11-23-15; Illinois Reaching Crisis--Can WC Reform Be the Turning Point?; Brad Smith's Big Wins Make IDC Advance Sheets; Wisconsin Advisory Council Releases Agreed Bill and Republicans Issue Theirs...

Synopsis: As the State of IL Reaches a Crisis-Point, Can IL WC Reform Truly Be The Turning Point?

Editor’s comment: IL Government hasn’t had a budget since July 1, 2015. This has caused widespread consternation but it is amazing how folks adapt. Here are a few things that have gone wrong so far:

·         The IL WC Commission has stopped mailing decisions and is now effectively forcing participants to waive their right to get a copy via snail mail. This is happening even though the Commission has a budget/funding separate from the State General Revenue Fund. If you are short a few stamps, consider closing those unnecessary and do-nothing satellite offices.

·         Illinois 911 emergency centers are not receiving revenue from a dedicated tax on cell phones, which will result in layoffs and longer wait times for people reporting emergencies;

·         The 138-year-old Illinois State Museum in Springfield and its four satellite locations were closed on Sept. 30, along with the World Shooting and Recreational Complex in Sparta, leading to more than 100 layoffs. As we said in No. 1 above, we aren’t fans of unnecessary satellite locations when the State has over $100B in debt;

·         Hundreds of training classes for police department have been canceled, despite the passage of a law on Aug. 14 that requires additional training and re-training for officers;

·         At first, the Illinois Lottery said it wouldn't be able to pay people who win cash prizes of more than $25,000. Now anyone who wins more than $600 won't be collecting a dime until the State budget impasse is resolved. Tickets still are being sold.

There is a meeting set on December 1, 2015, next Tuesday between the Governor and Senate President Cullerton and Speaker Madigan. For reasons unclear to us, workers' compensation is emerging as a key element, as political leaders in Illinois try and find a way to break the state's nearly five-month budget deadlock. Various budget proposals are circulating in the state, with two appearing this week; one from state lawmakers, the other from a well-connected political operator. Both plans include proposals for substantive workers' compensation reform, including changes to the rules on “causation” of a work-related injury. This linking of reform to the budget goes to the heart of the debate and the lack of movement as Democrat leaders, particularly House Speaker Michael Madigan, D-Chicago, want to deal with the budget separately from the Governor's reform agenda. Moderate statutory reform of workers' compensation is inextricably a factor in the wider budget debate. The public meeting of the three most powerful state politicians will be a breakthrough, of sorts, but the bona fide negotiations will be done behind closed doors, as always happens in Springfield.

One plan has been put forward by Illinoisans for Growth and Opportunity, a political action committee led by Greg Goldner, a former campaign manager for Mayor Rahm Emanuel, who is also close to Gov. Rauner. The organization, known as IllinoisGO, leans Democrat. On workers' compensation, Goldner proposes, in the document published by IllinoisGO, that to control costs, the “state should look at the tighter causation definitions.” A second plan, put together by lawmakers on a bipartisan basis, also includes a reference to substantive workers' compensation without going into any strong detail. While workers' compensation forms a small part of the overall budget, it is likely to be key to discussions between political leaders in the state, not least because Rauner has included it as a main element of his turnaround agenda.

With the release of the Goldner plan and the one proposed by legislators, including Democrats, it appears increasingly likely workers' compensation reform is an area where compromise is possible. The Goldner plan supposedly includes potential savings of $300 million in state and local government workers' compensation costs, mainly through tightening rules on causation. We assume this new concept may end what we call “repetitive working” claims. Currently, in Illinois, a work accident does not need to be sole or primary cause of the employee's injury for it to be compensable—it just has to be “a” cause. The Illinois Manufacturing Association wants any new law to mandate at least 50% of a worker’s injury must be related to work done for his or her employer in order to receive compensation.

Michael Lucci, of the Illinois Policy Institute, has published a paper outlining potential savings to state and local government if the $2.35 Oregon WC Premium Rate study level was to be reduced by different percentages. Using information gathered from the Bureau of Labor Statistics, the Illinois Legislative Research Unit and the Oregon study, Lucci calculated the potential reductions on a covered payroll of $24.5 billion and total workers' compensation costs of $590 million for state and local governments. A 20% reduction, bringing Illinois' costs in line with Iowa, would result in savings of $118 million, a 50% reduction would save close to $300 million to state and local governments. “Causation is a core issue, but there are other issues,” said Lucci. Mr. Lucci said in addition to establishing a tougher “causation standard,” specific definitions for “traveling employee” need to be included in any potential workers’ compensation legislation. First, the IWCC and the courts have applied the doctrine to employees who are not traveling to areas that are unfamiliar and who are only engaged in incidental “travel” as a part of their regular job duties. Rauner has proposed an accident would be compensable only if the employee's travel and actions during travel are necessary for the performance of job duties.

Please remember changes to causation in this state will still require hearing officers with the brains and guts to put the legislative changes to work and cut the esoteric claims. We can also safely assume the IL Appellate Court, WC Division may later rule any legislative changes unconstitutional or find some esoteric way to counter the legislation, if that thinking becomes part of their and ITLA’s agenda. In our view, WC legislative changes are a “feel good” concept but their impact will take some time to weigh.

It appears the rather dramatic 30% cut to some IL WC medical costs has fallen out of favor (or maybe just out of sight of the media). We will have to wait and see—we are sure the doctors and hospitals across Illinois aren’t happy about this proposed change on top of almost 50% WC medical fee schedule cuts from 2005 to present.

How About Tackling Illinois’ Government’s Biggest Fiscal Issues?

With respect to Governor Rauner, Mike Lucci and everyone else, we don’t see how the workers comp reforms are on the point as do-or-die changes to save our State from this budget crisis and its decades of internal mismanagement. We continue to wonder why Governor Rauner isn’t using his executive power to cut, cut and cut bloated department budgets and trim staff across the state. We are looking for ABBC—Across-the-Board-Budget-Cuts. Cut the fat out of state government. Once you have accomplished that, there are other simple and patent ways to save Illinois taxpayers billions by bringing hundreds of injured state workers back to light work when sedentary and light duty jobs open up. On top of that, they can and should automate and get rid of hundreds of inefficient and antiquated positions, like collecting tollway tolls by hand—to fully automate the IL tollways would save $100M+ the first year they do it. We don’t need a state treasurer and a state comptroller—they are clearly duplicative departments. We can provide hundreds of other examples of do-nothing state jobs that should have been ended years ago.

How About Reforming State Pensions Before $100B in State Debt Grows to $200B?

Please remember, under former Governor Pat Quinn, our state’s debt picture doubled from $52B to over $100B. In our view, another spiraling and major problem in Illinois government are the hilariously de-funded state government pensions that are now costing taxpayers 25% of every state tax dollar—that ratio continues to spiral. We assure you your children and their children will be paying or post-funding government pensions for state workers who never worked for the state during their lifetimes—if you don’t understand, send a reply.. State government pensions come with “death math” where the State collects a couple bucks from the lower paid state workers as they rise in the ranks, then State government occasionally and sporadically “matches” that way-too-small contribution and then owes the worker 85% of their highest (and not median) salary plus 3% compounded annual increases that will cause their already-too-high pension to double in about 20 years after retirement. All of the changes to IL state pensions were made stupidly and without any true analysis about what our General Assembly or then-Governors were doing in boosting and boosting the payout. There are close to a million Illinoisans entitled to government pensions and there is no question we are moving to bankruptcy at some future time if the status quo isn’t meaningfully changed. We ask the rhetorical question—when are Governor Rauner, Senate President Cullerton and Speaker Madigan going to stop worrying about work comp issues and tackle meaningful state pension reform?

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

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Synopsis: KCB&A Defense Team Leader Brad Smith’s Big Wins Make the IDC Advance Sheets!

Editor’s comment: As our GL, EPLI and MVA work grows, we want to be sure our readers know of our biggest wins. Here are the reports:

Summary Judgment Granted for Keefe, Campbell, Biery & Associates’ Client

Northern District of Illinois Judge John Z. Lee granted summary judgment for Keefe, Campbell Biery & Associates’ client, a pharmaceutical company. Bradley J. Smith argued in his motion for summary judgment that the defendant is not subject to 42 U.S.C. § 1983 as it is not a state actor subject to liability. Smith further argued that plaintiff failed to bring forth any evidence demonstrating that defendant had a policy or pattern of practice that was deliberately indifferent to the plaintiff’s claimed serious medical needs. Plaintiff is a prisoner at Stateville Correctional Facility located in Crest Hill, Illinois. Plaintiff argued that the defendant was deliberately indifferent to his alleged serious medical needs by failing to timely fill prescription medications for the plaintiff. Plaintiff also argued that defendant was a state actor as it maintained contracts with a private company to fill pharmaceutical products for the Stateville prison population. In turn, the private company contracts with the Illinois Department of Corrections for the purpose of providing medical services to its prison population. Judge Lee granted defendant’s motion for summary judgment and dismissed the defendant from the case. Judge Lee based the summary judgment decision on plaintiff’s lack of evidence supporting a theory that defendant was deliberately indifferent to plaintiff’s alleged serious medical needs. The above matters are still subject to litigation and are subject to appeal. This article is in no way meant to influence the outcome of any potential appeals.

Bradley J. Smith of Keefe, Campbell, Biery & Associates, LLC Successfully Argues Case

After a week and a half of trial and approximately five hours of deliberations, a Cook County Jury found the decedent 50% comparatively at fault for her own death and ultimately awarded only $15,000.00 in pecuniary damages in a case tried by Bradley J. Smith of Keefe, Campbell, Biery & Associates, LLC. The decedent’s estate filed suit against the defendant alleging that its employee/driver was negligent in operating the armored truck at approximately 2:20 a.m. on New Year’s Day 2013 on East State Street in Rockford, Illinois. The plaintiff sought a range of pecuniary damages up to $3,500,000.00. The decedent made contact with the armored truck within the farthest left lane of the eastbound lanes. The employee/driver and his passenger did not see the decedent prior to the impact with the truck, but were keeping a proper lookout and scanning the roadway for hazards. Smith successfully argued that defendant’s employee/driver was not negligent and further that the decedent’s death was caused by her own lack of due care, including becoming intoxicated and impaired, crossing a dark area of roadway while wearing dark clothing, not keeping a proper lookout, and placing herself on a 6-laned roadway at 2:20 a.m. The above matters are still subject to litigation and are subject to appeal. This article is in no way meant to influence the outcome of any potential appeals.  

If you need assistance or counsel on similar claims, you can reach Brad on a 24/7/365 basis at bsmith@keefe-law.com.

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Synopsis: Wisconsin WC Advisory Council Releases Agreed Bill. Wisconsin Republicans Issue Another Version. Lots of New Concepts in the WC Mix.

Editor’s comment: Our top WC defense team members Jim Egan and Matt Ignoffo are closely watching the new workers' compensation legislation introduced to the Wisconsin Legislature this year. The number of stakeholders is a big increase from previous years and reflects the level of interest in the state's workers' compensation system. Last week, the Advisory Council released an agreed bill that represents a hard-fought compromise between the five labor and five management representatives on the panel. The Wisconsin Advisory Council will put finishing touches on the draft legislation, likely by the end of next week. The Council will then present their bill to both sides in the WI State Legislature. If the process is the same as in previous years, the bill will then be assigned to a committee, which will hold public hearings.

Legislators have been considering a break in tradition, in which state lawmakers did not tinker with any aspect of the workers' compensation system without an agreement between the management and labor on the WC Advisory Council. Republican lawmakers have taken an unprecedented step and introduced a separate workers' compensation reform bill—this isn’t typical WI politics. The competing bill that isn’t an agreed bill was filed last week and assigned to the Assembly Committee on Insurance.

The second and Republican-sponsored bill includes completely cutting all benefits to employees injured on the job as a direct result of being intoxicated or high on illegal drugs. That challenging provision would also apply to dependents if the injured worker dies. Presently, compensation for death benefits is only cut by 15% if intoxication is shown to be a contributing cause to an accident. This bill would proportionally reduce benefits for claimants who failed to follow instructions to use safety devices.

Under the bill, employers will not be liable for temporary disability benefits if a worker is suspended or fired for misconduct during the recovery. The legislation would also eliminate the deadline for filing claims for traumatic injuries from 12 to six years. Management had proposed cutting that to three – the second bill would reduce the statute of limitations to two years.

The bill also would change the rules on apportionment of causation for permanent partial disability claims. If a worker is permanently disabled, but only a portion of that disability was caused by an injury sustained at work, the employer would be liable only for the work-related percentage.

In exchange for the concessions by labor, the bill would increase the maximum weekly compensation rate for permanent partial disability to $342 from $322 for injuries occurring before Jan. 1, 2017, and to $362 for injuries occurring on or after that date.

The agreed bill would not make any changes to hold down medical fees in a state that has no workers’ comp medical fee schedule. A study released last week by the Workers Compensation Research Institute or WCRI showed Wisconsin workers’ comp system had the highest average fees for medical services of 31 states studied. On the other hand, WCRI studies have shown that Wisconsin employees get back to work quicker and have a higher level of satisfaction with their medical care.

The Republican-sponsored bill does not include any substantive proposals in relation to workers’ comp medical costs, either.

The Republican-sponsored bill would also:

-  Prohibit a claimant from pursuing claims worth similar amounts in two states, with Wisconsin benefits reduced by the amount paid in another state.

-  Reduce the statute of limitations for reporting traumatic injuries from 12 to two years.

-  Mandate that making a false statement on an application may result in denial of benefits.

-  Give the Department of Justice more powers to investigate and prosecute work comp fraud.

- Direct the Department of Workforce Development to study light-duty programs with the goal of establishing a definition that saves employers money.

- Provide employers are not liable for temporary disability payments if an employee is terminated for good cause.

- Allow employers to choose the medical provider for claimants who are not participating in a health benefit plan and allow the employer to require claimants who are provided a health benefit plan to choose a practitioner from within that plan.

We will continue to watch and report for Wisconsin risk managers and claims adjusters. We appreciate your thoughts and comments. Please post them on our award-winning blog.

11-16-2015; Important IL WC Appellate Ruling on WC Impairment Ratings; Dancing with the Devil in WC?--Can It Be Worth the Risk? Kevin Boyle and Pankhuri Parti on IN WC Medical Cost Study...

Synopsis: IL WC Appellate Ruling Provides Permanency Benefits Even With a -0- AMA Rating By Following the Plain English Meaning of the IL WC Act.

Editor’s comment: In Continental Tire of the Americas v. IWCC, the only issue raised in this workers' compensation appeal concerned the nature and extent of an injury to the left wrist and hand. Claimant worked as a labor trainer for the employer, Continental Tire of the Americas, LLC, at its manufacturing plant in Mt. Vernon, Illinois. He was involved in an undisputed workplace slip and fall accident. Arbitrator Luskin found Claimant sustained a 5% loss of use of his left hand, equaling $6,474.31. The employer appealed the Arbitrator's decision to the Illinois WC Commission panel that includes Commissioners DeVriendt, Tyrrell and Gore. The Commission affirmed and adopted the Arbitrator's decision. The Circuit Court confirmed the Commission's decision. 

The employer argued Claimant failed to prove he suffered any permanent partial disability as a result of the workplace accident. The parties do not dispute Claimant suffered a workplace accident when he tripped and fell while taking trash to a dumpster, landing on his left hand and arm. Subsequent X-rays revealed a serious left wrist fracture. An orthopedic surgeon who treats hand injuries, Dr. David Brown, examined Claimant, placed his arm in a splint, and restricted him to light duty. After appropriate care, Petitioner returned to work full duty with no restrictions and has not sought any further medical treatment as a result of the fall. Petitioner is now making the same  rate of pay that he did prior to the accident and worked more hours. The week before the arbitration hearing, he worked 57 hours. He testified he continued to experience pain from time to time in his left wrist. He testified when he was required to grab tires at work, he sometimes experienced pain in his left hand. In addition, when he carried something heavy, he can feel pain in his left wrist. 

After reaching maximum medical improvement, he played golf in the plant's golf league, which required him to play nine holes of golf one day per week. His team came in first place out of 16 teams in the league. He also played nine additional holes of golf each week. He testified he sometimes had difficulties with his wrist when playing golf.

Dr. Brown testified his initial examination of the Claimant's left wrist revealed a dorsal triquetral avulsion, which is also called a chip fracture of the triquetral bone in the wrist. He described the chip as being approximately three or four millimeters and located on the back or top of the wrist. For treatment, he recommended a removal splint to rest the wrist and allow the swelling to go down and a home exercise program. Dr. Brown released Claimant to work full duty and opined Claimant should not suffer any residual functional loss or difficulties with his left hand or wrist. He believed there would be some soreness for some time, usually four to six months, but the soreness would go away. He noted that typically there was no long-term negative sequelae from this type of injury.

Dr. Brown prepared a written report containing a disability rating based upon American Medical Association guidelines, which is required by section 8.1b(a) of the Act. Dr. Brown opined in his report there was no permanent impairment in the Claimant's left extremity as a result of the chip fracture. He explained in the report at the time of the last examination, Claimant was doing great functionally. He had full range of motion, no tenderness, and no measurable impairment.

The Appellate Court noted the determination of permanent partial disabilities for workplace accidents occurring after September 1, 2011, is governed by section 8.1b of the Act, which became effective on June 28, 2011. Section 8.1b(a) requires a licensed physician to prepare a permanent partial disability impairment report setting out the level of Claimant's impairment in writing. The report must "include an evaluation of medically defined and professionally appropriate measurements of impairment that include, but are not limited to: loss of range of motion; loss of strength; measured atrophy of tissue mass consistent with the injury and any other measurements that establish the nature and extent of the impairment." Section 8.1b(a) requires the physician to use "[t]he most current edition of the American Medical Association's 'Guides to the Evaluation of Permanent Impairment' *** in determining the level of impairment."

In determining the level of a Claimant's permanent partial disability, section 8.1b(b) directs the Commission to consider: "(i) the reported level of impairment pursuant to subsection (a); (ii) the occupation of the injured employee; (iii) the age of the employee at the time of the injury; (iv) the employee's future earning capacity; and (v) evidence of disability corroborated by the treating medical records." In the present case, the Arbitrator considered each of the factors contained in section 8.1b(b) and made the following findings: 

      Dr. Brown found an impairment rating of 0% of the left wrist; 

      Claimant was employed as a labor trainer for the Respondent and has continued in his usual and customary employment as of the trial date;

      Claimant was 49 years old as of the date of loss; 

      Claimant was released to his regular job by his treating physician and continues to work in that position as before the incident; and

      Claimant described some minor residual symptoms in the wrist.

Despite Dr. Brown's 0% impairment rating, the Arbitrator found Claimant sustained a 5% loss of use of his left hand as a result of the accident. The Arbitrator stated he determined the nature and extent of the Claimant's injury by considering "the totality of the evidence adduced."

In the present appeal, the employer argued, by adopting the Arbitrator's decision, the Commission misinterpreted section 8.1b of the Act. The employer argued, as a matter of law, Claimant's request for permanent partial disability should have been denied because he did not present a physician's report to support a finding of a permanent partial impairment. The employer also argued, alternatively, under the manifest weight of the evidence standard, the Commission failed to give proper weight to Dr. Brown's impairment report, Claimant's extremely limited treatment, and his return to full duty at his prior earning capacity. 

As we expected, the IL Appellate Court WC panel quickly and summarily “knocked out” each of the employer's arguments.

First, the employer asked the Court to interpret section 8.1b under a de novo standard of review and hold Claimant was required under section 8.1b to submit a medical report in support of his disability. This sets up what we call a “battle-of-the-ratings” that happens in other states. The employer complained Claimant did not offer any subsection (a) report that supported permanent impairment; instead, the only report in the record is their report from Dr. Brown, which contained a 0% impairment rating. Therefore, the employer argued the Appellate Court must reverse the Commission's award as a matter of law under Section 8.1b of the Act. The unanimous appellate majority noted the language of section 8.1b(b) required the Commission to consider a report prepared by a physician that includes an opinion concerning the level of the Claimant's impairment. The record in the present case established the Arbitrator and later the Commission considered Dr. Brown's impairment report in determining Claimant's permanent partial disability. They noted the Commission's consideration of this impairment rating report complied with section 8.1b's requirements. 

The IL WC Appellate Court expressly and accurately noted the statutory language does not require Claimant to submit a written physician's report. It only requires the Commission, in determining the level of the Claimant's permanent partial disability, consider a report that complies with subsection (a), regardless of which party submitted it. In addition, the majority notes section 8.1b does not specify the weight the Commission must give to the physician's report. Instead, the language of section 8.1b(b) clear states "[n]o single enumerated factor shall be the sole determinant of disability." Therefore, nothing within the statutory language of section 8.1b requires the Commission to automatically adopt Dr. Brown's reported level of impairment merely because the two parties submitted only one subsection (a) report. To the contrary, the Commission is obligated to weigh all of the factors listed within section 8.1b(b) and make a factual finding with respect to the level of the injured worker's permanent partial disability with no single factor being the sole determinant of disability. 

Second, the employer argued, alternatively, the Commission's decision is improper under the manifest weight of the evidence standard. The Court’s majority again disagreed. The decision notes under the manifest weight of the evidence standard, they must give proper deference to the weight the Commission gave to each of the factors listed in section8.1b(b). There was sufficient evidence to support the Commission's findings with respect to each of the factors, and nothing in the record indicates the Commission panel gave improper weight to any one factor. The ruling indicates “[n]othing in the record compels us to second-guess the Commission.”

We want to add a couple of thoughts—one, we always compare what happened to Claimant as it might compare to a non-employee visitor to the same tire-making plant who fell and suffered the same injury and sued in Circuit Court for premises liability. If you or I suffered the same injury, we could see a jury finding liability and awarding $25,000 or more in damages. In contrast, this Claimant received only $6,474.31. It is tough to imagine the “value” of a rapid and fair workers’ comp award being that low but it is hard to get one’s head around the more intense idea an undisputed and seriously fractured wrist should be zero in a workers’ comp setting.

We also want our readers to note the ruling appealed from for 5% LOU hand for a fractured wrist is a dramatically lower value than would have been issued by this administrative body just ten years ago. In 2005, the traditional value for a broken wrist would have been reserved from 15-25% LOU hand. Lots of Arbitrators under former-Governor-Blago-Now-In-Jail would have awarded 20% LOU hand or about $26,000! Illinois WC isn’t perfect but values continue to inexorably drop.

Please also note our current Governor Bruce Rauner is trying to again change the IL WC Act and a confab is set to discuss these proposed reforms with Speaker Madigan and Senate President Cullerton. The proposed WC reforms include a proposed change to consideration of impairment ratings but we are certain that reform, as drafted, wouldn’t change this outcome at all. We also don’t recommend IL WC move to a “battle of ratings” as it appears this employer wants—it won’t be hard for the Plaintiff-Petitioner bar to do so and litigation expense on both sides is certain to rise. We again suggest our brilliant Governor let the quiet WC reforms already in place take effect and move on to bigger things like fake government pensions, bringing state workers back to light duty and cutting the size of our bloated State government.

Finally, please note this employer probably spent $10,000-20,000-30,000 in litigation costs and expenses to fight these odd issues through four levels of hearings/appeals. Moving forward, our respectful advice would be to carefully read the IL WC Act as written and assume the Arbitrator, Commission and reviewing courts will enforce it as the General Assembly enacted it. While we have seen odd rulings where the Commission and reviewing courts “bend” the law and rules, it doesn’t happen for the WC defense side very often.

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

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Synopsis: The Dumbest Thing a U.S. Risk Manager Can Do In Workers’ Comp—Dancing with the Devil by “Paying Out of Pocket” for WC Losses.

Editor’s comment: We had an inquiry from a reader about a company/risk manager that knew they had a work-related accident with a serious injury but didn’t report it to their WC insurance carrier. To maybe save future insurance premium dollars and keep their “mod rate” low, they were paying medical bills and lost time out of their own bank account. As you can bet, the claim got bigger and bigger and it appeared they weren’t going to care any more about their future insurance premiums, they started to care about their current cash flow. They reported the claim very late and asked the carrier to reimburse the WC dollars paid to date and pick up the claim thereafter.

If you aren’t sure, this is the WC equivalent of “dancing with the devil.” In short, you are taking a giant risk to maybe save a few bucks in the near term. Why is it an enormous risk to pay a couple of bucks and avoid your insurance carrier for a work-related injury? Late reporting of injuries drives up costs. Workers are less likely to get proper care outside of the workers' comp system if the claim goes unreported. Prompt accident investigation and early treatment of injuries is often the key to successful claim handling. Late-reported injuries also tend to involve more costly litigation, as the insurance carrier and injured worker debate the necessity of medical care and time off from work.

Some state laws sanction employers who do not report compensable injuries to their insurance carriers. In some cases, employers wish to avoid paperwork and costs associated with a workers' comp injury and simply tell the injured worker to seek medical treatment, for which the employer will pay out of pocket. To avoid this practice, most states set a short deadline for filing a first report by an employer to the carrier; in Minnesota, the deadline is 14 days, while in South Dakota it's 20 days and in Iowa just 11 days. If the deadline passes without a report, state’s WC law may assess fines against the employer. This action can also incur inquiry, investigation and issues with your the insurance carrier, including denial of defense or cancellation of the workers' compensation policy.

In the Illinois workers’ compensation system, the risks of late reporting and ending up uninsured for a WC injury are dramatic. First, you can face both the administrative workers’ comp claim at the WC Commission, you can also be simultaneously sued in Circuit Court as a lead defendant. If you are sued in Circuit Court, any money you pay to your worker as a result of that litigation is not a credit against the WC claim. In short, you can owe double-benefits to your worker.

You may think “well, that can’t happen, because I have WC insurance, right?” Again, you are driving down a very scary road because you only have WC insurance if you timely report your WC claims to the carrier. At some unstated but important point, your WC insurance carrier has a valid basis to deny your WC coverage. There is a mountain of case law on denial of insurance coverage for late reported insurance claims. Please also remember you may be fighting a WC claim at the IWCC, a Circuit Court claim brought by your worker and an insurance coverage fight with your carrier. All of these sources of litigation can easily be avoided by simply following the rules.

In a late reported work comp claim, some WC insurance carriers may accept and start to pay appropriate benefits beginning when they learn of the WC claim and some carriers will deny WC insurance coverage entirely. The insurance carrier will want to be able to demonstrate what is called “late-notice-prejudice” and not simply late notice.

In a late-reported WC claim, for an insurance carrier to demonstrate “late-notice-prejudice” should be relatively easy. Some of the factors an insurance carrier isn’t able to do in a late-reported claim are:

ü  If prompt reporting had occurred, their claim adjuster could have insured key evidence was preserved;

ü  Witnesses could have been interviewed in completing a timely investigation of the loss to determine compensability and to determine an appropriate plan of action for resolving the claim.

ü  Prompt reporting allows the detection of “red flag indicators” for fraud and determines whether a work comp case should be referred for surveillance or if there is an opportunity to pursue subrogation against a negligent third party.

ü  Nurse case management could be used to monitor and manage all medical decisions;

ü  Medical treatment could be moved to a WC PPP or in specialized occupational medical clinics familiar with treating workers’ compensation injuries with a focus on facilitating an early return to work to promote quicker healing.

ü  Legal counsel could have been retained to set a litigation plan and validate evidence;

ü  IME’s and utilization review could be used to control medical costs.

Veteran WC readers will also remember the McMahan v. IWCC ruling from year 2000. In this claim, the employer didn’t timely report an undisputed injury. After late reporting, the carrier and employer got into a legal dispute over coverage and neither one of them paid the work-related medical bills. The claim went all the way to the Illinois Supreme Court who judicially changed longstanding and well-settled Illinois law to start allowing penalty petitions on unpaid medical bills.

Either way, our strong recommendation to all of our readers—it isn’t worth it, report your claims to your carrier as soon as you are sure you are dealing with a work injury. If you need advice relating to these issues, please contact us to discuss. 

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

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Synopsis: Surprise--Indiana WC Medical Payments Per Worker’s Compensation Claim Are Higher Than 17 States, WCRI Study Says. Analysis by Kevin Boyle, J.D. and Pankhuri Parti, J.D..

Editor’s comment: Indiana is often cited as one of the states with the lowest worker’s compensation costs for their businesses. Indiana politicians often make headlines after landing out of state companies that move to Indiana for this benefit. However, Indiana WC might not really be the lowest when you look at the highest cost in any work comp claim—medical care.

A national study indicates medical payments are actually higher in Indiana and rising faster than in most states examined by a recent study from the Workers Compensation Research Institute (WCRI). Their report, "CompScope™ Medical Benchmarks for Indiana, 16th Edition, covers 2008 to 2013, before the introduction of a hospital fee schedule enacted under Indiana’s House Enrolled Act (HEA) 1320, which went into effective on July 1, 2014. 

“Before HEA 1320, Indiana had higher prices for medical care than most states, and prices were rising faster, situations our studies have found among states with no price regulation,” said Ramona Tanabe, executive vice president and counsel for WCRI. “In Indiana, utilization of medical care was somewhat lower, which tended to offset the higher prices paid.”

Information in the current study serves as a baseline for Indiana, to compare with experience after the adoption of the hospital fee schedule.  The other states examined in the study were: Arkansas, California, Florida, Georgia, Illinois, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin.

 Surprisingly, from those states studied, every other state in our law practice, Illinois, Michigan, Iowa and Wisconsin, has better metrics than Indiana.

The following are among the study’s findings:

·         Medical payments per claim with more than seven days of lost time rose 6 percent per year on average from 2008 to 2013 in Indiana, a faster rate than in most of the 17 states WCRI studied.

·         The percentage of medical payments for care within networks increased since 2010, which may have had a dampening effect on price increases. States that lack fee schedules tend to use medical networks frequently to help control medical costs through claims management and negotiated payment discounts. 

WCRI studied medical payments, prices and utilization in 17 states, including Indiana, looking at claim experience through 2014 on injuries that occurred in 2013 and earlier. WCRI’s CompScope™ Medical Benchmark studies compare metrics of medical costs and care from state to state and across time.

This article was researched and written by Kevin Boyle, J.D. and Pankhuri Parti, J.D. who are our top KCB&A Indiana legal specialists. Please do not hesitate to email them at kboyle@keefe-law.com or pparti@keefe-law.com.

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Synopsis: We are happy to announce the appointment of former IWCC Arbitrator Ketki Shroff Steffen to the Circuit Court bench.

Editor’s comment: She worked hard but wasn’t at the IWCC long and already had a number of years’ experience as a judge. We extend kudos to her and wish her well.

11-9-2015; IL Supreme Court Pulls Our State Back From Legal WC and GL Chaos, Sort Of; Nathan Bernard, J.D. Analyzes an Important Restrictive Covenant Ruling and more

Synopsis: Illinois Supreme Court Pulls Our State Back from Legal Chaos and Confusion, Sort Of.

Editor’s comment: It is hard to imagine Illinois subtly but certainly facing legal/legislative turmoil, confusion and disarray at the hands of the Illinois Trial Lawyers Ass’n but we assure you it was present. We send kudos to the august members of our highest state court for pulling our state back to a semblance of political and judicial normalcy.

What Almost Happened? 

Try to imagine a complete end-run around the WC system by Plaintiff-Petitioner lawyers. Try to imagine new and unexpected work-injury claims for seven and eight-figure damages along with punitive damages. Try to imagine being at the mercy of Illinois’ aggressive and pro-Plaintiff judiciary.

Well, in Folta v. Ferro Engineering, Plaintiff’s decedent claimed he was exposed to products containing asbestos in the course of his employment with Defendant 41 years before he was diagnosed with mesothelioma. The defense team at KCB&A has defended various claims for such alleged exposures and we are sure many of the claims may be very strained and difficult to believe. Many folks, when they come down with cancer, like to blame their employers and not their lifestyle choices.

The now-deceased Plaintiff filed this civil action one month after his cancer diagnosis. The claim was taken over by his widow. Defendant Ferro Engineering’s motion to dismiss based upon the exclusive remedy provisions of the Occupational Diseases Act was routinely granted. The IL Appellate Court shockingly reversed that dismissal, accepting Plaintiff’s argument this disease “was not compensable under the Act” because of the operation of the 25 year period of repose in the Act, so he had never had an opportunity to recover any benefits under the IL WC Act. As the injury was both covered and then barred under the IL WC Act, the Court ruled the injury “was not compensable under the Act” and fell under an exception to the operation of exclusive remedy contained in Section 5 of the Act.

Here, the injury was indisputably the type of work-related injury/exposure which fell within the purview of the Act, and therefore the Supreme Court ruled the employer’s liability was governed exclusively by the IL WC Act. The majority ruling accurately indicates “The litmus test is not whether there is an ability to recover [workers comp] benefits.” The Court said it was aware of the “harsh result” in the case. However, the ruling noted whether a different balance concerning the historic bargain under the Workers’ Compensation Act is a question for the legislature, and not the courts. The decision indicates “It is not our role to inject a compromise but, rather, to interpret the acts as written.”

We have three thoughts:

First, with respect to our Court’s members, we don’t consider the outcome harsh at all. Workers’ comp benefits are an all-or-nothing-at-all situation. The value of this IL WC claim at the IWCC would probably be in the range of $1.5M. Gosh only knows what the value might be in front of a friendly jury. We find it difficult, if not impossible to believe there was strong and irrefutable evidence the disease from which decedent suffered was inextricably linked solely or partially to work he performed for an unstated duration during the decade of the 1970’s. If he lived to testify, we are sure he would have testified to support such a claim but how could an employer truly “rebut” or defend those assertions more than forty years later? How could the employer know where Claimant later worked or how he conducted his life outside of work for those four-plus decades? In our view, a 25-year period of repose is plenty of time within which someone should have to demonstrate the effects of a deleterious workplace exposure.

Second, please also note this ruling, if it had been allowed to stand would basically have sucked every Illinois employer and employers across the state into the impossible litigation morass that is the Madison County, IL Asbestos Docket. Please note Edwardsville, IL which has the Madison County courthouse in its quaint downtown is a tiny southern IL town with less than 25,000 citizens. In years past, court records show there were 659 new asbestos cases filed there in 2008; 814 in 2009; 752 in 2010; 953 in 2011 and 1,563 in 2012; in 2013, they had 1,678 new filings with 1300 claims filed in 2014. In those seven years, there were 7,719 new asbestos filings in that city. Lots of rural and similarly populated IL counties don’t have 200 major law suits filed in a year.

Without question, tiny Madison County, IL has the largest asbestos docket in the country. They have literally hundreds of asbestos claims set for trial every month of every year. It was dubbed the "epicenter" of U.S. asbestos litigation by the American Tort Reform Association in its 2013 “Judicial Hellholes” report. If you aren’t sure this is an ever-growing legal cottage industry funded by the Plaintiff’s bar and the many settlements of such challenging claims.

If the Folta ruling wasn’t overturned by our highest state court, just imagine every major Illinois employer being joined as parties defendant in all that messy and endless asbestos litigation—we are sure hundreds of Illinois employers would be screaming to the highest heavens seeking relief and/or pulling up stakes and moving to saner shores. Thankfully, the IL Supreme Court staunched such concerns.

Third, please also remember the legal theory espoused by the Plaintiff lawyer in the Folta claim wouldn’t be limited to asbestos WC/OD claims. Every claimant across the state could then have asserted they injured their [insert body part] and didn’t notice symptoms until the typical three-year IL WC statute of limitations had run. When that happened, it would be Katie-bar-the-door with lots of new GL litigation taking over for WC claims in the Circuit Court. Judges and juries could then decide liability and damages and maybe even punitive damages against hapless Illinois employers. Again, we are happy to report this isn’t going to happen—let’s make a collective sigh of relief.

What Else Almost Happened (and Might Still Come Back to Bite U.S. Business)? 

In Price v. Philip Morris, Inc., we again saw our State again pulled back from the precipice of chaos, sort of. Please note you could probably write a great book about this uproarious multi-billion dollar claim which has the feel of an entertaining but eventually scary Broadway play. In the first episode of this litigation, two of the world’s largest tobacco companies were sued in a class action in tiny and semi-rural Edwardsville, IL. Plaintiff’s class action claim was focused on the concept of marketing/selling “light” cigarettes. Plaintiff’s counsel asserted this was misleading because the term “light” sounds like the cancer-sticks have less nicotine when they don’t. For reasons we have never heard, neither tobacco company sought removal of the matter to federal court or filed a jury demand. These two mistakes could have been the biggest mistakes in the history of U.S. (and maybe world) jurisprudence. The mistakes put these tobacco companies in front of a wildly Plaintiff-friendly judge in a bench trial presented by a Plaintiff attorney who legally supported this judge with substantial contributions for his elections. After the bench trial in March 2003, this trial judge gave a whopping $10 billion dollar verdict with a $1.1 billion dollar attorney fee award!

Passing on the massive verdict, we are confident the attorney fee award of $1.1 billion is the highest hourly attorney fee award in the history of this planet. Please note the matter didn’t have a lot of pretrial discovery and there weren’t hundreds of experts called at trial—it was a relatively quick hearing. Please try to grasp just how much money $1.1 billion is—if claimant’s counsel expended 10,000 hours trying the Price claim, the award would be $100,000 per hour! If they put 100,000 hours into the claim, the award would still be $10,000 an hour. Most federal and state court judges start to balk when hourly fee awards start to near $1,000 a hour. In our view, without any true reasoning or justification, this hourly award was exponentially higher.

Either way, the billion dollar money judgment was reversed by the IL Supreme Court upon a direct review under SCR 302(b). That plurality opinion found the Federal Trade Commission specifically authorized the use of descriptors for light cigarettes, thereby effectively barring Plaintiffs’ complaint by operation of Section 10b(1) of the Consumer Fraud Act. The claim was dismissed about a decade ago.

About two years ago, Plaintiff’s counsel filed a petition for relief from judgment in the Madison County Circuit Court, asserting new evidence existed, primarily consisting of an amicus brief filed by the FTC before SCOTUS which was said to reflect the opinion of the FTC on the use of such descriptors. Ultimately, Circuit Court Judge Dennis Ruth, the former IWCC Chairman considered the merits of Plaintiffs’ petition and denied it, deciding Plaintiffs failed to show the IL Supreme Court would have decided the case differently if it had the evidence contained in Plaintiffs’ petition. The wildly pro-Plaintiff Fifth District Appellate Court reversed Judge Ruth, stating it was “easy to see” how the IL Supreme Court’s analysis “would have been changed.” The Appellate Court directed Judge Ruth to reinstate the original multi-billion dollar judgment.

Last week, the IL Supreme Court held a litigant cannot file a Section 2-1401 petition in the Circuit Court to vacate the judgment of a reviewing court because it would not be filed in the same court in which the judgment being challenged was entered. The Court also found support for its decision in Article VI of the Illinois Constitution. Our Supreme Court stated it was expressing no opinion on the merits of a motion to recall the mandate, “should such a motion be filed in this court at a future date.” This leaves the door open for more chaos, as we are certain Plaintiff’s counsel is going to continue to pursue the gigantic pot of gold at the end of this rainbow.

Madison County Court Carnival Legal Side-Show Number One

The appeal bond for the 2003 appeal of the Price ruling to the IL Supreme Court would have been over $16 billion dollars. This would have bankrupted both tobacco companies. They went to the IL Supreme Court on an emergency motion and the appeal bond requirement was reduced to $600M. Statutory interest runs on such appeal bonds and is split between the State and the County—in this case, the interest on this whopping appeal bond eventually brought almost $90M in unexpected cash to this tiny and mostly rural county. In the spirit of kleptocracy, the county fathers/mothers avoiding using this largesse for the poor and downtrodden and instead chose to spend it mostly on themselves. They completely redid the County Courthouse so it is now one of the largest court buildings in the U.S. and stands out like a giant sore thumb in the tiny town of Edwardsville, IL. They computerized the courts and also put some money into the police department. With the money left over, it seems they grabbed it and ran--they all took early retirement!

Madison County Court Carnival Legal Side-Show Number Two

The pendency of the Price ruling contributed to an enormous and sometimes ugly battle over the election and later retention of the seat of current IL Supreme Court Justice Lloyd Karmeier. He is the Supreme Court justice for the position that is elected from far southern IL. A television attack ad was aired by political action group Campaign for 2016urging voters to remove Karmeier from the bench. The ad and subsequent campaign, funded mainly by Plaintiffs' attorneys, accused him of ruling in favor of big business after receiving donations of $4 million from pro-business interests during his 2004 campaign. The ad ended with the phrase "Our justice is not for sale." What is ironic is the Plaintiff bar was not shy about six-figure donations during the initial campaign to his opponent from interested Plaintiff firms from all over the U.S.—why would a law firm from outside Illinois contribute so heavily to a Supreme Court candidate in our state or fight for the removal of a sitting judge? Can there be any other reason than to see Plaintiff interests and multi-billion dollar rulings protected?

In response, the Republican State Leadership Committee, a national PAC, stepped in and began heavily campaigning in support of Justice Karmeier. Their ad commended Karmeier for standing strong against "Chicago trial lawyers who have tried to buy the courts." Additionally, the Republican State Leadership Committee also began pouring money into Karmeier's campaign ($950,000).

A Common Sense Warning about Madison County Carnival Legal Side-Shows and the Illinois Plaintiff Bar

We want our readers, the Governor, the Supreme Court, presidential candidates on both sides and anyone else interested to remember this warning. The reason Madison County, IL is such an outlier when compared to almost all other counties in the United States is the willingness of the Plaintiff bar to invest heavily in judicial and other elections. The concept of “justice” in that county is so pro-Plaintiff, it has drawn intense national criticism. Former President Bush visited Madison County and worked to reform national class action law to thwart what some felt were abuses. The Price case was felt to be one such abuse.

If one of Madison County’s leading Plaintiff attorneys recovers a judgment paying legal fees of what now are supposedly $1.8 billion dollars, the attorney is going to be wealthier than our Governor and almost anyone else in our state. That Plaintiff lawyer will have a giant war chest from which to lawfully fund his choice of candidates across our state in legislative, judicial and gubernatorial elections. Such a Plaintiff lawyer is certain to want to legally use that money to de-form Illinois into their image and likeness. We are confident that image and likeness isn’t one that is pro-business. If this sort of judgment with such legal fees is paid out, we are fairly sure Madison County may become a hub to seek gigantic judgments against any U.S. business they can pull into their web.

A Caveat from Your Editor

We don’t want to get sued for libel, particularly in nutty Madison County. The facts outlined are presented to the best of our knowledge and research. The opinions voiced are those of your editor and we assert we are entitled to our opinions. Feel free to carefully post your best thoughts and comments on our award-winning blog.

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Synopsis: Keep Employer-Employee Restrictive Covenants “Reasonable” to Protect Your Legitimate Business Interests or Skip the Whole Concept.

Editor’s comment: The defense team at KCB&A are expert on handling restrictive covenants and the law in this area is fairly simple. We are confident our rates to create and review effective documents are dramatically lower than our competition. In drafting or approving such documents, we advise our clients that, rather than impose undue hardship on a what may become a former employee or result in a loss of trade to the public, make sure the activity, time, and geographic restrictions are narrowly related to the business and current customers/clients or lose any chance to enforce the agreement at all. 

In Assured Partners, Inc. v. Schmitt, 2015 IL App (1st) 141863 (October 27, 2015) the First Division Appellate Court decided the issue whether to allow an employer to enforce a noncompetition, non-solicitation and confidentiality provision in an employment agreement with its former employee. The restrictive covenant was found to act as a blanket prohibition intended to bar a former employee from working as a broker, in any capacity, within the entire professional liability insurance business nationwide, and was thus overbroad and unenforceable. The former employee was a wholesale insurance broker who began working in the insurance industry in the early 1990's. Since 2003, his business centered on the lawyers' professional liability insurance (LPLI) market. He built a "substantial" book of wholesale lawyers’ professional liability insurance business during many years prior to his employment with the employer, to the extent that he placed millions of dollars in LPLI with insurers in the United States and also in the United Kingdom. In addition, during that time, he established contacts with LPLI retail brokers and insurers, which spanned approximately a dozen of the fifty United States as well as the United Kingdom.

In 2006, the former employee was recruited by the employer in the position of senior vice-president to spearhead, promote and build the business and relationships throughout the United States and foreign jurisdictions where it conducted business. The former employee signed a noncompetition, non-solicitation and confidentiality provision. In 2013, a dispute led to a resignation and a lawsuit to prevent the former employee from purportedly transferring their business/customer list. Public policy favors enforcement of a restrictive covenant where an employee behaves dishonestly in blatantly stealing the employer's lists of customers.

The court uses a “rule of reasonableness test” to determine the enforceability of any restrictive covenant.  A restraint on trade is reasonable only if it: 

(1) is no greater than is required to protect a legitimate business interest of the employer; 

(2) does not impose undue hardship on the employee; and

(3) is not injurious to the public.

Factors considered to be relevant to this analysis include, but are not limited to, the near-permanence of customer relationship and, the employee's acquisition of confidential information through his employment (activity), and time and place of restrictions. No single factor bears greater value than the other in the assessment. 

Here, the Court found restrictive covenants unreasonable because the former employee was prevented from any business activity related to any type of professional liability insurance, and not just LPLI. It would prohibit the former employee from soliciting any business or potential acquisition of not only the employers more than 30 affiliate brokerages in the U.S. and U.K., but also restricted him from soliciting any not yet-acquired customer. The employer did not have legitimate protectable business interest in protecting customers they didn’t even have yet! Technically, the restrictive covenant would allow the former employee to work in other insurance-related business that did not involve any professional liability insurance products or services anywhere outside of a 50 mile radius of West Orange, New Jersey. But this was illusory as the former employee had not worked in any capacity other than as a wholesale insurance focusing on LPLI since 2003. Plus, it prevented the former employee from work in any insurance-related business for a period of 28 months. This was a significant period to impose on a former employee whose effective term of employment lasted only 20 months.

The prohibition imposed an undue hardship on the former employee because he had developed contacts over many years even prior to coming to work for the employer. The employer did not provide him with any training, technology, or other specialized information unique to assist him in building his book of wholesale LPLI business, and he was hired specifically due to his contacts with LPLI retail brokers and insurers and his expertise in placing and serving wholesale LPLI.

Finally, it was an unreasonable restraint on business activity to not just prevent the former employee from soliciting their customers but precluded him from working, in any capacity, in the industry in which the employer did business. It would prevent the former employee from earning a living as a wholesale broker for all professional liability insurance products and services in every location within the 50 states and territories of the United States and effectively force him to work in another country which would result in loss of trade in the U.S. 

Beware! Just because the court may ultimately find a restrictive covenant to be unreasonable doesn’t mean the prohibition cannot be judicially modified so as to narrow the scope of the restraint on the former employee’s activities. The courts are willing to limit the geographic scope of the noncompetition provision and to limit only those clients of the employer the former employee had interactions with during his employment. In determining whether modification is appropriate, the fairness of the restraints contained in the contract is a key consideration. In this case, the restrictive covenant contained several overbroad restrictive covenants that effectively prevented the former employer from practicing his trade anywhere. This was significant as it wasn’t just one minor deficiency, but several deficiencies that rendered it too great to permit modifications as this would be tantamount to fashioning a new agreement. The drafter of a contract, generally the employer, is the one who suffers if there are disputes. The less the agreement was negotiated, the more it can be argued the contract was "forced" especially as often the former employer will argue the restrictive covenant was a “take it or leave it” requirement for employment. So if there is ever a disagreement, the employer should choose the most important issues to fight about and not change minor issues. 

This article was researched and written by Nathan S. Bernard who can be reached at nbernard@keefe-law.com or (312) 756-3726 with any questions or comments.