9-5-2016: The IL WC Community Says Goodbye to Arb. Bob Williams and 11 Great Arbs Reappointed; WCRI Notes Wide Variances for WC Hospital Costs and more

Synopsis: IL Governor Rauner Reappoints 11 Arbitrators, Says Goodbye to 20-Year Veteran Arbitrator Bob Williams. Let’s Hope IL WC Costs Continue to Drop.

Editor’s comment: Illinois Gov. Bruce Rauner on Wednesday reappointed 11 Arbitrators to the IL Workers’ Compensation Commission and thanked outgoing Arbitrator Robert Williams for his nearly 20 years of service.

Former Arbitrator Bob Williams, of Cook County, has practiced law for more than 30 years in government and in the private sector, and was a solid IL workers’ comp arbitrator starting in 1997. He previously served as chief of the Chicago Industrial Commission Bureau of the Office of the Illinois Attorney General, as legal counsel for the Illinois Office of the Comptroller and as corporate counsel in the City of Chicago’s law department. He also was an associate at Washington, Kennon, Bryant & Hunter, and holds an MBA from the University of Illinois, a JD from Loyola University and a BS from Le Moyne-Owen College.

Bob Williams was the only sitting IL WC Arbitrator who played competitive volleyball against your editor and other WC attorneys in the Chicago Bar Ass’n league. His departure doesn’t do much for the concept of “diversity” among the 40 hearing officers at the IWCC along with the Circuit and Appellate Court judges/justices across this state. We have no reason why Former Arbitrator Williams was not reappointed and hope it was as much his decision as it was the Governor’s. Bob was a solid and knowledgeable hearing officer who we are sure wanted to keep IL WC costs both reasonable, affordable and fair.

Reappointed as IL WC Arbitrators were:

• Kurt Carlson, of Cook County, a workers’ compensation attorney and arbitrator starting in 2004. Previously he represented both employers and injured workers at the law firms of Macey, Chern and Diab; Teplitz & Bell; and Power & Cronin. He served in the U.S. Army Medical Corps before earning his BA from the University of Wisconsin and a JD from the John Marshall Law School in Chicago. I consider Arbitrator Carlson to be fair and a solid hearing officer who always listens to both sides.
• Brian Cronin, of Cook County, a finance and business professional and an arbitrator beginning in 1996. Previously he was an independent and head trader, broker, trading floor manager and options specialist for several firms, including the Chicago Board of Trade, Barclays Bank and O’Connell & Piper Associates. He holds an MBA in finance and business policy from the University of Chicago, and an MBA in management and finance from the University of Notre Dame. Arbitrator Cronin is also a knowledgeable, professional and fair hearing officer with high ethical standards..
• Carolyn Doherty, of DuPage County, who has worked in workers’ compensation, insurance law and as an attorney with the IWCC. She has served as an arbitrator in the Cook and DuPage county mandatory arbitration systems on a rotational basis. She holds a JD from the John Marshall Law School and a BA from Marquette University, and previously worked as an associate at the law firms of Sedgwick, Detert, Moran and Arnold; Hanson & Peters; and Schoen & Smith. Arbitrator Doherty is brilliant in pretrials and we consider her to be a strong mediator of difficult disputes.
• Greg Dollison, of Cook County, a review coordinator for the IWCC for more than 20 years. He has moderated negotiations between employers and union representatives, and served as an arbitrator for the IWCC starting in 2004. Dollison has a BS in city and regional planning from the Illinois Institute of Technology and attended Roosevelt University. To our understanding, Arbitrator Dollison may be the last “non-attorney” Arbitrator in our state. He has a legal understanding he learned the hard way and does a solid job running his hearing room.
• Barbara Flores, of Cook County, who has worked as corporate counsel of Alden Management Services and previously in the labor and employment law department at the U.S. Postal Service. She also worked as an assistant attorney general in the labor and employment unit at the Office of the Attorney General and at the firm Rock, Fusco and Garvey, and the AIDS Legal Council of Chicago. She holds a JD from Chicago-Kent School of Law at the Illinois Institute of Technology, and a BS from the University of Illinois. Arbitrator Flores is both knowledgeable and fair to both sides.
• William R. Gallagher, of St. Clair County, who has more than 35 years of legal experience, including as a solo practitioner specializing in workers’ compensation law in Illinois and Missouri. He also worked as in-house counsel at the Kemper National Insurance Co., and specialized in workers’ compensation and products liability cases, and as an attorney at the Harry J. Nichols Law Office, working on workers’ compensation claims in Illinois and Missouri. Gallagher has a BA in political science and economics, and a JD from Southern Illinois University. We feel Arb. Gallagher does great work and brings top-notch professionalism to the job every day.
• Christina Hemenway, of Lincoln, who worked as an attorney specializing in workers’ compensation claims for more than 20 years. Hemenway has worked for Country Financial as a workers’ compensation claims attorney, and managed catastrophic claims and employer liability and coverage lawsuits. She is a member of the Illinois Chamber of Commerce’s Workers’ Compensation Committee, the Property Casualty Insurers’ Workers’ Compensation and Medicare committees, and the Illinois Advisory Committee for the Workers’ Compensation Research Institute. Hemenway is a graduate of Missouri State University and earned her law degree from the University of Missouri. Arbitrator Hemenway has a great legal mind and, as a claims manager, was behind many of the Appellate and Supreme Court rulings that define IL WC law.
• Edward Lee, of DuPage County, who as more than 30 years of workers’ compensation law experience. He served as a U.S. Army armor officer, representing soldiers or the Army in court martial cases. Lee worked in private practice specializing in workers’ compensation law, representing both respondents and petitioners, and was named an IWCC arbitrator in 1997. He holds a law degree from John Marshall Law School and attended Tulane University for his undergraduate studies. Arbitrator Lee is a quiet, knowledgeable and hard-working man who carefully considers all sides and makes his best judgment.
• Molly Mason, of Cook County, who has more than 25 years of workers’ compensation law experience. She served as a commissioner with IWCC starting in 2007 and as a staff attorney beginning in 2003. Mason previously worked at the law firms Corti, Freeman & Aleksy, and Burke & Burke, and has published several articles in the Illinois Bar Journal. She holds a JD from Loyola University and a BA from Harvard University. When she started at the IWCC, we feel Arb. Mason learned every single minute on the job; she is now brutally honest to the lawyers and a very solid mediator and hearing officer.
• D. Douglas McCarthy, of Macon County, who has more than 30 years of legal experience. At McCarthy, Rowden and Baker, McCarthy specialized in workers’ compensation and Social Security disability law, and has appeared before the IWCC, state circuit and appellate courts, and in federal administrative hearings. He graduated from Illinois State University with a BA in communications, earned an MA in public affairs reporting from Sangamon State University, and a JD from Southern Illinois University. Arbitrator McCarthy had such a strong background as a Petitioner attorney, many attorneys were concerned he would be biased—to the contrary, he is professional, careful and fair to both sides.
• Deborah Simpson, of Kane County, who as more than 25 years of government and law experience, including in the Office of the Illinois Attorney General’s administrative review/civil prosecutions unit. Simpson also was an attorney at the State’s Attorney’s Offices for Kane, Vermilion and Cook Counties, and was a part-time instructor at the Danville Area Community College. She holds a JD from the John Marshall Law School and a BA from DePaul University. Arbitrator Simpson is unsurpassed in ethics, professionalism and hard work.

As we approach the publication of the 2016 Oregon WC Premium Analysis, we are confident the IL WC Arbitrators reappointed by our Governor “get it” and are working to have IL WC reach a middle ground among the U.S. workers’ compensation programs. We will continue to watch and vet them every day we are working as defense attorneys and reporting their strengths and any concerns to our readers.

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

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Synopsis: WCRI Report Shocks Lots of State WC Systems Due to Wide Variances in Work Comp Hospital Costs.

Editor’s comment: As we have advised, IL WC doesn’t have high medical costs compared to our sister states.

In their recent study, WCRI found rapidly rising hospital costs in the treatment of injured workers receives attention from public policymakers and system stakeholders in many states. To assist in better understanding these costs, the Workers Compensation Research Institute (WCRI) released their new national study, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 5th Edition, that compares hospital outpatient payments across states and monitors the impact of fee schedule reforms.

“This report found that hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” said Dr. Olesya Fomenko, co-author of the study and economist at WCRI. Variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater—reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana. We have included a comparison of workers’ compensation hospital outpatient payments and Medicare rates,” said Ramona Tanabe, executive vice president and counsel at WCRI. “Medicare rates capture payments to hospital outpatient providers for similar services by a large payor, and the report offers an additional benchmark that helps states better understand their hospital payments.”

The following are some major findings from the study:

·         States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.

·         States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.

·         Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

The hospital outpatient payment indices compare payments (per surgical episode) for common outpatient surgeries under workers’ compensation from state to state for each study year and the trends within each state from 2005 to 2014. The analysis captures payments for services provided and billed by hospitals, and it excludes professional services billed by nonhospital medical providers (such as physicians, physical therapists, and chiropractors) and transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals. The analysis also excludes payments made to ambulatory surgery centers.

The 33 states included in this study represent 87 percent of the workers’ compensation benefits paid in the United States. The states are Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin. Note the 2014 workers’ compensation and Medicare comparison is conducted for 31 states.

To purchase this study, visit http://www.wcrinet.org/studies/public/books/hci_5_book.html.

8-29-2016; $1.6 Million Retaliatory Discharge Verdict Vacated But GPP Rewarded by IWCC; Epi-Pen Controversy--Do Risk Managers Still Need Them?; BPCIA Hosts WC Teaching Lunch with Keefe/Campbell

Synopsis: Employee’s Retaliatory Discharge Action Dismissed As There Was No Evidence Manager Knew of Plaintiff’s WC Claim; $1.6 million Verdict For Plaintiff Reversed--Before We Start to Worry About Plaintiff, Note He is a Well-Paid GPP or Ghost Pension Payroller.

Editor’s comment: A former City of Chicago employee’s Illinois Workers’ Compensation Act retaliatory-discharge claim failed as a matter of law because there was no evidence the official who made the decision to terminate Plaintiff (and many others) had any knowledge Plaintiff filed a workers’ compensation claim. Instead, the evidence tended to show the decision to terminate Plaintiff was part of a reduction in force or RIF that affected some 300–400 city jobs. Evidence indicated Plaintiff had not been singled out; everyone who held his job position was similarly laid off. Because an employee lacked evidence the decision-maker who included him in a budget-crisis-based reduction in force knew of his workers’ comp claim and he likewise failed to link his termination to his disability, neither his workers’ compensation retaliation claim nor his ADA claim should have gone to trial, ruled the federal Seventh Circuit Court of Appeals ruled, reversing in part a split judgment in this almost never-ending case.

There was a 1995 accommodation agreement--the employee began working for the Chicago Park District in 1973, later becoming a City sanitation truck driver. Plaintiff Hillman claimed he developed cervical radiculopathy—we do not see an “accident” or “injury” described in the record. This appears to be a “repetitive working” claim that is just about indefensible.  In 1995, Plaintiff Hillman entered into an ADA reasonable accommodation agreement with the City that allowed him to avoid “repetitive work” with his injured arm. He was reassigned to be chief timekeeper, and though he never performed all duties required by the job description, he performed the essential functions. In May 2000, the employee was put under a new supervisor, who assigned additional duties arguably requiring “repetitive use” of his arm, allegedly exacerbating his asserted delicate condition. In July of that year, for the first time in his career, the employee did not receive a merit raise—one might think “merit” would mean one earned the raise. Either way, Plaintiff informed his new supervisor he could not physically perform the additional “repetitive” duties. In response, the supervisor assigned him to supervising timekeeper duties which probably meant there wasn’t much work to do.

Aren’t All Jobs “Repetitive?”; Isn’t Repetition the Nature of Work?

Thereafter, the employee’s attorney wrote to the City manager asking the 1995 accommodation agreement be magically honored. In response, the personnel liaison wrote a new job description for Plaintiff. The first paragraph covered duties he had done as chief timekeeper; the second covered the reassigned duties of a supervising timekeeper. It also anticipated use of a new computerized payroll system that might render all of it otiose. The second paragraph supposedly included supposedly “repetitive tasks” the employee somehow claimed he could not physically perform. In August 2000, the liaison told him to report for a fitness-for-duty exam to reassess his asserted accommodation. Around that time, his physician noted his condition had somehow worsened while doing almost nothing at work. Later, the employee was transferred to the Construction Division where he answered phones. We assume this might mean he had to repetitively push buttons on the phones and he might have to put the phone to his ear and talk. That same day, he filed an IL workers’ comp claim. On October 1, he was again denied a merit raise. A week later, he was transferred to the Transportation Division where he again answered phones. He continued to see medical professionals in connection with his workers’ comp claim and, on December 1, he received a letter from the City advising “the most viable option for you is to apply for a Leave of Absence and to return to work when your physical condition allows you to perform the duties of your job title.” In February 2001, a doctor cleared him to perform sedentary work, but the department’s Assistant Commissioner wrote “Cannot accommodate with restriction” on the discharge sheet. He noted the employee could be accommodated in the Bureau of Traffic Services.

Cleared to work, the employee reported to Traffic Services and was given a temporary assignment involving routine duties, though his title was still chief timekeeper. Thereafter, he had a pattern of tardiness and absenteeism due to sick leave. He was again denied merit raises in 2002. When the City faced a serious budget shortfall and department heads had to identify positions to include in a RIF, the employee and his position was selected. Both the chief timekeeper and supervising timekeeper positions were included because no one was performing them and the Department’s transition to the new computerized payroll system rendered them obsolete. Final approval of the RIF was by an individual who did not know the employee had filed a workers’ comp claim.

In 2004, the employee filed a legal action claiming the City violated his rights under the First Amendment, the ADA, and state law. The judge allowed two claims to go to trial—discharge in retaliation for filing a workers’ compensation claim and an ADA claim alleging he was denied raises and terminated for requesting an accommodation. The jury returned a verdict for the City on the workers’ comp retaliation claim and the judge died before considering the ADA claim. A new judge granted a new trial. This time the jury returned a split verdict, awarding $2 million to the employee for workers’ comp retaliation and issuing an advisory verdict in favor of the City on the ADA claim. After post-trial motions, the court denied the City’s motion for judgment as a matter of law on the workers’ comp retaliation claim, though it did reduce damages to $1.6 million. It denied the employee’s motion for judgment on the ADA claim. Both parties appealed.

Reversing in part, the federal appeals court found the undisputed evidence showed the workers’ comp retaliation claim should not have reached a jury. To prevail, the employee had to show his workers’ comp claim was the “but-for” reason for his termination. That requires, at a minimum, the decision-maker knew he intended to file or had filed, a workers’ compensation claim, but here there was no such evidence at all.

Rejecting the employee’s cross-appeals as to his ADA claim, the federal court found no reason to disturb the findings of fact after the bench trial because the employee failed to prove his request for an accommodation was the “but-for” cause of the merit-pay increase denials and his inclusion in the RIF. In the federal appellate court’s view, the lower court’s findings were well supported by the record, including the lack of raises followed excessive tardiness and absenteeism, and the RIF was necessitated by a budget shortfall.

This Ruling Cuts in Numerous Directions

First, please note the City was sued in civil court for the retaliatory discharge/ADA dispute—at the same time, the WC claim was filed for the same damages. Magically, they don’t offset for reasons we completely disagree with. There is no possible way Claimant could be seeking “damages” for loss of earnings but not have those “damages” be offset by a T&P WC award that is clearly worth millions and millions of dollars to him. Whatever device was used by the civil courts to allow what would be double-compensation should be reviewed, reconsidered and vacated.

Second, for HR managers, if you are setting up a RIF, you need to find some way to get rid of or RIF your “challenged” workers while not knowing if they have pending WC claims. We are happy to assist in this process—just send a reply.

Third, please don’t pay or blindly accept “repetitive working” claims. The defense team at KCB&A knows how to fight and win such claims—please contact us for your best defense strategies.

Fourth, as we indicate above, Plaintiff Hillman is a GPP or Ghost Pension Payroller. In December 2007, the Commission panel headed by former IL WC Commissioner DeMunno affirmed an award of total and permanent disability benefits of $716.86 a week on a tax-free basis for life. By now from year 2000 to present, Plaintiff has already received about $600,000! That award also provides for RAF benefits that will double the weekly award every 23 years or so. Therefore, if Claimant lives to 2023, he will be getting about $1,500 a week or $75,000 on a tax-free basis each year for both T&P and RAF benefits. If he can make it another 23 years, he will be getting about $150,000 each year from Chicago taxpayers and the businesses/governments that pay into the RAF. Claimant Hillman got his wish to go on the dole and get paid handsomely to do nothing. Is there anyone so disabled in one arm, they can’t answer the phone wearing a headset?

Fifth and finally, I salute the federal appellate court for getting this one right. I point out it is decisions like this one that are causing property and other taxes/fees to skyrocket in Chicago. We need to stop creating GPP’s or Ghost Pension Payrollers that are gipping our taxpayers. It is also causing the entire workers’ comp system in this state to needlessly come under a microscope. As we outline above, we don’t see a work accident and we don’t see a work injury. We consider it impossible to consider Plaintiff Hillman couldn’t answer phones and work at sedentary work. I feel the reason he isn’t working right now and earning his pay was his personal decision to quit a sedentary position and sue, sue, sue. If the Arbitrator and WC Commission in 2007 hadn’t rewarded this unusual and unsupported behavior, we feel Plaintiff Hillman would probably have stopped the shenanigans and gone back to work.

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

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Synopsis: Epi-Pen Cost Skyrockets—Should HR/Risk Managers Still Have Them On the Job?

Editor’s comment: Epinephrine injection is used to treat life-threatening allergic reactions caused by insect bites, latex and other causes. Symptoms of allergic reaction include wheezing, shortness of breath, low blood pressure, hives, itching, swelling, stomach cramps, diarrhea, and loss of bladder control. Epinephrine is in a class of medications called sympathomimetic agents. It works by relaxing the muscles in the airways and tightening the blood vessels.

In its latest move to quell outrage over its price increases, the maker of the Epi-Pen has resorted to an unusual tactic — introducing a generic version of its own product. The company, Mylan, said the generic Epi-Pen would be identical to the existing product, which is used to treat severe allergic reactions. But it will have a wholesale list price of $300 for a pack of two, half the price of the brand-name Epi-Pen. The raging debate over Epi-Pen pricing has offered a surprisingly wide window into the complicated world of prescription drug pricing, in which powerful drug companies, pharmacy benefit managers, insurers and federal health programs all play major roles. However, the system remains questionable and quirky.

Can a Bee/Wasp Sting Be A Compensable Workplace Exposure?

For the most part, bee/wasp stings are random and rare. In those settings, it is hard for a hearing officer to relate the attack to the workplace. However, if an employee is subjected to high level of exposures to bees/wasps than the regular public, compensation may lie.

Therefore for workers who have allergies and sensitivities of all kinds, having an Epi-Pen at a work site is a must. Employees who, as part of their daily work activities, are exposed to bee/wasp venom or other workplace hazards that may result in an allergic reaction could potentially be at risk and may need an epinephrine pen or Epi-Pen.

Your employees who have workplace hazards that may result in an allergic reaction should indicate they are at risk when around some animals, bees and wasps. Employees who are known to have a systemic allergic reaction to the venom should carry, or have available at a moment’s notice, an epinephrine dispensing pen. To acquire an Epi-Pen for workplace use, the employee must obtain a prescription from your OccDoc or their personal physician. Most occmedicine staff will train and document with an outline of the training, date and participants. If you have occhealth selected for your workers, have them contact your Occupational Medicine group to schedule an appointment. Once an exam and training have been completed, the Epi-Pen may be acquired at a local pharmacy.

Emergency Use

Epi-Pens should be readily available in areas associated with apiaries/wasps for emergency use by workers, grounds keepers, etc. who may be exposed to or near the bees/wasps. Epi-Pens should be placed in your First Aid Kits and administered by First Responders (CPR, AED and First Aid) who have been trained to use them.

Epi-Pen users must observe the expiration date of the individual pens and replace accordingly. Expired Epi-Pens should be considered hazardous waste and must be returned to the pharmacy where they were purchased for proper disposal.

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

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    Bedford Park – Clearing Industrial Association

                                                          5101 West 67th Street ● Bedford Park, Illinois 60638 ● 708-496-0336 ● Fax 708-458-8885

_____________________________________________________________________________________________

QUARTERLY MEETING

Workers’ Compensation 101-102 For BPCIA

Speakers: Gene Keefe & John Campbell

September 20th

Mid-level presentation for managers and executives about dealing with workers’ comp claims including accident investigation, compensability, claim management, legislative and legal developments. Expect an interactive discussion of workers’ comp issues that will be entertaining and informative. Veteran WC trial lawyers Gene Keefe and John Campbell are also adjunct professors of law at The John Marshall Law School and can review strategies to avoid work injury claims, early intervention and how to maximize strong outcomes when an unfortunate injury occurs at your workplace. They will also discuss how workers’ comp interacts with other state and federal benefit programs like FMLA, ADA, Older Workers’ Benefit Protection, Unemployment and OSHA.

                                   DATE:   September 20, 2016 (Tuesday)

               COST:   $25.00 per person includes lunch (Non-members $35)

                                       PLACE:  Marriott Chicago Midway

                                             6520 S. Cicero Avenue          

              TIME:    11:30 A.M. Registration / 12:00 NOON Luncheon

For Reservations call 708-496-0336 or Email donna@bpcia.org

8-22-2016; Can IL Taxpayers Stop Being GPP'd By State Workers; Can the IWCC Be A Model of Efficiency to Survive?; New IL Law Changes "Mod Rate" and Ratings for Staffing Cos and more

Synopsis: Can IL Taxpayers Stop Being GPP’d by Former State Workers? Can Our IWCC Be A Model of Gov’t Efficiency in Doing So?

Editor’s comment: I wrote an article in last week’s KCB&A Monday Law Update about taking the staffers out of the four “remote” or satellite IL WC Commission offices across our state. The article appears to have hit a chord with attorneys and readers on both sides of the IL WC matrix who want the gov’t staffers to remain in the offices, despite a changing landscape where technology allows for the elimination of brick-and-mortar offices and people to perform tasks that can actually be done on-line.

With respect to these staffers, we don’t consider those tasks to comprise full time work. Their combined salaries are significant. That said, we are even more concerned about the staggeringly high future cost of GPP Former State Workers.

What Is A GPP Former IL State Worker?

Well, GPP stands for “Ghost Pension Payroller.” What is a Ghost Pension Payroller? That is easy to understand—it is an IL state worker that spent enough time working in a state job to become vested in our unconscionably lucrative state pensions to then receive more current tax money not working than they made while working with 3% compounded annual increases and lifetime “free” or taxpayer-paid health care coverage. In our view, becoming a GPP is the equivalent of winning the lottery because the Ghost Pension Payroller puts in so little to then get millions in return later in life. Please note we aren’t blaming the GPP’s in our state, as they didn’t create this mess but we don’t see lots of them calling for changes to end this welfare-like largesse at a staggeringly high cost to taxpayers. Either way, the less state workers we have now, the fewer GPP’s we will have in the future.

Who Are The Worst IL GPP Former State Workers?

I also want to make it clear, the math underlying these statements is immutable—it is simply math. I can back up the math with more details for anyone interested.

• A married IL legislator is fully vested in four years of service and will contribute about $24,000 to the IL Legislative Retirement System. If they remain at base pay (and very few of them do so), their fake pensions start at $57,800 each year, so they go through their entire $24K contribution in about six months of retirement. That means they are not actually getting “pension” payments after about a year because they will have completely exhausted their contributions and the State’s matching contributions during their service. They become “Ghost Pension Payrollers,” as they are back on your and my payroll, even though they are no longer working. After 23 years of retirement, they will be getting $115,000 each year. After 46 years of retirement, they will be getting $230,000 a year. If you note the math, they can receive several million dollars in retirement for their fake gov’t pension contribution of only $24K. I think that is a lot like winning the lottery—it certainly isn’t a “pension.”

• A married IL judge or justice is fully vested in only nine years of service. Their total pension contributions to the Judicial Retirement System will be about $180K over 9 years. A vested IL judge/justice retiring today will receive $174,250.00 in the first year of retirement. Noting the math, that judge will have exhausted their entire fake pension contribution in about a year and will be back on the payroll of folks like you and me and every IL taxpayer on this email chain in two years. With compounded 3% annual increases, a retired judge’s first annual raise will be more than $5K. In just 23 years, they will be receiving $348,500 each year. If they live 46 years into retirement, they will be getting almost $700K a year and their annual raises will be $20K a year. Again, to see a retired judge eventually getting as much as $15 million or more in retirement for an initial contribution of less than $200K is like winning the lottery to me.

All IL State employees can bask in this coming taxpayer-fed benevolence at whatever level—they all get un-funded state pensions that aren’t truly pensions. What I don’t think most folks understand is this “hidden” aspect of GPP’s or Ghost Pension Payrollers on IL State government. There are about 50,000 current State employees. To my understanding, there are about 250,000 folks on IL State fake government pensions. All employers have more retirees than active workers. Only IL State gov’t has literally hundreds of thousands of Ghost Pension Payrollers who get paid but don’t do any current work for their pay.

Actually, being vested and then retiring to become a Ghost Pension Payroller is a better financial deal than actively working for the State. Regular state workers don’t always get raises. In contrast, Ghost Pension Payrollers get annual, guaranteed 3% raises. They get the raises every year for the rest of their lives. Lots of folks are retiring right now from gov’t work to start getting paid more to NOT work.

I don’t feel some folks believe the GPP pension payout will double (and then quadruple) every 23 years. The math isn’t debatable. Try it out: https://www.investor.gov/tools/calculators/compound-interest-calculator. I just don’t think many folks understand how lucrative these fake pensions have become and how they are almost certainly going to bankrupt our State. This same killer math applies to secretaries, cleaning people, anyone with a IL State job that comes with a fake gov’t pension. Does it make sense to eventually pay the admins working at the Collinsville, Rockford, Peoria or Springfield call $100K+ a year in retirement?

What Does This Have to Do With the IWCC And Remote Office Staffing?

The IL WC System is under attack in every direction. At least one source is now calling for IL business to have an “opt-out” choice that would replace the current IWCC with another admittedly inconsistent and confusing approach to injured workers’ needs. I feel one way to quell the attacks and allow the system to remain in place is to start looking at the IWCC and make tough calls on what is needed and what we can live without.

The current budget of the IWCC is paid for entirely—every nickel—comes from IL business. That budget is about $30 million each year. If our IWCC Chairperson and General Counsel Ron Rascia and the many IWCC advisory boards want to show our great Governor and all the business leaders in this state they care about work comp costs, one way to do so would be to cut costs and staff by 10-20-25%. A 25% cut would be an immediate savings to IL business of $7.5 million. The longer term savings could be even greater because you would end the hiring of some GPP’s that are certain to end up costing double or triple or even quadruple what they are paid while working! Either way, such actions are sure to make national WC headlines in the very best way.

It is our hope the IWCC becomes a model for the other 87 IL State agencies in cutting costs by taking the lead and making headlines doing so. Please remember our State government debt is over $200 billion, yes billion. Our State’s unpaid or late-paid bills are nearing $10 billion dollars. I hate being in a state where we laugh at outside vendors who diligently work for taxpayers and then State gov’t laughs at them and is forcing some suppliers into bankruptcy waiting to get paid. One major reason for the unpaid bills are all the GPP’s.

How do we stop this embarrassing situation? Well, it starts with reducing or eliminating staff where possible, especially with the emergence of on-line filing capability at the IWCC, which we understand is in the works. We can also consider eliminating items like the IL WC Second Injury Fund and Rate Adjustment Fund and start to actually notice IL WC claims have dropped dramatically while administrative staffing and budgets keep going up. When e-filing starts, we hope even further cuts can be made as paper forms and libraries go on the cloud.

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

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Synopsis: New IL Law Changes WC Rules for IL Staffing Companies.

Editor’s comment: Staffing/Logistics and similar companies are exploding in growth. Governor Rauner just signed a new bill that is required reading for anyone in that part of the WC matrix. If you read the new law below, you may note it appears to block fiddle-fooling with “experience mods” or insurance ratings for staffing agencies.

The new law says: Section 5. The Employee Leasing Company Act is amended by changing Sections 25 and 30 as follows:

Sec. 25. Record keeping and reporting requirement.

    (a) A lessor shall maintain accounting and employment records relating to all employee leasing arrangements for a minimum of 4 calendar years. A lessor shall maintain the address of each office it maintains in this State, at its principal place of business.

    (b) A lessor shall maintain sufficient information in a manner consistent with a licensed rating organization's data submission requirements to permit the rating organization licensed under Section 459 of the Illinois Insurance Code to calculate an experience modification factor for the lessee.

    (c) Upon written request of a lessee with an annual payroll attributed to it in excess of $200,000, the lessor shall provide the lessee's experience modification factor to the lessee within 30 days of the request.

    (d) Upon request of a lessee with an annual payroll attributed to it of less than $200,000, the lessor shall provide the loss information required to be maintained by this Section to the lessee within 30 days of the request.

    (e) Nothing in this Section shall preclude a licensed rating organization from calculating the experience modification factor for each lessee nor an insurer from maintaining and furnishing on behalf of the lessor, such information as required by this Section.

    (f) In the event that a lessee's experience modification factor exceeds the lessor's experience modification factor by 50% at the inception of the employee leasing arrangement, the lessee's experience modification factor shall be utilized to calculate the premium or costs charged to the lessee for workers' compensation coverage for a period of 2 years. Thereafter, the premium charged by the insurer for inclusion of a lessee under a lessor's policy may be calculated on the basis of the lessor's experience modification factor.

    (g) A lessor that does not provide workers' compensation insurance coverage for leased employees of a lessee under an employee leasing arrangement shall not be subject to compliance with subsections (b) through (f) of this Section.

    Sec. 30. Responsibility for policy issuance and continuance.

    (a) Either a lessor or lessee may provide workers' compensation insurance coverage for leased employees under an employee leasing arrangement. When a workers' compensation policy written to cover leased employees is issued to the lessor as the named insured, the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees. The endorsement shall, at a minimum, provide for the following:

        (1) Coverage under the endorsement shall be limited to the named insured's employees leased to the lessees.

        (2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25.

    (b) (Blank).

    (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee.

    (d) The insurer shall provide proof of workers' compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed.

    (e) Calculation of a lessor's or lessee's premium shall be done in accordance with the insurer's rating manual filed with the Department.

    (f) When the lessee provides workers' compensation coverage for leased employees under an employee leasing arrangement, the lessor shall notify the Department in a manner specified by the Department to ensure proper and timely notification of coverage to the Department.

Effective Date: 1/1/2017

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