7-20-2015: Signs of the Gov't Apocalypse are Nigh--Can We Reform IL Gov't Pensions?; Lindsay Vanderford on an Important Employment Retaliation Ruling; New Development in IL Speeding Sentencing and...

Synopsis: Signs of the IL Gov’t Apocalypse Are All Around—Can We Reform Our Gov’t Pensions in Time?

Editor’s comment: If you are watching the news closely, you may note:

·         The Chicago Public Schools just passed an annual “budget” including $500M in ghost dollars they admittedly don’t have. Unless they can borrow a $1B+ as announced today, the school system is certain to shut down in the middle of the year when they run out of “actual” money;

·         Chicago Mayor Rahm Emanuel just borrowed over $1B at 8% interest to make a state-required pension payment and otherwise keep the City operating—you may note the cost of borrowing another billion for Chicago taxpayers is going to be $80M. The City doesn’t have $80M to make the interest payments and taxes are certain to skyrocket at some future point.

·         Cook County Board Chair Toni Preckwinkle just raised County sales tax so it is again in double-figures, making it one of the highest sales tax rates in the U.S.

State and local governments in Illinois are borrowing billions and raising old taxes and finding new things to tax primarily for one reason—fake pensions.

What is Financially Killing Chicago and the State of Illinois?--Fake Pensions.

Illinois had six statewide fake pension systems as of April 2015:

·         Illinois State Employees Retirement System;

·         Illinois General Assembly Retirement System;

·         Illinois Judges Retirement System;

·         Illinois Teachers Retirement System;

·         Illinois University Retirement System;

·         Illinois Municipal Retirement Fund.

In addition to the aforementioned state-level pension systems, there were 650 locally administered fake pension systems in Illinois. As of 2013, total membership in Illinois hundreds of government pension systems totaled 961,952. To our knowledge, no state in the U.S. (or probably the world) has even close to that many different pension programs. In the WC/Disability arena, there are two fake pension programs—line-of-duty disability fake pensions for police and firefighters along with “odd-lot” total and permanent disability pensions. If you don’t understand why those are fake pensions, send a reply.

Why Do We Call Them “Fake” Pensions?

It is easy—real pensions should be “funded” or to be more precise—“prefunded” from three sources. Participant contributions, “matching” contributions from the respective government body and interest income earned any time. The problem with Illinois’ challenging government pensions is many of them have been “deformed” with two virtually impossible-to-fund retirement benefits: 85% of highest salary payouts with 3% compounded annual increases. If you do the math, if you give someone an 85% pension and then provide 3% annual compounded increases, in less than five years of retirement, they are making as much as they made while working. And the 3% compounded increase means their annual pension payout will unquestionably double, triple and quadruple if they live long enough.

So let’s take a simple example—a Chicago public school teacher. They make $80K a year. If they retire at 85% of their pay, they will get $68K the first year. They only contribute 2% of their annual income to the pension program or about $1,600 a year. To provide them $68K in annual income, you have to pre-fund each vested teachers’ pension to the tune of about $1.5M. If you do the math, you have to pay them salary of $80K a year and also “double-pay” them another $80K a year to get to the kitty of $1.5M. That amount doesn’t cover the 3% compounded annual increases. We estimate to cover those increases, the Chicago Public School system would have to invest over $100K each year a retiree works until vested to fully pre-fund their pensions. As we have advised, we feel the IL state legislative and judicial pensions require state contributions for each participant of around $500K a year or more to pre-fund those pensions due to their inconceivably short vesting periods.

We assure you appropriate pre-funding isn’t close to happening, which is why we call IL government pensions “fake.” Across-the-board Illinois government pensions aren’t even 50% “pre-funded” so more than half of the continuing payout or “back-funding” is from current tax dollars. What is happening is the lack of pre-funding is causing the fake pension payouts and borrowing to be paid by unsuspecting taxpayers for decades after government workers have retired. And government officials/legislators are reluctant to explain this to you or raise your taxes so you will get mad at them for higher taxes. So what we are all seeing is our legislators and administrators borrowing billions and billions to fund it. What they aren’t doing is anything to stop this impending disaster. We assure our readers the problem is starting to dramatically threaten the entire state and all local government bodies.

Please Don’t Blame the Participants!

We caution everyone, you can’t get mad at the pension participants. From our perspective, the vast majority of them are innocent and had no direct role in the pensions becoming unglued and billions being borrowed. They have a right to some certainty in their retirement programs. We hope they are starting to read articles like this and join with the rest of us to get this disaster averted. We also want everyone to be sure—this isn’t a Democrat or Republican issue. It is simple finance—our state/local governments are all pointed toward chaos and are certain to sink to the bottom of the ocean, as the “unsinkable” RMS Titanic did a little over 100 years ago. Someone has to restart the whole concept and we haven’t seen anything from either Speaker Madigan or Senate President Cullerton once the IL Supreme Court ruled former Gov. Quinn’s attempts to be unconstitutional.

Governor Rauner has a Plan to Help

The fake pension reform proposed by Governor Rauner could impact more than just public pensions. State and local public workers in Illinois would lose collective bargaining rights for pensions, wages, work hours and tenure through this single reform. The global plan, which Gov. Rauner announced last week, contains significant pension reforms, but also contains measures Bruce Rauner has tried unsuccessfully to get through the legislature. A higher standard of proof for employee injury claims and bankruptcy eligibility for Illinois municipalities are among them. It also allocates funds from a Chicago casino for Chicago police and firefighter pensions even though legislation for a city casino has not been debated during Rauner's time in office.

Here is Governor Rauner's proposal:

1. Removes pensions, wages, hours of work and employee tenure from the collective bargaining process.

2. Applies changes to items removed from collective bargaining:

Wages would not decline for five years.

Vacation resets to two weeks for members with less than 15 years of service, and three weeks for those who have more than 15 years of service.

Adjusts vacancy and overtime rights.

Overtime pay would kick in at 40 hours instead of 37.5 hours, matching federal law.

3. Offers incentives for employees to move to the lower benefit plan:

Salary package - $2,000 transition bonus, one-time $3,000 salary increase, overtime pay at 37.5 hours and no additional vacation days.

Vacation package - $2,000 transition bonus, one-time $2,000 salary increase, overtime pay at 37.5 hours and two additional weeks of vacation

Overtime/vacancy package - $2,000 transition bonus, no salary increase, overtime pay at 37.5 hours, two additional weeks of vacation; priority rights in work schedule, vacation, overtime and "bumping."

4. Those now eligible for the highest pension benefits (in the Tier 1 plan that applies to employees hired before 2011) would have to choose between switching to a reduced cost of living adjustment in retirement or agreeing all future salary increases will be excluded from their pension calculations. Under current law, they receive a 3 percent, annually compounded increase in their pension every year. The new formula would grant annual, non-compounded increases of the lesser of 3 percent or half the U.S. Consumer Price Index.

5. Employees in Cook County would have to choose between the pension plan introduced by the County-except for the aforementioned collective bargaining changes-or choose between a reduced COLA benefit or agree all future salary increases are excluded from pension benefit calculations.

6. The funding schedule for Chicago Police and Fire pensions would change from the current target of 90 percent by 2040 to 90 percent by 2055, including a five-year period from fiscal year 2016 to fiscal year 2021 where mandatory pension payments are set in statute.

7. Downstate police and fire pension funding schedules would also change to 90 percent funded by 2055.

8. Transfers the investment assets of 642 individual downstate police and fire pension funds to the $35.6 billion Illinois Municipal Retirement Fund. The state's police and fire pension funds would remain independent entities administered apart from IMRF.

9. Changes the definition of catastrophic injury in the Public Safety Employee Benefit Act so it clearly states that such an injury would preclude the injured employee from performing gainful work.

10. Newly hired public safety employees would receive Tier 3 benefits, which is a hybrid defined-benefit and defined-contribution plan with local control on defined contribution benefits.

If you don’t think this is important, you are not thinking very much or you don’t care about the foibles of Illinois and the City of Chicago. Something has to be done and very soon. We consider pension reform to be the only path to “save” Illinois government. We assure our readers what happened in the country of Greece, the City of Detroit and five cities in California can and will happen here, if nothing is done.

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

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Synopsis: No Evidence, No Retaliation. The federal Seventh Circuit affirms summary judgment against employees alleging race discrimination retaliation in failure to promote claims. Thoughts and Analysis by Lindsay R. Vanderford, JD.

Editor’s comment: In Burks v. Union Pacific Railway Co., the Seventh Circuit struck down two Union Pacific employees’ unsound attempts to claim that they were retaliated against under Union Pacific’s promotion process. The Seventh Circuit Court of Appeals found that Magistrate Judge Maria Valdez did not err in granting Union Pacific's motion for summary judgment in an action alleging that defendant retaliated against two employees by denying them requested promotions. Union Pacific employed Frank Burks and Cornelius Jones.  They claimed that Union Pacific denied them the opportunity to take a test that was required for promotion and did so based on impermissible retaliation.

The promotion process took place in two ways:

1) the external process, and

2) the internal process.

Both employees chose to use the internal process. Under the internal route, the employee could apply into a centralized applicant pool. That pool would be open only to current Union Pacific employees. If an Assistant Signal Person position became available in the applicant’s seniority district, the employee would be invited to take the required test. Applications to the pool eventually expire, after which time an applicant must reapply if he remains interested in taking the test. Both employees had made prior complaints of racial discrimination on the job.

In order to get to a trial, the employees should have proffered evidence of unlawful retaliation. To do so, they could have proceeded under the direct method or indirect method of proof. Under the direct method, the employees could have provided either “smoking gun” or circumstantial evidence. Under the indirect method, the employees could have proceeded under the well-established burden-shifting method.

The record showed:

(1) certain individuals responsible for giving one employee information about the application process were unaware of any prior protest of race discrimination; and

(2) there were no available positions within that employee’s district while that plaintiff had an application on file.

Also, the second employee could provide only speculation that defendant's losing of his application was motivated by prior complaint of race discrimination. He also failed to submit any evidence that anyone providing him with information regarding the application process was aware of his prior complaint of discrimination. Without evidence of awareness or available positions that would have prompted the necessary invitations, both claims were denied as no material factual issues existed. Accordingly, the Seventh Circuit affirmed the District Court’s entry of summary judgment on Union Pacific’s behalf.

The Seventh Circuit saw the employees’ claims for what they were, lacking any evidentiary support.  Although it was unnecessary for the employees to prove their case at the summary judgment stage, they still needed to bring forth enough evidence to demonstrate that there were material issues of fact ripe for a jury’s consideration. As the Union Pacific employees could not do so, their claims were tossed out of court.

This article was researched and written by Lindsay R. Vanderford, J.D.  Lindsay can be reached with any questions related to workers’ compensation defense and employment law defense at lvanderford@keefe-law.com.

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Synopsis: There May Be Hope for IL Speeders Seeking Court Supervision After New Circuit Court Ruling.

Editor’s comment: The IL Legislature recently enacted a relatively draconian sentencing law for folks who are caught driving too fast. Now a Cook County judge found the law precluding court supervision for “excessive speeding” unconstitutional.

In People v. Rizzo, Defendant was charged with speeding well over the posted speed limit. In his motion, he argued our new aggravated speeding statute is unconstitutional as violating both Due Process and Equal Protection, and preclusion of court supervision on the charge violates the proportionate penalties clause of the Illinois Constitution. In the Circuit Court's Memorandum Decision and Order, Judge Gubin rejected Defendant’s first argument. She found, given the “serious problems that individuals operating a vehicle at excessive speed can cause,” Illinois had a legitimate interest in enacting legislation designating speeding more than 25 mph over the limit as a Class B misdemeanor, and 35 mph and more over as a Class A crime.

Judge Gubin went on to address Defendant’s argument that aggravated speeding is identical to reckless driving, and, because reckless driving is eligible for court supervision and aggravated speeding is not, the result is a violation of the proportionate penalties clause: “All penalties shall be determined both according to the seriousness of the offense and with the objective of restoring the offender to useful citizenship.” Judge Gubin rejected that argument, as a charge of reckless driving has an element of willful and wanton disregard for the safety of persons and property, while aggravated speeding does not contain such an element, thus the charges are not identical.

The Judge went on to rule the prohibition on court supervision for aggravated speeding was an unconstitutional violation of the proportionate penalties clause because it is cruel and degrading. She listed the charges for which court supervision was unavailable, noting many of them arise from crimes which involve bodily injury. She also confirmed offenses for which court supervision was continuously available include driving while suspended or revoked, driving under the influence, and theft.

Judge Gubin concluded mandating a misdemeanor conviction on a first offense, and not allowing a judge to consider mitigating factors, resulting in a non-expungable, permanent criminal conviction, with ongoing ramifications in many areas of a person’s life, is cruel and degrading, and therefore unconstitutional.

Please note we are reporting this important development as some of our colleagues, clients and their families have faced sentencing under this new law. We aren’t trying to encourage speeding or reckless driving—we want our readers to know the law has been struck down by one judge in one county. We don’t know what the Appellate or Supreme Courts may do with the ruling, should it reach those levels.

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

7-13-15; OMG-LOL, Great IL WC Statistical News--Not Another IL WC Committee!?; Dan Boddicker on Iowa Sup. Court WC on Surveillance; Jim Egan on 19H v. 19G IL WC Ruling; Get New IL/IN Rate Sheets...

Synopsis: OMG-LOL—Great IL WC Statistical News; Some New IL WC Legislative Recommendations but Please Not Another Illinois Workers’ Comp Committee!!?

Editor’s comment: Great news for Illinois businesses, insurance carriers/TPA’s and government bodies—the IWCC’s 2014 Annual Report is out and indicates there has been a 19% drop in IL WC costs since 2011! There has been a 16% drop in medical costs for the most recent statistical period of 2010-2012. We truly consider this solid news for our defense clients and we expect more progress in the days/months/years to come.

We do feel the every-other-year report from the State of Oregon is a solid statistical comparison of where Illinois stands in relation to other states but please remember their analysis becomes stale as the years roll forward—their last analysis on WC insurance premiums are for research/statistics from 2013 and prior. We are certain IL WC will be much closer to the middle when the report from Oregon next year is issued. In contrast, this new annual report from the IWCC is dramatically more current and outlines scientifically significant news on great progress in our state’s WC system. Take a look online at http://www.iwcc.il.gov/annualreportFY14.pdf

Over the weekend, we also saw various new changes to the proposed IL WC reform legislation coming from the Republicans in Springfield. Once again, we like some of them but have issues with two main changes, as we outline below. The new legislation is HB 4248. You can review it only at http://www.ilga.gov/legislation/99/HB/PDF/09900HB4248lv.pdf

The Proposed Legislation maintains the prior Republican proposals on

Ø  “Causation” or the requirement an accidental injury arises in a situation where the work is felt to be the major contributing cause of the deleterious and work-related medical condition—we feel this legislative change is unnecessary and could be easily and rapidly implemented on an administrative level;

Ø  “Traveling employee” coverage is somewhat confusingly defined but is designed to insure a worker who is “traveling” is only covered for injuries or illnesses when they are actually working, engaged in a work-related risk and not on a paid or unpaid break—we do agree with this legislative effort to rein in the more expansive interpretation seen by some reviewing courts. We also reassert that such a statutory change would be unnecessary if the current statutory construction were strictly construed;

Ø  Credit for any award or settlement under Section 8(d-2) of the IL WC Act.—again, we agree with this concept and hope injuries to the shoulder will again become loss of use of the arm and not loss of use to the body. Again, we feel our legislature is reining in the reviewing courts;

Ø  Medical services covered under the IL WC Act are going to be cut 30% more on June 1, 2016—please note this reduction is infuriating physicians and healthcare givers across our state who provide care to injured workers. We understand it is designed to match what group healthcare providers pay in medical reimbursements—every doctor we have discussed this with affirms there are lots more charges and issues with providing work comp care and the legislation is matching apples to oranges. Many doctors may turn down WC claimants if the reimbursements are not sufficient to cover their growing costs. Please also note Dr. David Fletcher of SafeWorks has written numerous articles contesting the basis for these additional cuts.

New and solid legislative recommendations:

v  No Impairment rating required for the Arb to write PPD. Not a major issue for anyone.

v  Electronic claims for payment of medical care—we assume docs and hospitals will still be mad at our legislators and lawyers but this legislation does appear to be a step forward;

v  State of IL and lots of government agencies and WC funds do not have to file WC appeal bonds—this clarifies what we consider to be a poorly reasoned ruling from our reviewing courts where they contradictorily found an injury claim legally wasn’t a work comp injury but then stripped out their ability to reverse the award due to the failure of the State to file an appeal bond for the fund it represented;

v  WC Fraud investigation and recommendations for prosecution are moving to the IWCC from the inert and hilariously inept IL Dep’t of Insurance that never wanted to handle this any way; and

v  The IWCC is supposed to get a slick new computer system with lots of new super-fast online stuff.

A new proposed IL WC Ombudsman Program

This concept is interesting but truly isn’t needed. If you grab a dictionary, you will note an ombudsman or public advocate is someone appointed with a degree of independence, who is charged with investigating and addressing complaints of maladministration or a perceived violation of rights. Here is the new proposed legislation:

Sec. 14.2. Workers' Compensation Ombudsman Program.

(a) The Illinois Workers' Compensation Commission shall establish  the  Workers'  Compensation  Ombudsman  Program  as a program within the Commission no later than July 1, 2016. The Ombudsman Program shall provide assistance to all regions of the  State. The Ombudsman  Program  shall  be  staffed  with personnel who are trained in techniques performed by ombudsmen and who are familiar with the Commission.

The Ombudsman Program may:

(1)  assist  injured  workers  with  the  use  of  the Commission's information portal;

(2) provide information to employers, employees, and medical   provider   with   questions   about   workers' compensation fraud;

(3) assist injured employees with referral to local, State, and federal financial assistance, rehabilitation, and  work  placement  programs,  as  well  as  other  social services that the Ombudsman Program considers appropriate;

(4) respond to inquiries and complaints relative to the workers' compensation program; and

(5)  serve  as  an  information  source  for  employees, employers,   medical,   vocational,   and   rehabilitation personnel,  insurers,  third-party  administrators,  and self-insurers.

(b) Individuals within the Ombudsman Program may not appear or intervene, as a party or otherwise, before the Commission on behalf of an injured employee, employer, or medical provider.

This Section shall not construed as requiring or allowing legal representation for an injured employee by the Ombudsman Program in any proceeding for the Commission.

Our concern with this program is the State already has an IL WC ‘Ombudsman’ and we don’t need another one. If you aren’t sure, her name is Joann Fratianni-Atsaves and she is the current IWCC chair. Joann is brilliant, tough and fair. There is no maladministration that might occur under her watch. She has lots of folks running around what we feel could be a smaller and streamlined agency who are currently doing good things—we suspect she has some of them acting as ombudsmen already. We see no reason for legislation to do anything outlined in the proposal above that can’t already be done. We recommend Governor Rauner call the great IWCC Chair he appointed and have her start doing all this stuff today/pronto.

WEARING IL WC Out

The final new proposal we have to make fun of is what they are calling the WEAR Commission. We aren’t sure which legislative intern came up with this idea but we hope the idea “wears off”—if you get the pun. The legislation seeks to create the  Workers'  Compensation Edit, Alignment, and Reform Commission, which shall be known as the WEAR Commission. The  purpose  of  the  WEAR  Commission is to develop a proposed recodification of the IL Workers' Compensation Act.

We point out the IWCC is a ‘commission’ itself. The IL WC Commission has lots of boards, blue-ribbon panels and commissions underneath it. They have a:

1.    WC Commission Review Board

2.    Self-Insurers Advisory Board

3.    Workers' Compensation Advisory Board

4.    Workers’ Compensation Commission

5.    Workers' Compensation Medical Fee Advisory Board

As we have repeatedly advised our readers the 2011 Amendments added a seventh committee/commission/blue ribbon panel named the Illinois State Workers' Compensation Program Advisory Board. That board has 13 members and it took about a year to get them empaneled. To our knowledge, they have never met, not even once. The problems they were appointed to attack were the hilariously high overpayment of WC benefits to Illinois state workers. Those problems remain today. This dysfunctional board is our main issue with the new WEAR Commission—are they going to meet and actually do anything?

In our view, if a proposed recodification of the IL WC Act is needed, have the nine veteran and knowledgeable members and the Chair of the bipartisan IL WC Commission handle the concept, hold hearings and propose it. We understand they are busy and hard-working folks but we know they are also devoted to their tasks. We don’t feel another “will-this-work-and-will-we-show-up” committee is a solid legislative concept. While it sounds good to the masses, it is probably all Springfield PR fluff.

We appreciate your thoughts and comments. Please post them on our award-winning blog at www.keefe-law.com/blog.

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Synopsis: Iowa Supreme Court Rules Surveillance of Injured Workers Obtained by Employers and Insurers Doesn’t Have to Be Disclosed Prior to Hearing. Analysis by Dan Boddicker, J.D., A former Hawkeye and our Iowa WC Defense Team Leader.

Editor’s comment: Recently, the Supreme Court of Iowa decided the issue of whether the Iowa Division of Workers' Compensation correctly interpreted Iowa Code section 85.27(2) as overriding the work product immunity and requiring the disclosure of surveillance video of any claimant seeking workers’ compensation benefits before deposition in the negative. Their highest Court concluded Iowa Code section 85.27(2) is limited to health-care related privileges such as the physician-patient privilege and does not affect privileges and protections related to the litigation process such as the work product doctrine.

In Iowa Insurance Institute, et al v. Core Group of the Iowa Association for Justice, et al, No. 13-1627, June 12, 2015, the Iowa Supreme Court upheld work product doctrine immunity with regard to disclosure of surveillance video before a medical or lay deposition in its opinion which limited Iowa Code section 85.27(2).

The Iowa Insurance Institute case was started when Christopher J. Godfrey, Iowa Division Workers’ Compensation Commissioner, ruled on a petition for declaratory order concluding Iowa Code section 85.27(2) applies to surveillance materials and waives the work product privilege except to the extent that requested materials contain mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation. The Commissioner concluded employers or insurers must produce surveillance materials upon request from a claimant and may not withhold the materials until after deposing the claimant.

The Court noted the Iowa standard that if a document or tangible thing may fairly be said to have been prepared or obtained because litigation is foreseeable or ongoing, it constitutes work product. The Court agreed that in Iowa surveillance materials are protected as work product, at least initially. The Court stated that surveillance lose the status of protected work product once a determination is made that the surveillance will be used at trial.

The Supreme Court used statutory interpretation to interpret Iowa Code section as being limited to health care provider records and held the declaratory order of Commissioner Godfrey erroneously determined the Iowa Code section 85.27(2) applies to surveillance.

We consider this ruling to be favorable to Iowa business and government entities who can save surveillance until they choose to disclose it.

This article was researched and written by Daniel J. Boddicker, J.D. Dan can be reached for questions, concerns or discussion of Iowa workers’ comp, general liability and employment law at dboddicker@keefe-law.com.

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Synopsis: Petition to Modify IL WC Award Doesn’t Block Claim for Judgment to Collect Undisputed Amounts. Analysis by Jim Egan, J.D.

Editor’s comment: The Illinois Appellate Court has ruled that the fact an injured workers’ petition to modify an award of benefits is pending does preclude the trial judge of jurisdiction to enter a judgment for payment of that award.

In a published decision, Sunrise Assisted Living v Banach, No. 11-MR-1348, the IL Appellate Court held the filing of a 19(h) petition is not a petition for review as considered by 19(g), which would bar a judge from entering a judgment on an award.

Claimant Banach worked for Sunrise Assisted Living and filed a workers' compensation claim after suffering a serious on-the-job injury in March 2007. An arbitrator determined she was entitled to temporary total disability benefits of $250.00 per week for 107 5/7 weeks; permanent partial disability benefits of 45% BAW totaling 225 weeks at the PPD rate of $225.00; $322,922 for her medical expenses; and $1,520 in interest. IWCC upheld the award, as did the Circuit Court and the Appellate Court. Sunrise then paid the award in three installments.

While the case was pending at the Appellate Court, Claimant filed a petition to modify the award due to an alleged worsening of her condition, requesting additional benefits. After employer Sunrise made payment, but before the Commission ruled on her modification petition, Claimant filed an application in the trial court for a judgment on the original award. She also demanded payment of an additional $56,395 as interest that accrued after the date the Commission upheld her award, until Sunrise paid her award.

Sunrise moved to dismiss the application for judgment, arguing the trial court lacked jurisdiction over the matter since Banach’s petition for modification was still pending. It also insisted it owed no additional post-award interest. The trial judge agreed with Sunrise's later argument and denied Banach's request for additional interest.

Analysis: In ruling the trial judge could not enter judgment on a workers' compensation award while the Commission was reviewing whether that award is proper, but judgment on the original award may be entered when the Commission is deciding whether a material change in circumstances warrants a prospective modification, The Appellate Court followed the 1978 ruling in Ahlers v Sears Roebuck Co., 73 Ill. 2d 259,262. In Ahlers, the Court held the prospective nature of a 19(h) petition was different from the subject matter contemplated by 19(g). Accordingly the Court held the Circuit Court judge properly found he had jurisdiction to rule on Banach's application for judgment.

The Court then went on to say that the judge properly found Banach wasn't entitled to additional interest because Sunrise had paid her award before Banach filed her application for judgment.

From a technical perspective, we remain concerned the petition to modify benefits doesn’t guarantee the current amounts due—it could be possible for the IL WC Commission to either increase or reduce the prior amounts at issue. This ruling seems to contemplate only an increase was possible.

This article was researched and drafted by Jim Egan, J.D. Jim can be reached for comment and questions at jegan@keefe-law.com. Please also consider posting questions and concerns on our award-winning blog.

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Synopsis: New IL and IN WC Rate Sheets due out any day—sign up!!

Editor’s comment: Shawn R. Biery, J.D., MSCC and Kevin Boyle, J.D. issue new and updated workers’ comp rate sheets for the states of Illinois and Indiana, respectively. Feel free to sign up for this free and helpful claims information—we will send it as soon as you ask for it. Shawn can be reached at sbiery@keefe-law.com. Kevin is at kboyle@keefe-law.com.

7-6-15; UPS Wins FMLA Beef with Great Documentation, analysis by Brad Smith; Nathan Bernard Reviews Credit Dispute in Death Claim; What is the Correct Year for Wage Loss Calc by Pankhuri Parti and...

Synopsis: Document! Document!  Document! Federal Judge Tosses Former Employee’s FMLA Claim Against UPS Due to Repeated And Well-Documented Performance Issues. Analysis by Bradley J. Smith, J.D.

Editor’s comment: In Parks v. UPS Supply Chain Solutions, Inc., the United States District Court for the Eastern District of Kentucky entered summary judgment on UPS’ behalf related to its former employee, Gene Parks claims for retaliation under the Family Medical Leave Act (“FMLA”), 29 U.S.C. § 2601, et seq. While certain claims remained pending under the FMLA (i.e., interference claim) and the Americans with Disabilities Act (“ADA”) (i.e., failure to accommodate claim), the District Court commended UPS on their documentation and other evidence demonstrating their progressive disciplinary plans. Particularly, the plethora of evidence related to Parks’ repeated performance issues were UPS’ legitimate reason for termination.

UPS hired Parks in February 1999 to work at its Hebron campus as a material handler assigned to UPS’ Honeywell account. His job duties included driving a forklift, moving boxes, picking products, and controlling inventory. From 2002 through and including 2009, Parks’ supervisors filled out fifteen SCS Discrepancy Forms detailing his errors in pallet building, putaway and labeling. In 2009, UPS lost its account with Honeywell. Consequently, UPS transferred Parks to the Birkenstock account. He was still a material handler with new supervisors overseeing his work.

Parks received numerous written warnings over the remainder of his time with UPS. Finally, after reviewing the numerous performance issues and a final warning, UPS decided to terminate Parks. At the time of his termination, he reiterated that he would be scheduled for surgery related to a spine issue within the coming months and needed UPS' insurance to cover his medicals costs for the surgery. UPS tendered him a COBRA package at the time of termination, but Parks immediately threw it away asserting it was “unaffordable."

During Parks’ employment, he was approved for, and also took numerous leaves of absence. Specifically, in late 2003, he was on a leave of absence for an allergic reaction and a blood clot. He also had leave of absences in July 2003 and November 2004 to deal with complications from a shoulder injury that derived from a prior car accident. In June 2004, January 2005, and February 2006, UPS gave Parks more time off to care for his wife’s serious medical issues. Notably, UPS never interfered with him taking leave on those occasions. UPS granted Parks FMLA intermittent leave in February 2010 for neck pain.

The District Court analyzed the retaliation claims under the well-established McDonnell-Douglas standard to determine whether Parks’ FMLA retaliation claim would survive summary judgment. Although it was easy for Parks to meet his prima facie case of retaliation under the first prong of the test—due to the timing of his termination—in response to UPS bringing forth legitimate and repeated performance issues demonstrating their reasons for terminating Parks, Parks failed to demonstrate any pretext. Accordingly, the district court granted UPS summary judgment and dismissed Parks’ FMLA retaliation claims.

Despite the survival of a portion of Parks’ claims, UPS demonstrated a proper progressive disciplinary plan (both in procedural rules and subjective application). Importantly, UPS maintained records of its prior performance issues with Parks, and also implemented progressive discipline due to his numerous performance issues. Had UPS not properly documented this process, it arguably would have been easier for Parks to demonstrate a material issue of fact requiring a jury trial. Instead, due to the plethora of documentation and testimony related to legitimate performance issues, UPS was able to demonstrate that it maintained legitimate reasons for terminating Parks.

We want our readers to know the defense team at KCB&A handles more than work comp in defending our clients. This article was researched and written by Bradley J. Smith. Brad can be reached for questions, concerns, or discussion regarding the defense of  FMLA, employment law, and general liability claims at bsmith@keefe-law.com.

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Synopsis: Prevent Double Dipping! It Is Imperative Work Comp Settlement Contracts or Commission Decisions Clearly Reflect Credit to be Taken from Final Payment.

Editor’s comment: In the Estate of Burns v. Consolidation Coal Company, 2015 IL App (5th) 140503 (June 30, 2015), the Fifth District Appellate Court clarified how an employer is entitled to offset the amount of federal claim benefits paid at the same time state workers' compensation benefits were paid. To be very clear, it is NOT by verbal agreement between the parties. Be warned, this may not adequately protect an employer from still having to pay the full amount of the award, and then seek significantly increased litigation costs to recoup any potential credit from benefits that may have overlapped from two or more sources, to prevent what is called “Double Recovery”. Further, even if the credit is stipulated to by the parties at hearing, or documented in a settlement contract approved by an Arbitrator/Commissioner, it still may not be enough to prevent the continued time and expense of having to seek the credit via the proper channels, but the defense team here at KCB&A strongly recommend it as absolutely necessary to protect your statutory credit in order to seek to offset it later.

Nota bene (note well): In claims dealing with a potential credit, be prepared to pay the award/settlement in full to avoid the risk of penalties and fees for nonpayment. Then you must file suit to offset any credit. Make sure there is adequate written documentation in the record (or contracts) of that credit at every level of the litigation process.

In the case at bar, and to attempt to make a long story short as the procedural history is somewhat convoluted, the estate of a deceased Petitioner was awarded death benefits and burial expenses under the Workers' Occupational Diseases Act after the deceased Petitioner died as a result of diseases arising out of his employment as a coal miner for 38 years. The employer also conceded liability in a concurrent federal claim which paid the widow amounts during periods of the same time the WC benefits were received. Specifically, the estate received federal death benefits from the U.S. Department of Labor via the Black Lung Trust Fund. Apparently, when the employer went to pay the WC award they had a verbal agreement with Petitioner’s counsel who handled both the state WC claim and Federal Black Lung claim that they would subtract the Black Lung credit and just issue the WC check for the remainder amount.

Admittedly, in a the majority of these claims this is a non-issue and may likely be the more practical approach rather than suing the estate to re-coup the overpayment resulting in even further litigation and distress to all parties. The testimony regarding this oral agreement was that it was reached between the attorneys of both parties "because it's the same agreement we reach in all of these death cases where there is a federal claim and there are benefits that overlap." Simply put, there is no dispute the employer is entitled to the credit. But this short-cut approach to recouping credit was found to be improper after disputes arose when the handling partner for the estate left the firm and the estate claimed they were never aware of the credit to be taken, which they then objected to and filed a Section 19(g) motion to obtain a state judgment on the amount claimed.

When an employer fails or refuses to pay a final award, Section 19(g) provides a statutory remedy to enforce the judgment in the Circuit Court. Commission approval of a settlement agreement constitutes a decision of the Commission and is the equivalent of an award within the meaning of Section 19(g). However, in the context of a Section 19(g) proceeding, the Court can only consider the plain language of the decision or settlement agreement.

Here, initially the employer made no claim for credit and did not present any evidence, or later in the appeal sufficient evidence, of the oral agreement between counsels. Neither the Arbitrator's order nor the Commission's decision makes any reference to credit claimed. Had the credit been presented to the Commission and approved by it at hearing, or even by a settlement agreement approved by the Commission, it would be an award within the meaning of Section 19(g). However, because the credit was not presented, either via an approved settlement agreement or at hearing, in the context of a Section 19(g) proceeding, the Court could only review the Commission's award or approved settlement contract.

Importantly, even if the credit had been documented, the Code of Federal Regulations in this specific claim, provided a mechanism for the recovery of any overpayment of federal black lung claims, NOT in a Section 19(g) proceeding. Again, there is no dispute the employer is entitled to the credit. While an employer may ultimately obtain a credit, it is not entitled to that credit in a proceeding under Section 19(g) and may still have to pay the full amount of any award, then properly seek to assert that credit elsewhere via proper channels. This is true even if the award/settlement documents the credit clearly.

This article was researched and written by Nathan S. Bernard, J.D. Please feel free to contact Nathan at (312) 756-3726 or nbernard@keefe-law.com with any comments, questions, or concerns.

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Synopsis: The IL Appellate Court, WC Division Held the Weekly Wage Differential Benefit an Injured Worker Receives Is Based On the Statewide Average Weekly Wage For The Year The Worker Was Injured. Thoughts and Analysis by Pankhuri K. Parti, JD.

Editor’s comment: In a decision confirming the intent of the legislators while writing the Workers’ Compensation Act, the Appellate Court upheld a decision of the Commission when it ruled the date of the claimant’s injury controlled the maximum rate of wage differential benefits the claimant could receive.

We believe this to be a positive outcome for the employers and insurers of Illinois, who would have had to pay much higher wage-differential benefits had the Court not limited the benefits to the maximum rate applicable at the time of the injury. This is especially true as the maximum rates for the benefits are adjusted yearly and cases can take up to six years to go through the entire appeals process.  

Facts and Procedural History: According to the undisputed facts of the case, the claimant was injured acting in his capacity as a hoisting engineer when he fell to the ground from a height of several feet and sustained injuries to his right shoulder and cervical spine. He received treatment and underwent surgery on his right shoulder in February 2007 and spinal fusion surgeries in December 2007 and June 2008. A functional capacity evaluation eventually found him capable of working light to medium duty and permanent restrictions were recommended, which precluded him from returning to work as a hoisting engineer. Evidence presented during arbitration showed at the time of the arbitration the rate of pay for a hoisting engineer with the employer was $45.10 per hour.

In her decision the Arbitrator found Claimant has suffered an injury arising out of and in the course of his employment. It was also found Claimant was entitled to wage differential benefits since he was permanently partially incapacitated from pursuing his usual and customary employment. Specifically, and more relevant to this article, the Arbitrator awarded $982.67 per week. Upon an appeal, the Commission modified this decision by reducing the figure to $840.65, the maximum weekly benefit allowable under section 8(b)(4) of the Act based on the claimant’s 2006 injury date. This rate was also affirmed by the Circuit Court.

The Decision: In appealing this modification of the Arbitrator’s decision, Claimant argued the maximum rate applicable to his award should be based on the State AWW at the time of his May 2012 arbitration hearing rather that the State AWW at the time of his December 2006 accidental injury.

In reaching its decision the Appellate Court looked at the language of the Act and considered the issue one of statutory interpretation. It quoted Section 8(d)(1) of the Act and stated the language made it clear the section was limited by the maximum amounts fixed in paragraph 8(b) of the IL WC Act and case law had long since established the maximum rates set forth in section 8(b)(4) of the Act were applicable to the wage differential awards. The Court also held the amendments effective July, 20 2005 had included express language concerning wage differential awards and the maximum wage differential benefits were 100% of the State AWW in covered industries under the Unemployment Insurance Act.

The Court also disagreed with Claimant’s argument since the Act had been consistently interpreted to require wage-differential awards to be calculated based upon the claimant’s earnings at the time of the hearing, the legislature must have intended the State AWW at the time of the arbitration hearing to be used to determine the wage-differential benefits. While the Court agreed prior decisions ruled it was the employee’s earnings at the time of the arbitration hearing which determined wage-differential awards, it also felt Claimant’s situation was distinguishable from those instances since it involved the application of the appropriate maximum rate under the IL WC Act.

It was the opinion of the Court Claimant failed to provide any authority in support of his arguments and its own review of the applicable case law reflected the opposite – it was the date of the injury which controlled the maximum rate applicable. While citing numerous opinions in support of its decision, the Court also referred to a Supreme Court decision in Grigsby v. Industrial Comm’n wherein the Court held the law in effect time of the injury determined the rights of the parties. Finally, the Appellate Court noted if the legislature had wanted the date of the hearing to control the applicable maximum benefits rates, it would have amended the language of the Act when it enacted its amendments in July 2005.

The Appellate Court also disagreed with Claimant’s argument that limiting an employee’s wage differential to the State AWW at the time of the injury was against the Act’s purpose of thoroughly compensating the injured workers. Claimant argued the State AWW at the time of the injury placed him in the financial condition he would have been in if the injury had never occurred. While the Court agreed with this, it noted the purpose of Section 8(b)(4) of the Act was to limit recoveries and depending on the facts of each particular case, the application of the maximum rates could result in no change to the wage-differential award, a significant decrease to the award, or something in between. As a result the Appellate Court found claimant’s arguments to be unpersuasive and not worthy of reversing the decision of the Commission.

This article was researched and written by Pankhuri K. Parti, JD. You can reach Pankhuri 24/7/365 for questions about WC at pparti@keefe-law.com.