10-27-14; The KCB&A Monday Law Update Endorses Bruce Rauner for Illinois Governor and more

Synopsis: The Keefe, Campbell, Biery & Associates Monday Law Update Endorses Bruce Rauner for Illinois Governor.

Editor’s comment: While we have tried to remain as bipartisan as possible throughout this campaign, we feel we have to make a clear stand on where our state and its taxpayers should go in this crucial election. It is our strong feeling our state is at a crossroads with this administration and incumbent Democratic leaders pointing our state government to economic failure or collapse, like Detroit. We note President Obama, Vice-President Joe Biden, and the Clinton family can come to Illinois to raise millions but we didn’t hear any answers to the hundreds of questions about why Illinois is such a mess and how to fix it. We feel there are very few objective reasons to vote for incumbent Governor Quinn and ample reasons for any interested taxpayer to vote for challenger Bruce Rauner.

This week, we reviewed a 77-page warning from the nonpartisan Civic Federation of Chicago on our current IL state budget. This is the budget our Democratic legislators already passed and Gov. Quinn signed into law for the fiscal year that started on July 1, 2014. You will note under this administration, Illinois gov’t is still in miserable financial shape. This administration’s array of tricks and “creative” accounting will have taxpayers' unpaid bills growing dramatically. And this year's budget hides bombs and shocking surprises that are going to detonate on IL taxpayers soon. The budget is designed to protect Quinn and incumbents during the election only—they will then deal with what they have done to us when it is too late to take any effective action to remedy it. If you have concerns about trusting our leaders in Springfield, read this scathing report.

The Civic Federation report clearly demonstrates how Democrats in Springfield are trying to hide their decisions and not further enrage taxpayers. As you consider your vote, keep these Civic Federation bullet-points in mind:

·         "General funds expenditures appear to decline by $1.1B from $36.8B in fiscal year 2014 to $35.8B in fiscal year 2015, but actually increase by $528M due to shifting of funds from year to year among state accounts."

·         Hidden in the shifting spending increases: a new school in Multimillionaire Speaker Mike Madigan's district at a cost of $35M when our State can’t pay its bills.

·         Despite spending growth, this budget underfunds agency costs by $470 million, chiefly for the state Departments of Human Services and Corrections and for mental health grants.

·         This year Illinois' general funds will receive $4.5 billion from Washington, much of it for Medicaid. “State-source” revenues will total $30.6 billion. Of that total, state gov’t pension costs will consume 1 of every 4 dollars, or 24.7% of the total.

·         Worse, IL taxpayers' pension contributions "are expected to increase sharply in fiscal year 2016.” Why? Because expected return on pension investments is comically low. Governor Quinn is doing nothing to improve investment returns.

·         The current budget reverses course from two years in which the state began to reduce its backlog of unpaid bills. Unpaid state bills are projected to rise this year from $6.0 billion to $6.4 billion. Gov. Quinn has been a delinquent bill payer for all six years.

·         This year's budget relies on borrowing $650 million from the state's Special Funds — debt that has to be repaid within 18 months. That's likely to crimp future spending on education, health services and other state government categories.

Governor Quinn's insistence on spending tomorrow's dollars today is one reason all three major bond rating agencies rank Illinois as the nation's least creditworthy state. Each agency also attaches a negative outlook to Illinois, meaning all three will almost certainly further downgrade our state's harmful credit rating even more. Please understand the awful credit rating of the Quinn administration isn’t a partisan/political view—it is simple math from three separate rating agencies. And it costs you and I more money to borrow. Standard & Poor's warned this current budget "is not structurally balanced and will contribute to growing deficits and payables that will likely pressure the state's liquidity." In shorter terms, Gov. Quinn is ignoring the approaching gov’t meltdown.

We ask our readers for a single objective reason someone who isn’t receiving or on a track to get a state government pension would vote for Governor Quinn. Illinois has a miserable unemployment outlook with jobs and people leaving Illinois in droves. As we advised last week, our state was ranked 48th out of 50 states in economic outlook—Governor Quinn can’t make lame excuses about a recession that all our sister states also dealt with. Governor Quinn was going to end the tollways and make every road into a freeway—Oooops, he then almost doubled your tolls. Gov. Quinn has already promised to retain the highest income tax increase in IL history in place, despite lying to us about having it automatically go down at year-end. Governor Quinn supports raising our highest state income tax rate to 8% and, if he wins, we expect that to start to happen in about three weeks. Governor Quinn tried to come up with phony property tax relief which failed and we assure our readers your property taxes are going to skyrocket across the state. Governor Quinn’s hiring practices have been questioned at IDOT and other state agencies—Illinois taxpayers are now going to have to pay for a federal monitor of Governor Quinn’s hiring practices.

Do We Really Want a Substantial Tax Increase to Pay for Spiraling Compensation for Folks Who Aren’t Working For Us Any More?

When you consider one out of every four Illinois tax dollars are going to folks who don’t work for our government any more, it is hard not to get mad. The current “fake” pension setup includes a 3% annual kicker that means we will rapidly pay more money to retired workers than they made while employed. For an example, Hank Bangser who retired about 7 years ago as the New Trier School Superintendent is getting an IL pension of around $300K a year annually with around $200K of that as fresh money coming from you and me. Yes, you are right, he gets millions of dollars from IL taxpayers not to work here. His annual pension 3% compound interest increases are currently more than $10K every year and will spiral and go up for life. He is around 57 years old. If he lives to be 87 and you do the math, we will owe him over $700K a year! http://articles.chicagotribune.com/2011-01-29/news/ct-met-superintendent-pensions-20110129_1_pension-rules-public-school-pension-state-pension Please note Hank isn’t actually retired and is working in the same job in California and probably making a combined income of over $500K a year. There are lots and lots of wealthy IL state pensioners getting six-figure pensions with compounded 3% increases out there all over our country. The only way our taxpayers will stop owing these people mega-money is when they eventually die off, as if they were feudal kings, queens and lords. The money to pay the staggering lifetime compensation could be going to social programs and women’s issues and psych counselors but, based on the IL Constitution created by Multimillionaire Speaker Mike Madigan, it has to be spent on former state workers. The only way to change this rapidly growing whirlpool for our tax dollars is to change the IL Constitution (not likely) or change benefits for incoming workers. We are sure Gov. Quinn won’t do so, as his money and support are coming from unions who won’t allow it. Please remember the gov’t pension debt was $54B under Quinn in 2009 and it is $105B and growing even faster now. That money has already been spent and you and me and our kids and their kids will have to pay it back along with the interest charged on it.

Our IL Supreme Court also ruled this year former Illinois state workers are also entitled to taxpayer-paid lifetime healthcare. There was no façade or pretense about the workers contributing a penny toward that immensely expensive post-employment benefit. Former IL government workers appealed all the way to the Supreme Court about being asked to contribute a measly 1 or 2% of the cost and they won—we have no idea why our tax dollars are going to provide “free” or taxpayer paid health care benefits to folks like President Obama and former Mayor Daley when they haven’t served in IL state government in over a decade. When we consider and weigh the amount of unfunded post-employment benefits for former IL state workers it is hard not to consider them the biggest mooches in Illinois history. If you don’t like the term “mooch,” please note our judges/justices and legislators can fully vest in their six- and seven-figure pensions without contributing one full year’s salary. They get it all back before the end of the first year of being on a fake pension and then get millions more with taxpayer-paid healthcare for life. Illinois taxpayers can’t and shouldn’t have to pay our former government workers this outrageous largesse.

Bruce Rauner Positives

For all the silliness in the attack ads about Bruce Rauner, we don’t think our readers understand how cool this guy and his wife Diana are. He is not your typical IL state Republican. Did you know there is a Rauner College Prep in Chicago? http://raunercollegeprep.noblenetwork.org/about/history-and-campus-overview. We think that is a pretty cool thing. Please note he didn’t use your tax dollars, their family contributed their own money. In contrast, we assure you Multimillionaire Speaker Mike Madigan hasn’t yet contributed anything from his own pocket to the new school in his district that we mention above—he is quietly using your money. We are also certain Multimillionaire Speaker Mike Madigan legally “rigged” this election by gerrymandering election districts across the state—just because he legally can and did do so doesn’t make it morally or ethically right. We feel Illinois needs a two-party system and Gov. Quinn’s administration is fighting to end it.

Please also remember Bruce Rauner and his great wife Diana aren’t “using” their charitable donations and activities in their campaign. Again, we consider that to be a very cool thing to keep off the map but we don’t know if our readers know how good for education, economics and jobs this guy is.

1.    Rauner was named the 2008 Philanthropist of the Year by the Chicago Association of Fundraising Professionals.

2.    In 2003 Rauner received the Daley Medal from the Illinois Venture Capital Association for extraordinary support to the Illinois economy and was given the Association for Corporate Growth’s Lifetime Achievement Award.

3.    Rauner and his wife Diana received the Golden Apple Foundation’s 2011 Community Service Award.

4.    Rauner and his wife Diana have been a financial supporter of many great projects including

1. 1. Chicago’s Red Cross regional headquarters,
   2. YMCA in the Little Village neighborhood,
   3. Six new charter high schools,
   4. An AUSL turnaround campus,
   5. Scholarship programs for disadvantaged Illinois public school students, and
   6. Achievement-based compensation systems for teachers and principals in Chicago Public Schools.

Bruce and Diana Rauner variously provided major funding for the construction of the Rauner Special Collections Library at Dartmouth College, endowed full professor chairs at Dartmouth College, Morehouse College, University of Chicago and Harvard Business School, and was the lead donor for the Stanley C. Golder Center for Private Equity and Entrepreneurial Finance at the University of Illinois. Bruce Rauner also serves on the board of the National Fish and Wildlife Foundation.

More Bruce Rauner Potential Positives – A Solid Business Approach to Illinois State Government May Be Coming!

If you don’t know what Bruce Rauner does for a living, he is a “Shark Tank” guy. He looks at businesses and turns them into well-run machines. He can do that for our IL Government, if we let him. Please vote for a guy as smart and as sharp as this guy is. If you are comparing the intellects and business acumen of these two candidates, Bruce Rauner wins by a light year. The defense team at KCB&A suggests you select the smart, successful private-sector candidate over the clunky political hack whose intentions are more aligned with victory than personal conviction and good government. You also don’t have to feel any remorse for Pat Quinn if he loses, as he is eligible to immediately retire with an annual fake pension starting at approx. $160K plus healthcare.

If you want some easy, outside looking in “better-government” thoughts on how Governor Quinn is wasting your money and how Bruce Rauner could easily and quick save IL taxpayers zillions of dollars, here are a couple:

·         IL has “Tow-Trucks-that-don’t-tow-trucks.” Those “Minutemen” tow trucks you see on our highways aren’t allowed to tow anything. They will bring you gas if you run out and they will provide guidance or call a private tow service for you but they won’t and can’t give you a tow. Try to understand how stupid it is that our state officials keep buying expensive vehicles they don’t and won’t allow to be used. Couldn’t our IL State Police do exactly the same thing our “Minutemen” do and save millions?

·         IL State Government has 88 agencies with 88 department directors and 88 assistant directors and 88 HR heads and 88 information departments and lots of redundancy. Couldn’t we consolidate them to 44 agencies or 22 agencies and save millions?

·         IL is the Land of Little Governments—Illinois leads the entire U.S. in expensive and redundant mini-governments at 6,963 to include irritating and duplicative government bodies like grade school districts, community college districts, water reclamation districts, mosquito abatement districts, park districts, forest preserve districts, townships and counties and everything else. Lots of these districts have their own duplicative and do-nothing police departments. Some of the workers get local pensions and some of the workers get state pensions—all of the pensions have challenging funding. Most Illinoisans have 10-20 taxing districts on our bills—your money is going to all these government workers to fund their retirements and not your retirement. We are used to too much government and, for the most part, don’t have any idea who all these folks are or what they do for us. All of it runs through Springfield and our Governor could work to minimize all this redundancy, if he were so inclined.

·         Please note four-five years ago, State Treasurer Rutherford and Comptroller Judy Baar Topinka both openly agreed their state agencies were redundant/duplicative and one of them could be shut down at an annual savings to Illinois taxpayers of about $12M. They both agreed those new-fangled “computers” ended the need for one of the agencies. Under Governor Quinn, nothing has happened about it. http://www.wrex.com/story/13029972/treasurer-comptroller-could-be-one-office-in-illinois.

·         Similarly, the Lieutenant Governor job in Illinois is a complete waste of everyone’s tax dollars. Current IL Lieutenant Governor Sheila Simon appears to be seeking a different office so she finally has something to do to keep busy. Why not save additional millions and simply end that office?

·         Automate Illinois tollways and save over $100M a year—Automated tollways have been around for over thirty years. If you want an example, travel the Indiana tollway—you can’t give money to a human. In contrast, Illinois spends over $100M each year on toll-takers’ salaries and overtime. In our view, that tax money is completely wasted and the boring task of taking coins and making change need to be phased out. Please note the toll-takers who hang around long enough then get lifetime healthcare coverage and fake pensions that pay them more than they made while working.

What Will Bruce Rauner Mean to the Illinois Workers’ Compensation Industry?

There are many players with a role in the IL WC system, including adjusters, risk managers, attorneys on both sides, healthcare providers, hearing officers and lots of support folks. We are sure Bruce Rauner doesn’t have major WC changes in mind but there are a lot of simple minor changes we feel could be made in a “good-government” model. Please also remember Bruce Rauner won’t have the power to change the IL WC Act as he won’t have control of the Illinois legislature—he may be able to appoint an IWCC and Arbitrators who might more closely follow the actual wording of the Act and put an end to all the “activism” and unusual definitions.

To the Petitioners’ attorneys in the IL WC system who are running around like the “sky is falling” if Bruce Rauner gets the governor’s job, we like to point out Illinois unemployment has stayed at high levels and there are almost no new jobs in important industries like manufacturing and construction coming to IL under Gov. Quinn. Newly filed IL WC claims have dropped by half under this administration and the one before it. If the downward trend of fewer and fewer IL jobs continues, there isn’t going to much need for the IWCC or Petitioners’ lawyers. In our view, both sides of the bar are better served if Illinois becomes a much better place for business and builds new jobs and we get our state government back on the rails and start aggressively competing with our sister states.

Summary

The election is ongoing—please go vote right now! It ends in eight days. We join with just about every major news outlet in and outside our state to confirm our choice is clearly Bruce Rauner for the best interests of our state. But please, please vote for the candidate of your choice. Neither candidate approved this message. We appreciate your thoughts and comments.

10-20-14; The "Compens-Ebola-ty of the West Africa Virus under WC/OD; Retaliatory Discharge Ruling of Note, analysis by Matt Gorski; More Failed IL WC Reforms and much more

Synopsis: What Is the “Compens-Ebola-ty” of the New Deadly African Virus in Workers’ Compensation?

Editor’s comment: We were in Dallas, Texas last week for the D/FW RIMS meetings and everyone is talking about the Ebola virus and its impact on workers’ compensation and possibly general liability for U.S. companies. As background, the Ebola virus is named after the river in the area it was first isolated in 1976. The first known cases in the United States were discovered in 1989. The condition of infection can be termed by doctors and scientists as “extreme amplification” where a host can be effectively consumed by a virus that grows so fast it can be seen growing by the human eye. Once it has been contracted, the fatality rate is about 70-90% although some progress has been made in counter-attacking it. There is no vaccine but scientists are working hard to find one.

Our readers are asking us when this medical condition would be compensable under workers’ compensation—to be academically accurate, the condition is a disease and therefore the focus would be on “exposure” and not an accident. Such a condition would be compensable under the appropriate workers’ compensation or occupational disease act. Some states, like Illinois have separate but parallel legislation; some states cover both accidents and exposures under the same act.

Two tests must be satisfied before an illness or disease can be considered occupational and thus compensable under WC or OD Acts.

First, the exposure causing or leading to development of the disease must be “occupational,” meaning it arose out of and in the course of employment.

Second, compensability of an exposure is wholly dependent upon the occupation and general or specific tasks of the employee. Illinois, Indiana and most states require the exposure arise out of or be causally connected to conditions “peculiar” of specific to the work.

To arise out of and in the course of employment is a function of the general or specific work tasks of the employee. Qualifying an exposure as occupational is the burden of the worker but the incidence and prevalence of a disease in many work populations can’t be ignored by employers. Either way, the employee or their counsel have to demonstrate they were at work when they were exposed to and later contracted the illness or disease.

Defining an exposure leading to illness or disease as compensable may ultimately require the Arbitrators/hearing officers to analyze expert medical opinion and admissible lay evidence. There is no singular test that can be applied to every case to declare an illness or disease as compensable or non-compensable, so most claims are judged on their own merits and circumstances. Please note the defense team at KCB&A has numerous experts on occupational diseases/exposures and we are happy to assist you in locating a great expert on your claims—simply send a reply.

Medical opinion indicating the conclusion an exposure leading to disease is occupational is not necessarily based on the medical condition but on the facts surrounding the patient’s sickness. Expert physicians and scientists will investigate:

• The timing of the onset of symptoms in relation to work performed.
• The nature of the work performed.
• Co-workers with similar exposures or diseases:
• Whether the exposure/disease is common to workers over a period of years in that particular industry;
• If the employee has a personal proclivity that may lend itself to the illness such as asthma or an allergy; and
• The habitus, age, personal habits and medical history of the worker. There is no question workers in poor physical condition, such as obesity, diabetics, tobacco/marijuana smokers and questionable family medical histories may be more likely to contract a disease or illness, clouding the causal relationship between occupation and disease.

How About Ebola?

Judged against the factors as we understand them Ebola is a very rare workers’ compensation exposure for U.S. workers. Unless it can be demonstrated the employee has an increased risk of contracting Ebola because of the nature of the job, this virus is not occupational and therefore won’t be compensable for most workers. Employees working in the healthcare and transportation industries may be able to prove such increased risk as they have little choice but expose themselves to this deadly and incurable virus as a regular part of their job duties. Beyond healthcare and transportation workers, not many workers may qualify for workers’ compensation or OD protection due to casual or random exposure to Ebola.

We feel many Arbitrators/hearing officers may apply more of a “reasonably foreseeable” standard which then opens up the potential for a raft-load of ancillary claims such as construction worker doing a renovation in a medical facility treating Ebola patients, regular business travelers, maybe even airline maintenance workers who clean the specific airplanes.

In the general liability field, limitation of liability clauses are apparently in increasingly wide use and most often cap or limit damages for which a plan or plan sponsor may be subject to liability. In California, for instance, courts appear to consider whether a limitation of liability provision violates public policy, or is otherwise unenforceable or whether the party seeking the limitation uses a standardized contract that doesn’t allow a covered individual to pay additional fees for protection against negligence or other torts which arise.

At present, the numbers of folks in the United States suffering from the disease remain very small and pale in comparison to other major diseases and causes of death in the U.S. Let’s hope that experience continues. If you need help investigating and defending occupational disease claims in the future, send a reply.

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Synopsis: Contract Employees In IL Not Provided Retaliatory Discharge Protections. Analysis by Matthew Gorski, J.D. 

Editor’s Comment: We consider this a very important Illinois Appellate ruling on applicability of a contractual employee’s right to bring a retaliatory discharge action. The First District Appellate Court reversed a jury’s award of a whopping $1,000,500.00 to an assistant principal on the basis that a contractual employee is not entitled to the same protections as an at-will employee. At Goodlow Magnet School the principal and assistant principal signed a four-year employment contract which outlined the rights and duties of both employer and employee. At the beginning of the new principal’s four-year term, the principal decided to select a new assistant principal and not retain the existing assistant principal.

In 2001 the principal was Patricia Lewis and the assistant principal was Kenneth Taylor. As part of their various duties, they were required by law to report any suspected child abuse. One day, Lewis was sick and Taylor was sitting in as principal for Lewis. An incident occurred where a special education teacher allegedly kicked a second grader in the back of the leg. Another teacher reported it to Taylor. Taylor then reported it directly to the police after the teacher refused to report it. Lewis was upset about Taylor’s actions of reporting the incident to the police because he never conducted a fact-finding inquiry and the actions by the special education teacher were actually authorized by the second grader’s parents.

At the end of the term, Taylor’s contract was not renewed and he was effectively “terminated.” He filed suit against the school board, alleging a common-law claim for retaliatory discharge and a claim for violation of the Illinois Whistleblower Act. To establish a retaliatory discharge claim, an employee must prove that (1) the employer discharged him, (2) the discharge was in retaliation for his activities, and (3) the discharge violated a clear mandate of public policy. This is an act that mostly protects individuals who file a workers’ compensation claim or report illegal conduct by an employer or its agents. The jury found for Taylor on his retaliatory discharge claims and awarded him the substantial verdict listed above. 

On appeal, the First District Appellate Court held retaliatory discharge only encompasses protection for at-will employees, not contractual employees. Since Taylor had a four year contract, he was considered a contractual employee, and therefore when the contract simply wasn’t renewed, he was unable to recover for retaliatory “discharge” or non-renewal.

We recommend Illinois employers consider the instant case, and various other factors into consideration when deciding to make your employees either contractual or at-will. There are positives and negatives for both types of employees. It is also always important to be clear and concise as to whether your employees are at-will or contractual employees.

This article was researched and written by Matthew G. Gorski, J.D. Matt can be reached with any of your questions or concerns regarding employment law, general liability defense, and workers’ compensation defense at mgorski@keefe-law.com.

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Synopsis: Was it a Real WC Reform or Another Fake Illinois “De-form?”

Editor’s comment: The Governor’s election ends in 15 days, folks. Your editor already “early-voted” and we recommend you vote as soon as possible and avoid the rush. We are trying to report the facts and remain as bipartisan as possible but you might note a slight shift to our reporting.

In 2011, we note there was a section of the new law which supposedly responded to the hilariously high level of workers’ compensation benefits being paid to state government workers. We reviewed two scathing reports, one by IL Auditor General William Holland and the other by Attorney General Lisa Madigan. Both pointed out how poorly our state government handled their workers’ comp claims. That hasn’t ended, to our understanding.

This is taken from the 2011 Amendments to the IL WC Act:

Sec. 405-411(e) There is hereby created within the Department of Central Management Services an advisory body to be known as the State Workers' Compensation Program Advisory Board to review, assess, and provide recommendations to improve the State workers' compensation program and to ensure that the State manages the program in the interests of injured workers and taxpayers. The Governor shall appoint one person to the Board, who shall serve as the Chairperson. The Speaker of the House of Representatives, the Minority Leader of the House of Representatives, the President of the Senate, and the Minority Leader of the Senate shall each appoint one person to the Board.

Why put that in the legislation if you had no intention of doing it? From our research, it appears the WCPAB only met once in early 2012: http://www2.illinois.gov/cms/Employees/benefits/rm/Documents/State%20WC%20Advisory%20Board%20Agenda%20011212.pdf. It appears they never again met, in violation of the legislation above. We cannot find a listing of the required members on the web. So much for managing the program in the interests of taxpayers.

Why do we think the concept was dropped? Well, if you look at this report in 2012, you may note they outlined the State of Illinois had 18,000 pending state WC claims or about one pending claim for every three state workers. We consider that a staggering number of state WC claims. http://www2.illinois.gov/cms/About/Reports/Documents/2012_Transfer_Workers_Comp.pdf. We also understand they continue to annually spend more than $150M of your tax dollars in generous workers’ comp benefits to Illinois government workers. Someone in the current IL State administration stopped caring about spending/wasting taxpayer money on government workers a long time ago. Illinois government provides our state workers effectively “free” lifetime pensions, actually free or 100% taxpayer funded state retiree healthcare coverage for life and millions in WC benefits every year.

There are no subsequent updated reports about the IL State WC program anywhere in their many web pages. Basically, this means all of your State WC program is being handled in secret. This sort of hush-hush mismanagement is precisely what we have become used to in this nutty state.

 If you aren’t sure, the secret-powers-that-be, including Governor Quinn are poised to raise our top income tax rate to 8%. If Gov. Quinn wins, we assure you this is going to happen in the November veto session in Springfield or in about one month from today. If you want higher taxes, tolls and government fees, vote for him. If you want to stop rising taxes and see better management in Illinois government, we recommend you vote for Bruce Rauner.

As an aside, while looking up other things, if you go to this web page http://www2.illinois.gov/cms/About/Reports/Pages/default.aspx, you will note the IL Department of Central Management Services has about $79M on deposit and the return they are getting on that gigantic sum of money is $733 a month!! That return is .011%!!! Again, do you want to keep the managers in place that can only find a .011% return on state funds?

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

10-13-14; Good News for IL WC--Bad Economic News for IL Gov't; New IWCC 'Rule' with analysis by Jim Egan; Rules of Evidence in IL WC by Lindsay Vanderford and much more

Synopsis: Good News for the IL WC Industry and Bad News for the Illinois Economic Climate.

Editor’s comment: As we advised our readers, the goofy WC “advisory rates” as a measure of workers’ comp costs are a very poor metric by which to measure the success or failure of our state’s workers’ comp system. In our experience, every year WC advisory rates drop. The problem with advisory rates is they are illusory—there is no requirement an Illinois WC insurance carrier adhere to them at all. In fact, when IL WC skyrocketed under convicted former Governor Blagojevich, WC advisory rates still went down.

In our view, the much better metric by which to evaluate the success or progress of IL WC reforms is the State of Oregon WC Premium Rate Ranking. This study is published on an every-other-year basis and the stat-rats in Oregon do a very solid job of evaluating and measuring what U.S. Business needs to know. They study and report how actual WC insurance premiums change for better or worse.

The 2014 Oregon Report is online: http://www.cbs.state.or.us/external/dir/wc_cost/files/report_summary.pdf

If you take a look, you will note Illinois has gone from 4th highest in 2012 to 7th highest on January 1, 2014. We consider that a solid improvement and is pointing our system in the right direction. The WC insurance premium rate indices were calculated based on data from 51 jurisdictions, for insurance premium rates in effect as of Jan. 1, 2014. The 2014 median value is $1.85, which is a drop of 2 percent from the $1.88 median of the 2012 study. Illinois WC premium rate index is $2.35 per $100 of payroll, or 127% percent of the national median. National premium rate indices range from a low of $0.88 in North Dakota, to a whopping high of $3.48 in California. You may note California is more than a dollar per $100 of payroll higher than our state. There were 21 states that had an index rate that was within plus or minus 10 percent of the benchmark value. In the upper part of the WC premium rate distribution, 13 states had index rates higher than 110 percent of the median, while 17 states were below 90 percent of the median.

What does all this mean? Well, it means the “haircut” which the IL WC system got in 2011 is working. We also feel the reasonable and professional Arbitrators and Commissioners are following the rules, reviewing the evidence before them and doing their very best to come to the middle. Much of the cronyism of the past is gone and WC fraud is considered a problem. We salute Chairman Michael Latz and his solid staff for their hard work in bringing things down and hope he keeps working hard to continue the progress made under their administration.

Can it get even better? Sure, it can! We don’t feel the improvement is stopping--we think it may just be starting. We hope the IL WC PPP concept kicks into fifth gear soon and Illinois business gets even more savings for their WC dollars. We are also sure the tried and true WC cost reduction tools of thorough accident investigation, getting a signed HIPAA/GINA compliant release and comparing medical histories in questionable claims are being done by solid risk managers and adjusters. When you have WC claims you feel need to be fought, send KCB&A an email with details and we can give you a solid review of the strengths and weaknesses of any IL WC claim. With more hard work, we truly feel the current ranking at 7th highest can be moved down into the teens or mid-twenties in the next 3-5 years. We will be watching for the 2016 Oregon WC premium rankings to best judge future progress.

The Bad News for the IL Economy—the ALEC or American Legislative Exchange Council just issued their important economic report titled Rich States, Poor States, 2014 Edition. In their detailed and dispassionate economic analysis, they rank Illinois 48th. This report is free and you can review it or download it online at: http://www.alec.org/publications/rich-states-poor-states/

One problem with this report is Illinois may be in even worse shape following our current statewide election—as we have advised our readers, Illinois income taxes may get dramatically worse under IL State Democrats next month. Right now, the highest rate is supposed to drop to 3.75% at the end of the year. If current IL Governor Quinn wins, our income taxes are set to rapidly escalate to a maximum rate of 8%.

As gubernatorial challenger Bruce Rauner has pointed out, you can’t tax your way out of the hole created by years of bad governance, unpaid bills and multi-billion dollar deficit borrowing. For one example, the State of Maryland raised tax rates on the “wealthy” in 2007 when the politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25 percent. Since two of Maryland’s biggest counties also impose income taxes, the state-local tax rate could go as high as 9.45 percent. Maryland Gov. Martin O’Malley declared these “wealthy” 0.3 percent of state tax filers were “willing and able to pay their fair share.” Guess again.

The next year Maryland state auditors discovered one-third of the millionaires disappeared from Maryland tax rolls and had obviously and wisely moved away. In 2008, roughly 3,000 “wealthy” income tax returns were filed in Maryland by the end of April. The following year there were 2,000 such returns, which the state comptroller’s office conceded was a “substantial decline.” On those missing tax returns and departed “wealthy” citizens, Maryland State government collects 6.25 percent of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did in the year prior—even at higher rates.

As you read this, Governor Quinn and House Speaker Madigan are openly fighting and pressing anyone willing to listen to raise our state income tax rates to 8%. Next month, In the November 2014 legislative veto session in Springfield, they may rise to 8% because Democrats have majorities in both houses of the legislature and may have a Democrat governor who has already indicated he will rapidly sign this giant increase in your taxes. Please also note, following the Maryland model above, it probably isn’t going to help at all. If Bruce Rauner becomes our Governor, it will be dramatically harder for IL Democrats to enact the much higher taxes, as they will have to override his veto.

We see no efforts or open discussion by Governor Quinn or any incumbent state official to reform our state government and stop the obvious waste and redundancy in Springfield which is causing the need for these higher levies. For the entire time Pat Quinn has been our Governor, he has been a ���deadbeat” bill payer, leaving billions of dollars of unpaid bills sitting for vendors, agencies and others to wait months or years for tax money to arrive before payments are made. The practice is so common, sadly everyone has become “used” to it and knows there is no reason to complain. Our concern remain the same—is this a solid way to run government? Is Illinois ready for reform?

Please note the Illinois statewide election has already started and you can vote right now—if you don’t know how, send a reply. It will end on November 4 which is just over three weeks away. We urge our readers to make your voice known and vote.

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Synopsis: Are New IWCC Rules Being Established for IL WC Motions to Withdraw? Analysis and comments by Jim Egan, J.D.

Editor’s Comment: It was recently announced at one of the downstate status calls this week IWCC Chairman Latz had enacted a new but informal rule on Petitioner attorney’s motions to withdraw as counsel for record. It was announced that no longer would a certified mail green card be enough to have a motion to withdraw granted by the Arbitrator assigned.

Going forward the motion would have to go on the record and the motioning attorney would need to produce evidence of a skip trace to confirm all efforts had been made to locate a missing Petitioner. If you are not aware, a “skip trace” requires the attorney to hire a detective or similar licensed provider to seek out any trace of a missing claimant. The Arbitrator advised the attorneys at the call that if there was no skip trace on record there was a risk the case could be reinstated later if the Petitioner re-appeared. Attorneys questioning the new “rule” at the call were politely advised while there was not a section in the Act nor case law confirming authority for this new rule, failure to follow this directive would be done at their own risk as this is what the Chairman wanted.

We note no new announcement on the IWCC’s excellent and informative website confirming this new rule and we are continuing to monitor the situation to confirm.

This being said, we fell the defense bar will need to be diligent going forward in following counsel’s motions to withdraw. If a skip trace is made part of the record when counsel withdraws, you will want a copy of the record or the skip trace in order to confirm same when the defense motion for hearing/dismissal is filed. If no skip trace is produced and counsel proceeds with testimony that he/she “performed their due diligence” in searching for Petitioner, the defense may, in order to protect their dismissal motion/hearing request, obtain their own skip trace of a missing Petitioner.

It was also announced obligatory responses to red-line matters would no longer be accepted and Form 41s would be required going forward. Veteran downstate practitioners will note that it has always been relatively easy to continue matters by informally announcing the status during the call. We were advised six months of “negotiating settlement” or “setting deps” will no longer get the job done for a red-line continuance.

It seems the IL WC Commission is making another attempt to crack down on the red-line, this time in the downstate venues. We are continuing to monitor other status calls to see if the same announcements are made. As always we will continue to report if this practice becomes State-wide or an announcement is made in the IWCC website.

This article was researched and written by James F. Egan, J.D. Jim can be reached on a 24/7/365 basis at jegan@keefe-law.com.

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Synopsis: WCLA CLE’s for the IL WC Industry—Modernization of the Rules of Evidence and an Appellate Ruling regarding  the Statute of Limitations as it relates to Repetitive Trauma Claims Thoughts and Analysis by Lindsay R. Vanderford, J.D.

Editor’s comment: Last week, several important rules of evidence were discussed and a recent case was discussed by WCLA experts in a continuing legal education format. Some of the key issues are discussed below. This article is focused on the Commissioners, Arbitrators and attorneys at the IWCC on both sides of the bar. For risk managers and adjusters, it is fairly technical and you might want to go on to other things.

Rules of Evidence Modernized

The most current Illinois Rules of Evidence became effective January 1, 2011. They are primarily a codification of existing common law rules of evidence with some modernization. Though similar to the Federal Rules of Evidence, there are a few unique respects which Illinois chose not to adopt. These rules govern proceedings in the courts of Illinois. (Rule 101 – Scope). Illinois common law rules of evidence apply to proceedings before the Commission, except to the extent they conflict with the Act or Commission Rules. (Comm. Rule 7030.70).

Rule of Completeness? Rule 106, Remainder of Related Writings or Recorded Statements

If part of writing or recorded statement is introduced into evidence, an adverse party may require any other part of a writing or recording or any other writing or recording which “ought in fairness” be considered is also admissible. Previously, only another part of same writing or recording was admissible. This applies both to substantive evidence and impeachment evidence. Mere mention of a conversation or statement (casual reference) does not require completion. Notably, this modernization will help to admit earlier records showing like complaints.

Habit or Routine Practice? Rule 406

Evidence of the habit of a person or the routine practice of an organization, whether corroborated or not and regardless of the presences of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice. Previously, some cases required evidence of corroboration. The modernized rule has clearly abolished the need for corroboration. Similarly, some cases forbade habit evidence if there were eyewitnesses to an occurrence. Now, evidence is admissible even if eyewitnesses were present. An individual with personal knowledge must lay the foundation the practice was sufficiently “routine.”

Prior Inconsistent Statement ? Rule 613(a)

When examining a witness with a prior statement, the statement need not be shown to the witness. However, on request, the statement must be shown to opposing counsel.

Statement by an Agent ? Rule 801(d)(2)(D)

A statement is not hearsay if the statement is a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment. The statement does not need to be against the interest of the declarant. An admission of a party is substantive evidence (not just for credibility/impeachment). The declarant need not hold a position of authority in the company and need not be authorized to speak on behalf of the company. The statement just has to concern a matter within the scope of employment during such employment.

Statements for Purpose of Medical Diagnosis or Treatment ? Rule 803(b)(4)

“Statements made for purposes of medical treatment, or medical diagnosis in contemplation of treatment, and describing medical history, or past or present symptoms, pain, or sensations, or the inception or general character of the cause or external source thereof insofar as reasonably pertinent to diagnosis or treatment but, subject to Rule 703, not including statements made to a health care provider consulted solely for purpose of preparing for litigation or obtaining testimony for trial.” This exception does not apply to an examining physician seen solely for purpose of litigation or testimony at trial. Statements of causation are only admissible if they are reasonably pertinent to medical diagnosis and treatment.

Self-Authenticating Documents ? Rule 902

Some documents are self-authenticating, including (1) public documents of a government or governmental agency filed under seal and (2) public documents not under seal if signed by an official in an official capacity. In Craig v. Prairie Material Sales, Inc. (13 IWCC 1040) Respondent attempted to submit PubMed document entitled “Rheumatoid Arthritis” into evidence. The Arbitrator and Commission found the document was not self-authenticating. The document was not issued by public authority. Furthermore, it did not describe activities of agency or matters of which agency had duty to report. In Aragon v. Around the Clock Food Store and IWBF (13 IWCC 0118), Petitioner submitted a letter from an investigator at the IWCC Insurance Compliance Division to demonstrate the employer was uninsured. The Arbitrator excluded the document, but the Commission reversed. The document was self-authenticating because it contained the seal of the IWCC, an agency of the State.

Section 6(d) Application to Admissible Evidence

In PPG Industries v. Workers’ Compensation Commission (2014 IL App (4th) 130698WC) Petitioner brought a repetitive trauma claim before the Commission. Petitioner worked for her employer for thirty-eight years prior to claiming the repetitive trauma injury. The Arbitrator awarded compensation, basing the decision in large part on the testimony offered by Petitioner of a development of pain over a period of time. The Arbitrator also considered and rejected a statute of limitations argument raised by the employer regarding the admissibility of evidence from more than three years prior to the claim. This argument relied on Section 6(d) of the Act, which states in pertinent part:

In any case, other than one where the injury was caused by exposure to radiological materials or equipment or asbestos unless the application for compensation is filed with the Commission within 3 years after the date of the accident, where no compensation has been paid, or within 2 years after the date of the last payment of compensation, where any has been paid, whichever shall be later, the right to file such application shall be barred. 820 ILCS 305/6(d).

The employer appealed to the Commission, which slightly modified the PPD award but otherwise affirmed and adopted the Arbitrator’s ruling – including the rejection of the statute of limitations argument. The employer appealed to the Macon County Circuit Court, which was persuaded by the statute of limitations argument. The Circuit Court vacated, directing the Commission to consider only evidence of activities three years prior to the filing of the application. The Circuit Court then entered an order granting a motion for certification of an interlocutory appeal, namely to challenge the court’s application of Section 6(d) to exclude evidence. The certified question to the Appellate Court of the Fourth District was, “does section 6(d) of the *** Act, which sets forth a three[-]year statute of limitations for the filing of worker’s [sic] compensation claims, act as a bar  to the presentation of evidence of work activities that took place more than three years prior to date of accident, or manifestation date, of a repetitive[-]trauma injury?” (PPG at ¶12). The Appellate Court held no such evidentiary limitation existed stating, “It stands to reason that a claimant's work history may be necessary and relevant to determining whether she sustained a work-related, gradual injury.” (¶19). And further noting, “a claimant’s work history has been routinely considered in repetitive trauma cases, including work history that extended beyond three years prior to an alleged manifestation date.”  (Id.) Logically, the bar of such evidence would preclude Petitioner from testifying to any causation issues prior to a claim on which the three year statute is about to run. In our opinion, the Appellate Court reached the proper conclusion.

Though it seems incredible this question was granted an audience of such esteem, it is good to see the issue of evidence coming to the forefront of workers’ compensation litigation. The Administrative Procedure Act relaxes the standards of evidence in our forum, but its statutory constructionists hardly contemplated allowing proceedings to run amok, allowing clearly inadmissible evidence entrance to the record and denying admissible evidence its rightful consideration.

This article was researched and written by Lindsay Vanderford, J.D. Lindsay recently passed the IL Bar and will be sworn in as a licensed IL attorney and become the newest member of our defense team shortly. She can be reached at lvanderford@keefe-law.com for questions, comments and congratulations.