February 14, 2017

2-13-2017; Grand Bargain Remains Stalled--IWCC Still May Close; OSHA Going Quiet on Enforcement-Penalties-Citations; When is a Loss Covered by the IL or Another State’s WC Act? and more

February 14, 2017/ Eugene Keefe

Synopsis: It is February 13, The Illinois Workers’ Compensation Commission and all IL State Offices To Stop Paying Their Workers in Just 15 Days from Today!

Editor’s comment: The “Grand Bargain” to create an IL State budget remains completely stalled. The two parties remain at odds and negotiations are officially going nowhere. Our IL General Assembly and more specifically, the IL Senate won’t be publicly dealing with the issues this week that you or I will be able to watch. Lots may be happening behind closed doors and our sources continue to watch and learn.

Governor Rauner appears to be sitting on the sidelines, hoping for spending cuts and structural change but not making concrete proposals.

Whatever happens, we hope any income tax or other new taxes will be linked to strong curbs/limits on runaway spending, hilariously high government compensation/retirement and appropriations. The main issue is that if curbs/limits don’t happen, just because taxes increase, it isn’t going to “cure” anything to possibly keep pace with a history of years of over-spending.

From all participants on both sides of the IL WC matrix, the odd proposed IL WC reforms appear to be on the sidelines where they belong. The bigger issues of multi-billion dollar debt, unpaid state government bills and skyrocketing income, real estate, sales and other taxes are on the forefront.

We will continue to report any developments as we learn of them. We appreciate your thoughts and comments. Please post them on our award-winning blog.

Synopsis: OSHA Website and Management Going Quiet on Enforcement and Penalties; Focusing On Positives In Workplace Safety.

Editor’s comment: The Occupational Safety and Health Administration is changing its emphasis from enforcement to employer compliance assistance under the Trump administration. As an indication of the change, the U.S. Department of Labor hadn’t issued a single news release regarding OSHA enforcement since Jan. 18, two days before President Trump’s inauguration on Jan. 20.

Before this dearth of enforcement news started, workplace reporters like us would see several OSHA releases every day, detailing strong fines and punitive citations issued to U.S. employers for workplace safety violations. In contrast to the “quiet” from OSHA, the U.S. DOL has continued to issue news releases on other topics.

More may be known about OSHA’s enforcement philosophy when/if Andrew Puzder’s nomination as the new secretary of the DOL is confirmed. Our new President nominated Mr. Puzder, chief executive officer of CKE Restaurants Inc., the parent company of the Carl’s Jr. and Hardee’s burger chains.

Many observers forecast that OSHA under the new administration will focus more on workplace safety education and less on enforcement and punitive action. This move would be a reversal of what was seen under the Obama administration when OSHA staff was moved from training and education into enforcement.

Most veterans again feel the frequency of workplace injuries will continue a long-term gradual decline. From the perspective of Illinois employers, WC claims are steadily dropping.

We are getting lots of questions and gossip about many OSHA rules from the last administration—in response, we predict a kinder, gentler OSHA under the new administration. We are certain you can expect a reversal of OSHA’s recent hike in penalties, or an easing of restrictions on post-accident drug testing and safety incentive programs that were part of a OSHA’s new electronic reporting rule. If you were planning on getting into training or changing your work rules/employee handbooks to address the “old” rules, we recommend you relax and hold off for now.

The electronic reporting itself, in which OSHA would make public safety records of larger employers, was described as a way to “shame” businesses into improving worker safety. To us, that was a facet of the anti-business environment of the old administration. We think it is going, going, gone…

Even if OSHA shifts its focus from enforcement to voluntary compliance, another variable is how states with their own OSHA programs will respond. Twenty-two states or territories, including Illinois, have OSHA-approved state plans that cover both private and public sector workers. The state programs must follow certain OSHA requirements, but also have some latitude in how they operate.

As OSHA-Watchers, we might find clues about OSHA’s future in the agency's twice-monthly newsletter, Quick Takes. The top story for the Dec. 15 edition under the Obama administration was “Alabama auto parts supplier, staffing agencies face $2.5 million in fines after robot fatally crushes young worker.” In contrast, the top story of the Feb. 1 edition has a more positive and pro-business tone, discussing how the OSHA’s free On-site Consultation Program “helped more than 27,000 employers create safer workplaces in 2016.”

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

Synopsis: When is a Loss Covered by the IL or Another State’s WC Act??

Editor’s comment: The first thing an attorney, risk manager or adjuster must do when a new claim has been made is to evaluate whether the loss is covered by Illinois workers’ compensation law (versus the various federal acts, general liability, or some other common law or statutory remedy). If so, the next inquiry is whether Illinois workers’ compensation law applies versus the law of some other state or the federal system. Finally, if the case is properly an Illinois workers’ compensation claim, the adjuster must determine whether the policy in force at the time of the accident or disability covers the particular loss alleged.

A. Is this a workers’ compensation claim?

This basic question is often overlooked. The assumption is, if an Illinois workers’ compensation claim is filed, the case involves a loss that should be compensated under Illinois workers’ compensation law. However, in order to recover benefits under workers’ compensation law, the activities must be covered by the IL WC Act and not under any other benefit provision in a different system that may be considered exclusive.

For example, if an Illinois employee is working to maintain a commercial watercraft when injured and the vessel is on a navigable waterway, such injuries would be covered by the exclusive provisions of the federal Longshore Harbor and Workers’ Compensation Act, administered by the OWCP. Such injuries would not be appropriately covered by the state Workers’ Compensation Act, even though the employee was hired by and working for an in-state employer. U.S. Postal workers are also covered by a similar federal-only WC Act. There are similar laws that have exclusive coverage to eliminate jurisdiction of the State WC Board or Commission to hear the claim.

Another aspect of the WC system coverage question is when the employee can bring a workers’ compensation claim against an employer and when the employee can also sue the employer for the same injuries in civil court. This concept is a possibility but under very limited circumstances. The basic model in the development of workers’ compensation throughout the industrialized world is the injured employee gave up his/her right to bring a common law action against the employer in exchange for workers’ compensation benefits that are more certain and more rapidly provided but potentially lower than what a jury might be able to provide for a similarly severe injury.

There have been a number of strange and complex legal devices that have allowed U.S. employees to maintain common law claims against third parties that might require the employer to pay a part of a jury verdict, but the general rule is supposed to be that the employee cannot sue the employer at common law if he/she is entitled to workers’ compensation benefits.

One clear exception to this concept is when an employer commits an intentional act or hires another to commit an intentional act to injure an employee. For example, if the employer were to hire a ruffian to injure/attack an employee due to a work-related dispute, the employee could seek workers’ compensation benefits and also sue the employer for the injuries suffered in the intentional attack.

In specialized circumstances, the employer and its carrier/TPA may have an ‘option’ with regard to payment of benefits under either workers’ compensation or general liability. For example, if an employer has an employee become injured as a result of slipping on ice and snow while working on company property, it is possible that you might successfully deny the claim for workers’ compensation benefits only to then face a premises liability or other general liability lawsuit which is possibly much more expensive to defend and potentially explosive due to the unpredictability of jury awards.

The employer can ‘opt’ not to fight the workers’ compensation claim and voluntarily pay workers’ compensation benefits which should block any third party claim against the employer if the employee knowingly accepts such benefits.

B. State Subject Matter Jurisdiction of a Work Injury.

Once it has been established that the claim properly involves workers’ compensation benefits, the adjuster, attorney, or risk manager must determine whether a given state is the proper jurisdiction for the claim to be heard versus a different state or the federal government.

It is critical to understand a claimant with a single injury, a worker could have a claim for workers’ compensation benefits in a multitude of states. The employer should receive ‘credit’ for any benefits paid in any state under the full faith and credit clause of the United States Constitution and not have to double or triple pay multi-state benefits. There is not much guidance on this legal principle, as such issues aren’t litigated often. Sometimes common sense prevails.

But remember, payment of state WC benefits does not necessarily block the filing of a claim in another state or states. Conversely, the filing of a claim in another state for benefits or the receipt of such benefits does not preclude an Illinois claim.

Most state have proper subject matter jurisdiction of a work injury if one of the following tests are met:

1. The accidental event occurs in a given state. This concept applies even if the employee executed a written agreement prior to employment to only seek benefits in another state or forum;

2. The accident occurs outside a given state but the ‘contract for hire’ was formed in a different state. This is the tactic most commonly used to bring out of state claims into a favored or liberal state. The contract for hire is said to be finalized where the employee ‘accepts’ the offer of employment which leads to a number of factual disputes;

3. Employment was ‘principally localized’ in a given state. This is utilized when the employer may have an out of state headquarters for employees who actually perform the majority of their work in your state. This situation frequently occurs in trucking claims where Petitioner/Plaintiff establishes the principal localization of work in a given state by logs indicating the aggregate number of miles driven in one state versus other states. There are also cases that hold where work is “centered” in one state—employment may be established so as to create jurisdiction. The concept of “centered” work would mean the employee comes to or calls for assignments in their favored state but does most of their work outside the state.

Please also note the employment cannot be for the various branches of our federal government, nuclear industry or U.S. armed forces. Such workers are almost always exclusively covered by the federal OWCP or Office of Workers’ Compensation Programs. State law does not regulate WC benefits for such workers.

Other factors sometimes cited by a given WC Board or Commission and the courts in subject matter jurisdiction claims include the state of petitioner’s residence, the location of the principal work site and the level of business conducted by the employer in a given state. These concepts are not contained in the applicable WC statute and shouldn’t be germane. The facts are sometimes utilized by a WC Board or Commission or courts stretching to find jurisdiction by looking for factors considered in other areas of law involving jurisdictional fights.

C. Pre-injury agreements with regard to subject matter jurisdiction of all the employer’s WC claims across the country.

Several years ago, this was an interesting trend among some employers but has waned in recent years. We caution you to be wary of pre-injury agreements to have an employee select or agree to the jurisdiction where benefits will be received upon suffering an injury. We have seen employers with multi-state operations or traveling employees routinely require employees to execute such agreements.

These documents may generally be ignored at hearings and do not have any real legal effect in many states. However, we are not aware of any prohibition in any state with regard to such agreements. If they are designed to confuse unsuspecting workers after they suffer injury, they may be considered an attempt to defraud the worker of benefits under the law and we consider them unethical for that reason.

It is possible an employee or their attorney will not become aware of his or her ability to make a claim for benefits in a given state and may act consistent with the agreement with regard to jurisdiction. If workers’ compensation benefits will be paid timely in the state that they have agreed to and a dispute does not arise, this concept may be successful.

D. ‘Multi-state settlements’

Also, when any workers’ compensation claim is settled, you may attempt to block the filing of other claims by indicating that the settlement is for claims in any state. This technique is employed more for the perception of the employee and his attorney than for its legal effect. Most hearing officers won’t approve such agreements.

For technical reasons which do not bear repetition, this concept probably wouldn’t be legally effective. It does leave petitioner and their counsel with the sense that closure has been reached and may cause them to refrain from filing subsequent claims in other states.

For neophyte lawyers, please remember you can’t ethically provide legal advice and counsel about workers’ compensation rights in states in which you aren’t licensed. If you are asked to do so, you need to tell the client of this concern or join with the client in seeking assistance from a licensed lawyer in the other state.

E. Insurance Policy Coverage

The adjuster or risk manager must also consider whether the specific policy written for the employer to cover the injured worker covers the loss. The date of accident or disability must fall within the dates/states of coverage although this issue becomes clouded in repetitive trauma claims where no specific incident is identified. It is not uncommon for two or three different insurance carriers to argue the actual manifestation of onset of pain occurred during a different carriers’ policy.

If a coverage question is precipitated by the lapse of the workers’ compensation policy prior to the accident taking place, the insurance carrier must prove the policy was properly terminated. This requires notice to the employer/respondent and possibly to the local WC Board or Commission. Otherwise, the Workers’ Compensation Board or Commission may require extension of coverage through the date of accident to ensure the injured party gets WC benefits.

An additional consideration in policy coverage is the employment position of a given petitioner. If petitioner is a sole proprietor, owner or partner of a business, it is legally possible for such executives to opt out of insurance coverage for injuries and thereby save the premium cost. If there is no election for coverage, the principal may not be entitled to workers’ compensation benefits paid by the carrier. This does not mean WC benefits might not be sought—they would just be not covered by the insurance policy, but by the company the executive worked for. This also might not affect any other common law rights available.

One interesting quirk in some states’ workers’ compensation claims practice is the insurance carrier may be named as a party respondent by petitioner in filing the pleading. If there are concerns about the financial status of the employer, it may be a prudent thing for the attorney for a claimant to include the insurance carrier as a party to insure any award or settlement is paid.

Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need To Be UPDATED RETROACTIVELY(!). Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. As mentioned twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $775.18. When it was published, this rate changed retroactively from July 1, 2016 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong. If you have a claim with a date of loss after July 2016 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. WORD OF CAUTION: There is pending legislation which Gene reported last week and this week which currently states “The maximum compensation rate for the period July 1, 2017 through June 30, 2021, except as hereinafter provided, shall be $755.22. Effective July 1, 2021 and on July 1 of each year thereafter the maximum weekly compensation rate, except as hereinafter provided, shall be determined as follows: if during the preceding 12-month period there shall have been an increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act, the weekly compensation rate shall be proportionately increased by the same percentage as the percentage of increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act during such period.” THIS NEW LEGISLATION WOULD POTENTIALLY CHANGE THIS PPD MAX AGAIN. If this isn’t clear, send a reply to Shawn at sbiery@keefe-law.com.

The current TTD weekly maximum has risen to $1,435.17. A worker has to make over $2,152.76 per week or $111,943.52 per year to hit the new IL WC maximum TTD rate. Does any state in the United States have a TTD maximum that high?

The new IL WC minimum death benefit is 25 years of compensation or $538.19 per week x 52 weeks in a year x 25 years or $699,647.00! The new maximum IL WC death benefit is $1,435.17 times 52 weeks times 25 years or a lofty $1,865,721.00 plus burial benefits of $8K. On top of this massive benefit, Illinois employers/governments have to pay COLA increases.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa with your mailing address if you would like to be mailed a laminated copy at mpatel@keefe-law.com and they will get a copy routed to you before they raise the rates again!

Synopsis: Happy Valentine’s Day from the Gang at KCB&A!!

Editor’s comment: Like the Boy Scouts—Be prepared!

February 08, 2017

2-6-2017; The Biggest IL WC News In History That No One Is Reporting But Us, Part Two; John Karis on Important Hearing Loss Measurement App for Your Workplace; Shawn Biery's New IL WC Rate Sheet

February 08, 2017/ Eugene Keefe

Synopsis: The Biggest News in Illinois Workers’ Comp History No One is Reporting, Part Two—I Assure You The IL Workers’ Comp Commission Is Set To Close Just 22 Days From Today!

Editor’s comment: As we advised last week, everything is still in place for an IL State Government shut-down on Feb. 28, 2017. Attorney General Lisa Madigan filed her request in one of Illinois’ most shady counties to insure she cannot possibly lose her effort to stop paying all Illinois state workers' salaries until we have a state government budget. Her motion asks the St. Clair County Circuit Court to dissolve by Feb. 28, 2017 a preliminary injunction that has allowed state workers to be paid even though the Legislature and Governor haven't approved a spending plan. A six-month "stopgap" state budget was approved last summer but expired on Jan. 1, 2017.

The sparks are expected to fly tomorrow morning in Springfield, as the legislature takes on the issue of possibly hammering out a budget along with the normal circus side-shows we have whenever our nutty legislature is in session. There were about 19 planned IL WC reforms—we have no idea how many have survived but we are sure some of them have been dropped.

The leaders of the Illinois Senate claim they're moving forward with their proposed budget compromise. However, developments in the past 24 hours suggest the sweeping legislative proposal, involving everything from billions in new taxes to workers' compensation reform and expanded casino and computer game gambling, is in deep trouble, facing even steeper obstacles than when first posted.

The first omen appeared when some of the “Grand Bargain’s” tax concepts and other clauses were almost immediately dumped and then completely changed. For one example, the proposed penny-an-ounce soda tax and minimum wage hike disappeared. For another example, what I feel is a stupid “Business Opportunity” minimum annual tax on small and mid-sized Illinois businesses got thrown in to supposedly raise three quarters of a billion solely from Illinois businesses. The reason I feel it is stupid is the amount of the tax is based on your Illinois payroll, be it W2 employees or 1099 contractors. Your every interest in avoiding this anti-business tax, if it is enacted, will be to move your Illinois workers across state lines to the other states KCB&A cover, like Wisconsin, Indiana, Iowa and Michigan. Why pass a tax to force businesses and jobs to leave this state?

The goofy and unvetted “Business Opportunity” idea was clearly enough to get the Illinois Chamber of Commerce to oppose the entire measure as bad for business. That's significant because the IL State Chamber has the ear of Gov. Bruce Rauner, who publicly has been neutral on the proposed deal. The perception Gov. Rauner may now be against the plan—a perception Crain’s Chicago Business asserts is held by high-ranking Democrats—may explain why Chicago Mayor Rahm Emanuel termed Rauner "Gov. Gridlock" and declared the state to be "rudderless" under his governorship.

Challenging critics to devise something better, Illinois Senate President John Cullerton in a speech at the City Club today strongly defended the huge "grand budget deal" he and Senate GOP Leader Christine Radogno initially put together and then changed and changed again in a bid to finally end two years of deepening Springfield budget warfare. "If not this plan, then what?" the Chicago Democrat ."If not now, then when?" As Cullerton conceded, "We'll find out in the next few days" whether the plan will fly politically as a solution.

With the greatest respect for Senators Cullerton and Radogno, we saw an answer to Senator Cullerton’s question about “if not this plan, then what?” posted by the Illinois Policy Institute. If you take a look at this link

https://www.illinoispolicy.org/reports/budget-solutions-2018-balancing-the-state-budget-without-tax-hikes/

You will see the great brains at the IPI have come up with amazing analysis and recommendations on how to avoid more borrowing and new and higher taxes and work to keep jobs, businesses and you and me in this state. They also note and want you to understand part of this budget crisis is due to what I call “Illinois-aires” or folks who are going to receive literally millions in retirement from our tax dollars under the guise of their phony and unfunded government pensions.

If you want my spin on all of this, I was asked by a reader for my plan on how we get the money to pay all the State’s outstanding bills owed to those who provided service to the state.

I answered:

Across-the-board budget cuts to reduce the size of Illinois State Government about 20% or more without losing any services.
Require the State to bring back injured workers to sedentary jobs when such jobs are open to avoid phony total and permanent disability payments to folks that aren’t “disabled.”
Immediately get rid of do-nothing, duplicative or repetitive state jobs that no one will ever miss like the unneeded Lieutenant Governor’s office, the stupid Secretary of State Police and “remote” offices for the IWCC and other state agencies.
Change all new state pensions to 401K’s. Cut the number of State fake pension boards from 5 to none.
Consolidate the number of IL State agencies from 88 to maybe 30 to avoid having duplicative leadership and separate accounting systems, etc.
Completely automate the Illinois tollways and all state parking facilities.
Raise income tax to the level needed to pay bills and start to pay down debt.

I would support number seven when 1-6 are in place. When we pay down enough state debt, lower the income tax or get rid of it. If we don’t do something like these changes soon, the world is going to do it for us—raising taxes now to pay old bills, rising debt and unneeded government costs will only lead to more and higher future taxes.

Other than the IPI, no one appears to be fighting to change the game and cut state government costs/spending. We are left to wait and see if there will be any votes on the “Grand Bargain” and legislators are due to be out of town next week. Trust me, we are getting closer to no more Illinois Workers’ Comp Commission by the end of this month.

What Happens Then? Can We Survive Without WC Hearing Officers?

It will be interesting to see what happens but an IWCC shutdown may certainly happen. The main crisis would be termination of medical and/or lost time benefits for seriously injured workers—there would be no place for such folks to go. Even Medicaid might shut down in a total government collapse. We assume the IL WC claims community isn’t going to do silly stuff because at some time, the IWCC will return to action and get back into the swing to punish defense wrong-doers.

What Is Happening With the Pending 2017 IL WC Reforms?

From my last web search, literally all sides appear more and more tired of the new WC “reform” concepts and seemed to be either losing interest or actively discarding them. Some of the WC reforms have promise but all of it seems to be rapidly cobbled together without strong metrics to support them. We assure our readers some of them are hilariously nebulous and when there is unclear WC legislation, that is never good for the defense side of the matrix because our “activist” courts will make us pay for any uncertainty.

Whether anything of the many proposed IL WC reforms will survive and be passed into law is yet to be seen—watch this space. With what is at stake in a government shutdown, my vote is back out of the few reforms of value and take the time needed to come up with “hard” reforms that will make the system operate more effectively for IL business and local governments. I am happy to quietly help, if asked.

I again suggest we all diary February 28, 2017 to watch and see if they can come up with a plan that will keep the IL WC Commission open and our circus-like state government afloat.

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

Synopsis: New App Can Help Prevent and Defend Future Work-Related Hearing Loss Claims. John Karis, J.D. reporting.

Editor’s comment: The National Institute for Occupational Safety and Health (NIOSH) just announced the availability of a new mobile application (app) for iOS devices that can measure sound levels in the workplace. We feel this is a very cool new concept you and your safety team need to take a look at.

The app is called the NIOSH Sound Level Meter (SLM) app which can help prevention efforts at construction worksites and all United States workplaces by acquiring, saving and displaying real-time noise exposure data. The NIOSH SLM app is free, easy to use, and can give any user immediate feedback about sound levels and noise exposure.

Please remember if you don’t do this, you may have unions or wily members of your workforce doing so to try to document hearing loss claims at your worksites. This is a ready-made tool for a worker to easily demonstrate your workplace was too loud and hearing protection should have been required. Please also remember hearing loss claims can create lifetime benefits for your workers who can claim you have to pay for life-long hearing aids due to their weakened condition.

The NIOSH SLM app has many important features, it provides a readout of the current onsite sound level using the built-in microphone (or external microphone if used) and reports the instantaneous sound level in A, C, or Z-weighted decibels. The app also reports the main metrics that are of importance for proper occupational noise measurements – mainly the run time (total time), the A-weighted Equivalent Sound Level (LAeq), the Maximum Level measured during the current run time, the C-weighted Peak Sound Pressure Level (LCpeak), the Time-Weighted Average (TWA) and Dose.

In addition, the app allows the user to save and share measurement data using your smartphone’s other communication and media features. If location services are enabled, the app can utilize the GPS feature to provide an exact geospatial location of the noise measurement.

NIOSH estimates that 22 million workers are exposed to hazardous noise levels every year. We believe this app can be used by your safety and health professionals to assess risks and prevent exposure.

We also believe this can help defend workers’ comp claims. For example if an employee alleges a hearing loss claim, occupational safety and health professionals are readily able to assess the decibels of the alleged exposure. Depending on the measurement it can help combat assertions in the future of hazardous noise levels.

If you click the link below on your iPhone you will be sent to the App Store from Apple where you can download it now:

https://itunes.apple.com/us/app/niosh-slm/id1096545820?mt=8

For additional information and detailed guidance on how to use the app, please visit the NIOSH app page at: https://www.cdc.gov/niosh/topics/noise/app.html

This article was researched and written by John Karis, J.D. You can reach John 24/7/365 for questions about general liability, employment law and workers’ compensation at jkaris@keefe-law.com.

Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need To Be UPDATED RETROACTIVELY(!). Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. As mentioned twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $775.18. When it was published, this rate changed retroactively from July 1, 2016 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong. If you have a claim with a date of loss after July 2016 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. WORD OF CAUTION: There is pending legislation which Gene reported last week and this week which currently states “The maximum compensation rate for the period July 1, 2017 through June 30, 2021, except as hereinafter provided, shall be $755.22. Effective July 1, 2021 and on July 1 of each year thereafter the maximum weekly compensation rate, except as hereinafter provided, shall be determined as follows: if during the preceding 12-month period there shall have been an increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act, the weekly compensation rate shall be proportionately increased by the same percentage as the percentage of increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act during such period.” THIS NEW LEGISLATION WOULD POTENTIALLY CHANGE THIS PPD MAX AGAIN. If this isn’t clear, send a reply to Shawn at sbiery@keefe-law.com.

The current TTD weekly maximum has risen to $1,435.17. A worker has to make over $2,152.76 per week or $111,943.52 per year to hit the new IL WC maximum TTD rate. Does any state in the United States have a TTD maximum that high?

The new IL WC minimum death benefit is 25 years of compensation or $538.19 per week x 52 weeks in a year x 25 years or $699,647.00! The new maximum IL WC death benefit is $1,435.17 times 52 weeks times 25 years or a lofty $1,865,721.00 plus burial benefits of $8K. On top of this massive benefit, Illinois employers/governments have to pay COLA increases.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa with your mailing address if you would like to be mailed a laminated copy at mpatel@keefe-law.com and they will get a copy routed to you before they raise the rates again!

Synopsis: Happy Valentine’s Day from the Gang at KCB&A!!

Editor’s comment: Okay, so it is a little early but, like the Boy Scouts—Be prepared!

January 31, 2017

1-30-2017; The Biggest IL WC News In History That No One Is Reporting But Us!; RICO Suits To Disappear As WC Bad Faith Claim; Uninsured Motorist Loses Coverage If Too Much WC Paid and more

January 31, 2017/ Eugene Keefe

Synopsis: The Biggest News in Illinois Workers’ Comp History No One is Reporting—I Assure You The IL Workers’ Comp Commission Is Set To Close Thirty Days From Today!

Editor’s comment: I had a reader tell me Illinois State Government appears to be filling in for the Ringling Bros. and Barnum & Bailey Circus that is soon to close. Everything that is happening in our state government appears to make our leaders look like clowns and teetering out of control. The problem with seeing legislative clowns is the lack of any humor when billions of our tax dollars are at stake. In short, the “grand bargain” for an actual IL state budget appears to have fallen to the wayside as the battle between Governor Rauner and Speaker Madigan accelerates wildly.

Last week, Speaker Madigan’s daughter, IL Attorney General Lisa Madigan filed a request in St. Clair County Circuit Court, to stop paying all Illinois state workers' salaries until legislators and Gov. Bruce Rauner work out a spending plan to end an 18-month budget impasse. The motion asks the St. Clair County Circuit Court to dissolve by Feb. 28, 2017 a preliminary injunction that has allowed state workers to be paid even though the Legislature and governor haven't approved a spending plan. A six-month "stopgap" state budget was approved last summer but expired on Jan. 1, 2017.

Attorney General Madigan's surprise legal motion was criticized both by government employee unions and other state officials. I feel it is an exercise in brinkmanship (brinkwomanship?) to force an unhappy budget truce. Please also note the screaming you can’t hear are the holders of over $11 billion, yes, billion in unpaid bills owed by our crazy State government—the amount of unpaid state gov’t bills is going up by millions upon millions each day.

Governor Rauner said he was "deeply disappointed, very upset" by Madigan's move. "I hope this is not a direct attempt to cause a crisis to force a shutdown of the government to force another stopgap spending plan — short-term, unbalanced, incomplete — as a step to force a tax hike without any changes to our broken system," the Governor said in Chicago.

Unless things change dramatically, it is my current assumption Attorney General Madigan will win her motion and the preliminary injunction will be dissolved. Following that ruling, all IL government salaries and other monies paid to IL State workers will end on February 28, 2017. After that date, I further assume the IL WC Arbitrators, Commissioners, Chairperson and support staff won’t volunteer their services but will stay home or away from work until the impasse is resolved. In short, the IWCC and lots of other state agencies and services will close until a budget deal is struck. Could it happen? Youbetcha.

What Happens Then? Can We Survive Without WC Hearing Officers?

It will be interesting to see what happens but an IWCC shutdown may certainly happen. The main crisis would be termination of medical and/or lost time benefits for seriously injured workers—there would be no place for such folks to go. Even Medicaid might shut down in a total government collapse. We assume the IL WC claims community isn’t going to do silly stuff because at some time, the IWCC will return to action and get back into the swing to punish defense wrong-doers.

What Is Happening With the Pending 2017 IL WC Reforms?

From my last web search, literally all sides appear more and more tired of the new WC “reform” concepts and seemed to be either losing interest or actively discarding them. Some of the WC reforms have promise but all of it seems to be rapidly cobbled together without strong metrics to support them. We assure our readers some of them are hilariously nebulous and when there is unclear WC legislation, that is never good for the defense side of the matrix because our “activist” courts will make us pay for any uncertainty.

Whether anything of the many proposed IL WC reforms will survive and be passed into law is yet to be seen—watch this space. With what is at stake in a government shutdown, my vote is back out of the few reforms of value and take the time needed to come up with “hard” reforms that will make the system operate more effectively for IL business and local governments. I am happy to quietly help, if asked.

Will The State of Illinois Ever Dig Out of the Massive Financial Hole Created by Our Legislative Leaders?

The “Grand Bargain” currently being proposed includes

· At least $7 billion in new state borrowing for a state awash in spiraling debt and

· State income tax being dramatically raised to record levels for individuals and corporations and

· The stupidest tax on moderate and small businesses I have ever heard of. Some PR guy gave this proposed tax the silly name “Business Opportunity Tax.” Our legislative leaders want to raise $750M to tax payroll and 1099 payments for businesses working in Illinois. If it passes, every incentive will be to move jobs and business out of this state even faster than is already happening. In my view, the only “opportunity” that will almost certainly come from such a tax is to have businesses jump on this “opportunity” to get out of this state and bring jobs and work elsewhere.

· Lots of other unpalatable things that will infuriate you and me, as taxpayers.

What this bargain doesn’t include are any budget cuts or government efficiencies or basically anything to get us out of the giant financial mess in the years and decades to come. If you don’t change what caused these new and higher taxes and borrowing, you are going to need more taxes and borrowing until something snaps. I feel they are simply patching up the financial mess they caused with literally no long-term relief in sight. All I see the legislature doing is fighting Governor Rauner and digging deeper and deeper into an anti-business and anti-local government financial abyss. Lots of folks and businesses are fleeing with fewer and fewer new Illinois jobs being created—does anyone in the General Assembly care?

I suggest we all diary February 28, 2017 to watch and see if they can come up with a plan that will keep the IL WC Commission open and our circus-like state government afloat.

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Synopsis: RICO Claims To Disappear from U.S. Workers’ Comp World And Good Riddens.

Editor’s comment: If you don’t know, the Federal RICO concept was, in my opinion, created to stop Mafia folks from defrauding and extorting money from our citizens. The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a private civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focused specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to do the act and then be exempt from the trial because he did not actually commit the crime personally.

About ten-fifteen years ago, WC Claimant lawyers in Michigan decided to bring RICO into the world of workers’ comp. Several lawsuits were filed and a heated battle ensued.

Now a Michigan Federal Court just again ruled RICO may not be used for workers’ comp bad faith claims. Citing two earlier precedents, a U.S. District Court in Michigan has once again ruled, in pertinent part, that racketeering activity leading to a loss or diminution of workers’ comp benefits a plaintiff expects to receive under a state workers compensation system does not constitute an injury to “business or property” under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Accordingly, where an injured worker alleged a claims conspiracy, pursuant to which the workers’ compensation insurance provider hired IME or other doctors to write allegedly fraudulent reports for the purpose of denying his workers’ compensation benefits, the worker stated no demonstrable cause of action.

In Gucwa v. Lawley, the worker sought to distinguish earlier decisions—Jackson v. Sedgwick Claims Management Services, 731 F.3d 556, 563–64 (6th Cir. 2013) (en banc), and Brown v. Cassens Transport Co., 546 F.3d 347, 354 (6th Cir. 2008)—on the grounds in his own case, he alleged tortious activity by “independent medical examiners.” The U.S. District Court held the worker’s argument was meritless and a motion to dismiss granted.

As I have advised my readers on many occasions, if RICO were to come into the world of workers’ comp, the same sword could cut both ways. We could see aggressive and upset employers filing RICO actions against phony and/or questionable claimants seeking treble damages and attorney’s fees. If that happened, it would be very hard for the Claimant bar to step up and fight back—Federal RICO litigation is very, very expensive to defend.

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Synopsis: When Enough Work Comp Benefits Are Paid, Uninsured Motorist Benefits May Not Be Due.

Editor’s comment: In Country Preferred Insurance Co. v. Groen, Claimant suffered an accident that occurred during the course of her employment and Claimant-defendant Groen received substantial benefits under the Illinois Workers’ Compensation Act in excess of $400,000. In addition, she sought uninsured motorist benefits from Plaintiff Country Preferred Insurance Company, under a policy, which contained a provision entitling Plaintiff insurance company to reduce the amount of its liability by any payments made or due under the IL WC Act.

Ultimately, the trial court granted summary judgment in favor of Plaintiff Country Preferred and against the injured worker. She appealed, arguing the court erred in granting summary judgment because Plaintiff insurer should be prohibited from reducing the amount of its available

uninsured motorist coverage by the amount of medical expenses paid by her employer in her work comp claim. Specifically, she argued

(1) medical payments made pursuant to the IL WC Act are not “for” an insured and, therefore, are not subject to setoff under her uninsured motorist policy;

(2) alternatively, the setoff provision was somehow ambiguous as to whether medical payments made by an employer under the IL WC Act are subject to setoff and, therefore, should be construed in her favor; and

(3) the setoff provision “is unenforceable because it violates the IL WC Act.”

On October 7, 2013, the worker was struck as a pedestrian by an uninsured motor vehicle and suffered serious injuries. At the time of the accident, Claimant Groen was working and was acting within the scope of her employment. As a result, Claimant sought and received workers’

compensation benefits under the Act. Specifically, she received temporary total disability benefits in the amount of $328.33 per week beginning on October 7, 2013, and up to at least July 28, 2014, the date Claimant signed an affidavit in the within action. In addition, as of July 22,

2014, defendant’s employer had paid $410,266.63 in medical bills pursuant to the Act.

In addition to receiving workers’ compensation benefits, Claimant Groen sought benefits from Country Preferred under an uninsured motorist policy with limits of $250,000 per person and $500,000 per occurrence.

In June 2014, the insurer filed a complaint for declaratory judgment, seeking a declaration of the parties’ rights and obligations under the uninsured motorist policy, which, in relevant part, provides as follows:

“Amounts payable for damages under Uninsured-Underinsured Motorists, Coverage U, will be reduced by the present value of all amounts paid or payable under any workers’ compensation, disability benefits or any similar law.”

The insurer asserted Claimant Groen was not entitled to benefits under her uninsured motorist policy because she had already collected more than $250,000 in workers’ compensation benefits. In March 2015, the insurer filed an amended motion for summary judgment, asserting Ms. Groen could not maintain a viable uninsured motorist claim, since she had already received workers’ compensation benefits in excess of the uninsured motorist policy’s limits. In August 2015, Counsel for Claimant Groen filed a cross-motion for summary judgment, asserting the setoff provision (1) violated the Act and was unenforceable and (2) excluded medical payments made by her employer directly to her medical providers.

Following a December 2015 hearing on the motions, the trial court granted the insurer’s amended motion for summary judgment and denied Ms. Groen’s motion for summary judgment. In its written order, the trial court found the setoff provision was enforceable, unambiguous, and not against public policy. This Appellate Court unanimously agreed.

We checked the IWCC website and note the underlying WC claim is now moving into its fourth year.

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