rapidly approaching the day where they aren’t going to be able to keep borrowing and issuing bonds to pay these rocketing pension costs—the government union leaders aren’t saying so but simple math indicates potentially massive tax increases are on the horizon. The worst week for taxpayers in IL history may be the week after the November gubernatorial election because that is when they will pass all the new taxes in Springfield.

What does it mean to workers’ comp? We only see one Republican candidate Bruce Rauner who is aware of this shocking math and appears to be concerned about it. Government union leaders are shockingly investing about $1M to attack him in the primary. We are sure incumbent Governor Quinn knows the challenges but he apparently is sitting on the sidelines to see if the state pension reforms he signed will pass muster before the IL Supreme Court. Governor Quinn has accepted millions and millions from the same government union leaders who are contradictorily fighting his pension reforms—the unions want to keep the Impossible Dream of lifetime pay from the taxpayers for 4-20 years of work and minimal pension contributions alive. If Bruce Rauner wins the Republican primary on March 18, he doesn’t owe anything to the government unions and will hopefully have the ear of the taxpayers and voters about the need for dramatic government pension reforms, like implementing a 401K that most businesses have.

The winner of this epic battle gets almost complete control of the Illinois Workers’ Compensation Commission. Watch this space for further news as the election unfolds. We appreciate your thoughts and comments.

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Synopsis: Top Ten Reasons to Hire Outside Defense Counsel versus the In-House Attorneys offered by your Insurance Company.

Editor’s comment: We were asked by a reader and wanted to give you our thoughts.

Top Ten reasons to consider using Keefe, Campbell, Biery & Associates as your defense team versus in-house counsel:

1.            Responsiveness to the client—outside counsel reports to the client and the adjuster; in-house counsel reports to the adjuster first;

2.            We want to get things right--If the adjuster makes a clerical error, oversight or is inaccurate in reserves, judgment or handling, we will quietly tell both you and the adjuster and work out issues. In our view, an in-house attorney would never challenge an adjuster. They simply don’t question or challenge their co-employee’s decision;

3.            Hourly rates are lower—lots of folks are surprised by this one. In many claims, outside defense counsels hourly rates are almost always lower—if they aren’t, we can lower them. Some observers are amazed to learn of the high billing rates of in-house counsels. You also need to keep asking them for their hourly rates because, in our experience, they don’t always notify you about a rate increase;

4.            Expertise—it is our view our expertise is much higher, as our law professors teach in-house attorneys;

5.            Aggressive handling--we are typically much, much more aggressive in trying claims and getting them favorably settled.

6.            Global legal issues are covered for our clients—in-house counsels will rarely, if ever get involved in release/resignations, countersuing a claimant or WC fraud. In-house counsels typically have a “mono-focus” of handling workers comp defense only. An outside defense firm can and will handle any legal issue you ask us to handle and we do with similarly discounted rates over the industry.

7.            Knowledge of new and breaking legal developments--we watch changes in the law and IWCC like hawks and report it to several thousand readers every week. House counsels learn of changes from courthouse coffee breaks or lunchroom gossip—or from our KCB&A updates!.

8.            Free legal stuff--we provide free research, advice and analysis of non-litigated claims including death claims, amputations and catastrophic losses—you don’t have to assign us a file to ask us questions via email/phone or conference. We consider it a rare setting in which a house counsel would be asked to participate in a call or answer a question about a non-litigated claim.

9.            Responsiveness--while it sounds unusual, we would always want an attorney we can fire—if you aren’t happy with handling by a house counsel, it is a challenge to get them off your files. As outside counsel, we work hard to avoid making a client unhappy.

10.         Winner, winner, chicken dinner—the defense team from KCB&A wins lots of cases—if you want a list of our successes, let us know. Last week was one of the most successful weeks in terms of wins per recent cases tried with five clean wins out of five cases tried—see above.

In our experience, if you want an outside attorney, be sure to ask your broker or the adjuster. Usually they will want to keep you happy since it is your money.

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

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Synopsis: Welcome Aboard, Kevin Boyle!

Editor’s comment: We are thrilled to add Kevin to head up our Indiana GL/WC defense team. He is a long-time, knowledgeable and veteran defense attorney based in Bloomington, IN.

He is listed on www.linkedin.com and we will add him to our website shortly. Please consider Kevin for your statewide IN defense needs!

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Synopsis: WCRI or the Workers’ Comp Research Institute Stat Rats Document Continued Savings for IL Business in Workers’ Comp.

Editor’s comment: Please take a look. Everyone in the IL WC matrix hopes these dramatic and documented savings are going to cause IL WC premiums to proportionately drop.

New WCRI Publication:

The Effect of Reducing the Illinois Fee Schedule

In September 2011, Illinois enacted new legislation that introduced a 30 percent decrease in the fee schedule rates across all types of medical services. Important questions asked by policymakers and others after this fee schedule change are: Did a 30 percent reduction in the fee schedule produce a 30 percent change in the average medical cost of a claim? Was the 30 percent reduction too much or too little? How do the post-reform prices paid in Illinois compare with prices in other states? These important policy questions are addressed in this report.?read the abstract?order this report

This is their webinar scheduled in ten days:

Webinar - Effect of Reducing the Illinois Fee Schedule

In an effort to address one of the highest fee schedules in the nation, Illinois enacted a 30 percent reduction in their medical fee schedule in 2011. Since then many have wondered about the impact. Join WCRI researchers and co-authors, Dr. Rebecca Yang and Dr. Olesya Fomenko, for an hour-long webinar as they discuss the findings from a recently published study, The Effect of Reducing the Illinois Fee Schedule on Thursday, February 27, 2014 at 1pm ET (12pm CT, 11am MT, and 10am PT).  Click here to register.

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.