7-7-14; "Dusty" New Asbestos Ruling Creates End-Run Around Exclusive Remedy Provision; Is It WC Fraud to Own/Operate a Business and Collect TTD?; New Indiana WC Rates from Kevin Boyle, JD and more

Synopsis: “Dusty” New Illinois OD Appellate Court Ruling May Cause Hundreds of New Asbestos Filings Against Employers.

Editor’s comment: Sometimes we hate to report what is happening in our state because it is so challenging and “activist.” But report we must and we will let the dust fall around us.

Unless The IL Supreme Court Takes This Case and Flips It, the “Mesothelioma Bar” Can Now Sue U.S. Employers With Illinois Operations for Asbestos Exposures to Your Employees!

In Folta v. Ferro Engineering, 2014 IL App (1st), issued June 27, 2014, the IL Appellate Court issued a game-changing ruling involving the exclusive remedy protection offered to employers when their employees become injured or sick due to work. It appears there is a new trend from the troops at the Illinois Trial Lawyers Association or ITLA and the legislators/judges/justices they legally support for election to strip away such protections to allow IL employers or their vendors to be sued in Circuit Court. The most recent legislative change was SB 3287 which now allows for direct actions against “safety consultants” or anyone providing “safety advice” to an employer—prior to June 5, 2014, such folks couldn’t be sued directly and the injured worker received WC benefits only. As we have reported, our legislature changed the law in a fashion we consider counterproductive for both jobs in our state and safety in the IL workplace.

Now it appears our courts are re-writing the law to allow IL and all U.S. employers with Illinois workers to be sued for decades-old asbestos exposures. In the Folta ruling we cite above, the worker may have worked with asbestos products about fifity years ago in the late 1960’s. It appears he contracted mesothelioma in the 1990’s and passed away sometime after 2011. The IL Occupational Diseases Act would traditionally provide whatever benefits he might be due from his employer for exposure to asbestos products at work. There is no question the limitations period for making a claim for an occupational  disease arising from exposure to asbestos is crystal-clear. The employee is provided 25 years to make a claim for asbestos-related “injuries” under our law and 3 years for asbestos-related diseases. By the time of the illness and passing of decedent James Folta, any potential occupational disease claim against Ferro Engineering was possibly time barred by the OD Act’s 25-year statute of repose for asbestos-related injuries and the three-year statute of repose for asbestos-related diseases. Thus, instead of filing a workers’ comp claim, Folta filed a direct action against his employer Ferro Engineering and other Defendants who supposedly supplied Ferro Engineering with products or equipment containing asbestos.

There appears to be no question Plaintiff, now decedent James Folta would have been challenged in making a claim for benefits, consistent with the IL OD Act’s requirements. The applicable section of IL law is in Section 1(f) of the OD Act which states:

(f) No compensation shall be payable for or on account of any occupational disease unless disablement, as herein defined, occurs within two years after the last day of the last exposure to the hazards of the disease, except in cases of occupational disease caused by berylliosis or by the inhalation of silica dust or asbestos dust and, in such cases, within 3 years after the last day of the last exposure to the hazards of such disease and except in the case of occupational disease caused by exposure to radiological materials or equipment, and in such case, within 25 years after the last day of last exposure to the hazards of such disease.

820 ILCS 310/1(f). Please note the legislation above does not say the OD Act doesn’t cover exposure to asbestos dust—in our view, it clearly covers the exposure and indicates no benefits/compensation are due from the employer unless the requirements of the law are met. Plaintiff and later his widow had an appropriate period after the last exposure to asbestos dust to get an OD claim on file or they are barred by the simple requirements of the OD Act. In our view, this occupational disease legislation has been kept in the same format it was started with for decades. Either decades ago or right now, the IL legislature could change the law to match current science and understanding of the effects of exposure to asbestos. Our legislature, in its wisdom, did not change the law so, in our view, the reviewing courts are now doing it.

What About the Durand Ruling?

We point out the IL Supreme Court in Durand v. Industrial Commission expaaaaanded the workers’ comp and, by analogy, the OD statute of limitations in Section 6 of the WC/OD Acts. Our highest court ruled the key “cut-off” date was not the date on which the injury and its causal relationship became apparent to a reasonable physician, but when it became plainly apparent to a reasonable employee. The Court stated the WC Commission, in evaluating an accident or manifestation date, should consider many factors, such as the employee’s medical treatment, the severity of the injury, and how the injury affects the employee’s performance.

The problem Plaintiffs in Folta have is they have never made a claim under either the IL WC Act or the IL OD Act. That potential appears to have been lost to Plaintiff’s counsel so the “activist” Appellate Court can’t expaaaaand the statute of limitations or statute of repose for them in a fashion similar to the Durand reasoning. It appears to us this new ruling is new judicial legislation that didn’t or couldn’t consider the earlier judicial legislation.

Where IL WC and OD May Be Going

In our view, confusion and chaos now abound. This ruling appears to state when an injured worker’s claim under the WC or OD Acts is time-barred in a fashion the statute contemplates but the worker or their survivors are consequently blocked from receiving benefits under our laws, the employee can sue their employer in circuit court, and the exclusive remedy provision of those Acts does not bar such a suit. With respect to our Appellate Court, we consider that approach another anti-jobs and anti-business concept.

You might ask “wait a minute—do you mean anyone blocked from receiving benefits by the operation of the limits of the WC or OD legislation can now sue the employer in Circuit Court?” The answer is—no one knows. The Folta court was asked and didn’t answer such questions in their ruling. While we are uncertain about that concept, we are certain hundreds of “asbestos-bar” plaintiff lawyers are sprinting to the courthouse as you read this to add the employer as a party defendant to all pending asbestos lawsuits.

If you aren’t aware, tiny Madison County IL, with a population of about 260,000 has the largest asbestos docket in the U.S. We assure our readers there is a potential for hundreds of new asbestos claims against IL employers—we predict the new filings will be focused there and if you need assistance, the KCB&A team in southern IL can help. Madison County had 752 asbestos exposure claims filed in 2010; 953 asbestos claims filed in 2011 and 1,563 in 2012—those numbers may double or triple but are certain to go up exponentially if this decision stands. As an aside, if every asbestos claim in Madison County were to be set for trial this year, every eligible adult in the county would have to appear as a juror on three to four or more jury trials before year-end.

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

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Synopsis: Full TTD Awarded Despite Admitted Part-time Work at Florist Shop for Nurse—In Many States This Might Be WC Fraud, in IL WC, It May Be Rewarded.

Editor’s comment: What happened to temporary partial disability? In Sunny Hill of Will County, dba Sunny Hill Nursing Home v. IWCC, 2014 IL App 130028WC, filed June 26, 2014, Petitioner had a shoulder problem due to a work-related injury and was receiving care at her employer’s expense. The employer learned she was working at a flower shop she owned while getting full temporary total disability. They sent out surveillance that clearly documented Petitioner was working at her shop.

At the time of the initial injury, Claimant Mahoney-Tapella was a licensed practical nurse at Sunny Hill Nursing Home of Will County. In December 2008 she injured her right shoulder and lower back lowering an obese patient from a patient lift. Ms. Mahoney-Tapella was awarded TTD benefits for three periods between December 2008 and June 2011, and Respondent Sunny Hill terminated her employment in September 2010 because she had been continuously off work for them for more than one year.

Prior to her injury, she opened and operated a flower shop which appears to be called Blossoms and Blooms in Crest Hill, IL with her two daughters. Our research indicates their website is: http://www.blossoms-and-blooms.com/ From their website, it looks like a well-run company and there is an indication it has been in business for over two decades.

Claimant owns a majority stake in the business and her daughters run it with her. Despite working at the flower shop three days each week since getting injured at work in 2008, Ms. Mahoney-Tapella testified she was not “formally employed,” didn’t collect a paycheck, and doesn't follow a regular schedule. When at the flower shop, Ms. Mahoney-Tapella admitted she answered the phone, picked up faxed orders, helped her daughters prepare flower arrangements and babysat her grandchildren. We ask the rhetorical question--what else would someone do in a florist shop?

The arbitrator ruled “it is apparent that (Ms. Mahoney-Tapella's) partial ownership interest in a local flower shop that is operated on a day-to-day basis by her daughters does not constitute a 'return to work' in the sense of disqualifying her from receipt of TTD benefits.”

With respect to this solid and veteran hearing officer, we completely disagree—working disqualifies one from TTD but may still entitle the worker to TPD. There is no dispute Petitioner owns the company and clearly either actively makes money or is entitled to a portion of the profits of the company she owns. The fact her daughters appear to do the heavy lifting and hard work doesn’t mean Claimant isn’t working. Please also note “babysitting” her grandchildren also has value that can be easily ascertained.

In our view, you can’t have it both ways—Illinois WC law was amended in 2005-6 to provide workers with temporary partial disability or TPD. If a given claimant is working for someone else or operating a business they own for profit, the pro rata amount of money they make needs to be used to calculate temporary partial disability. When any other approach is used, it appears to us to take on the veneer of WC fraud. We salute the many attorneys on the other side of the practice who feel a duty to report to the adjuster or Respondent’s counsel when they learn their clients are working in any way and therefore TTD needs to be recalculated as TPD.

We thank the reader who gave us the heads up on this ruling. We appreciate your thoughts and comments. Please post them on our award-winning blog.

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Synopsis: Important Indiana WC Benefit Changes effective July 1, 2014 with analysis by our Indiana Defense Team Leader, Kevin Boyle, JD.

Effective July 1, 2014, the Indiana Worker’s Compensation benefit rates will increase for the first time in a number of years. You’ll need to update your old charts for injuries that occur after 6/30/14 due to the recent Indiana legislative changes from H.E.A. 1320.  Below is a chart to help.

There are also additional planned benefit changes for injuries on and after June 30, 2015 – 2017 as well. If you need those rates, contact Kevin at the email address below or call him at 312.662.9899or 812.369.7182.

                 Indiana PPI Value Increases

Date of Injury

1 - 10 degrees

11 - 35 degrees

36 - 50 degrees

51 - 100 degrees

7/1/10 - 6/30/14

$1,400

$1,600

$2,700

$3,500

7/1/14 - 6/30/15

$1,517

$1,717

$2,862

$3,687

Indiana Max. Dollars for Weekly Wages: TTD-TPD-PTD and DEATH BENS or any combo of these.

Date of Injury

Maximum Wage

Benefit Rate

Minimum Wage

Maximum Compensation

7/1/09 - 6/30/14

$975

$650

$75

$325,000

7/1/14 - 6/30/15

$1,040

$693.33

$75

$346,666.67

source: http://www.in.gov/wcb/files/ppiweeklybenefits.pdf

This article was researched and written by Kevin Boyle, JD. Kevin is our Indiana Defense Team Leader and is licensed in Indiana, not Illinois. He is available for answers to any questions about general liability, employment law or workers’ comp in Indiana at kboyle@keefe-law.com.

6-30-2014; SB3287--Can We Counterattack?; Important ECA Ruling with analysis by Pankhuri Parti-Shawn Biery; Kevin Boyle Reviews Title VII Ruling of note; Matt Gorski on WCLA Presentation and more

Synopsis: SB3287 Makes Safety Consultants and Maybe You Liable for “Safety Advice”—Can We Counterattack?

Editor’s comment: We are asking for our readers thoughts and comments. SB3287 strips away the exclusive remedy protection for independent safety consultants when someone gets injured at work after they have provided safety advice. On top of that, no one has any idea what “safety advice” might be or how it will be defined moving forward. We are now concerned all workers’ comp participants/vendors other than employers, insurance carriers and brokers might get hung out to dry and be sued for doing their normal day-to-day work in handling claims. By that we mean, safety consultants, lawyers on both sides, third party administrators and their adjusters (who arguably aren’t “insurance carriers”), treating and IME doctors, surveillance operatives, physical therapists and others all are arguably providing “safety advice” and might get drawn into litigation.

In short, we feel this is a very irritating new law. To the extent it makes provision of safety services more difficult and expensive, we feel it is anti-social and counterproductive. It is our reasoned legal opinion there is significant new liability for many WC vendors of whatever nature to provide safety consulting services or advice in the Illinois workplace moving forward. The lead claim which led to the passage of SB 3287 was a safety consultant who looked at/examined a manlift in a building. A female worker later used the lift and fell and became paraplegic. She died from her injuries about seven years later. Plaintiff’s counsel argued the safety consultant should have noticed an OSHA-required railing should have been installed. It wasn’t there. Although workers’ comp benefits were paid, the civil case was dismissed under the old law but the new law would have allowed it to proceed against the consultant.

The last paraplegic claim that went to a jury in Illinois resulted in a verdict of $64,000,000. One might assume if you provide any “safety advice” and someone is seriously injured or killed, you may have significant liability now that you didn’t have prior to June 5, 2104 when our current Governor signed this troublesome bill into law.

At present, it is our reasoned legal impression whenever someone is moderately/seriously injured or killed in an Illinois workplace, Plaintiff’s counsels are going to send the employer written interrogatories about who the non-employee consultants/claims handlers and other WC vendors that provided any advice for the premises or processes leading to injury. Anyone listed as a “consultant” is certain to be sued with high exposure. While there will be defenses, it is going to be challenging and expensive to deal with such suits.

Here are some thoughts for folks that might be traditionally identified as “safety consultants”

·         Become an LLC or limited liability corporation and don’t carry any insurance—if you get sued, fold the LLC. Right now, there is no provision in the law which allows Plaintiff to “pierce the corporate veil” to allow you to be sued as an individual. Please consult with your own lawyer or our defense team at KCB&A about the strengths and weaknesses of this approach before following this model.

·         Perhaps a middle ground, consider becoming an LLC and get a moderate amount of liability coverage—perhaps $100K. If you get sued, tender the $100K and then fold the LLC. Unlike typical workers’ comp settings, there is no requirement of which we are aware that a safety consultant have any specific level of liability insurance coverage. If you have some coverage but not a lot, you might be able to get out of a claim rapidly and avoid higher levels of liability—again, discuss this approach with counsel or reply to set a meeting with our experts at KCB&A.

·         Reach an agreement to literally become an employee of the company you are consulting for and get paid on a W2 with other employee benefits. Even if you only work for the company on a part-time basis, if you are an employee of the employer where someone later gets hurt, you will hopefully have the exclusive remedy protections from Section 5. The IL WC Act, as amended, doesn’t say anything about full-time or part-time employment status for in-house consultants.

Here are some thoughts for non-traditional “safety consultants”

Considering the situation of lawyers on both sides, third party administrators and their adjusters (who arguably aren’t “insurance carriers” per the amended IL WC Act), treating and IME doctors, surveillance operatives, physical therapists and others, we recommend you start routinely using disclaimers. KCB&A has just made the following adjustments/additions to the disclaimers in our email tag-lines and fax cover sheets—see the bolded language at the end:

CONFIDENTIALITY NOTICE AND DISCLAIMER: This e-mail message, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information or otherwise be protected by law. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. Any advice or recommendations provided in this document are solely legal advice. Keefe, Campbell, Biery & Associates does not provide safety advice or consulting services. If such services are needed, a licensed safety expert should be contacted.

In our view, all workers’ comp vendors across the state have to do their jobs. By that we mean claims handlers at TPA’s have to handle claims. Attorneys have to fight for their clients. Treating doctors, IMEs and physical therapists have to work their magic. Some of what we do might be called “safety advice” by a rabid Plaintiff lawyer but we have to hope judges and justices in this state are going to let us do our jobs and not expand our liability exponentially for doing so. We hope disclaimers will work but have no way to guarantee it.

We are also asking the many legal, medical and claims experts among our readership—do you have any thoughts on this new challenge? Is there any way to effectively counterattack and defend ourselves from this nutty new law? Please reply with your thoughts and best strategies.

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Synopsis: In another ruling we consider positive for Illinois business if they take the proper steps in hiring venders, the Illinois Appellate Court 1st District confirms the Employee Classification Act is not an avenue for a subcontractor to seek personal benefits from a contracting company via the ECA. Analysis by Pankhuri Parti, JD and Shawn R. Biery, JD MSCC.

Editor’s Comment: In a positive decision which guides employers who contract with parties to perform services in the State of Illinois, the Illinois Appellate Court in Michael v. Pella Products, Inc., 2014 IL App (1st) 132695 (June 25, 2014) affirmed lower courts had properly granted summary judgment to Defendant window company since facts confirmed the window company contracted with a residential contractor who was a bona fide corporation under Department of Labor administrative regulations, and thus the Illinois Employee Classification Act did not apply.

By way of confirming the facts of the case, Michael incorporated RJM in 2007 and entered the business of residential contracting. RJM first entered into a contract with Pella in 2008 to provide window and door installation services and then again in 2009. Both the agreements were signed by Michael as “owner” of RJM. As part of the agreement, RJM was to provide sufficient labor to perform the work required by Pella to be judged by Pella’s specification, standards, and expectations. The contractual relationship between RJM and Pella ended in December 2009 and in 2012 Michael filed a putative class action complaint claiming Pella improperly classified him and others similarly situated as independent contractors instead of employees in violation of the Employment Classification Act. The trial court granted summary judgment to Pella finding Michael had performed services for Pella through a “bona fide corporation” and not as an individual. Michael appealed.

The purpose of enacting the Employee Classification Act was to address the business practice of misclassifying employees as independent contractors in order to avoid paying payroll taxes, unemployment insurance contributions, workers’ compensation premiums, and minimum wage and overtime payments in the construction industry. While the Act does not define an “individual” it does create a rebuttable presumption an individual performing services for a contractor is an employee unless it is shown the individual was effectively operating independently from the contractor. Additionally, the Department of Revenue has also promulgated regulations which exclude bona fide corporations from the purview of the Act.

In his appeal Michael did not dispute RJM constituted a bona fide corporation as defined by the Act and he was an employee of RJM. Instead Michael alleged because he performed services in his individual capacity for Pella, he must also be considered an employee of Pella – the contractor and is thus protected by the Act. In essence Michael asked the court to expand the purpose of the Act to include individual claims by employees of a subcontracting bona fide corporation against the contractor itself.

However, the Appellate court disagreed and refused to expand the purpose of the Act in this manner. According to the Court, Michael could not prove he served Pella in an individual capacity because it was RJM who performed those services under the subcontractor agreement. As a result the trial court did not err in deciding Michael did not have an individual claim under the terms of the Act. The Court reasoned the concerns underlying the Act were not implicated in this situation because RJM had properly classified its own employees, complied with the tax laws, paid its employees (like Michael) wages and provided them with benefits. The Court reasoned it was the intent of the Act to exclude bona fide corporations from the purview of the Act because the individuals working for these subcontracting corporations were already employees and could seek wages, benefits, and any additional claims from those corporations. As Michael, an employee of RJM was already receiving wages and benefits from RJM, he could not claim to be misclassified under the Act.

The Court was also unimpressed by Michael’s attempts to show this interpretation of the Act yielded absurd results as a corporation could classify its employees as independent contractors and then those individuals would have a claim against a contractor like Pella. However, the Court clarified in this hypothetical the misclassification claim under the Employee Classification Act would lie against the employer – RJM – and not the contractor. Similarly the contractors could not circumvent the Act by insisting on the creation of a corporate entity with which to contract as in this case the entity created would not be a bona fide corporation.

In its holding the Appellate Court explained since it was the subcontracting company (RJM), and not the individual employee (Michael) who rendered services to the contractor (Pella), the employee was not an "individual performing services" for the contractor under the terms of the Act and therefore was not protected by the ECA. The impact for employers is an affirmed ability to contract with companies for certain services without fear the individual employees of the subcontracting companies would be classified as their employees when some issue arises which may create disputes.

This article was researched and written by Pankhuri Parti, JD who has now successfully transitioned to attorney after clerking for Shawn R. Biery while matriculating at DePaul Law. Feel free to contact Pankhuri about this article at PParti@keefe-law.com or Shawn atSBiery@keefe-law.com.

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Synopsis: Important Seventh Circuit Title VII Ruling with analysis by Kevin Boyle, JD.

Editor’s comment: An African-American substitute janitor alleged he was subjected to harassment over a two-and-a-half week period by co-workers at an elementary school in Michigan City, Indiana. Nichols v. Michigan City Plant Planning Dept., 2014 WL2766776 (7th Cir. 2014). 

Although it was a “close call,” the Seventh Circuit affirmed the Northern District of Indiana’s grant of summary judgment for the employer, and against the pro se plaintiff, ruling any harassment was not severe or pervasive enough to create a hostile work environment in violation of Title VII.  Further, the Seventh Circuit ruled the elementary school did not discriminate in its decision to replace the substitute janitor with a permanent janitor. 

·         ALTHOUGH A CLOSE CALL, THE PRO SE PLAINTIFF LACKED THE EVIDENCE TO PROCEED TO A JURY TRIAL

The alleged harassment included a co-worker's alleged one-time use of the "black n----r" racial epithet, which she purportedly directed at Plaintiff. The Court held although deplorable and inappropriate in the workplace, it was not severe enough to trigger liability. There were also several other incidents of alleged harassment including the co-worker saying "where that boy at?" without knowing Mr. Nichols was within earshot; a co-worker bringing Mr. Nichols food but slamming the tray into his chest; other employees allegedly not telling Mr. Nichols the location of the janitor's closet; other employees making a mess for him to clean up; and other employees baiting him to steal a purse and money from an open register. 

Nonetheless, the Court held the totality of the incidents were not pervasive enough to trigger liability; that one racial epithet was not severe enough to trigger liability; that a reasonable trier of fact would not conclude that all of the allegedly harassing comments were directed at him; and the employees were not necessarily trying to ensnare him on account of his race when someone left a purse. The Court also noted Mr. Nichols was never physically threatened, the alleged harassment did not interfere with his work performance, and it was doubtful all of the comments were directed at him. Accordingly, the alleged incidents were insufficient to show such an offensive nature to constitute actionable conduct. 

Lastly, the Court also affirmed summary judgment for the employer and held Mr. Nichol’s termination did not violate Title VII. Particularly, the Court reasoned Mr. Nichols failed to prove discrimination in his employer’s decision to terminate him through the direct or the indirect method. Overall, Mr. Nichols failed to proffer sufficient evidence to defeat his former employer’s motion for summary judgment. Thus, he was unable to present his Title VII claims to a jury. 

·         EMPLOYERS NEED FIRM POLICIES FOR REPORTING AND INVESTIGATING ALLEGED WORKPLACE RACIAL HARASSMENT TO PROPERLY PROTECT THEMSELVES

Although the employer defeated this claim through an expensive summary judgment motion, properly written and applied policies can help to limit an employer’s liability. Ultimately, the record from the court proceedings appears to be devoid of any written policies for reporting any alleged racial harassment. Although Plaintiff reported the alleged incidents of harassment to the principal, nothing in the record demonstrates what individuals Mr. Nichols should have reported the incidents to. Particularly, a clearly outlined policy for reporting the alleged harassment and follow-up investigation under the policy would allow for an employer to demonstrate its active involvement in preventing and halting any alleged racial harassment. Ultimately, although the pro se plaintiff failed to recover here, these types of incidents should not be considered acceptable behavior between co-workers. 

This article was researched and written by Kevin Boyle, JD. Kevin is our Indiana Defense Team Leader and is licensed in Indiana, not Illinois. He is available for answers to any questions about general liability, employment law or workers’ comp in Indiana atkboyle@keefe-law.com.

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Synopsis: The IL Workers’ Comp Lawyers’ Ass’n CLE’s for the IL WC Industry—Notice Defense, Myth or Reality. Thoughts and Analysis by Matthew G. Gorski, JD.

Editor’s comment: On June 19, 2014, different IWCC cases in which notice defenses were at issue was presented by WCLA in a continuing legal education format. We again tell our readers statutory notice remains a requirement in IL WC. Some of the key issues presented at this WCLA presentation are discussed below.

(1)  Sufficiency of Notice

Some things to keep in mind with the sufficiency of notice is a claim is only barred if no notice whatsoever has been given and it is an issue of fact, not law. In Raymond v. Indus. Comm’n, 354 Ill. 586 (1933), the employer was aware the employee was sick even though the employee did not officially give notice to the employer. This illness was unknown as to the cause, and he eventually had to quit work because of the illness. The Commission in this case ruled the Legislature did not intend to require employees to inform their employers of an illness they did not know about in the first place.

This is something for employers to look out for. This would be a prime issue in asbestos cases, where an employee has been exposed, but did not know they were sick. The Commission in this case is saying it is impossible for the employee to give notice if he does not know he has been exposed to asbestos and suffered from its sequalae. 

(2)  Notice in Repetitive Trauma Claims

As we all know, the date of accident in a repetitive trauma case is the date the condition manifests itself. Oscar Mayer & Co. v. Indus. Comm’n, 176 Ill.App.3d 607 (1988), set out two ways the date of injury manifests:

(1) the time at which the employee can no longer perform his job; or

(2) the onset of pain which necessitates medical attention.

In Three “D” Discount Store, 198 Ill. App. 3d 43 (1989), the Commission set out the diagnosis date as the manifestation date, where an employee was examined by an orthopedic surgeon and prescribed surgery. Petitioner continued to work for another month after the diagnosis, but was still constrained to the diagnosis date as the manifestation date.

Employer’s need to be on the lookout for both of these factors, and use them to their advantage. If Petitioner receives a diagnosis and continues to work, Petitioner will have to give notice within 45 days of the diagnosis, and not the date the employee can no longer perform his job.

Also, please note the 45 day notice requirement in 8(j) cases does not begin to run until payments have been cut off. So, be wary of those situations when Petitioners have been receiving benefits under the group plan.

This article was researched and written by Matthew G. Gorski, JD. The opinions Matt is voicing are his and not those of any member of WCLA or its board. Matt can be reached 24/7/365 for questions about WC at mgorski@keefe-law.com

6-23-14; No-Fault Attendance Policies Will Put You In The "Danger Zone", analysis by Bradley Smith, JD; HIPAA Fines To Soar, analysis by Ellen Keefe-Garner, JD; June is PTSD Awareness Month and more

Synopsis: No-Fault Attendance Policies May Put Your Company in the “Danger Zone.” Analysis by Bradley J. Smith, JD.

Editor’s Comments: Taking aim at No-Fault Attendance Policies, the EEOC takes action against auto parts retailer AutoZone for Its alleged failure to accommodate in their policy pursuant to the ADA. To fix the problem, we feel you need to consider implementing a “some-fault” policy because a blind or “no-fault” policy sounds good and easy to implement but is sure to get you into unwanted litigation.

Generally, when it comes to employer attendance policies, application of the policies should be applied the same across a broad range of employees. This allows the employer’s attendance policy to be applied without the impression of discrimination. In other words, you are applying the attendance policy fairly to all employees regardless of religion, color, race, gender, or any other protected category under applicable Federal and State law. Nonetheless, the opposite may be true when considering the Americans with Disability Act’s (“ADA”) failure to accommodate provision. Consequently, in EEOC v. AutoZone, Inc., the Equal Employment Opportunity Commission (“EEOC”) is taking aim at AutoZone Inc. regarding its no-fault attendance policy for allegedly failing to accommodate certain disability-related absences and further for retaliation for engaging in protected activities. EEOC v. AutoZone, Inc., No. 1:14-cv-03385 (filed May 9, 2014). Initially, the EEOC unsuccessfully attempted to reach a pre-litigation settlement with AutoZone through its conciliation process. Subsequently, the EEOC brought the suit under the ADA, which prohibits disability discrimination in employment and retaliation for reporting such discrimination. The EEOC claims for a period of approximately two (2) years, AutoZone assessed its employees and distributed points for absences. The EEOC further alleges AutoZone created no general exceptions for disability-related absences. Thus, any employee who violated AutoZone’s twelve (12) point attendance policy regardless of the reason for the absence was terminated. The EEOC alleges qualified employees with disabilities with minimal disability-related absences were fired. In further opposition to the no-fault policy, the EEOC argues reasonable accommodations should have been made for these employees. In essence this claim is a disparate impact claim as it relates to the no-fault policy, along with a disparate treatment claim as it relates to the individual instances of failure to accommodate and retaliation.

As an example, the EEOC asserts an Ottawa, IL employee with Type 2 diabetes was fired because he/she had to leave work early occasionally because of insulin reactions. The Complaint also alleges an employee was discharged in retaliation for objecting to the attendance policy and filing a charge with the EEOC.

Can Your Company Provide Light Work But Only for Work-Related Injuries?

This action by the EEOC also brings up the continuing question in the workers’ comp arena whether U.S. employers can offer temporary light work for work-related injuries but not offer similar accommodations for non-work-related problems and issues. If your company only offers medically modified work for work-related injuries, you may want to contact the author to discuss that delicate issues.

A reasonable accommodation under the ADA is one that would enable an employee with a disability to enjoy an equal opportunity for benefits and privileges of employment as are enjoyed by employees without disabilities. However, employers do not have to provide an accommodation if doing so would cause undue hardship to the employer. Undue hardship means the accommodation would be too difficult or too expensive to provide, in light of the employer’s size, financial resources, and the needs of the business. Generally, whether the accommodation creates an undue hardship relates to the job duties and descriptions of the position. However, employers cannot deny an accommodation because it will incur some costs.

Consider an Absence Committee

One way to avoid the uncertainty and litigation in this situation is to have your employees get points for absences but, in lieu of termination, have their chart moved to a management committee for review and final decision. In this fashion, you aren’t providing a “no-fault” approach and could make careful accommodation to avoid rancor. The committee can keep records of their decisions and all of this would be the sort of evidence needed to defend any EEOC or state discrimination charge.

Burden of Proof is on the Government But The Costs are on U.S. Employers

The author notes the EEOC may have a difficult time in proving AutoZone failed to reasonably accommodate the alleged disabled employees, but may likely reach a jury trial on the issues. The EEOC will initially need to demonstrate the individuals allegedly discriminated against suffered from a disability under the ADA. Although the EEOC would likely not bring the case if there was no evidence that the individuals suffered from disabilities, this element will need to be proven. Second, the EEOC will need to establish AutoZone was actually aware of the employees’ disabilities, as required to sustain a failure to accommodate claim under the ADA. Although this element is a prime area for summary judgment, in the event there is no dispute AutoZone was unaware of the disabilities, it is highly likely this area will be factually disputed by the EEOC and the individuals. In other words, at a minimum, if the EEOC can establish there is a factual dispute as to whether AutoZone had actual knowledge the disabilities, then the case will proceed to a trial. Nonetheless, to finally prevail on the ADA failure to accommodate claim, the EEOC will need to prove the employer failed to reasonably accommodate the employee’s disability. Of course, if the EEOC fails to demonstrate AutoZone’s actual awareness of the alleged disabilities, then consideration of whether AutoZone failed to reasonably accommodate the individuals will be unnecessary. Despite the EEOC’s difficulties, the case will likely proceed to trial without any early disposition.

As for the ADA retaliation claims, the EEOC will need to prove AutoZone retaliated against certain individuals for asserting their ADA rights and/or engaging in protected activities. Thus, the EEOC must evidence that AutoZone discharged its employees for filing their claims with the EEOC, an action all employees should have the right to engage in without fearing termination.

Notably, this is not the first time that the EEOC set its sights on AutoZone. In 2009, a consent decree resolved an EEOC claim that AutoZone allegedly failed to promote a visually impaired employee and further denied his/her use of a service animal. (EEOC v. AutoZone, Inc., No. CV-06-1767 (D. Ariz)). That decree awarded the employee $140,000.00 and required the company to conduct ADA training in all of its Arizona stores. In yet another case in 2001, a central Illinois jury found that AutoZone refused to accommodate a sales manager’s disability by requiring the employee to mop of floors, which led to additional injuries. (EEOC v. AutoZone, Inc., No. 07-cv-1154 (C.D.Ill.)). The case resulted in a $424,000.00 judgment against AutoZone. Moreover, in 2012, the EEOC claimed that AutoZone fired an employee rather than accommodating her lifting restriction. (EEOC v. AutoZone, Inc., No. 12-cv-303 (E.D. Wis.)). This case is currently proceeding to trial.

Summary

Essentially, the EEOC is attempting to force AutoZone to alter its nationwide no-fault attendance policy—and in doing so, to set an example—to account for individuals with disabilities needing “reasonable accommodations” related to their attendance at work. Although this is not a novel concept, employers and their insurers need to be aware no-fault attendance policies must leave room to accommodate for known disabilities, as long as those accommodations will not create an undue hardship on the employer. In other words, having clearly mandated policies and detailed written job descriptions, and further application of the same, can alleviate the stress of future litigation and expensive attorneys’ fees and costs. Thus, if employers provide a strong legal foundation for their policies and procedures, employers can avoid becoming the EEOC’s target.

It is not our intention to comment on the merits of the claim reported above—our goal is to inform our readers of these important developments. This article was researched and written by Bradley J. Smith, who is our employment law defense team leader. Fully ready to service your legal defense needs, Mr. Smith also manages the firm’s general liability department. Feel free to contact Bradley about this article at bsmith@keefe-law.com.

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Synopsis: News from Washington D.C., HIPAA Fines are Skyrocketing. Analysis by Ellen Keefe-Garner, RN, BSN, JD.

Editor’s comment: It has long been known failure to comply with HIPAA can result in civil and criminal penalties (42 USC § 1320d-5). Our recommendation to all our readers in the WC industry is to get an HIPAA-GINA compliant release signed by the claimant whenever/wherever possible. If the release is later withdrawn, you can then rely on the WC “exception” to HIPAA-GINA but you are much better protected to have a signed release in your files. If you need our draft HIPAA-GINA compliant release for your use, send a reply and we will email it to you, no charge. Either way, when you come to the end of handling a workers’ comp file, it has to be appropriately and securely stored and then shredded.

Civil Penalties

 The “American Recovery and Reinvestment Act of 2009”(ARRA) that was signed into law on February 17, 2009, established a tiered civil penalty structure for HIPAA violations (see below).  The Secretary of the Department of Health and Human Services (HHS) still has discretion in determining the amount of the penalty based on the nature and extent of the violation and the nature and extent of the harm resulting from the violation.  The Secretary is still prohibited from imposing civil penalties (except in cases of willful neglect) if the violation is corrected within 30 days (this time period may be extended).

HIPAA Violation

Minimum Penalty

Maximum Penalty

Individual did not know (and by exercising reasonable diligence would not have known) that he/she violated HIPAA

$100 per violation, with an annual maximum of $25,000 for repeat violations (Note: maximum that can be imposed by State Attorneys General regardless of the type of violation)

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation due to reasonable cause and not due to willful neglect

$1,000 per violation, with an annual maximum of $100,000 for repeat violations

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation due to willful neglect but violation is corrected within the required time period

$10,000 per violation, with an annual maximum of $250,000 for repeat violations

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation is due to willful neglect and is not corrected

$50,000 per violation, with an annual maximum of $1.5 million

$50,000 per violation, with an annual maximum of $1.5 million

Criminal Penalties

In June 2005, the U.S. Department of Justice (DOJ) clarified who can be held criminally liable under HIPAA. Covered entities and specified individuals, as explained below, whom "knowingly" obtain or disclose individually identifiable health information in violation of the Administrative Simplification Regulations face a fine of up to $50,000, as well as imprisonment up to one year.

Covered Entity and Specified Individuals

The DOJ concluded that the criminal penalties for a violation of HIPAA are directly applicable to covered entities—including health plans, health care clearinghouses, health care providers who transmit claims in electronic form, and Medicare prescription drug card sponsors. Individuals such as directors, employees, or officers of the covered entity, where the covered entity is not an individual, may also be directly criminally liable under HIPAA in accordance with principles of "corporate criminal liability." Where an individual of a covered entity is not directly liable under HIPAA, they can still be charged with conspiracy or aiding and abetting.

Enforcing Agencies

The DHHS Office of Civil Rights (OCR) enforces the privacy standards, while the Centers for Medicare & Medicaid (CMS) enforces both the transaction and code set standards and the security standards (65 FR 18895). Enforcement of the civil monetary provisions has not yet been tasked to an agency.

No Private Cause of Action

While HIPAA protects the health information of individuals, it does not create a private cause of action for those aggrieved (65 FR 82566). State law, however, may provide other theories of liability.

The Office of Civil Rights (OCR), a division of the U.S. Department of Labor, investigates potential HIPAA violations. Since 2013, the Department of Health and Human Services (HHS) has recovered more than $10 million from health care entities and business associates for alleged violations of HIPAA. During a American Bar Association conference, in mid-2013, Jerome Meites, Chief Civil Rights Counsel for the HHS predicted future awards for HIPAA violations will be increasingly larger than in the past. Mr. Meites supported his prediction with the premise that HHS’s Office of Civil Rights is attempting to send a strong message that entities should comply with HIPAA or face steep penalties.

In addition to the potential onus of huge financial penalties for a HIPAA violation, Mr. Meites informed many more investigations of possible violations were already planned. He explained portable media devices used for storing health care information have caused a huge number of complaints about breaches of protected health care information. In addition, Mr. Meites indicated the failure of an entity to perform the required HIPAA investigation—called a comprehensive risk assessment—has been a factor in most of the data breach cases with which HHS has been confronted.

The warnings given by Mr. Meites about the proposed upswing in the number of investigations was intended to cause health care entities and their business associates (including attorneys, law firms and insurance claims managers) to take a closer look at their policies and procedures related to HIPAA protection. The warnings were intended to force entities to analyze how and when they will investigate a potential HIPAA violation. Needless to say, a strong message was sent to indicate that all entities should carefully scrutinize their policies for protecting data in relation to portable media devices, devices which are or could be used to store private health care information of patients.

This article was researched and written by Ellen Keefe-Garner, RN, BSN, JD who is our health law defense expert, along with handling numerous defense roles. Feel free to contact Ellen about this article at emkeefe@keefe-law.com.

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Synopsis: PTSD Continues to Vex Workers’ Comp Managers.

Editor’s comment: In order to bring greater awareness to the issue of posttraumatic stress disorder (PTSD), the United States Senate designated June 27th as National PTSD Awareness Day. In addition, June has been designated as PTSD Awareness Month by the National Center for PTSD.

 
PTSD is an anxiety disorder resulting from exposure to a single traumatic event or multiple traumatic events, such as assault, natural or man-made disaster, and work- or war-related combat stress. Symptoms of PTSD include persistent intrusive thoughts and distressing dreams about the traumatic event, triggered emotional responses to reminders of the trauma, efforts to avoid thinking or talking about the trauma, and persistent hypervigilance for cues that  indicate additional danger or trauma re-occurring. Indeed, according to estimates published by The National Center for Post-Traumatic Stress Disorder, some 7.8 percent of Americans will experience post-traumatic stress disorder (PTSD) at some point in their lives. Statistics indicate women are twice as likely to suffer from the condition than men.

Because the employer supposedly takes the “egg-shell” employee as it finds them, employers, claims administrators, and insurers view PTSD as an ongoing and difficult challenge to claims management and administration. Some industry experts are taking action to assist employers to identify if and confirm when a worker might be at risk of PTSD. Prevention and early identification of PTSD as an important part of their overall risk management.

One caveat we always tell our readers, clients and friends, always remember if someone is seriously injured or killed in the workplace, you have to handle the injury/death but also have to consider potential PTSD claims from everyone around the event. Be sure to offer counseling or medical care to your entire workforce, as needed. If you want assistance in finding such counselors, send a reply.

The “Double Whammy” of Dealing with PTSD Claims

·         PTSD usually lurks in the shadows, only to become present when the employee is confronted with a slow-developing or sudden physical or psychic trauma.

·         PTSD doesn’t have open scars or surgical sites--like other mental injury conditions, this condition has a significantly subjective component. The problem with all “soft-tissue” WC claims is when to give the worker the benefit of the doubt and when to shut the claim down.

Current Status Illinois and Indiana WC Mental Claims, Including PTSD

Mental conditions resulting from physical injuries are almost always compensable. The extent of care required is going to be an issue for litigation, like all other IL and IN claims.

Mental stimulus-mental reaction cases are compensable, but only if the stimulus is “unusual.” Our research indicates Colorado, Illinois, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina and Vermont fall within this group. In most of the decisions “unusual” means unusual for a typical person holding the claimant’s job. Thus, a police officer or firefighter is expected to handle some levels of stress within his or her ordinary duties that would be deemed “unusual” for someone else in the general public. However, please compare the recent City of Montgomery ruling where a police officer faced with an orange-tipped toy pistol was provided line-of-duty disability benefits for a confrontation that didn’t result in injury. We feel the Illinois Workers’ Compensation Commission is more conservative in handling PTSD claims than our much more liberal reviewing courts.

Similarly, where the level of stress faced by the employee is objectively quite ordinary, although subjectively quite the opposite, the bulk of the jurisdictions, , either through court decision or actual statute, deny compensability for mental injury claims, including those related to PTSD. We have always felt attorneys on both sides don’t like to deal with psych claims and we hope that trend continues.

If you need experts or consultation on best practices in handling/defending PTSD claims, send a reply.

Synopsis: Gene Keefe, JD and Joseph D’Amato, JD to Speak about the future of workers’ compensation at American Insurance Ass’n in Washington DC tomorrow.

Editor’s comment: As you read today’s KCB&A Update, we are leaving for O’Hare to participate in a panel discussion on where the IL WC system has been and where we hope it is going under future administrations. If you have thoughts or comments you would like us to make to this important national association, please send them along.