August 03, 2015

8-3-15; A Worker Died in Our Workplace! What Do We Do?; USDC Tosses Removal Petition Due to WC Counts Fraudulently Pled; Third Party Liability Might Remain Even if "Umbrella" Approach Used and more

August 03, 2015/ Eugene Keefe

Synopsis: Our Worker Died in the Workplace! What Do We Have to Do?

Editor’s comment: U.S. Bureau of Labor Statistics (BLS) preliminary data show 4,383 workers were killed on the job in 2012, fewer than in 2011 (4,693) and far fewer than in 2008, when there were 5,071 workplace fatalities. The 2012 total represents the second lowest preliminary total since the BLS first started collecting this data in 1992. Experts attribute the significant drop to the poor economy. However, construction industry deaths increased from 738 to 775. We are confident aggressive OSHA enforcement is causing a continued drop in workplace fatalities. While fatalities are dropping, you still need to be prepared, as the Boy Scouts say.

Here is a brief primer on the process of handling workplace fatalities, work-related or not, for risk and safety managers. If you want this article in a PowerPoint format for easy reference, send a reply. If you want help in handling/investigating/reporting/paying out the early, middle or late stages of a workplace fatality, send a reply or see below.

First, get any needed post-mortem attention for Decedent and the workers around him/her. Remember, the workers who saw or “experienced” the event may also bring claims for the sudden and unexpected shock. Consider getting counselors to assist with grieving and mental/physical recovery from the unforeseen event.

Next, once the situation has stabilized, you have to crank up your most thorough accident investigation. If you don’t have a solid accident investigation form/process, send a reply and we will share our documents at no charge. By definition, any fatality is a serious potential claim(s) and generally merits the highest possible level of investigation. You should include

· Statementizing witnesses to include your workers and members of the public who might be in the area;

· Getting the full and detailed story from supervisors;

· Protection/preservation of the site and materials surrounding the worker’s passing including lock-out/tag-out of equipment involved and

· Safeguarding all surveillance/security video of the hours leading up to and after the event. Remember, if you don’t have cameras at your work site, there are still lots of cameras around us—places like banks and schools may have security videos you can ask them to preserve and produce.

When you are investigating something as serious as a fatality, remember you may also want to demonstrate the absence of things that might have caused or contributed to the worker’s passing. You should record the workplace temperature, outside weather if applicable and the lack of emergent circumstances or overtime being worked by decedent or others around him/her. You may need witnesses to prove it was a normal, boring work day if litigation ensues.

When You Are Sure You Have a Complete and Solid Accident Investigation, You Have to Call OSHA.

Federal regs mandate within eight (8) hours after the death of any employee as a result of a work-related incident, you must report the fatality to the Occupational Safety and Health Administration (OSHA). You must report the fatality, inpatient hospitalization, amputation, or loss of an eye using one of the following methods:

· By telephone or in person to the OSHA Area Office that is nearest to the site of the incident.

· By telephone to the OSHA toll-free central telephone number, 1-800-321-OSHA (1-800-321-6742).

· By electronic submission using the reporting application located on OSHA's public Web site at www.osha.gov.

If the OSHA Area Office is closed, under the federal regs, you cannot and should not leave a voicemail message. You must call either their 800 number listed above or use the reporting application located on OSHA's public Web site at www.osha.gov. When you call or use the application, you must give OSHA the following information for each fatality:

· The establishment name;

· The location of the work-related incident;

· The time of the work-related incident;

· The type of reportable event (i.e., fatality, in-patient hospitalization, amputation, or loss of an eye);

· The number of employees who suffered a fatality, in-patient hospitalization, amputation, or loss of an eye;

· The names of the employees who suffered a fatality, in-patient hospitalization, amputation, or loss of an eye;

· Your company’s contact person and his or her phone number; and

· A brief description of the work-related incident.

If the fatality is part of a motor vehicle accident or MVA, you only have to report the fatality if the MVA occurred in a construction work zone. However, even if the MVA occurred on a public street/highway, you have to record it on your OSHA injury/illness records. The same rules apply if the fatality occurred on a commercial or public transportation system.

Please note you still have to report a workplace fatality to OSHA even if the event was an unforeseen from heart attack. If a fatality occurs within thirty (30) days of a work-related incident, you still need to report the passing to OSHA.

If you need assistance at any time in working with OSHA or reporting an event to them, Brad Smith is the KCB&A Defense team leader who regularly deals with OSHA—Brad can be reached 24/7/365 at (312) 756-3714 or bsmith@keefe-law.com.

What Does Your State Require Us To Do/Pay After a Potentially Work-Related Workplace Fatality?

These laws are unique to each state. KCB&A handles only 5 of the 50 states. We strongly recommend you contact our defense team leader for your state if you are dealing with a fatality. You don’t have to hire our team to simply ask questions on how to best handle an undisputed WC death claim—we can guide you through the statutory maze to insure you are properly following the law and paying what is owed to the correct folks.

For IL claims/risk managers, we feel the 2011 Amendments to the IL WC Act made IL WC death benefits higher than what a widow or widower might eventually need. Right now, a beneficiary gets 25 years of death benefits and can receive such benefits even if they remarry over and over again. We suggest legislation be proposed to require the beneficiary of an IL WC death claim to have to return to the IWCC to demonstrate the continuing need for the employer or insurance carrier/TPA to continue to pay the benefit, at an interval of once every ten years or whatever the General Assembly might decide.

Who Do I Call For Legal Assistance on a WC Death Claim in My State?

For Illinois WC Death Claims, you can contact Gene Keefe at 312 907 8226. You can also simply send a reply to this KCB&A Update.

For Wisconsin WC Death Claims, contact Jim Egan at 312-756-3710, office: 312-617-4553, jegan@keefe-law.com or Matt Ignoffo at office: 312-756-3729; cell: 773-992-7030, mignoffo@keefe-law.com

For Michigan WC Death Claims, contact Ellen Keefe-Garner office: 312-756-3716; cell: 734-604-8969; emkeefe@keefe-law.com

For Indiana WC Death Claims, contact Kevin Boyle office: 812-369-7182; cell 312.662.9899; kboyle@keefe-law.com or Pankhuri Parti office 312-756-3746; cell 206-304-0307; pparti@keefe-law.com

For Iowa WC Death Claims, contact Dan Boddicker at 312-756-3721, cell: 312-371-4128, dboddicker@keefe-law.com

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Synopsis: Federal Court Tosses Objections to WC Retaliatory Discharge Claim Due to WC Cause of Action Fraudulently Pled.

Editor’s comment: One of the problems of defending U.S. business in southern IL is the hyper-liberal and Plaintiff-driven circuit courts. These courts are not called “litigation hellholes” without reason. One of the best defense tactics in handling such litigation is to get the claim out of state court and into the federal court via “removal” to the federal Southern District of Illinois when/where possible.

In Faarup v. WW Transport, Inc., Plaintiff Faarup sued Defendant W.W. Transport, Inc. (WWTI) in state court for wrongful discharge in retaliation for filing a workers’ compensation claim under the Illinois Workers' Compensation Act (IWCA), as well as pleading two separate causes of action under the IWCA. Defendant WWTI removed the state action to federal court. WWTI is based in West Burlington, IA and does the normal hauling of flatbed and heavy haul type business, but also specializes in its award winning food grade bulk hauling - both liquid and dry bulk, as well as having a refrigeration division

In considering the objections to removal, the federal court issued an order to show cause why the court should not remand the case to state court, since Faarup had ostensibly pled a cause of action under IWCA and, pursuant to 28 U.S.C. §1445(c), workers' compensation claims are arguably “non-removable.”

WWTI responded that counts I and II, claims for wrongful discharge in retaliation for filing a workers' compensation claim, were removable claims, as the law is clear a claim of retaliation for the exercise of rights under the IL WC Act does not arise under the IWCA but under general tort law. Therefore, if the claim was non-removable under §1445(c), it was because Counts III and IV of the complaint alleged causes of action for refusal to provide workers' compensation benefits. WWTI appropriately responded the court should disregard Counts III and IV because Plaintiff Faarup fraudulently pled those causes of action to avoid removal. WWTI pointed out there was no such civial cause of action in state court for refusal to pay workers' compensation benefits. Instead, the Illinois Workers' Compensation Commission had exclusive jurisdiction to decide whether workers' compensation benefits should be awarded, and Illinois courts are limited to appellate review of those administrative decisions.

Plaintiff Faarup maintained Counts III and IV were properly pled because WWTI failed to comply under its duties and responsibilities consistent with the IL WC Act. The federal district court found Counts III and IV were frivolous because they had no basis in law and served only to frustrate federal jurisdiction. The court held both Counts had been fraudulently pled and disregarded them for the purposes of determining whether removal to the federal district court was proper.

The federal court discharged the order to show cause, dismissed Plaintiff Faarup’s Counts III and IV without prejudice as fraudulently pled, and held removal was proper. The federal court also gave the parties 21 days to update and re-file their state court motions, if appropriate, citing appropriate federal standards and authority.

We strongly agree with this outcome. The ruling can be located online at https://docs.justia.com/cases/federal/district-courts/illinois/ilsdce/3:2015cv00114/69909/17.

Our research also indicates while the claim above was pending, Plaintiff received over $100,000 in several IL WC settlements. The employer should have known what they were getting into when they hired this litigious worker. Do you know how to legally protect your company from repeat claimants? If you are interested, send a reply.

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Synopsis: Paying IL WC Benefits May Not Protect an Employer From A Civil Action Even If “Umbrella” Approach Used. Thoughts and Analysis by Pankhuri K. Parti, JD.

Editor’s comment: In a decision reversing the lower court’s granting of summary judgment, the IL Appellate Court remanded the case for further proceedings based on its decision finding the evidence presented was insufficient to establish a legal obligation to pay workers’ compensation benefits on the part of Defendant. We believe this to be an anti-business outcome because the IL Appellate Court explained the IL WC Act only confers Section 5(a) immunity to direct employers of injured workers and makes no provision for a corporate entity legally distinct from the employer to unilaterally insulate itself against liability for negligence, especially if the actual employer was self-insured and the separate entity could make reimbursement decisions on a case-by-case basis.

In Burge v. Exelon Generation Company, LLC, Plaintiff Burge was a security guard employed by Exelon Nuclear Security or ENS. He was injured and filed a WC claim against Exelon Nuclear Security, his direct employer. He received $180K from that WC settlement.

He sued Exelon Generation Company or EGC for the same injuries and his civil claim was dismissed. He appealed an order from the Circuit Court granting Defendant Exelon Generation Company’s motion for summary judgment. In its motion, Defendant EGC successfully argued Plaintiffs’ exclusive remedy was under the Workers’ Compensation Act and thus their civil case against Defendant EGS was barred by Section 5(a) of the IL WC Act. It was undisputed Plaintiff Burge sustained injuries arising out of and in the course of employment with ENS, which provided security services on Defendant’s premises pursuant to a contract. It was also undisputed Plaintiff filed and settled a workers’ compensation claim against Exelon.

In reaching its decision the IL Appellate Court explained under Section 1(a)(3) of the Act, an employer was liable to pay compensation to its own immediate employees and also to the employees of any contractor or sub-contractor, unless the contractor or subcontractor already had workers’ compensation insurance. As Defendant engaged ENS as a contractor, it argued it was thus the employer who paid the workers’ compensation benefits for Plaintiff Burge. Thus pursuant to Section 5(a) of the IL WC Act Plaintiffs could not maintain a common law action against Defendant. In support of this contention Defendant submitted an affidavit from Christine Wendt, who was the workers’ compensation manager for Exelon. The affidavit stated she oversaw the entire Exelon-related system of workers’ compensation benefits and Defendant used a third-party administrator for workers’ compensation benefits and paid all monies for the Exelon account made to or on behalf of Plaintiff. Ms. Wendt also stated Defendant did so because it was obligated under the IL WC Act to pay for the workers’ compensation benefits for any and all employees of Exelon. Essentially Defendant’s argument was because they had reimbursed ENS for workers’ compensation payments for all Exelon employees, including Plaintiff, and because it had authority to manage Exelon’s affairs, EGC was essentially cloaked with the same immunity as ENS. In a supplemental affidavit Ms. Wendt further stated Exelon was self-insured and through the LLC agreement Defendant paid workers’ compensation benefits of any/all Exelon employees on a reimbursement basis. In our view, Ms. Wendt’s affidavit was intended to cloak their WC responsibilities as an umbrella—the Appellate Court apparently didn’t follow their approach in a fashion with which we disagree.

The Court quickly dismissed one of the arguments of Defendant stating while section 5(a) of the Act did bar lawsuits against an employer’s agent, the facts present before the Court clearly established this corporate Defendant was not ENS’s agent. According to the Court, there was nothing in the LLC agreement which gave ENS any right to “control” Defendant EGC. In fact, the Court’s members felt the opposite appeared to be true.

In determining the next question of whether Defendant EGC was saved via immunity granted by section 5(a) of the IL WC Act because it paid Plaintiff’s workers’ compensation settlement, the Court looked at the precedent of Forsythe v. Clark USA, Inc. and Ioerger v. Halverson Construction Co. The Court explained Defendant in Forsythe was not granted immunity under section 5(a) of the Act even though the employer involved was a wholly owned subsidiary of Defendant. Defendant in that case argued it was merely a holding company and thus owed no duty to the employees of its subsidiary. The Supreme Court of Illinois held when there was evidence sufficient to prove a parent company mandated an overall business and budgetary strategy and carried that strategy out by its own specific direction or authorization, surpassing the control exercised as a normal incident of ownership in disregard for the interests of the subsidiary, then the parent company could face civil liability. In essence, the Court explained in order to avoid liability the holding company was asking to be treated like the injured workers’ employer and thus Defendant was asking to “pierce its own veil.” This practice has been consistently discouraged by the Illinois courts because while on the one hand the employer was asserting it owed no duty because it was just a shareholder, at the same time it was also attempting to invoke the Act’s grant of immunity by characterizing itself as an injured employees’ employer.

On the other hand, in Ioerger the Court held a joint venture was entitled to Section 5(a) immunity from liability for injuries to employees of one of the two corporations engaged in the joint venture. While stating the joint venture was entitled to immunity under the agency relationship, the Court also explained the joint venture should also enjoy immunity because it was obligated under the joint venture agreement to pay workers’ compensation for the employees of both corporations. The Court further explained while allowing a party who had paid nothing toward an injured employee’s workers’ compensation benefits to nevertheless invoke the Act’s immunity and escape tort liability was tantamount to allowing the party to “have its cake and eat it too,” subjecting a party to tort liability when it has already borne the cost of the injured employee’s workers’ compensation benefits would be the same as declaring a party who had paid for “the cake” may neither keep it or eat it.

In reaching its decision the IL Appellate Court, in the present case, agreed with Plaintiff the grant of immunity to an entity different from the direct employer of the injured employee in Ioerger depended on the existence of some pre-existing legal obligation to pay or reimburse another payer. The Court ruled the IL WC Act had no provisions for an entity legally different from the employer to unilaterally insulate itself against liability for negligence and allowing such an entity to do so would become particularly problematic where the employer is self-insured and a separate entity could thus make reimbursement decisions on a case by case basis.

In the end the Appellate Court reversed the grant of summary judgment ruling immunity under Section 5(a) of the Act could not be predicated on Defendant’s payment of workers’ compensation benefits unless Defendant was under some legal obligation to pay. And because evidence until this point had not sufficiently established a legal obligation on the part of Defendant EGC to pay workers’ compensation benefits for Plaintiff’s injuries, the grant of summary judgment was premature.

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.

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Synopsis: Richard “Rick” Kimnach, 62 of Bloomfield, IN, passed away last Saturday July 25, 2015 at his home. The entire IL WC community hopes he will rest in peace. His memory as a quiet and hard-working man will continue.

Editor’s comment: Rick was a defense competitor of our firm and also a very solid advocate for his clients, as both a Petitioner and Respondent lawyer. Rick was born on February 4, 1953 in Needham, MA, the son on Donald and Nancy Sitgreaves Kimnach. Rick was a 1971 graduate of Watseka Community High School. He graduated from the University of Illinois in 1975. In 1980, Rick received his Juris Doctor from Loyola University in Chicago.

Rick actively practiced law in Chicago for 30 years specializing in the area of workers’ compensation. He was admitted to the Illinois Supreme Court in 1980 and the U.S. Supreme Court in 2005. In 2014, Rick earned AV Preeminent status, the highest possible rating in both legal ability and ethical standards by Martindale-Hubbell. Rick remained a true Cubs and Bears fan.

Memorials may be made to Richland Twp. Fire Department or Southern Care Hospice.

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Synopsis: If You Handle IL WC Claims, the WC Rates are Updated again So Get the Updated Version of Shawn R. Biery’s IL WC Rate Sheet.

Editor’s comment: The new IL WC minimums and maximums have been posted and our updated KCB&A IL WC Rate Sheet is now available via email or snail mail if you prefer the fancy laminated version. We note IL WC rates continue to increase based upon the reported increase in the statewide average weekly wage or SAWW and the increase was more significant than the WC rate increase last July.

The reality on the streets still doesn’t seem to match the hefty increase however as noted in the past, since the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, your WC minimum rates somehow keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now updated too—the new MAX is $749.06!! The new PPD max rate becomes retroactively effective on July 1, 2015. You have to retroactively change reserves on all claims. If this isn’t clear, send a reply or email IL WC rate wiz, Shawn R. Biery at sbiery@keefe-law.com.

The current TTD weekly maximum is $1,379.73. A worker has to make over $2,069.60 per week or $107,619.20 per year to hit the new IL WC maximum TTD rate.

The new IL WC minimum death benefit is 25 years of compensation or $517.40 per week x 52 weeks in a year x 25 years or $672,620.00! The new maximum IL WC death benefit is $1,379.73 times 52 weeks times 25 years or a lofty $1,793,649.00 plus burial expense benefits of $8,000. These numbers make it very important to keep your workplace safe and free from hazards.

The best way to make sense of all of this is to get Shawn Biery’s awesome and easy-to-understand IL WC Rate Sheet. If you want one, they are free so simply reply or email Shawn at sbiery@keefe-law.com and we will send it along.

If you would like fancy/shiny laminated copies, copy Marissa at mpatel@keefe-law.com and let her know the number of copies and your MAILING ADDRESS!

July 28, 2015

7-27-15; Thoughts From Dr. Fletcher on Illinois' Unbalanced WC Medical Fee Schedule; Former Arbs Dibble and Akemann Lose Federal Appeals; Shawn Biery's Updated IL WC Rate Sheet Now Available and more

July 28, 2015/ Eugene Keefe

Synopsis: Thoughts From Dr. David Fletcher on Important WCRI Research Report on IL WC Medical Costs..

Editor’s comment: The Workers Compensation Research Institute or WCRI is an independent, not-for-profit research organization providing high-quality, objective information about public policy issues involving workers' compensation systems. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures.

You can analyze and review the recent IL-focused WCRI statistical study by using this link: Illinois Chamber Presentation 2015

This is a current and up-to-date WCRI analysis of IL WC Medical Costs prepared for the IL WC State Chamber Working Group. This group is composed of a number of influential Illinois leaders from business, industry and our IWCC Administration. Dr. Fletcher is the CEO of SafeWorks Illinois and a leading source of workers’ comp information and guidance to other medical and industry leaders. As we have advised our readers over the years, the IL State Chamber is on the point as the lead organization looking out for the interests of Illinois business in the WC arena. We urge all our business readers to consider joining the IL State Chamber to learn more about the strengths and weaknesses of the IL work comp system and possible legislative and other changes.

Dr. Fletcher advised:

Illinois has a very unbalanced fee schedule that incentivizes surgical procedures over conservative management for injured workers.

Until July 2014, the reimbursement for evaluation and management (E&M) codes was below Medicare and this low reimbursement caused access to care issues as documented by WCRI research and Dr. Fletcher’s experience trying to refer injured workers to non-surgical specialists for care.

Currently, the Illinois Workers’ Comp Medical Fee Schedule posted rates for typical office visits as documented by WCRI in their findings are 20% below the national median average and ranks Illinois as the 6th lowest fee schedule state in the entire country. In contrast, surgery reimbursement remains high and averages around 400% above Medicare (see slide 9 of the link above). WCRI documents Illinois WC surgical fees rank 3rd highest in the nation.

Injured worker primary gatekeepers, such as occupational medicine specialists, that control return to work decisions and referrals to other specialists for care, have the most effect on controlling costs in work injury care. Due to the current IL WC Medical Fee Schedule the private practice of occupational medicine in Illinois is dying because $80 reimbursement for an office visit that may require 30 minutes of direct patient interaction, but requires an hour of additional unreimbursed professional time (most WC carriers refuse to pay for CPT code 99358 for prolonged non-face time even though Medicare recognizes this case management service as vital in controlling costs) to update the employer, interact with an external case manager, review diagnostic studies, consult with the physical therapist, issue a return-to-work slip, and prepare a detailed narrative report that a practitioner may have to defend line-by-line in a future deposition.

Thirty-one (31) states of the 43 states that have a WC medical fee schedule construct a fee schedule that is based on relative value (Medicare RVU-relative value units is the most common system) in contrast to Illinois’ unbalanced WC medical fee schedule.

Neighboring states, Iowa, Indiana, Wisconsin, often cited as models for the Illinois WC system, pay substantially higher E&M codes than Illinois and have much lower costs.

Bottom-line, Illinois needs a balanced RVS-based fee schedule that would encourage and reward effective office management of complex work injuries as opposed to rushing off to surgery when such indications are not clear-cut. Higher reimbursement for office visits would bring back many Illinois primary care practitioners, who will no longer see injured workers, because the reimbursement is not worth the time and effort required to manage such patients.

Dr. Fletcher is personally advocating for an IL WC fee schedule that is 200% above Medicare across the board that recognizes taking care of injured worker takes more physician or healthcare resources and time than a typical Medicare patient, where decision-making on return to work and communication with multiple parties are not necessary.

For the last five years, Dr. Fletcher has been one of the two WCRI advisory committee physician members. We salute him for letting you, as our readers, know what is happening right now for this crucial IL WC working group.

From your editor—we want our readers to understand the number one cost in workers’ comp across the United States and the world is medical care. The recent statistical study documents current measurements on the cost of some aspects of IL WC care aren’t nearly as bad as the popular business or government perception.

We also note the IL WC Commission has a Workers' Compensation Medical Fee Advisory Board which includes among its members leading WC medical and legal gurus like Dr. Michael I. Vender, Dr. Avi Bernstein and David Menchetti, J.D. along with others from both sides of the WC matrix. We hope the Medical Fee Advisory Board members are closely watching what is happening in Springfield and working hard to save money for Illinois businesses and local governments while also insuring injured workers get solid medical care.

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

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Synopsis: Former Arbitrators John Dibble and Peter Akemann Lose Their Federal Appeals Over Getting Canned. Sadly, You Are Still Paying Them.

Editor’s comment: Former Arbitrators John Dibble and Peter Akemann were hearing officers for the Illinois Workers’ Compensation Commission. At the time of their appointments, the IL Workers’ Compensation Act, 820 ILCS 305/14, provided each arbitrator would be appointed for a term of six years, with the possibility of reappointment.

The Illinois General Assembly passed Public Act 97–18, which was signed on June 28, 2011 and took effect three days later, ending the terms of all incumbent IL WC arbitrators effective July 1, 2011 and providing Governor Quinn could make new appointments, basically at his whim. The new law allowed incumbent arbitrators to serve as holdovers until the Governor made new appointments.

In the interim, Governor Quinn was booed off the stage at the Illinois State Fair by a group of union members who were unhappy about proposed legislation that would have limited their fake pensions and lifetime-taxpayer-paid health care benefits. Shortly thereafter former Arbitrators Jackie Kinnaman, Peter Akemann and John Dibble were summarily terminated. As these hearing officers came from opposite sides of the political fence, it is hard to understand why they were summarily canned. We assure our readers former Arbitrator Kinnaman was always considered liberal and pro-union—she was also married to an important union official. Former Arbitrator Akemann was the son of a west suburban judge and considered to be a middle-ground hearing officer for representatives of business and labor. Former Arbitrator John Dibble surfed on the challenging waves in southern Illinois where some Petitioner attorneys used to have plenary power to get someone appointed or fired as an Arbitrator.

Former Arbitrator John Dibble was a middle-of-the-road hearing officer who generally got along with the rabidly pro-labor lawyers in southern Illinois. John Dibble had the stigma of receiving a favorable bilateral carpal tunnel WC settlement for $48,790.45 at a time when hundreds of prison guards and Central Management Services WC adjusters were also getting favorable WC settlements in a setting that made the settlements appear questionable. In 2010, Dibble, who was not an attorney, received a tax-free payment on his claim he incurred "delayed onset" carpal tunnel syndrome as the result of falling on steps at a workers' comp hearing site in Herrin, IL. The award was withheld from the public record until the Belleville News-Democrat reported it. One embarrassing aspect of the settlement is the claim was brought against the State, defended by the Attorney General’s office and then-Arbitrator, now current IWCC Commissioner Ruth White had to approve the deal.

We note former Arbitrator Peter Akemann had a work comp claim for an injury occurring in 2010 and, in 2014, got an award of 10% LOU BAW or $33,236.00 as the result of an arbitration decision by an independent IL WC Arbitrator named Alan Rosen.

Either way, by July 1, 2012, both John Dibble and Peter Akemann lost their IWCC positions. They alleged by shortening their six‐year terms as arbitrators under the prior law, Public Act 97–18 deprived them of a property interest without due process of law. The Seventh Circuit affirmed judgments for Defendants. Plaintiffs’ claims for injunctive relief were moot, and Defendants were entitled to qualified immunity on Plaintiffs’ claims for damages. Even if Plaintiffs plausibly alleged a constitutional violation, the applicable law was not clearly established under the circumstances of these cases, where a statutory amendment eliminated the property interest the statute previously conferred.

From our perspective, They were both solid hearing officers who did nothing wrong. They showed up and worked hard. These former Arbitrators who received either a settlement or decision got caught up in the moment in a fashion we consider wholly unfair—it shouldn’t be a stigma to suffer from a work injury in a system that provides benefits for injuries.

Don’t Cry Too Hard for Them

We want our readers to note, you never truly “fire” any IL state employee who is vested in their fake or comically defunded IL government pensions. By law, we as taxpayers have to keep paying them and they no longer have to work. To our knowledge, former Arbitrator Dibble should be getting a full fake pension and IL taxpayers continue to compensate him, despite his termination. He will also get compounded 3% annual increases so he is probably making more from taxpayers than he made while actually working. His fake government pension may double or triple, if he lives long enough. He also gets taxpayer-paid lifetime health care—not a bad deal either.

Our research indicates former Arbitrator Peter Akemann worked for the State starting in 1983 with IDOT and then as an Arbitrator—we are confident he remains on our dime and is getting lots of your tax dollars. He is a good man and among many other things, Peter is on the board of a kid’s theatre group http://www.cteelgin.com/about-us/board/

It is weird how things work out. We appreciate your thoughts and comments. Please post them on our award-winning blog.

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Synopsis: If You Handle IL WC Claims, the WC Rates are Updated again So Get the Updated Version of Shawn R. Biery’s IL WC Rate Sheet.

The current TTD weekly maximum is $1,379.73. A worker has to make over $2,069.60 per week or $107,619.20 per year to hit the new IL WC maximum TTD rate.

If you would like fancy/shiny laminated copies, copy Marissa at mpatel@keefe-law.com and let her know the number of copies and your MAILING ADDRESS!

July 21, 2015

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...

July 21, 2015/ Eugene Keefe

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.

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