9-21-2015; Don't Follow the "Herd" in IL WC Voc Rehab; Lindsay Vanderford JD on Important New NLRB Ruling; Matt Gorski Analyzes WC Drug Formularies and much more

Synopsis: Please Don’t Follow the “Herd” Mentality In IL Work Comp and Voc Rehab.

Editor’s comment: The social psych concept of “herd” mentality has been studied for years. Herd mentality and herd behavior have been prevalent descriptors for human behavior since people began to form tribes, migrate in groups, and perform cooperative marketing and agricultural functions. Herd behavior in human societies has also been studied by Sigmund Freud and other noted scientists.

What the attorneys at KCB&A feel is happening in the area of voc rehab in our state is akin to herd mentality. We have seen several major WC Plaintiff-Petitioner lawyers who are pressing to make the choice of a certified voc rehab counselor for an injured worker to be solely their selection but at your sole expense. You may then have to pay endless TTD/maintenance while their voc counselor doesn’t find claimant a job. And if you accept their selection, aren’t you implicitly agreeing to pay them for the rest of this century? How do you stop the voc counselor opposing counsel selects, if the CRC does a rotten job? What rhymes with skyrocketing IL WC costs?

We consider this position from the other side to be unusual to say the least. We point out the IL WC Act and Rules have been in place for over 100 years and prior to this last three-five years, very few IWCC or Appellate Court decisions address this new and unprecedented concept. No one made these claims five-ten or twenty years ago but now this new concept is coming from lots of different Plaintiff firms. We can’t confirm but we are fairly sure ITLA may have discussed this at a WC conference and the firms that attended are now pushing to get the “herd” to move in their ideal direction.

The reason we feel “herd” mentality is used by the Plaintiff-Petitioner bar is they aren’t communicating with our attorneys or our clients to tell them their personal legal position or interpretation. They are telling everyone “this is the law in this state and you have to follow it.” It is almost as if they are threatening “workers’ comp jail” if you don’t concede their version of the law. They are repeating it over and over, as if repeating it will turn it into the law. Some gullible adjusters and risk managers may listen to this repeated diatribe in IL work comp claims prior to retaining defense counsel and believe they have to follow the demands/commands of the other side. We urge everyone of our respected legal opinion you are being led astray in being asked to follow the herd in this instance.

Please also note our strong ethical opinion this concept puts a defense lawyer in a very poor position—we are being asked or actually demanded to hire an expert for the other side with our client’s money. If the expert we ask our client to pay for turns a moderate claim into a seven-figure claim, we can see how clients across the country might not only fire us, they may file ethical beefs asking we be sanctioned to do so.

Shawn Biery, one of our top legal scholars, points out the Rules Governing Practice don’t mandate employers or their insurance carriers/TPA’s have to hire Petitioner’s choice of voc counselor. Shawn wants our readers to remember, besides the Act, there are Rules Governing Practice. Here is the applicable voc rehab rule:

Section 7110.10Vocational Rehabilitation

A.   The employer or his representative, in consultation with the injured employee and, if represented, with his or her representative, shall prepare a written assessment of the course of medical care, and, if appropriate, rehabilitation required to return the injured worker to employment when it can be reasonably determined that the injured worker will, as a result of the injury, be unable to resume the regular duties in which engaged at the time of injury, or when the period of total incapacity for work exceeds 120 continuous days, whichever first occurs.

B.   The assessment shall address the necessity for a plan or program, which may include medical and vocational evaluation, modified or limited duty, and/or retraining, as necessary.

C.   At least every 4 months thereafter, provided the injured employee was and has remained totally incapacitated for work, or until the matter is terminated by order or award of the Commission or by written agreement of the parties approved by the Commission, the employer or his or her representative in consultation with the employee, and if represented, with his or her representative shall:

a.    if the most recent previous assessment concluded that no plan or program was then necessary, prepare a written review of the continued appropriateness of that conclusion; or

b.    if a plan or program had been developed, prepare a written review of the continued appropriateness of that plan or program, and make in writing any necessary modifications.

D.   A copy of each written assessment, plan or program, review and modification shall be provided to the employee and/or his or her representative at the time of preparation, and an additional copy shall be retained in the file of the employer and, if insured, in the file of the insurance carrier, to be made available for review by the Commission on its request until the matter is terminated by order or award of the Commission or by written agreement of the parties approved by the Commission.

E.   The rehabilitation plan shall be prepared on a form furnished by the Commission.

The Rule above is clear--how about the legislation? Having looked carefully, the IL WC Act says literally nothing about who gets to choose the CRC. It does say the Commission gets to “decide disputes” about voc, consistent with the Rules above and the sections of our IL WC Act cited below. In our view, the idea the employer shall pay for something doesn’t mean the employer cannot select it or question it in any way and has to allow the other side sole discretion to make the  selection, as we are being bluntly told.

To the extent our opponents are claiming they get to “choose” this consulting voc service as if it were medical care doesn’t mean there is a voc rehab “fee schedule” or voc IME’s or voc UR or anything else to limit it other than the Commission “deciding disputes,” as we reference above. We are sure our legislature hasn’t addressed control of voc counseling in years. It appears the defense side of the industry may have to start pushing to reform this concept if our Commission and reviewing courts follow the “herd” and upset the legislative scheme that has been in place for over a century.

We are sure the legal standard we, as representatives of Illinois employers have to reach is to show there is appropriate, typically restricted work within a reasonably stable labor market around claimant’s home. We don’t have to “find him/her a job” which is the main flaw we feel our competition and some Plaintiff-oriented adjusters read into the Act and Rules. We assure our clients, you can’t find someone a job, if they don’t want one.

We researched the IL WC Act on this topic and it says:

Section 6d: Application Filing Periods

(d) Every employer shall notify each injured employee who has been granted compensation under the provisions of Section 8 of this Act of his rights to rehabilitation services and advise him of the locations of available public rehabilitation centers and any other such services of which the employer has knowledge.

Section 8a

The employer shall also pay for treatment, instruction and training necessary for the physical, mental and vocational rehabilitation of the employee, including all maintenance costs and expenses incidental thereto.

Vocational Rehabilitation Counselors Need Certification

Any vocational rehabilitation counselors who provide service under this Act shall have appropriate certifications which designate the counselor as qualified to render opinions relating to vocational rehabilitation.  Vocational rehabilitation may include, but is not limited to, counseling for job searches, supervising a job search program, and vocational retraining including education at an accredited learning institution.  The employee or employer may petition to the Commission to decide disputes relating to vocational rehabilitation and the Commission shall resolve any such dispute, including payment of the vocational rehabilitation program by the employer.

Maintenance; TPD

The maintenance benefit shall not be less than the temporary total disability rate determined for the employee. In addition, maintenance shall include costs and expenses incidental to the vocational rehabilitation program.

We agree these sections require the provision of voc rehab in an appropriate IL WC claim. We don’t see anything that says Petitioner’s counsel gets to select it as Respondent’s sole expense. We agree if our defense clients select the voc counselor, we are going to pay for it. We hope claims adjusters and risk managers stay out of the “herd” on this concept and ask KCB&A lawyers for our best defense advice on your biggest claims.

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

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Synopsis: If It Ain’t Broke, Redefine and Overbroaden It? The NLRB goes overboard in an attempt to protect temporary workers. Thoughts and Analysis by Lindsay R. Vanderford, JD.

Editor’s comment: On August 27, 2015, in a 3-2 decision involving Browning-Ferris Industries of California, the National Labor Relations Board refined its standard for determining joint-employer status. In the decision, the NLRB applied established principles to find that two or more entities are joint employers of a single workforce if 1) they are both employers within the meaning of the common law, and 2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board established it will—among other factors—consider whether an employer has exercised control over terms or conditions of employment directly through an intermediary, or whether it has reserved the authority to do so. Contract workers and other temporary employees will be able to more easily unionize following the landmark ruling.

The ruling from the National Labor Relations Board in Browning Ferris will ripple through the fast-food, construction, and other industries that rely heavily on contract workers and employees of franchisees. Previously, such companies were considered by law to be a step removed from many of their workers when certain labor disputes arose.

Companies increasingly have been turning to temporary contract workers, a business model that gives them more flexibility to add or shed workers as needed. The decision, which came in a 3(D)-2(R) vote on a single case before the board involving sanitation workers, is the latest to attempt to tackle the core question of who counts as an ‘employee’ in a modern economy that is increasingly reliant on shift work, contract workers, and other temporary employees. The board itself was starkly divided on the move, which revised its “joint employer” standard for determining when one company shares responsibility for employees hired by another.

The change alters a decades-old approach that previously said one business couldn’t be held liable for employment-related matters at another, unless they had direct control over the employees in question. That approach has meant companies could keep arm’s length contract workers supplied by staffing firms, and has allowed franchise arrangements to flourish. Under the revised standard, the NLRB will consider if a business exercises indirect control through an intermediary, or has reserved the right to do so. The Board noted it will consider this on a case-by-case basis.

“If this decision stands, the economic rationale for hiring a subcontractor vanishes,” said a senior legal counsel for the National Federation of Independent Business. “It will make it much harder for self-employed subcontractors to get jobs and of course it will drive up operating expenses for the companies that hire them.”

Browning Ferris discards the existing joint employer relationship that exists when two legally separate businesses are deemed jointly liable for employment-related claims. Under the ruling of Browning Ferris, the well-established legal standard is tossed aside in favor of one in which almost any economic or contractual relationship could be used to show joint employer status. The overwhelming effect will be increased cost of doing business across subcontracting, franchising, etc.

Normally, such a change in regulation would be subject to the administrative process wherein an administrative body is required to provide notice and allow affected parties to have an opportunity to comment on the proposed change. This process often results in a negotiated change favorable to both the administrative body and those it regulates. Instead it appears the NLRB is attempting to effectuate change through case law that refines the scope of the regulation and may be overcome only on appeal.

The Illinois Chamber of Commerce is working with supporters across the country against what it has termed a “misguided and unfair” regulation. It has reached out to members of its congressional delegation to engage with the NLRB to ensure that any proposed changes go through the regular administrative process rather than attempting this change through case law, as the NLRB appears to intend. Changing any definition or regulation through case law does not provide the public or impacted parties the opportunity to comment and provide input as to how changes will impact them as the administrative process would. You can contact the Illinois Chamber of Commerce at http://ilchamber.org/communications/contact-us/.

This article was researched and written by Lindsay R. Vanderford, JD. Lindsay can be reached 24/7/365 for questions at lvanderford@keefe-law.com.

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Synopsis: Should Illinois WC Adopt a Drug Formulary? Thoughts and Analysis by Matthew G. Gorski, JD.

Editor’s comment: Drug formularies are a hot topic in WC as more and more states are considering adopting WC drug formularies. More specifically, Louisiana, Nebraska, South Carolina, and North Carolina have joined the WC drug formulary discussion party.

A drug formulary is a list of prescription drugs prescribed by physicians and other medical professionals identified to offer the greatest overall value. The drug formularies are created and maintained by a committee of physicians, nurse practitioners, and pharmacists.

At the moment, only four states have adopted WC drug formularies, and those are Texas, Oklahoma, Ohio, and Washington. Numerous other states have begun discussions with legislators to create WC drug formularies, but Illinois is not one of those states.

The biggest effect a drug formulary in Illinois WC would have is to control costs to the employer on the payment of prescription drugs. If there is a list of the most effective and cost efficient drugs that WC will only approve, it will eliminate WC having to pay for costly and ineffective medications. Also, this will also ensure injured workers will be receiving medications that will actually help them.

There are numerous situations in Illinois WC where doctors continue to prescribe narcotics and opioids, when they likely provide diminishing returns, or ever increasing complaints. As most medical experts will agree, long term narcotic and opioid use hurts an individual’s recovery from an injury—in addition to the addictive side effects of long term use. The injured individual becomes dependent on the narcotics and opioids for pain management, instead of, engaging in work conditioning or physical therapy.  A WC drug formulary will be an indirect effect to lower drug addiction and long term narcotic and opioid use by injured workers.

Overall, WC drug formularies will be beneficial to both employers and injured workers. It will create an efficient way to lower costs for employers, and will help injured workers recover from their work injuries faster. Illinois should join the WC drug formulary discussion, we would benefit from it.

This article was researched and written by Matthew G. Gorski, JD. Matt can be reached 24/7/365 for questions about WC at mgorski@keefe-law.com

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Synopsis: KCB&A is Looking for a Great Michigan Defense Lawyer and Legal Secretaries for our Chicago office.

Editor’s comment: We are adding to our Michigan staff—if you are or know a candidate, have them reply to this Update!!

We have one and perhaps two openings for admin staff. If you have or know someone with litigation experience, send a reply with resume asap!

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9-14-15; Current IL WC Reform and Where We Are Going; Shawn Biery, JD Analyzes Important Ins. Coverage Ruling; What Do You Want in a Great Defense Team? and more

Synopsis: Current Reform of Illinois Workers’ Compensation And Where We May Be Going.

Editor’s comment: Most work comp observers remain mildly stunned about the focus of our new Governor, Bruce Rauner. Almost the minute he took office at the beginning of this year, Governor Rauner announced a strong goal of greatly remodeling our IL WC Act. That drive continues today. What is somewhat unusual is the IL WC Act has been amended on three different occasions in the decade prior to the ascension of Governor Rauner to public office. Our IL WC Act was changed in 2005, 2006 and 2011. We feel the changes were made, in large part, to correct the corruption and skullduggery of the failed Blagojevich administration. What our former-Governor-behind-bars did to win his first gubernatorial primary in 2002 was to “sell” or give control of the IWCC to the Plaintiff lawyers in Madison County along with political/financial support from Plaintiff lawyers across our state.

Prior to that happening, IL WC legislative reform was generally performed by joint legislation calmly created between the two political parties—there was an “agreed bill process” which was used to allow give and take in quietly vetting and making needed changes to the Act. Once Blago got in, the agreed-bill process was tossed. All of a sudden the name of the Commission was changed from “Industrial Commission” to “Workers’ Compensation Commission.” The funding of the Commission was changed from the general state revenues to funding from a specific levy on IL business only. The new funding allowed the IWCC to more than double in size and hire lots and lots of new politically charged Arbitrators who were either former Petitioners’ lawyers or were very amenable to the labor side. Finally, a bunch of new and unprecedented IL WC Funds were created or cash was infused into old dormant funds to allow the party-in-power to attain political goals not previously funded—as an example, the Rate Adjustment fund is a levy on business to allow annual COLA increases to widows/widowers and folks receiving total and permanent disability awards.

Please note the four things we outline in the paragraph above aren’t truly “legislative” changes although legislation was required to enact them. We feel they should be more properly characterized as “administrative” changes. What we consider fascinating is the defense or business side of IL workers’ comp took an enormous hit with such administrative changes and related funding. The leaders on the business side, like the IL State Chamber of Commerce and IL Manufacturers Ass’n almost never seem to care about them or mention them as being needed for reform. Please note a lot of money from IL business could be immediately saved to take a hard look at the IWCC itself and evaluate its size and configuration and consider streamlining this bloated state agency. As one obvious example, the IL WC Second Injury Fund provides benefits to less than 100 Illinoisans at any given time—are we ever going to look at this hilariously outdated fund and get rid of it, as other states have done? As another obvious example, IL WC claims are dramatically down and we have nine Commissioners who each have two full-time attorney assistants, making for 27 administrative appeals lawyers—do we really need that many? As we have said in the past, if all 27 lawyers at this IWCC level issued just one contested decision a week, they would have literally nothing to do in about ninety days. If our readers want our best thoughts on administrative reform, send a reply.

Bruce, Is That All You Got?

We have started to wonder if our new Governor has anything else to bring to the table. He has been in office for nine months and we aren’t seeing much in the way of improvements in the way our State operates on a day-to-day basis. Work comp reform, property tax freezes and the other minimalist reforms being debated in Springfield aren’t that sweeping. In our view, there are also lots of simple administrative reforms that should and must be put out into place. For one example, the State of Illinois has 88 agencies with redundant department heads, unneeded managers and lots of waste—as we have asked our readers in the past, can our State get along with 44 agencies or 22 agencies? The State is paying over $100M a year to collect highway tolls where the State of Indiana has no payroll devoted to collecting highway tolls—all IN tolls are collected electronically. State government could make a simple, quick change to toll collection that would save taxpayers over $100M every year. The Illinois Policy newsletter indicated our State misspent at least $130M on workers’ comp costs for state workers last year—we need better claims, safety and legal help to attack that high and increasing cost—that isn’t occurring. We don’t see anything being done about almost any of the challenging money-wasting issues in state government. Other than the current five-issue reform deadlock in Springfield, we are wondering what else is in store from our new Governor to get this state computerized/organized and running lots better. As a beginning point, we suggest he create a government efficiency information drive, open a hotline and ask State workers and taxpayers for their best thoughts and ideas on how to streamline things and save money.

As to true IL legislative WC reform, remember at its most basic form, workers’ comp benefits are three things: medical, wage replacement benefits (or TTD) and settlements/decisions. Right now, the IL WC system provides medical benefits to injured workers at rates/reimbursements lower than our sister state of Indiana. Yes, folks, IN doctors and hospitals get more money from insurers and businesses in the WC arena than IL medical caregivers receive. And right now, Governor Rauner is fighting to again cut medical reimbursements for IL surgeons and surgeries another 30%. We aren’t sure why this cut is needed and doctors/hospitals across our state are screaming mad about it—you may recall the great pieces written by Dr. David Fletcher, the CEO of SafeWorks Illinois and published here. Whether Gov. Rauner can enact these cuts remains open but we assure our readers IL WC medical costs are already low and may get much lower than our sister states.

On TTD or wage replacement benefits, rates continue to rise in this state. In the early 80’s a spiraling mathematical factor was enacted to insure such rates always rise. In our view, the current legislative proposals to require “major contributing cause” be shown by an injured worker along with clarification of the “traveling employee” standard may cause a minimal cut in IL WC costs. Another main cost-driver in IL WC TTD benefits remains the obdurate refusal of some of our biggest government bodies, such as the State of Illinois itself along with the City of Chicago in bringing injured workers back to work in light duty programs. We consider it a continuing scandal to report this is still occurring—at some point, Governor Rauner’s administration is going to have to take some responsibility and action to force his agencies to put light work programs in place across the board.

As to “settlements” or awards of permanent partial disability, former Governor Quinn’s administration brought in “impairment ratings” to allow the AMA Guidelines to be used in determining permanency. This remains a giant political football with Governor Rauner currently seeking to allow Arbitrators to consider that single factor in making awards. We don’t see that as a major change to “settlements” or permanency awards. What we do see and feel will have a giant impact are new conservative Arbitrators whose appointments we have been reporting to our readers. Already, we are advised settlements and awards for permanency are down 10, 20 or even 30% across the state—we feel that trend will continue in the weeks and months ahead. We understand another great new hearing officer will be announced by the Rauner administration this week. We predict she will be one of the smartest and sharpest WC hearing officers in state history and will insure benefits are properly awarded where true accidents and injuries occur and WC fraud will be greatly discouraged.

IL Workers’ Comp Costs are Dropping and Will Keep Dropping—the Math Will Take Time To Present Itself

What our politicians and WC observers aren’t doing is to let these earlier and ongoing changes occur and be measured for transmission across the country. We are absolutely certain the next evaluation of the IL WC system by the Oregon WC Premium Ranking that is due about one year from now is going to show dramatic and beneficial cuts in WC premiums and payouts due to the continuing impact of medical cuts already in place along with the drop in settlements and overall conservative approach that is coming from Republican arbitrator appointees. Please note concerns about ongoing IL WC reforms will be discussed by the KCB&A defense team at next month’s 2015 Illinois Workers’ Compensation Annual Seminar hosted by the IL State Chamber of Commerce. You are invited to attend and ask your best questions of us and challenge our team in every way possible. For information and to register, see below.

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

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Synopsis: If You Handle Claims For Multi-line Accounts, Knowing When There Is a Duty to Defend is Key. Analysis of Your Policy And of Relevant Pleadings Are A Must—Reviewing Policy Alone Is Not Sufficient. Analysis by Shawn R. Biery, J.D., M.S.C.C.

Editor’s comment: In Pekin Insurance Company v. Martin Cement Company, (issued September 2, 2015) Will Co. (O'BRIEN)  the Appellate Court noted the decision of the Circuit Court erred in finding an injured worker's employer's insurer, to whom defense had been tendered in an underlying personal injury construction accident suit, owed no duty to defend a cement company alleged to be in charge of construction of building where injury occurred because the third-party complaint against an employer made sufficient allegations that actions or omissions of employer caused the employee's injuries.

This case involves injuries sustained by an employee of Platinum Steel named Swartz on or about July 14, 2010 while working on a construction project. The underlying complaint named The Frederick Quinn Corporation (FQC) and Martin Cement Co. (Martin) as defendants alleging Martin was in charge of the construction of the building where Swartz was injured when one of the rebar forms that he was working on broke away, causing Swartz to fall. The direct employer Platinum was working on the construction site pursuant to a subcontract agreement with Martin wherein Platinum agreed to provide labor and equipment to set rebar. The court noted count 1 of the underlying complaint was relevant as it alleges FQC and Martin owned and/or were in charge of the erection, construction, repairs, alteration, removal and/or painting on the construction project where the underlying plaintiff, Swartz, worked as an employee of Platinum--and further alleged FQC and Martin, through their agents, servants and employees were present and participated in coordinating the work; checked the work progress; inspected the work; and had the authority to stop work, refuse the work, and order changes in the work. It finally also alleged FQC and Martin were guilty of certain negligent acts, including “(g) failed to provide safe, suitable and proper support for plaintiff to work off of."  Count II alleged direct negligence of Martin and FQC. 

In December 2011, Martin’s attorney in the underlying case tendered Martin’s defense to Pekin based upon a Commercial General Liability Policy issued by Pekin as the insurer to Platinum for the effective policy period covering the date of accident.  Under the subcontract agreement whereby Platinum, as the subcontractor, agreed to set rebar for Martin, as the contractor, dated June 15, 2010, Platinum was required to purchase and maintain this insurance coverage, naming Martin as an additional insured. The policy contained an additional insured endorsement titled “Contractors Additional Insured/Waiver of Rights of Recovery Extension Endorsement. Specifically, the policy provided coverage to Martin with respect to vicarious liability for bodily injury or property damage imputed from Platinum to Martin as a proximate result of Platinum’s ongoing operations performed for Martin. It did not provide coverage for Martin’s own negligence.

On January 13, 2012, FQC filed a third-party complaint against Platinum in the underlying case. That complaint sought contribution from Platinum if FQC was found to be liable to Swartz, based upon Platinum’s: failure to properly train and supervise Swartz; improper maintenance and control of the area where Swartz was working; failure to warn Swartz; failure to provide adequate safeguards; and failure to provide Swartz with a safe place to work.

In February 10, 2012, Pekin rejected Martin’s tender of the defense of the underlying case, stating that Martin was not listed as an additional insured on the Declarations page and the allegations against Martin in the underlying complaint were for negligence by Martin, which was excluded under the policy. Martin did not withdraw its tender of defense, so Pekin filed this declaratory judgment action on March 20, 2012.

On March 30, 2012, Martin filed a third party complaint against Platinum in the underlying case, making similar allegations to FQC in the contribution count, and adding a count for breach of contract. Pekin moved for summary judgment. With respect to Martin, Pekin argued it was entitled to summary judgment because it owed no duty to Martin under the additional insured endorsement when Swartz sued Martin for Martin’s own conduct and the policy provided no coverage for Martin’s own negligence. Martin filed a cross-motion for summary judgment, arguing the underlying complaint stated claims against Martin that Platinum was potentially responsible for, thus falling within the endorsement. In addition, FQC’s third-party complaint alleged Platinum was at fault. The Circuit Court granted summary judgment in favor of Pekin and against Martin. In so ruling, the Circuit Court determined it was not appropriate to consider Martin’s third party complaint, but it did specifically to rule on the argument that it could consider FQC’s third-party complaint. Martin appealed. Martin argued Pekin had a duty to defend it as an additional insured under the policy issued to Platinum because the underlying complaint, read in conjunction with the subcontract between Martin and Platinum, contained allegations Martin was sued for vicarious liability imputed from Platinum to Martin. 

In their analysis, the Appellate Court noted an insurer’s duty to defend its insured is broader than its duty to indemnify and in determining whether an insurer has a duty to defend its insured, a court must look to the allegations in the underlying complaint and the relevant portions of the insurance policy, citing Outboard Marine Corp. v. Liberty Mutual Insurance Co. The court must focus on the allegations of the complaint, liberally construed in favor of the insured, citing United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. If the allegations of the underlying complaint fall within, or potentially within, the policy coverage, then the insurer has a duty to defend per Outboard Marine Corp. The Appellate Court also noted summary judgment is appropriate only where “the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

The IL Appellate Court indicated they had in the past concluded the terms of the policy required the insurer to defend additional insureds against claims arising out of the insured’s work or “'ongoing operations performed for that Additional Insured during the Policy Period.” and as a general rule, as long as in so doing the trial court does not determine an issue critical to the underlying action, a trial court should be able to consider all the relevant facts contained in the pleadings, including third-party complaints and counterclaims, to determine whether there is a duty to defend and confirmed a trial court is not required to put on blinders and could consider a complaint filed by an outside party in determining duty to defend, even though it was filed after the declaratory judgment action, because there was no indication the outside complaint was filed to fill in information for coverage.

In this case, there were two third party complaints filed, the complaint filed by FQC before the declaratory judgment action was filed and the complaint filed by Martin after the declaratory judgment action was filed.Thus, while Martin’s own third party complaint against Platinum, filed after the declaratory judgment action was filed, was arguably potentially self serving in that it was filed by the putative additional insured after the declaratory judgment action was already filed, there is no similar reason to bar consideration of FQC’s complaint, which was filed prior to the declaratory judgment action. That complaint makes sufficient allegations that actions or omissions of Platinum caused Swartz’s injuries, making summary judgment in favor of Pekin on the duty to defend in error.

The best way to make sense of your duty to defend in situations such as this or any situation is an initial analysis of your policy to determine all areas of potential coverage and once those are determined, a cross review of all underlying pleadings to determine if there is any chance a judgment on one of the counts alleged would arguably fall under that coverage. As you can see from this case, the courts will find that duty to defend much more liberally than they will potentially find liability. This article was written and researched by Shawn R. Biery. If you have any questions about this case or regarding specific issues with duty to defend on a policy for one of your claims, please reply or email Shawn at sbiery@keefe-law.com and we will give you an initial opinion.

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Synopsis: What Would Make KCB&A the Best WC Defense Firm for Your Needs/Goals?

Editor’s comment: We have a national client advise during the last fiscal year, we assisted them in saving $2,000,000 from their year-earlier WC payout. We greatly appreciated the news! What they want us to do is to let all U.S. businesses know how we can work with you to save money off the bottom line and make you look great to your bosses.

Among other things, the defense lawyers at KCB&A have a

·         Continuous hotline for All WC questions - We are happy to help all claims adjusters on a 24/7/365 basis--send your claims inquiries and toughest questions to ekeefe@keefe-law.com for answers to your toughest claims questions for the States of IL, IN, WI, IA and MI. Give us 24 hours and we will get back to you with reasoned thoughts and suggestions, recommendations on pro se settlements and best practices in handling difficult and complex claims concerns.

·         WC File Closers – We close litigated claim files faster than any defense firm in the U.S. We have a number of solid strategies to make that happen. If you need your old dog claims closed, try the team at KCB&A.

·         Ethics - We may be the most ethical law firm in the U.S. and can prove it—if you need a presentation on Claims Ethics with CLE’s/CEU’s, we will come to your office, cater lunch and present an interesting and information program on Claims Ethics.

·         Winning outcomes - Next, we prepare, try and win lots of cases, when you can’t favorably and rapidly settle them. If you don’t believe it, take a look at actual winning results from the top defense firm in Illinois, Wisconsin, Michigan, Indiana or Iowa by going to this link: http://www.keefe-law.com/Successful_Decisions_Document.pdf

·         Free Text Books and Resources - We also have a free book/materials on all aspects of Illinois/Indiana/Wisconsin/Iowa/Michigan Workers’ Compensation Law and Practice. If you are unfamiliar with these Acts and Rules and want a resource book, please send a reply.

·         Accuracy of Reserves - We provide free answers to questions adjusters have about appropriate reserves on your claims, usually within 24 hours. We employ WestLaw© research in rendering our evaluation for your complete file. If you have interest in a legal opinion to support your reserve calculations, email ekeefe@keefe-law.com.

·         Free Legal Audits - We are happy to provide a free legal audit of your worst litigated claims. Our goal is to advise how to best bring such claims to rapid closure within authority. We have had solid outcomes from such reviews. All of our handling is attorney-client privileged. If you have interest in a legal audit, send a reply to ekeefe@keefe-law.com.

·         Great experts - We have a strong list of medical, diagnostic, pharmacological, vocational, utilization review, nurse case managers, surveillance, accident reconstruction, ergonomics, safety and other top-notch experts for your consideration to use in workers’ compensation, general liability and employment law defense litigation. Such recommendations are free. We update such lists continuously. We can also provide research backing up the credentials of such experts. If you have a need for an expert, send a reply.

·         Medicare Set-Aside Experts – We have two certified MSA experts on staff, Shawn R. Biery and Matt Ignoffo. They can help with getting pricing, approval and all aspect of handling of MSA’s for your claims. You can reach out to them directly at sbiery@keefe-law.com and mignoffo@keefe-law.com.

·         Other Related Legal Fields – Our defense team can assist you with employment practices/discrimination claims, motor vehicle and general liability practice, wage and hour law and commercial litigation of all types.

If the factors above don’t cover anything and everything you need to save money in your workers’ comp claims program, please tell us what, if anything, more might be needed and we will put it into place with and for you. We appreciate your thoughts and comments. Please post them on our award-winning blog.

9-7-2015; Chicago, The City That Doesn't Work; Chris Ory is Our New IL WC Arbitrator; NCCI Won't Issue IL WC Advisory Rates This Year But You Can Learn From the Report and much more

Synopsis: Chicago, The City That Doesn’t “Work.”

Editor’s comment: Research indicates equating Chicago and “work” dates back to Mayor Richard Daley the First. When Mayor Richard Daley the Second took over, he financially pointed the City at an iceberg, similar to the iceberg that sank the RMS Titanic. No one thinks of the Titanic or City of Chicago as “sinkable” but we assure you the Titanic is on the bottom of the Atlantic and our fair City may see the same financial fate. At some point in the near future, like Detroit, someone is going to pull the plug on borrowing and the City will have little choice about whether to sink or swim. If the City doesn’t file for actual bankruptcy under current Mayor Rahm Emanuel, it is certain to be out of cash and informally bankrupt in the next several years. The main “process” problem is they simply aren’t addressing the “root cause” of their municipal problems.

Please remember the City of Chicago is actually a government unto itself and like anything else in Illinois/Chicago government, there are also lots of arcane and “hidden” sister governments. These are all major tax-collecting organizations that are all feeding off taxpayers such as the Chicago Public Schools, the Chicago Park District, the Metropolitan Water Reclamation District, Cook County, County Forest Preserves and the Chicago Transit Authority. The mayor of Chicago has a strong role in managing all such governments. All of these government organizations are wildly in debt and seeing continued turmoil. When you have time, take a look at this link for a study from the Chicago Tribune called “Broken Bonds” that indicates how the Chicago Public Schools borrowed and owed $12B by the year 2013. http://apps.chicagotribune.com/bond-debt/#story3 Please note the Chicago Public Schools remain out of money and just borrowed $1.2B more at 8% interest to make ends meet for this school year. They are certain to be broke next year and the year after that and so on until they act to stop what is causing them to be broke. About three decades ago, some idiot in Mayor Richard Daley the Second’s office didn’t give them a single year’s pay raise and in return forever agreed Chicago school teachers could cut their fake pension contributions from 9% to 2%--this past year, that largesse cost Chicago taxpayers about $170M! If you are following the math, this cost to Chicagoans each decade is approximately $2B. Please also remember Chicago taxpayers also “match” the monies the school teachers aren’t actually contributing to their fake gov’t pensions.

Last year, Illinois Policy reported the City of Chicago and its sister government’s combined debt is a whopping $63.2B. With the added borrowing, they are over $65B by now. Of that debt, fake pensions and retiree health care are about 60% or $37B. Chicago’s fake government pensions are among the worst funded in the nation. Morningstar Inc. reported Chicago had the worst funding ratio and the highest per capita pension liabilities among the nation’s largest 25 cities. All that debt has led Moody’s Investors Service to downgrade Chicago’s debt to just three notches above junk status. Chicago’s bonds are now rated the lowest of our nation’s biggest cities, other than Detroit.

If real pension and spending reform are not enacted, higher and higher taxes will be the only way for the city to stave off insolvency for a while. In the end, higher taxes will only hasten out-migration from the City. Nearly 800,000 Chicagoans have left our city since 1992 and lots of folks continue to leave. One of the fascinating aspects of out-migration is most City retirees leave to have their checks sent to them in other states—they know the high taxes and skyrocketing debt they have caused can only be avoided by leaving!

Mayor Rahm Emanuel’s current “chewing-gum-and-baling-wire-fix” for Chicago calls for a $700M increase in property taxes, taxing cab rides and new garbage fees. All of these hundreds of millions of new tax dollars are to catch up and pay for just two fake government pensions—police and fire. His plan does nothing to actually reform the failed “process” that is killing City governments.

Illinois State and Chicago Municipal Workers’ Comp Defense Programs Remain a National Laughing Stock

Earlier this year, Illinois Policy reported the State of Illinois, as an employer is paying $130M or more in state workers comp costs. We are certain the City of Chicago by itself is paying over $100M in annual workers’ comp costs. Our sources indicate the State had over 25,000 pending lost time WC claims and the City has several thousand. Why are those WC claims and costs so stupendously high? Is it so dangerous to work for the State of Illinois or the City of Chicago?

Please note the lawyers on both sides of the City of Chicago WC matrix—Plaintiff and Defense--contribute heavily to the politicians who select them for handling defense claims or tacitly “approve” them to market the City workforce for Petitioner claims. One WC defense firm has had City of Chicago “emergency” WC defense work for over a decade on a continuing no-bid political deal.

Along with that odd political situation, the main reason for failed and foolish government workers comp defense programs for these and many governments remains their lack of commitment to defending questionable accident claims and, if an bona fide accident occurs, keeping the employee engaged and rapidly bringing them back to work at light duty. Your editor worked for the City of Chicago for seven years and I assure you from that experience, our City has hundreds of seated/sedentary jobs that could be used to return injured workers rapidly to gainful employment. We consider it a national disgrace to report these governments could care less—they are happy to have lots of workers stay off on months/years of TTD and possibly “odd lot” total and permanent disability benefits in a fashion that makes most objective observers in this industry upset. We have heard of city workers, like a truck driver or garbage collectors have routine shoulder surgery and then be given a medium-duty lifting restriction and then be allowed to stay off work indefinitely. At some magical point, someone quietly gives them a giant settlement or puts them on another version of a fake government pension—they are provided lifetime “odd lot” total and permanent disability benefits with annual cost of living increases paid for by Illinois business.

Why Do We Have All This Debt? Fake Government Pensions and Poor Workers’ Comp Defense Programs Create Political Puppets

The first national figure to see the problem with government unions was Franklin Delano Roosevelt. He noted the “union-concept” should work fine in the private sector where there is competition but unions in a the public sector are dysfunctional. In our view, the main reason leaders like IL House Speaker Mike Madigan have created these inconceivably high government pensions with lifetime salary and healthcare benefits is to gain strong political puppets from those closest to him—the government workers who are quietly selected via “juice” or political pull. Even firefighters and police officers who aren’t necessarily selected by political pull are compensated so highly, they rapidly develop political allegiance to their political masters and benefactors. All such workers are on government union political email lists like the address lists for this KCB&A Update. The government union participants are regularly told who to support at the polls and who is “bad” for their futures and pensions.

We want our readers to understand you would be wildly loyal to someone who gave you a well-paid job in City or State government that you only have to work in for a relatively short period of time to become vested and then get paid lifetime benefits with regular annual increases and full medical coverage for life. The worst fake government pension of all is the Illinois General Assembly Pension program where an IL legislator only has to work on a part-time basis for four short years to later be entitled to millions in taxpayer dollars. Try to imagine what a political puppet you would be to someone who helped you get such a job with that level of multi-million-dollar lifetime compensation.

For the same reasons, the poorly run WC defense programs for these governments provide rock-star benefits and lifetime medical coverage for anyone who can construct an “injury” in our previously relaxed IL Workers’ Compensation Commission. For decades, State and City of Chicago workers were treated like royalty and allowed to create and maintain claims private sector employers would have screamed about—the reason no one in State or City government has ever complained is the simple mantra—fake government pensions and poorly run WC programs.

The “root cause” of Chicago’s skyrocketing debt is the trade-off of unfundable pension/healthcare benefits to government workers to breed and foster political loyalty.

Join With KCB&A on Our Workers’ Comp Defense Program FOIA Request

We are considering a Freedom of Information Act Request to the City of Chicago to see how badly run things are. We are asking for YOUR help. We want to ask things like

ü  How many employees does the City of Chicago have right now?

ü  How many pending IL WC claims does the City of Chicago have right now?

ü  What was the total amount paid by the City of Chicago for all workers’ comp costs in the last recorded year?

ü  How many WC claims adjusters work for the City of Chicago right now?

ü  How many outside claims adjusters work for the City of Chicago right now?

ü  What is the process to select and hire outside WC claims adjusting companies for the City of Chicago?

ü  How many pro se WC settlements did the City of Chicago enter into with its workers in the last year?

ü  How many pro se WC settlements did the City of Chicago enter into with its workers in the last five years?

ü  How many litigated IL WC claims is the City of Chicago defending right now?

ü  How many lawyers who work for the City of Chicago are defending all such claims?

ü  How many lawyers who don’t work for the City of Chicago but work for outside law firms are defending such claims?

ü  What is the process to select and retain outside defense lawyers to defend the City of Chicago in your workers’ compensation claims?

ü  How much did the City of Chicago pay for workers’ comp settlements in the last recorded year?

ü  How many City of Chicago workers are currently on TTD?

ü  How many City of Chicago workers have been receiving TTD for over one year?

ü  How many City of Chicago workers have been receiving TTD for over five years?

ü  How many City of Chicago workers have been receiving TTD for over ten years?

ü  How many City of Chicago workers are currently receiving lifetime total and permanent workers’ compensation benefits?

ü  Does any City of Chicago Department have a light-duty return to work program?

ü  Does the City of Chicago use any in-house investigators or surveillance providers to surveil its injured workers to insure they aren’t working while on TTD?

ü  Does the City of Chicago use any outside investigators or surveillance providers to surveil its workers to insure they aren’t working while on TTD?

ü  Does the City of Chicago use any WC nurse case managers in its workers’ comp defense program to monitor injured workers and manage their medical care?

ü  Does the City of Chicago use a workers’ comp PPP or preferred provider program to insure low medical reimbursements and limit choice of doctors for its workers?

ü  Does the City of Chicago use any vocational counselors or certified rehab counselors (CRC’s) to get your workers back to work in as timely a fashion as possible?

ü  If so, in how many WC claims are vocational counselors or CRS’s being used?

ü  What is the process to select and hire outside WC vocational counselors or CRC’s for the City of Chicago?

Give us your best questions and we will add them to the list. We will also send the folks who send great questions a $10 Starbucks gift card.

Where Do We Go From Here?

Plan A—Start telling the truth. Try to model the City of Chicago and its sister governments after great municipalities, like Naperville and Glencoe. Find a new and dramatically more affordable approach to post-government retirement programs for new and all future workers. Stop paying for lifetime healthcare coverage for new workers like the private sector. Consider combining police and firefighters into one public safety department where you train police officers to fight fires and firefighters to be police officers. Have the inactive firefighters help the police side of the combined force when they aren’t fighting fires. Start combining other city departments and get rid of duplicative, expensive and redundant leadership. Start using staffing companies so you don’t owe pension and healthcare benefits to such workers.

Plant B—Bankruptcy, either actual bankruptcy or virtual bankruptcy where the City runs out of money and can’t pay bills.

We appreciate your thoughts and comments. If you aren’t sure why we call them “fake” government pensions, send a reply. Please post comments on our award-winning blog.

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Synopsis: Governor Bruce Rauner Appoints Christine Ory as Our Newest IL WC Arbitrator.

Editor’s comment: Last week, Governor Rauner announced he appointed a former Claimant lawyer to become Illinois’ most recent selection for an arbitration post at the IWCC. Ms. Ory who has always been known as “Chris” is an experienced workers’ compensation attorney, working in the field since 1975. She began her career as a claim supervisor at The Hartford before becoming an attorney.

Until last week, Ms. Ory ran her own law practice, which focused solely on workers’ compensation claims. Prior to opening her own firm in 2005, she was a partner and president of Gabric, Millon & Ory, P.C. She began working in private practice in 1986.

Ms. Ory is a member of the IL Workers’ Compensation Lawyers Association, and is the previous chair of the Illinois State Bar Association Workers’ Compensation Committee. In addition, she has experience as an arbitrator in DuPage Circuit Court. Ms. Ory earned her bachelor’s degree in business from North Central College and her law degree from John Marshall Law School. She is a native of Naperville and now lives in Lisle.

We feel confident Chris Ory will be fair and diligent in her work as an arbitrator.

We are certain of at least one more arbitrator appointment coming and possibly two. We aren’t sure how there are going to be enough IL WC claims for all the arbitrators we will soon have running all over our state!

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Synopsis: News from NCCI: No IL WC Advisory Rate Filing for 2016.

Editor’s comment: We have always felt the NCCI IL WC advisory rate filing is mildly misleading. In our experience the advisory rates have almost always dropped, dropped and dropped some more. The problem with NCCI advisory WC rates is just that—they are ‘advisory’ and you can’t purchase IL WC insurance at those rates.

This year, the National Council on Compensation Insurance said in its latest State Advisory Forum for Illinois that it will not make an advisory rate and loss-cost filing for 2016. We assure our readers the NCCI statistical analysis is more significant. Overall, the latest WC experience in Illinois is a mixed bag with different components applying offsetting pressure on system costs. An increase in indemnity severity, higher benefit payments because of inflation and a slow-down in claim closures at early reports are putting upward pressure on costs.

At the same time, indemnity claim frequency declined slightly in 2012 and 2013 and medical severity increased at the same rate as inflation, helping to mitigate any cost increases. The two big questions for Illinois involve the lagging economy and pending legislation A standoff between Gov. Bruce Rauner, a Republican, and Democrats in the House and Senate prevented the Illinois General Assembly from passing a state budget by July 1 or even to present. The Governor and Democratic lawmakers are also deadlocked over workers' compensation reforms.

According to NCCI, several positive trends were observed in Illinois last year. Illinois WC direct written premium increased to $2.8 billion from $2.7 billion in 2013. That is a very minimal increase in IL WC insurance premiums—it is a .37% increase by my math.

The accident year 2014 combined loss and expense ratio was 92%, the same as in 2013. Combined ratios in Illinois dropped under $100 in 2012 for the first time in more than a decade.

Average indemnity claim frequency dropped by 1% in policy year 2013, following a 0.6% reduction in 2012 and an 8.5% reduction in 2011.

Illinois averages 999 indemnity claims per 100,000 workers, compared to a national average of 845 and a regional average of 871. Only Iowa, with 1,050 indemnity claims per 100,000 workers, has a higher frequency of lost-time claims.

Overall claim frequency in Illinois, however, is better. Illinois averages 3,054 claims per 100,000 workers, compared to the regional average of 3,811 and the national average of 3,407. No other regional state had fewer claims.

Average indemnity claim severity in Illinois increased 3.4% in 2013 to $33,000 from $31,900, the highest in the region. Iowa was second-highest with average indemnity severity costs of $26,000.

Average medical claim severity also increased by 1.4% to $31,100 in 2013 from $30,700.

Medical severity or average cost per WC claim in Illinois is lower than Indiana, $34,000, and Iowa, $33,000, but higher than Missouri where the average medical cost per indemnity claim is $28,000.

Since 2013, NCCI recommended a cumulative 15.5% reduction in voluntary loss costs and a 7.7% reduction in assigned risk rates. NCCI notes in its State Advisory Forum the "Illinois experience is very similar to that used in a prior Illinois filing." But it will not make a filing this year. If you want the link to the NCCI report, send a reply.

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