9-8-14; Desperate Gov. Quinn Hits IL Insurers/Insured with New Stealth Tax on Captives; Four New IWCC Arbitrators Appointed; Dealing with Dog Attacks and Bug Bites in WC and more

Synopsis: Desperate Governor Quinn hits IL Insurers and Insured with New Stealth Tax on Captive Insurance.

Editor’s comment: When you have to actively pay billions for Illinois’ seven “Fake Pension” programs and you are already over $100B in debt, you have to start squeezing out new taxes/tolls and fees everywhere. Under Gov. Quinn, we have the second-highest real estate taxes in the U.S.; we dramatically raised highway tolls and three years ago, Illinois reinstated our estate tax. Gov. Quinn wants state income taxes to be 5%, House Speaker Madigan wants our state income tax to top off at 8%. Now we see another new tax quietly enacted.

In a move we consider completely surprising during a heated election, Governor Quinn quietly signed SB 3324 a couple of weeks ago. SB 3324 imposes a new and unprecedented tax on Illinois-based companies that self-insure their risk in captive insurance programs. The new law, which amends the IL Insurance Code was confusingly promoted by the IL Department of Insurance as a technical bill designed to close “loopholes” created by the federal Dodd-Frank Act. We assure our readers it wasn’t a “loophole” the way the federal law worked created an advantage for Illinois companies in relation to other states. God forbid Governor Quinn and his minions would allow Illinois business to have an advantage compared to pro-business climates in all our surrounding states.

The tax aspects of this new law were not debated in a legislative committee and the bill’s sponsor, Senator William Haine was unaware the bill imposed a new tax on captive insurance plans when it was called for a vote. The new tax will cost Illinois business 3.5% on the premiums paid for captive insurance. All 47 IL House Republicans signed a letter to the Governor asking him to veto this bill. They also confirmed:

·         The new and unprecedented tax established by SB 3324 has one of the United States’ highest rates for a self-procurement or direct placement tax and will fall solely on the shoulders of businesses headquartered in Illinois.

·         SB 3324 will eliminate a long-standing benefit of being an Illinois-based business. Under the Non-admitted and Reinsurance Reform Act of 2010, which was enacted as part of the federal Dodd-Frank Act, only a business entity’s home state may tax “industrial insureds” –businesses that are not required to purchase insurance from an authorized insurer because they meet certain employment-force size or minimum annual gross revenue amounts. To date Illinois has wisely chosen not to tax industrial insureds or companies that choose to establish their own insurance program which provides an important advantage over other states. Oops, that ends January 1, 2015.

·         Regulatory oversight of self-insurers is not needed. SB 3324 is not needed for the purpose of regulatory oversight. Revenues from our existing insurance premium taxes are intended primarily to fund Department of Insurance oversight of the insurance industry for the purpose of protecting individual consumers from faulty insurance products or other fraudulent or deceptive activities. Illinois-industrial companies that self-insure or use captive insurance companies assume only their own insurance risk --they do not sell to consumers and no government oversight of their activity is necessary. Such companies rely on professional risk managers to assess their insurance needs and to manage their own insurance programs.

·         SB 3324 acts as a tax disincentive for self-insured companies to use actual cash set-asides and captive insurance companies to ensure that they have sufficient funds to address any unanticipated liabilities. This is an activity that should be encouraged to assure the ongoing fiscal stability of our Illinois-based companies. SB 3324 would now penalizes this responsible corporate behavior.

·         SB 3324 has not been adequately vetted by members of the General Assembly. Quite simply, it flew under the radar and many members of the General Assembly did not realize that they had voted to impose a new tax on Illinois headquartered companies.

Our problem with the new law is Governor Quinn, his staff and election supporters are desperately in need of cash to pay for the Fake Pensions and will try to find it anywhere they can. They have to in order to pay the seven Fake Pensions Illinois offers to “retired” government workers. We always wonder why taxpayers don’t treat such largesse with the same disdain accorded to welfare payments, as government workers contribute a miniscule amount to get these generous and ever-increasing lifetime benefits. Please also remember, the “pension fix” for only three of these Fake Pensions sponsored by Governor Quinn is almost a lock to fail when our Supreme Court rules on the constitutionality of the reform legislation. The Seven Fake Pensions include:

1.    The hundreds of state workers out on “odd-lot” workers’ compensation total and permanent disability claims who could be brought back to work and get off our dime today. We regularly point out the term “odd-lot” doesn’t appear in our IL WC Act and was created by our courts. If Governor Quinn would use vocational rehabilitation and job retraining and find such folks new government positions, they would be back working and actually earning a living, as the rest of us do. These benefits cost IL Taxpayers a minimum of $26,150.80 each year and currently cap at $69,735.64 per year. The benefits are tax-free. These workers also get COLA increases via the Rate Adjustment Fund that is a levy on IL business and local governments.

2.    The line-of-duty disability pay to firefighters and police officers who can and will work after becoming “disabled” only from working as a firefighter or police officer. That legal standard is based upon a very strained version of applicable law and, in our view, it was also created by our Courts. If a supposedly disabled IL firefighter or police officer can work and make $50,000 or $100,000 a year or more, it is hard to understand how and why they need taxpayer’s money for this Fake Pension. We have no problem with provision of such benefits when such workers can never work anywhere again but our courts created a loophole to only require the workers be unable to work as firefighters or police officers to get lifetime pay with COLA increases.

3.    The other five “Fake Pensions” are

a.    The State Employees' Retirement System (SERS),

b.    The Judges' Retirement System (JRS)—this plan can pay a judge/justice over $1M per year for each year of judicial service if they live long enough—if you don’t believe this, send a reply.

c.    The General Assembly Retirement System (GARS)—this plan can pay a legislator over $1M per year for each year of legislative service—again, if you don’t believe it, send a reply.

d.    The Teachers' Retirement System (TRS), and

e.    The State Universities Retirement System (SURS).

4.    All of these Fake Pension programs are hilariously de-funded—by that we mean the money for Fake Pension payments aren’t from employee contributions, matching state money or investment income. At the end of last year, IL State Auditor General William Holland pointed out the State has about 40% of what is needed to make required Fake Pension payments—during this year, IL taxpayers are going to have to spend $7B from current tax dollars to make the needed Fake Pension payments to folks who don’t work for the State any more.

5.    Please also note all of the Fake Pensions have very generous COLA provisions that require us to quickly pay more to the retirees than they made while working for us. If a state retiree lives long enough, it is possible their pensions could be more than double what they made while working.

If you aren’t sure, every TV commercial you see for Governor Quinn, including his quaint and silly “beer-powered” lawnmower commercial is being paid for by the folks that want to keep these Fake Pensions in place. The debt we all owe on the Fake Pensions is well over $100B now. Please also remember this same debt was $54B in 2009 or just five years ago. It is going up exponentially. If it simply doubles in the next five years, we will be looking at more than $200B in pension debt alone. They are clearly running out of money. At some point, they are certain to run out of money, like the Titanic was certain to sink.

If we don’t make some changes in Springfield, please assume we are going to continue to see more and more taxes, tolls and fees coming at Illinois business from every angle. The new 3.5% tax on IL captive insurers’ premiums is a sad note for our clients and the overall business environment in this state.

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

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Synopsis: Didn’t Know They Were Hiring—Four New Arbitrators Appointed to the IWCC.

Editor’s comment: We remain amazed to see how the secret WC hiring process continues under this administration. We regularly check to see the IWCC’s “jobs” link and note Arbitrator’s job openings never seem to make it there. The IWCC has announced the appointment of four new arbitrators

Ø  Maria Bocanegra who was with the Katz, Friedman firm representing Petitioners. Her photo and resume are online at: http://www.kfeej.com/maria-bocanegra/

Ø  Stephen Friedman formerly of Rusin, Maciorowski & Friedman, Ltd. He is one of the top WC defense lawyers in our state. His photo and lengthy resume is at: http://www.rusinlaw.com/attorneys/stephen-friedman/

Ø  Steven Fruth who is leaving the legal department at the CTA or Chicago Transit Authority. We assume he is used to handling a high number of claims. An interesting article and photo of new Arbitrator Fruth from five years ago are online at: http://www.oakpark.com/News/Articles/8-18-2009/Two-Oak-Parkers,-one-judge's-seat/

Ø  Michael K. Nowak of Becker, Paulson, Hoerner & Thompson, P.C. New Arbitrator Nowak’s photo isn’t online but his extensive resume can be found at: http://bphtlaw.com/nowak.html

It appears these choices may have been somewhat political but you can also readily argue these are some of the better WC lawyers in our state and will bring extensive experience, legal knowledge and professionalism to the IWCC. While the choices were made in secret, they appear to be solid selections.

We wish the new IL WC Arbitrators all the best as they take over their new roles.

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Synopsis: Dog Bites Man--Dealing with Bug Bites, Dog Attacks and Claims Coming from Contact With Animals/Pets in Workers’ Comp.

Editor’s comment: Animal attacks on humans are not uncommon events. In a typical year, about 4.7 million dog bite incidents occur, and something like 800,000 of such attacks require medical attention or result in death. In 2011, there were 31 fatalities in the U.S. due to dog attacks.

Please remember subrogation may be a factor in some animal attack claims. A person injured by an animal would have a legal case against the animal’s owner, or possibly against the owner of the premises where the attack occurred. Workers’ comp law in most states provides medical, lost time and possibly permanency for a person injured by an animal attack, if the risk of the attack is heightened due to work. As defense lawyers advising our clients and their adjusters, the key measure is demonstrating an “increased risk” of accidental injury versus a “risk common to the public” in dealing with bug-bites and animal/pet attacks.

We know that any worker can be vulnerable to any type of injury while on the job, but each type of injury has its own distinctive incidence pattern. As workers’ comp defense lawyers we find these sorts of workers most vulnerable to insect stings, animal bites, and pet attacks:

• Building workers. Construction workers may encounter nests of stinging or biting insects in the course of employment, as well as raccoons, opossums, rats, skunks, or other wild animals adapted to urban living.
• Delivery Workers. Such workers may be required to enter other peoples’ homes, where they can be bitten by dogs or other household pets. Wasps, fleas, mosquitoes, hornets, and other stinging and biting insects can present a threat to delivery workers as well.
• Nursing professionals. Home health care workers and nurses who visit home-bound patients may be injured in animal attacks. They are also exposed to insect bites and stings.

Bite injuries are the most common result of an attack by a household pet. Attacks by dogs and other large pets can inflict severe and even deadly wounds to disable or disfigure the victim. Serious on-the-job injuries, infections, and complications caused by insects and animals include:

• Infected wounds. Pets’ mouths and claws typically teem with bacteria. A bite or scratch injury can spread bacterial diseases or parasitic diseases. The rise of antibiotic-resistant bacteria makes such infections potentially deadly.
• Cat scratch fever. Bacteria causes cat scratch disease, which can be transmitted to humans from a feline bite or claw scratch. Typical symptoms include swollen lymph nodes, fever, headache, fatigue, and listlessness.
• Insect and spider bites. A few varieties of insects and spiders have a venomous bite that can cause dangerous-or even fatal-reactions in some vulnerable persons. A few species of biting insects carry bacterial or viral pathogens that can be transmitted to humans during a bite; these infectious agents are responsible for grave diseases, including Lyme disease, West Nile disease and encephalitis.
• Lyme disease. Another bacteria is responsible for Lyme disease. Ticks carry the bacteria from animal hosts-dogs, horses, or rodents are the most common-to humans. Many people who are exposed have no symptoms at all, and many get mild effects: a distinctive “bull’s eye” rash, muscle or joint aches, fever, and headaches.
• Rabies. A bite from an infected animal can transmit the rabies virus to humans. Unfortunately, the disease is usually fatal once those symptoms are evident.
• Rocky Mountain spotted fever. Tick bites transmit this disease from infected dogs to humans. The earliest symptoms of Rocky Mountain spotted fever develop in a week or two: rash, chills, fever, muscle pain, and confusion.
• Toxins from stinging insects. Bees, hornets, wasps, and some ants have stings at the end of their abdomens. These stings inject a venom that can paralyze or kill other insects, but would normally be only a mild irritant to humans. For some people, exposure to an insect toxin can trigger a severe allergic reaction, ranging from hives to life-threatening anaphylactic shock. Yellow jackets-a variety of wasp-are responsible for most of the stings to humans.
• West Nile virus. This viral disease is transmitted by bites from infected mosquitoes. Most people who contract West Nile virus have no symptoms at all, but about one-fifth of all human cases will involve fever and intense flu-like symptoms. For about one percent of the people who are exposed, the disease can trigger life-threatening neurological complications, including meningitis and encephalitis. There is no treatment for West Nile virus other than palliative care for the symptoms. For some people with serious reactions to the pathogens, symptoms can persist for as long as five years.

If your workers have been injured on the job from a stinging-biting insect or a larger animal attack, it is important to get them to immediate medical care. Then try to document, document and document what happened and why. You need to lock in evidence when possible so take statements and investigate thoroughly, if it is a severe injury.

If you need help in determining compensability or investigating an animal attack or insect bite claim, send a reply any time to ekeefe@keefe-law.com.

9-1-2014; Was It Partisan Politics for Gov. Quinn to Fire All IL Arbitrators?; Important Discrim Ruling, Analysis by Brad Smith; Tubes-of-Drugs and Controlling IL WC Medical Costs and more

Synopsis: Was It Partisan Politics for Governor Quinn to Fire All the IL WC Arbitrators and Reinstate Some Political Favorites? How Could It Not Be?

Editor’s comment: We recently saw a Chicago Sun-Times poll confirming what all of our readers should know—Governor Quinn has completely discarded any hope of being a “reform” candidate with a goal of giving independent and nonpartisan approach to Illinois taxpayers. If you aren’t sure, Gov. Quinn has been bought and paid for by state government unions, administrators, judges/justices and legislators who want to keep their “post-employment income” or what Illinoisans also call “pensions.” We assure our readers these “post-employment income” programs aren’t truly pensions as the vast majority of their money isn’t coming from contributions by the workers, matching money from government coffers and investment income. The vast majority of the money for these post-employment income programs are coming from multi-billion dollar borrowing that has to be paid by you and me and your kids and grandkids and probably great-great grandkids from our taxes/tolls and fees. In the same vein, all state government “pensioners” will now mooch free lifetime medical care from you and me—the IL Supreme Court just made that expensive multibillion dollar benefit untouchable by the legislature. Believe it or not, the free-loading pensioners fought and won so they don’t have to contribute even 2% of their pensions to share the cost of their healthcare with current taxpayers! We truly feel they have changed from “public servants” to make taxpayers their “private servants” as we now irrevocably owe IL government workers lifetime post-employment income and full healthcare coverage for the rest of their lives.

The media outlets have been looking at the complete and embarrassing mess that was made by the Quinn administration of a State of Illinois anti-violence program where lots of the administrators took the money that was supposed to go to neighborhoods to stop murders, mayhem and other violence. The other source of political bamboozling is the IL Dep’t of Transportation where lots of folks were given positions as “administrative aides” to allow them to get wholly political appointments for routine jobs in violation of the Shakman order which dictates only high-level jobs are supposed to be political.

How did Partisan Politics Hit the Illinois Workers’ Compensation Commission?

Well, when the Quinn Administration took over from Blago’s troops, there were a couple of interesting things happening at the good ole IWCC that started to make the news.

First, we had perhaps the worst Arbitrator in the history of Illinois Arbitrators in Jennifer Teague, now Jennifer Carril. Former Arbitrator Carril was sending blunt emails critical of other Arbitrators and attorneys. She tried to hide or keep secret a hearing in a controversial claim by a former IL State Trooper who was basically joy-riding at 138mph and texting his girlfriend when he blew a light and killed two innocent young girls. It seems fairly obvious the Assistant Attorney General assigned to defend that claim blew the whistle about the planned “secret hearing.”

Perhaps the oddest thing former Arbitrator Carrill did was to file a workers’ compensation claim for benefits for herself. What she learned is the State of Illinois has a silly, unnecessary and unwritten “rule” requiring injured state employees to wait six months after settling a workers’ comp claim before getting paid. We assume some misguided state administrator made this “rule” up to push some of the settlements from this year into the next fiscal year. When former Arbitrator Carril learned of the six-month wait, she caused a ruckus and tried to use her influence to have the “rule” waived.

What the commotion over a wait of 180-days for this one Arbitrator was make lots of folks look to see several sitting Arbitrators had filed workers’ compensation claims and had either received settlements or were waiting out the six-month period. In our view, this put all IL Arbitrators under a microscope. Some folks also learned the state adjusters at CMS had also filed claims and gotten settlements. For some reason the foul odor only settled on the sitting Arbitrators and the CMS adjusters got a pass and kept their jobs.

What Followed was a “Deform” or Misguided Reform of the Wrong WC Folks

As we indicate above, the Arbitrators came into the cross-hairs of the secret-powers-that-be-that-run-the-Commission and before we knew it, the Governor’s Office created a plan to not only fire all of them but strip out their civil service protection in the process! While our former Arbitrators would be allowed to “re-apply” for their jobs, it was clear an enormous and political house-cleaning was ongoing. Step one was to strip out civil service protections afforded the Arbitrators for several decades. This staggering and seminal change to the jobs of our Arbitrators was unprecedented and wholly unnecessary. The reason we say this is eleven or as many as twelve Arbitrators lost their jobs simply as political scapegoats—other than former Arbitrator Carril, no one has ever indicated why that many Arbitrators were suddenly ousted.

You Show Us Your Political Patron and We Will Show You Ours

Having fired all Arbitrators in a swift and unexpected fashion, what Governor Quinn’s folks then did is perhaps the worst thing they could have done from the perspective of decent and good government—we were advised Governor Quinn’s staff forced every former Arbitrator who wanted to get their job back do a secret and slimy “patronage-check.” To our understanding, the folks who could demonstrate they had active and continuing political patrons who strongly supported Governor Quinn or were solidly protected by the other side were allowed to return to their posts. For example, one former Arbitrator we knew had a political patron that had passed away a year or two before the controversy arose—that former Arbitrator lost his position.

Another immediate disqualifying factor was any Arbitrator who, like former Arbitrator Carril had a pending or prior IL WC claim or settlement. Basically, Governor Quinn’s troops reached the conclusion retaliatory discharge for filing a WC claim that is prohibited in the Kelsay v. Motorola ruling didn’t apply to what were now political posts. To our understanding all the former Arbitrators with pending or prior WC claims were put in the “do-not-rehire” pile.

What then happened is several of the terminated former Arbitrators filed lawsuits and sued the Governor for their obvious mistreatment and those suits are all wending their way through our courts. One appellate ruling was just issued in the claim brought by former Arbitrator Peter Akemann and, without much surprise to anyone, denied him reinstatement to his position. In our view, former Arbitrator Akemann was a quiet, honest and decent man who did his job for both sides and worked hard for our state. His brother David Akemann is a sitting Circuit Court judge. We consider both of them to be above reproach and great jurists. We feel the mistreatment of former Arbitrator Peter Akemann by the current administration to be the worst sort of partisan politics.

What Was the Biggest Problem With These “Deforms??”

The concerns we raise in response to these decisions are two-fold. 

First, we want our readers to understand our view IL WC Arbitrators can’t and should never be political appointees but under Governor Quinn, they now are. Instead of reforming the positions, he has politicized them. The reason IL WC Arbitrators had civil service protections was to insure they wouldn’t be subject to the whims of the party in power. One of the worst things an IL WC Arbitrator faces is listening to and considering the evidence and making a determination for one side or the other and then getting summarily fired because their honest and fair decision upset a powerful lawyer or union boss. Arbitrators aren’t supposed to work at the whim of their parties litigant. 

Please also note the IL WC system has an administrative appeal process that allows the Arbitrator’s ruling to quickly be brought before an openly political group—the three-member IWCC panel reviews the Arbitrator’s decision in a “de novo” appeal. The Commission panel is composed of a member of IL labor, management and one member that is supposed to represent “the public.” We feel this is a strong system for adjudicating questionable WC issues.

Second, the other problem with the humiliating challenge and sudden ouster of many of  to our former Arbitrators targeted the wrong people. We assure our readers, the problem wasn’t with the Arbitrator staff—the issue should have been the mismanagement of claims by the Central Management Services state agency who was charged with actual management of all IL state workers’ comp claims. We understand lots of state claims adjusters also brought WC claims to get settlements for themselves—unlike the Arbitrators, the adjusters weren’t summarily canned.

The CMS agency has been criticized by Attorney General Lisa Madigan and State Auditor William Holland. The agency has not gotten any better under Governor Quinn. It remains something of an hilarious mess—for one example, a large State institution in Chicago is still being “defended” or represented by a prominent Plaintiff attorney. That defense work hasn’t been put out to bid for more than a decade.

We were also advised at one point, CMS or Central Management Services had about 25,000 pending IL WC claims with only a handful of adjusters to keep watch over your money in paying out WC benefits to State workers. The analogy we draw to that mismanagement model is a prison with 10,000 prisoners and three guards—the managers can proudly confirm how much they are saving on payroll and benefits for the guards but the real costs are stopping the hundreds of jailbreaks and hunting down all the prisoners who are escaping. In the same way, state government workers and their legal counsels were making zillions of dollars on questionable WC claims because of the cacophony and confusion caused by this understaffed agency. 

That group was and still is misspending $150M or more a year on IL state workers with WC claims in a comical fashion. We feel no state dumps as much money into workers comp benefits than our state on a pro rata basis. For another example, we assure our readers there may be over a thousand state workers who have been adjudicated “odd-lot” total and permanent disability recipients—all of them could be returned to work, if the State would simply locate jobs in other agencies for them. In our view, the mismanagement of state claims by this agency poisoned many claims arising in the private sector. Another hilarious part of the mishandling of your tax dollars by CMS was their WC claims computer database was hilariously out of date and was thirty-forty years old. Basically, if you asked the adjuster for any data or information about what they were doing or spending, you would be advised they didn’t have the staff to go through all the paperwork to figure out how to answer you.

What they Quinn administration did to “deform” this issue was quickly and quietly issue an RFP or request for proposal to obtain an outside claim service to come in and try to make sense of the tens of thousands of pending and questionable IL WC claims. Rather than select an IL claims management company, Quinn’s folks selected TriStar Risk Management out of California. To our understanding TriStar is doing their best with the onerous task they have been given. Another issue is sometimes they have money to pay vendors and claims and sometimes they don’t. Finally, to heighten the level of mismanagement of IL state government workers comp claims handling, the State didn’t terminate the CMS adjusters who previously handled the claims when they were replaced by TriStar, There is now an ongoing tug-of-war over who is in charge of the whole mess.

We do feel the Quinn administration did make the IWCC more professional and things have gotten dramatically fairer for all sides. We don’t feel the Arbitrators who were let go were given a fair chance and we hope sitting Arbitrators are allowed to do their jobs as they see fit.. We also hope someone again takes a long hard and open look at CMS and TriStar to see if that combination is working and much more effectively handling WC claims by state workers.

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

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Synopsis: Prior Comments May Be Background Evidence Demonstrating Racial Animus. Analysis by our Employment Law Defense Leader Bradley J. Smith, JD.  

Editor’s Comment: In Macias v. Bakersfield Restaurant, LLC, No. 13-cv-4300, 2014 WL 4057449 (N.D. Ill. May 28, 2014).   On May 28, 2014, Northern District of Illinois Judge Ruben Castillo denied Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint as 1) a 42 U.S.C § 1981 claim for racial harassment would not be inferred, and 2) a supervisor’s comments could be considered as background evidence.  

Plaintiff brought a lawsuit against Defendant alleging national origin and race discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., racial discrimination in violation of 42 U.S.C. § 1981, and retaliatory discharge in violation of state law. Specifically, Plaintiff claims he was “treated less favorably than” non-Ecuadorian and non-Hispanic individuals in his work environment despite meeting the legitimate expectations of his employer and performing his job well. Additionally, Plaintiff alleged during his employment, he was subjected to several race and national origin related comments by his supervisor. Those comments allegedly included: (a) “Mexicans are dirty to work with”; (b) “You Mexicans stink!”; (c) “You [] Mexicans are stupid”; and (d) “[] Mexicans!” Additionally, Plaintiff claims his iPhone went missing. Eventually, after numerous complaints, Plaintiff found his iPhone in his supervisor’s vehicle. Shortly thereafter, Plaintiff alleged he was terminated without an explanation and without being subjected to any formal discipline.  

On August 13, 2012, Plaintiff filed a discrimination charge with the Equal Employment Opportunity Commission (“EEOC”). Plaintiff amended his complaint on August 30, 2013. Particularly, in Count I, Plaintiff alleged national origin discrimination in violation of Title VII; and in Count II, Plaintiff alleged racial discrimination in violation of Title VII and Section 1981. Subsequently, Defendant filed a Motion to Dismiss Counts I and II pursuant to Federal Rule of Civil Procedure 12(b)(6).  

Initially, the Court declined to treat the Motion to Dismiss as a motion for summary judgment in order to consider documents Defendant attached to its motion. Next, Defendant argued Plaintiff’s claims should be dismissed as Plaintiff intended to bring a claim for racial harassment, which Defendant contended exceeded the scope of his EEOC charge allegations. Instead, the Court declined to accept Defendant’s argument, and consequently, the Motion to Dismiss was denied as Plaintiff properly exhausted his national origin and racial discrimination claims before the EEOC. Thus, Judge Castillo declined to dismiss Plaintiff’s claims for national origin and racial discrimination.

Unavailingly, Defendant also argued Plaintiff should not be allowed to use the aforementioned comments in his complaint because background evidence is permitted only when a “current practice” is at issue, and Plaintiff’s dismissal was not a current practice. However, Judge Castillo reviewed Seventh Circuit law that interpreted Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 111 (2002), to mean where “the plaintiff timely alleged a discrete discriminatory act …, acts outside of the statutory time frame may be used to support that claim.” Accordingly, Judge Castillo determined the comments Plaintiff included in his amended complaint served to illuminate the discriminatory conduct by indicating his supervisor’s racial animus. Therefore, Judge Castillo denied Defendant’s Motion to Dismiss in its entirety.  

We recommend you always engage in a thorough investigation of racially charged comments in the workplace. It is even more essential to investigate allegations of racial comments when a supervisor with the ability to hire and fire employees is alleged as the perpetrator. Not doing so may subject you and your company to numerous discrimination claims as racial comments demonstrate animus in a supervisor’s tangible employment decisions. An investigation will allow for any necessary discipline and will also shield a legitimate decision of no discipline.    

This article was researched and written by Bradley J. Smith, JD.  Bradley can be reached with any of your employment law and general liability issues at bsmith@keefe-law.com.  

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Synopsis: Are the “Tubes-of-Drugs” About Patient Care or Making Money?

Editor’s comment: We received a question and comment from a long-time reader who inquired about what steps should be taken when you see doctors and other healthcare givers prescribing tubes of compound “pain creams” at a gigantic mark-up. These tubes full of narcotics and other sorts of snake oil can cost as much as $1,000 a piece! We assume they provide the patient a major kick for your money.

Take a look at this link to see how the “Tubes-of-Drugs” are being marketed to doctors to maximize income from dispensing it to the soon-to-be greasy patients: 

http://www.primemedicaltechnologies.com/wp-content/uploads/2013/08/terocin-profit-sheet_new.pdf  

In the IL WC system, the major tools to control medical care of all types, including tube prescriptions are

·         Utilization review or UR—we recommend Genex or CID Management to quickly and rapidly get all medical care and prescriptions reviewed and analyzed in your claims.

·         IMEs or Independent Medical Examinations to get a top-notch Pro from Dover to review the patient’s chart and opine about the course of care and prescriptions—if you need recommendations on an IME expert, send a reply and we can provide our KCB&A expert list or contact Chris Rocks at Woodlake Medical for his top docs.

·         Having medical and prescriptions priced and processed under the IL WC Medical Fee Schedule—we have a coding expert who can provide assistance if you need it; simply send a reply with questions or concerns.

·         Implementing an IL WC PPP is another strong method to control your workers’ comp costs in our state—if you go this route, you limit your workers “choice of physician to either the PPP doc or one other choice outside the PPP. Two great sources for information and enrollment into an IL WC PPP is Darren Stahulak of CorVel or David Kolb of HFN, Inc.

·         Last but not least, if you need aggressive defense counsel to analyze and devise defenses at the IWCC that work, send a reply for the KCB&A defense member in your area.

We appreciate your thoughts and comments. We thank the reader who sent us this solid information

8-25-14; Election Concerns for All Illinoisans; Do Retailers Need to Provide Security? by Matt Ignoffo; Important Ruling on Jones Act v. LHWCA by Jim Egan; Contribution Update by Matt Gorski and more

Synopsis: Concerns for our Readers about the Coming IL State-Wide Election on November 4, 2014.

Editor’s comment: We are carefully watching and listening to see how the political battlefield is firming up. What we consider strange beyond strange is the lack of political discussion about the biggest issue facing all Illinoisans—state government pensions. This growing issue trumps every other state matter, including workers’ comp.

As you may be aware, Governor Quinn was giving a speech at the IL State Fair a couple of years ago. As Gov. Quinn was in the process of trying to reform the pension issue, a group of state government union members were in the audience at the State Fair and booed the Governor off the stage. In stark reply, Governor Quinn very quickly fired the wife of one of the union bosses—former Arbitrator Jacqueline Kinnaman. We felt bad to see Arbitrator Kinnaman so unceremoniously canned, as she was a quiet, honest and hard-working administrator.

What is wacky about former Arbitrator Kinnaman getting the boot is the same folks who rudely booed Governor Quinn off that stage are now his strongest supporters! Governor Quinn has received literally millions and millions in campaign contributions from government unions who want to keep their pensions sky-high and effectively unsustainable. Unless the State of Illinois finds oil or discovers gold, our taxes/tolls/fees are going to have to rise and no one is talking about it. If you look at the graph to the left, you will note in thirty years, the five IL government pension programs are going to cost more than the entire amount of tax/toll/fee income our government is taking in annually!

In our view, basically the government unions would prefer to have Governor Quinn in place to muck along with the current government pension cataclysm than have political neophyte Bruce Rauner in place to push true pension reform. But that all begs the question—how is either candidate going to truly reform the current pension calamity?

Governor Quinn was able to get moderate “reforms” passed for three of the five state pension programs. He also got a law passed requiring retired state workers to pay something toward their healthcare coverage. If you aren’t aware, the IL Supreme Court has already knocked out the law on the requirement retired state workers contribute to their healthcare costs. The IL Supreme Court ruling clearly signals they are also going to knock out any reforms of the three pension programs that Governor Quinn pushed for and passed. The 800lb pink gorilla in the ongoing election is what Governor Quinn might do if he is going to reform state government pensions, once the Supreme Court says he can’t follow the earlier approach. If you want our thoughts on the only paths to pension reform, see below.

What does this crisis mean for you, me and other IL government voters? Well, the state government pension programs have to be changed—they can’t stay the way they are or the state is facing dramatically higher taxes, tolls and fees. Try to contemplate state taxes and tolls doubling or even tripling. Please remember every business entity or government always has more former employees than active employees. If you are forced to pay more money to your former employees than they made while working for you, you are certain to go bankrupt quickly—that is what is happening to our state as you read this. If you look at the graph that we consider accurate, the cost of Illinois state government pensions are already at about 22% of all income received by IL state government today. During the next four years or the next governor’s term, state government pension costs are going to be about ½ of all current state gov’t income. In a decade or two, state government pensions are going to drain all the current income our state government collects.

Don’t believe us? Well, here are a couple of simple examples of where your money is going. Please note everything we are outlining is completely legal and legitimate for the participants. Please also note there are folks from both the Democrat and Republican sides who enjoy these hefty benefits—this is a bipartisan fiasco.

·         Do you know an IL judge or justice can work just nine years before becoming vested and entitled to a lifetime pension and taxpayer paid healthcare? We assure you the current IL system can pay a judge/justice over a million dollars a year in their lifetimes for the nine years of service! The vast majority of the money to pay the “pension” or post-retirement income of a retired judge/justice doesn’t come from the “pension” program, it is coming from our current tax dollars. The annual statewide cost of all these former judges/justice pensions are well over $100 million dollars each year. That post-employment income cost is inexorably rising at 3% on a compounded basis each year—they will quickly make more money annually in the “pension” program than they made while working (it takes about six years for that to occur). Their raises and post-employment income boosts are protected in the Illinois constitution.

·         Similarly, a former Illinois legislator like U.S. President Barack Obama or former Chicago Mayor Richard M. Daley can also receive more than $4M over their lifetimes for their required four years of part-time legislative service to become vested. Again, over 80% of the money to pay former legislators is being paid from your current IL taxes, tolls and fees. That “pension” program is costing you and I over $100M each year.

·         The former New Trier H.S. superintendent is now in Ojai CA and isn’t truly “retired”—he is working as a school superintendent there. He makes about $200K working as a school superintendent in California and is also receiving about $300K from you and me as a “pension” or post-retirement income for his years at New Trier. You may quickly note he isn’t “retired”—he is still working in the same job, albeit somewhere else. He is also receiving 3% annual increases to his “pension” and if he lives long enough, you and I will owe him $400K a year and more. You may also note about $200K of his current $300K “pension” or post-employment income is being paid from our current tax dollars.

During the last several years, both IL House Speaker Mike Madigan and Senate President John Cullerton have written letters and met with state government union leaders to try to find a middle ground and agree to reform these five programs that are sure to eventually fail. To our understanding their efforts were rebuffed. After those efforts, Senate President Cullerton made it clear—IL state government can’t file for “bankruptcy” as states aren’t included in the Bankruptcy Code so the only alternative is going to be dramatically raising your taxes, tolls and fees. If you aren’t crystal-clear about it, the folks currently funding Gov. Quinn’s campaign are secretly but effectively demanding protection of their “pensions” and will press hard for the legislature to dramatically increase your taxes. We predict this is going to happen in the legislative session in the week following the gubernatorial election because doing so will give the legislators the longest possible time to calm down the voters who are certain to scream to the heavens about it. Right now, the current IL deficit for pensions and healthcare costs exceed $140 billion dollars and continues to rise every day—someone is going to pull the plug on all that borrowing some day.

How can IL government pensions be reformed? Well, as veteran lawyers who have carefully reviewed the IL Supreme Court ruling knocking out healthcare reform, we see two paths and each has issues Governor Quinn and Bruce Rauner and every IL state senator or representative should be forced to address by the voters.

1.    Start all new or “non-vested” government employees in an affordable retirement program, such as a 401K or other similar approach. You would have to keep paying the vested ones at whatever cost until they have left this mortal coil.

2.    Change the IL Constitution to eliminate the “pension clause” to see if that might allow a more affordable pension or post-employment approach. If you aren’t sure, the “pension clause” is a “stick-it-to-the-taxpayers” clause requiring you and I to pay whatever pension or post-employment income to participants regardless of how lucrative it might be for them and how punitive it is for us. Basically, the Supreme Court ruling on healthcare benefits confirms post-employment benefits for former state government workers can only rise; they can’t ever be cut.

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

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Synopsis: My Phone!!! Plaintiff’s Negligence Claim Dismissed When Cell Phone Stolen at a Fast Food Restaurant. Analysis by Matt Ignoffo, J.D., M.S.C.C.

Editor’s Comment: The facts in Lewis v. Heartland Food Corp involve Plaintiff Lewis alleging his iPhone was stolen by fellow customers while at Burger King No. 1250. 2014 IL App (1st) 132842 (July 25, 2014). He asserted Burger King, by not providing "manned security" in the restaurant, negligently, as well as willfully and wantonly, breached its duty to exercise ordinary care and caution and provide all patrons proper security. Plaintiff sought $1,000.00 in compensatory damages and $1,000,000.00 in punitive damages. Defendants filed a motion to dismiss challenging the legal sufficiency of the complaint. The motion was granted by the trial court. Plaintiff appealed.

As many of our readers will recognize, for a plaintiff to state a cause of action for negligence, his or her complaint must allege:

• Facts that establish the existence of a duty of care owed to him by Defendant;
• A breach of that duty; and
• An injury proximately caused by that breach.

In their motion to dismiss Defendants argued they had no duty to protect plaintiff from the theft of his iPhone. The Illinois Appellate Court examined the rules of law regarding landowners having a duty to protect others. In general, a landowner has no duty to protect others from criminal activities by third persons unless a "special relationship" exists between the parties. The applicable special relationship here is business invitor and invitee.

In Illinois, even when this special relationship exists, the landowner may only be held liable for physical harm caused by acts of third persons. The Court examined an out of state case with similar circumstances. The decision indicates, in general, a business landowner or occupier has no duty to protect its invitees from the criminal acts of unknown third parties absent "special facts and circumstances." Such circumstances were noted to be when the landowner knows or has reason to know there is a likelihood of conduct by third persons, which is likely to endanger the safety of visitors.

The parameters of the "special facts and circumstances" exception did not reach a duty as to damage to or loss of property, and the Appellate Court declined to extend the exception to cases of property loss or damage. The IL Appellate Court here was in agreement and held Burger King owed Plaintiff no duty to protect him from the theft of his iPhone by third persons.

Please note the Court went on to state in the absence of such a special relationship, liability may still be imposed for negligent performance of a voluntary undertaking, such as a voluntary undertaking to provide security. As there was no voluntary undertaking of Burger King to provide security in this matter Plaintiff again failed under this theory of liability.

As you can see, a minor change in the facts, such as a history of theft at the Burger King, which it was aware of, and Plaintiff having been struck during the theft, sustaining physical damage, would indicate such a claim would survive a motion to dismiss. Likewise, if a security officer were present and the theft occurred the argument could be made that by allowing the theft, Burger King was negligent in its performance of providing security.

This article was researched and written by Matthew Ignoffo, J.D., M.S.C.C. Please feel free to contact Matt at mignoffo@keefe-law.com.

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Synopsis: Important Ruling on Distinction Between Jones Act and LHWCA to Move to the U.S. Supreme Court, If They Will Accept—analysis by Jim Egan, J.D.

Editor’s comment: The U.S. Supreme Court has been asked to determine whether a ship repairman who was injured when the crane he was operating collapsed should be allowed to recover for his emotional trauma from the death of a coworker/relative in the accident under the Jones Act. The 5th Circuit Court of Appeals' determined the Jones Act applied to Plaintiff in a ruling many in the maritime industry feel vastly broadens the definition of a "seaman" under the Jones Act.

For quick reference, the Jones Act is a longstanding benefit plan for folks who work on “navigable waters” or our rivers and neighboring oceans—Jones Act claims that don’t settle are typically presented to juries. The Longshore Harbor and Workers’ Comp Act is a federally administered WC benefit program for folks that fix/repair vessels and/or load and unload cargo. LHWCA claims that don’t settle are tried before Administrative Law Judges who work for the U.S. Department of Labor. The defense team at KCB&A has experience in handling both.

In Naquin v Elevating Boats, Plaintiff Naquin worked at the Elevating Boats shipyard in Houma, Louisiana, and his primary job duties were maintenance and repair of the company's fleet of lift-boats. While Naquin was using a lift-boat the boom and crane house abruptly separated from the crane pedestal. Naquin was able to escape from the crane before it toppled onto a nearby building. However, Naquin suffered severe injuries to his feet and an abdominal hernia in making his escape. Complicating matters was the fact the husband of his cousin, who also worked for Elevated Boats, was inside the building and was crushed to death when the crane fell on him.

Naquin filed a Jones Act suit alleging Elevated Boats had been negligent in the construction and/or maintenance of the shipyard crane. After a three-day trial a jury awarded him $2,463,842 in damages, plus interest. 

Elevating Boats appealed, asserting Plaintiff’s injuries should have been covered by the Longshore and Harbor Worker's Compensation Act because he was "a land-based boat repairman," who "spent less than 0.01% of his work time...on any vessel in navigable open waters." Even though he worked on repairing and inspecting boats dockside, Defendant argued "he was not on navigable vessels, and the nature of his work did not expose him to the perils of the sea," Elevating Boats contended. Thus, Elevating Boats insisted he was not the sort of worker the Jones Act was designed to protect.

The Federal 5th Circuit Court of Appeals in New Orleans disagreed, concluding Naquin was a Jones Act seaman. The panel majority also held emotional damages resulting purely from another person’s injury, and not a fear of injury to one’s self, are not compensable under the Jones Act. Further casting confusion on the claim, the dissent argued the Jones Act shouldn't have even come in to play in Naquin's case because he was a land-based worker.

In its petition for rehearing, Elevating Boats argued, unsuccessfully, the en banc federal court needed to reverse the panel's decision because it was inconsistent with the U.S. Supreme Court's decision in Chandris v Latsis, as well as rulings from the 5th, 9th and 11th Circuits following the rule ofChandris. Elevating Boats argued Naquin could not show how his connection to any vessel in navigation was "more than fleeting," and he did not face the type of maritime perils the Jones Act was intended to address.

Because of the federal circuit conflict, Elevating Boats believes this case presents a prime issue for the U.S. Supreme Court to review and is hoping the SCOTUS accepts the case in order to provide attorneys with more guidance as to the scope of the Jones Act. Elevating believes the dissent is correct and the Jones Act does not apply. Maritime defense experts are following this case closely and believe the Fifth Circuit majority was right in reversing the jury's damage award. Many experts feel even applying the Jones Act to a case of this nature blurs the line between LHWCA coverage and the Jones Act. Concerns are based upon 5th Circuit's ruling, workers who aren't really assigned to vessels and exposed to the perils of the sea qualify as Jones Act seamen, which would open the door for nearly any land-based worker who does repairs onboard a vessel to bring a Jones Act claim.

If workers can qualify as both longshoremen and seamen, vessel owners could may face significantly more exposure and costs for claims if the 5th Circuit’s decision stands. So along with the rest of the U.S. maritime industry we will continue to follow the progress of this matter and report. This article was researched and written by James F. Egan, J.D. who is our LHWCA and Jones Act guru. Jim can be reached for your questions and concerns at jegan@keefe-law.com.

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Synopsis: To Stay or Not to Stay a Contribution Action, that is the Question. Thoughts and Analysis by Matthew G. Gorski, JD.

Editor’s comment: On July 25, 2014, our IL Appellate Court issued Cholipski v. Bovis Lend Lease, Inc., 2014 IL App (1st) 132842 (July 25, 2014). Justice Randye Kogan of the First District of the Illinois Appellate Court ruled it was within the trial court's discretion to stay a third-party contribution action until after a trial of the original action. We feel this ruling is of great importance in the construction and other industries where contribution actions are commonplace. 

Plaintiff and his wife brought both negligence and loss of consortium claims against Defendants for injuries resulting from metal tubing falling on him during a construction project. Defendants initially responded by denying any liability. Subsequently, three (3) years after Plaintiff brought the original claims, Defendants requested leave of the trial court to bring a third-party contribution claim against the pain management doctor alleging medical malpractice. The trial court granted Defendants leave to file their contribution claim. However, as Plaintiff did not want further delay of the already set trial, he requested relief from the trial court. Using its discretionary authority, the trial court granted a stay of the contribution claim until after the trial of the original claims was completed. Defendants' counsel requested an appeal of the stay pursuant to Illinois Supreme Court Rule 307(a)(1), which allows for the immediate appeal of an injunction. Upon hearing the matter, the Appellate Court affirmed the trial court’s rulings.

The contribution claim alleged Plaintiff’s pain management doctor misdiagnosed Plaintiff with complex regional pain syndrome (CRPS), failed to treat plaintiff for hypertension, failed to treat plaintiff for plantar and peroneal neuralgias, administered massive doses of Decadron—even though plaintiff has hypertension and other alleged acts of negligence.

Importantly, the Appellate Court analyzed the Laue rule, which states “if an action by an injured party is pending, any contribution claim must be made in that pending action.” It is essential that upon receiving defense of any type of claim that your attorney consider any available contribution claims and all third-party practice options which might relieve you of a portion of liability. In other words, if you do not use contribution claims, you lose them.  

Additionally, the Appellate Court decided to affirm the stay of the contribution claim until after the original claims trial was completed because of the length of time that had passed without a trial. The Appellate Court also held Defendants waived certain claims by not presenting them before the trial court at the time of it ordering the stay of the third-party proceedings.  

Overall, we recommend that you always consider any possible contribution claims at the earliest opportunity. The earlier you are able to assert them upon receiving a lawsuit, the better. Not doing so will subject you to all of the liability when another individual or entity may be responsible for a portion or possibly the entire liability. If you aren’t sure of other paths for contribution claims, feel free to send an email or contact a KCB&A attorney to discuss.

This article was researched and written by Matthew G. Gorski, JD. Matt can be reached with any of your questions regarding third-party practice, contribution claims, workers’ compensation, and all other general liability issues at mgorski@keefe-law.com.