4-10-2017; Hacking May Change Workers’ Comp Record/Bill Keeping But Not in a Good Way; Whistleblower Complaints have to Relate To Problems Complained Of by Shawn Biery, J.D. and more

Synopsis: Hacking May Change Workers’ Comp Record/Bill Keeping But Not in a Good Way.

Editors’ comment:  If your financial stuff has ever been hacked, consider a challenging new statistic, by 2024, everyone in the U.S. may have had health care and workers’ comp data compromised if online theft keeps accelerating at the current pace. As ouir health records are going digital in the past several years, they've become far more vulnerable to poaching—and far more interesting to online thieves, who may sell a complete medical record for more than $1,000 on the darknet. That is because the records contain not just your insurance info—which can be used for fraudulent billing and prescriptions—but also they include your Social Security, driver's license and credit card numbers. As a result, the health care and work comp industry is scrambling to play catch-up to secure patient and hospital data.

Always remember workers comp benefits are about 45% health care costs in the U.S. and other countries. Health care has lagged far behind banking, financial services and retail when it comes to implementing security protocols. Until Obamacare mandated electronic records, many medical providers still operated with ancient concepts like paper, faxes and handwritten charts. Once electronic systems were finally implemented, the industry struggled to attract and retajn top IT talent to protect us. The access issues are industry-specific. "Security in health care has some unique challenges because we have to share data in order to save lives while also protecting patient information," says Steven Smith, chief information officer at Evanston-based NorthShore University HealthSystems. "If you think of a bank, your financial information is locked up and not shared. But we need to share our data with all doctors, nurses and outside payers, as well as with the patients themselves."

IT security experts say it's tough to overstate the enormity and frequency of the threats, which have skyrocketed in the past decade as everything has become exponentially more networked.

So far in 2017, 79 security breaches, each affecting at least 500 patients, have been reported to the U.S. Health & Human Services Department. That's more than five incidents a week. Only one, involving Walgreens Boots Alliance and 4,500 records, took place in Illinois. Still, our State has experienced nearly 100 incidents since 2010, according to the HHS breach portal, known as the "Wall of Shame" to security professionals.

Major hospital systems here are beginning to pay the price as HHS levies fines on providers who have lost sensitive patient data. In January, Chicago's Presence Health agreed to pay $475,000 to HHS for failing to report in a timely manner a 2013 breach involving missing paper schedules containing patient information. Presence is "working diligently" on a corrective plan, including additional security training for staff, a spokesman says.

That figure pales in comparison to the $5.5 million shelled out by Advocate Health Care in August. The Downers Grove-based hospital network agreed to pay HHS the largest settlement ever by a single entity for potential violations of federal patient privacy law related to three separate 2013 breaches that compromised the data of at leaset 4 million people. Two of the incidents involved stolen employee laptops, while a third involved a consultant's potentially unauthorized access to patient records. Since then, Advocate has "enhanced (its) data encryption measures," says a spokeswoman, adding that there's been no indication the information was misused.

Nationwide, IT breaches cost the medical and workers comp industry more than $6 billion annually—a number that grows each year.

Hospitals and physicians' practices make enticing targets. For starters, the protections are lax. "Based on our testing, health care applications performed more poorly on just about every (security) measure than applications in any other industry," says Tim Jarrett, a senior director of product marketing at Veracode, a Boston software security firm. Then there's the industry's personnel problem. "The U.S. has a huge shortage of highly qualified cybersecurity people across all industries," says Rod Piechowski, a senior director at the Healthcare Information & Management Systems Society, or HIMSS, a Chicago-based nonprofit with more than 50,000 members. "Being late to the game, health care just can't compete."

Although they're in high demand, IT professionals in health care and workers’ comp historically have not had a major say in their employers' procurement process, unlike in other industries, according to Jarrett. Until recently, security wasn't prioritized the way it was in finance or banking, and, as a result, network administrators couldn't effectively lobby manufacturers to increase software security standards, so they often ended up overseeing systems that are tough to keep safe. Plus, it's not just computer and billing systems that are vulnerable. Medical devices from insulin pumps to pacemakers store information wirelessly. Several years ago, former Vice President Dick Cheney revealed that, while he was in office, his doctors had disabled his heart implant's wireless connection because of a fear of assassination attempts. More recently, Johnson & Johnson warned customers about a security problem with one of its insulin pumps.

Some medical devices aren't made to allow any remote management, which prevents IT people from detecting problems and installing updates efficiently. Once tech teams are saddled with subpar systems, they're really stuck—because medical equipment tends to have a much longer life cycle than consumer electronics. Jarrett says he knows of one Midwestern drug company where computers that prepare prescription for patients use Windows XP, a 16-year-old operating system that stopped being supported in 2014. "That's horrifying," he says.

'SHADOW IT' SYSTEMS

Compounding the issue, some physicians, frustrated by clunky systems and compelled to find quick workarounds in the name of patient care, have created ad hoc "shadow IT" systems that rely on insecure methods like texts or unencrypted personal email, according to Coady.

As health care systems struggle to secure their data, increasingly sophisticated thieves have more reasons to steal it. Because the records include so much information, thieves can falsify insurance claims and collect checks, get tens or hundreds of thousands of dollars of free care on someone else's insurance (which might affect the real policyholder's coverage limits), and falsify driver's licenses to illegally get prescriptions. "The fraud that can be executed against payers is incredible," Coady says. Medical hackers have also been known to attempt extortion. In late 2014, Clay County Hospital, an 18-bed facility in downstate Flora, received an anonymous message saying that more than 12,000 patient files would be released unless it paid thousands of dollars. Administrators instead contacted the FBI—but other hospitals, including Hollywood Presbyterian Medical Center in Los Angeles, have paid thousands of dollars in similar situations.

Most Chicago hospital systems are reluctant to discuss their security efforts beyond confirming that they've invested lots of time and money. But they acknowledge the pressing issue. "The Cook County Health & Hospitals System has invested considerable financial and human resources into ensuring the highest level of security possible," Donna Hart, the system's chief information officer, says in a statement. "The security of our systems is one of our highest priorities."

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Synopsis: Whistleblower Claims Have to Relate to Issues Complained Of.  Analysis by Shawn Biery, J.D., M.S.CC.

Editor’s comment:  Interesting decision for anyone who has been subjected to defending claims made under the Whistleblower Act. In Corah v. The Bruss Co., No. 1-16-1030, decided before the Appellate Court of Illinois, First Judicial District, Third Division March 2017, the court found no whistleblower protection for employee Corah due to lack of any evidence that his refusal to complete accident reporting.

Joseph Corah was the supervisor of bone-in-steak production at The Bruss Co., an affiliate of Tyson Foods. In September 2010, an employee under his supervision named Yvette Albea began having issues with lightheadedness and sweating, which caused her glasses to fog up. At Corah's recommendation, Albea was taken off the production line however after Albea threatened a union grievance, she was placed back on the line and after her return, cut her finger on a band saw. Corah completed an accident report (internally identified as an AIR) in which he placed the root cause of the accident on the superintendents for negligently placing Albea back on the line. After a dispute with the two superintendents and the plant's human resources manager over what to put in the report, Corah was terminated for insubordination.

The court again held that the language of section 20 is unambiguous and thata‘plaintiffmustactuallyrefusetoparticipate’  inanactivitythatwouldviolatealawor regulation.” citing Lucasv.  CountyofCook,  2013ILApp(1st)  113052(quoting Sardigav. Northern Trust Co., 409 Ill. App. 3d 56, 62 (2011) which indicated Plaintiff bears the burden of establishing his claim under the Whistleblower Act.

The appellate court found that because the worker was not being asked to do anything illegal, his actions were not protected under whistleblower laws.

Key to the decision was evidence that Corah's managers said they were willing to include typewritten notes from Corah "voicing (his) concerns about Albea being permitted to remain qualified on the band saw" in the report. They said they terminated Corah after he refused to fill out the AIR completely. The court also accurately determined that the AIR was an internal document not submitted to any outside agency so Corah failed to demonstrate that modifying the AIR would have violated any state or federal law, rule or regulation.

The court specifically noted "Defendant did not ask Plaintiff to falsify the AIR but merely to include the technical cause of Albea's accident,"  and “In addition, defendant's safety manager established the AIR was an internal document that would not have been submitted to any government agency."

Other facts determined in the matter also confirmed Bruss Co. submits a separate workers' compensation form to the state and only circulates the AIR internally, managers testified. The workers' compensation administrator for Tyson, a self-insured company, indicated access to AIRs when processing claims but confirmed they are not submitted anywhere.

It is probably also relevant that Bruss/Tyson approved Albea's application for workers' compensation benefits as a result of the accident.

This case is a strong example of an employer’s ability to control their internal documentation process and procedures. It also supports our general longstanding advice to KCBA clients when we consistently recommend investigation matching the urgency of claims and detailing all issues, including facts which may impact other potential claims—in this case, the initial WC investigation noting the threat of union grievance provided evidence to defend the whistleblower claim.

It is also important to note that Bruss/Tyson did not violate any state or federal laws in this matter—and it is significantly easier to defend a well-managed and innocent client!  This article was researched and written by Shawn R. Biery, JD. You can contact Shawn at sbiery@keefe-law.com for questions regarding any of your employer defense claims.

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4-3-2017; Will The U.S. Ever Allow Dying with Dignity? Iowa Gov Signs New WC Reforms; Staffing Risk Management Ruling of Note and more

Synopsis: Will Our Country Ever Be Smart Enough to Allow Dying with Dignity?

Editor’s comment: I am on vacation in Jamaica and met a wonderful couple from Guelph, Ontario. They gave me the inside scoop on a new socio-legal development in Canada—Dying with Dignity. In short, if you or a loved one are suffering from a terminal condition, it is okay to follow the safeguards with your physician to plan for and execute an exit strategy.

How Does This Concept Impact Workers’ Comp?

One sad part of Dying with Dignity is there is a facet of it that relates to saving money for insurance carriers and employers who cover most of many folks’ health care coverage. There are people who suffer fatal injuries or become exposed to terminal diseases at work. These workers don’t all pass immediately and may linger for a time after suffering through an accident or disease. A small aspect of the concept is to avoid the high cost of unnecessary and expensive medical care that will only prolong pain.

For the last year available, these are the key findings of the 2015 U.S. Census of Fatal Occupational Injuries:

·         Annual total of 4,836 fatal workplace injuries in 2015 was the highest since 5,214 fatal injuries in 2008.

·         The overall rate of fatal work injury for workers in 2015, at 3.38 per 100,000 full-time equivalent (FTE) workers, was lower than the 2014 rate of 3.43.

·         Hispanic or Latino workers incurred 903 fatal injuries in 2015—the most since 937 fatalities in 2007.

·         Workers age 65 years and older incurred 650 fatal injuries, the second-largest number for the group since the national census began in 1992, but decreased from the 2014 figure of 684.

Get The Facts On Physician Assisted Dying

Physician assisted dying is a safe, compassionate choice for individuals facing the prospect of a horrific death. But don’t take my word for it. Get the facts on end-of-life choice and decide for yourself.  The Canadian model in allowing assisted dying respects a patient's right to choose. Their Supreme Court struck down the laws forbidding physician assisted dying because the laws unfairly restricted individual choice. Access to aid in dying will give Canadians further control over their care and, ultimately, their lives.

People want choice. More than eight in 10 Canadians support physician assisted dying. Commissioned by DWD Canada, a 2014 Ipsos Reid poll opinion poll showed that 84 per cent of Canadians believe seriously injured or gravely ill patients should have the right to end their lives with the help of a doctor.

Making assisted dying illegal doesn’t stop it. Each year, a handful of gravely ill Canadians travel to Switzerland for a medically assisted death. The cost — $20,000 to $30,000 when you account for flights and accommodation — puts this option out of reach for most people. At home, laws banning assisted dying and voluntary euthanasia have led Canadians with catastrophic diagnoses to end their own lives, sometimes violently and often prematurely. These tragedies devastate families and scar first responders. It’s time to stop this unnecessary trauma.

The safeguards work. They can provide choice for competent Canadians and protect the most vulnerable members of their society. International research has repeatedly concluded legalized assisted dying doesn’t threaten vulnerable groups such as children, the very elderly, the poor, people with disabilities and the mentally ill. This conclusion was upheld by the Supreme Courts of British Columbia and was a key factor in the Supreme Court of Canada’s decision to decriminalize physician assisted dying.

Palliative care is not enough. Palliative care is critical, but alone it is not enough. In Oregon, nine in 10 people who used that state's Dying with Dignity legislation were enrolled in a hospice program. That’s because there is some suffering only death can end. Assisted dying doesn’t hurt palliative care. Jurisdictions where end-of-life choice is legal are often global leaders in end-of-life care. Oregon, Washington and Vermont were the first American states to legalize assisted dying. They also lead the U.S. in terms of access to palliative care.

Access to assisted dying can actually lead to improved end-of-life care. A recent study in the medical journal Health Care shows investment in palliative care in the Netherlands took off after the Dutch government passed a historic assisted dying bill in 2002. Both Belgium and Quebec tied legalization of PAD to increased funding for palliative care.

Physician assisted dying is good for end-of-life healthcare. In places where assisted dying is legal, doctors are more likely to discuss end-of-life care with patients and their families.

Legal choice in dying also forces doctors to learn more about a broad range of end-of-life options. After Oregon passed a Dying with Dignity bill in 1997, the state embarked on a campaign to teach physicians how to care for patients at end of life. Five years later, a team of experts interviewed social workers and hospice caregivers to gauge how doctors were doing. “Most respondents rated Oregon physicians as showing improvements in knowledge and willingness to refer and care for hospice patients,” the authors reported.

Offering physician assisted dying is all about compassion. Forcing others to endure unwanted, intolerable suffering is inhumane and wrong. As a compassionate society, we must offer information and choices to those who face the prospect of a horrific death.

At present, the states of Oregon, Washington, Vermont, Montana and California now allow Dying with Dignity. I hope we are going to start talking about it in Illinois and the other states in which we defend claims. To me, it makes a great deal of sense when all the safeguards are in place.

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Synopsis: Iowa Republican Governor Terry Branstad signs Pro-Business workers’ compensation legislation.  Analysis by Daniel J. Boddicker, J.D.

Editor’s Comment: GOP lawmakers in Iowa pushed legislation to reduce the cost of workers’ compensation for employers and Governor Terry Branstad agreed by signing the bill last Thursday, just one day after it was sent to him.

Senators in the Iowa passed Iowa House file 518 by a 29 – 21 vote after it was stripped of two provisions: a cap on benefits at age 67 and changing the burden of proof for injuries. Governor Terry Branstad wasted no time in signing the bill on Thursday. An important pro-business provision of the bill is a basis for disallowing compensation if a positive test for drugs or alcohol is shown by an employer. In such case, a presumption will exist that the employee was intoxicated at the time of the injury and that intoxication was a substantial factor in causing the injury. The burden of proof will then be on the employee to overcome the presumption.

We are aware of recent reports that since February 6, when word of workers’ compensation reform legislation began to spread, the Iowa Division of Workers’ Compensation has received a large amount of new petitions for benefits. The glut of new petitions is a clear sign claimants attorneys rushed to have the cases heard under statutes applicable before the new pro-business changes.

Other changes in the new legislation include the disallowance of whole-person impairment ratings related to shoulder injuries; employees are no longer compensated for permanent partial disabilities if they are receiving benefits for permanent total disabilities; traveling employees can be offered light duty at geographically suitable workplaces as long as the employer pays for any travel, lodging and meals; compensation for permanent partial disability begins when maximum medical improvement has been reached and the impairment rating can be determined; and the Iowa Workforce Development Department would be required to retrain workers at community colleges so that they can return to work.

We recommend you review all the changes to the legislation. Iowa employers have a reason to be happy.

This article was researched and written by Daniel J. Boddicker, J.D. You can reach Dan at any time for questions about Iowa or Illinois workers’ compensation at dboddicker@keefe-law.com.

Synopsis: Required Reading for All Staffing Risk Managers—Your Workers May Not Be Able to Sue Your Accounts When WC Covers the Claim. Analysis by Lilia Picazo, J.D.

Editor’s Comment: In Terrance Falge v. Lindoo Installations, Inc., 2017 IL App (2d) 160242 (issued March 24, 2017), the Illinois Second District Appellate Court ruled an employee of a temporary staffing agency could not sue the borrowing employer for negligence after his finger was partially amputated in a workplace accident while performing work for the borrowing employer.

In August 2012, Terrance Falge was an employee of a temporary staffing agency, Labor Ready, when he was assigned to work for Lindoo Installations Inc.

Falge and five Lindoo employees were assigned to assemble storage shelving units at a Benjamin Moore & Co. warehouse. While handling a bundle of shelving units, a Lindoo employee drove a forklift loaded with bundles over to Falge, who the cut the bands holding a bundle together with a pair of shearers. The bundle shifted as Falge was cutting through one of the bands and trapped his index finger against the forklift resulting in a partial amputation of his right index finger.

Falge filed a workers' compensation claim against Labor Ready, and a personal injury claim against Lindoo, alleging his injuries were caused by Lindoo’s negligence.

Lindoo moved for summary judgment arguing that is was Falge’s borrowing employee, and therefore immune under the exclusive remedy provision of the Workers’ Compensation Act. A trial court judge granted Lindoo's motion.

Falge appealed, saying there was a genuine issue of material fact as to whether Lindoo was a borrowing employer under the Act because there did not appear to be any direct supervision or direction from Lindoo. The Appellate Court affirmed the circuit court’s decision.

Section 5(a) of the Illinois Workers’ Compensation Act, the exclusive remedy provision, prohibits an employee from suing his or her employer for negligence. The provision extends immunity to loaning and borrowing employers.

Under the IL WC Act, a worker in the general employ of one company may be loaned to another company to perform work thereby becoming the employee of the borrower while he or she is performing the work.

Here, the court said there was no question that Labor Ready qualified as a loaning employer. Instead, the question was whether Lindoo qualified as a borrowing employer.

The court explained a borrowing employer relationship exists if the borrowing employer has a right to direct and control the manner of work performed by the borrowing employee, and if there was a contract of hire between the employee and borrowing employer.

The court found Lindoo had the right to control Falge's work because Falge was taking direction from Lindoo employees, and the contract between Lindoo and Labor Ready expressly said Lindoo had the power to direct Falge's activities, including set Falge's work schedule. The court also found Falge impliedly consented to a borrowing employer relationship with Lindoo, because he knew he was working for Lindoo through Labor Ready when he accepted the assignment.

The Falge case is a reminder for our readers of the protections against dual avenues of recovery in workers’ compensation cases. A copy of the decision can be found here .

This article was researched and written by Lilia Picazo, J.D. You can reach Lilia 24/7/365 for questions about workers’ compensation at lpicazo@keefe-law.com

3-27-2017; CTBA Confirms IL WC Reform Not A Crisis--What Do You Think?; Tim O'Gorman, JD Reports Important Ruling on Medical Bills-Penalties and more

Synopsis: Center for Tax and Budget Accountability (CTBA) Confirms IL WC Reform Not A “Crisis.” Whether You Agree Or Not, Take a Look.

Editor’s comment: I support Governor Bruce Rauner in his efforts to bring fiscal sanity to the moderately insane State of Illinois and City of Chicago. In my view, our State/City leadership has made numerous mistakes and misjudgments. Illinois and Chicago taxpayers are paying and will continue to pay a heavy price for this tragic and continuing government dysfunction. I agree something has to be done to protect our jobs, homes, schools, places of worship and lives in this state.

That said, Governor Rauner’s “Turnaround Agenda” regularly features workers’ comp reform as his number 1 or number 2 priority. Governor Rauner almost seems to make take the concept to “crisis” levels. I have literally no idea why, as workers’ comp reform or moderate cost-cutting should be

·         Easy for him to implement and

·         Should be the 33d thing he would care about in “turning around” IL State government.

Why Should It Be Easy for an IL Governor To Implement WC Reform?

Governor Bruce Rauner, and no one else in IL gov’t, completely controls the jobs of all of IL WC Chairperson Fratianni, the nine Commissioners and our Arbitrators! As I have said repeatedly, if the Governor wants to cut WC costs, all he has to do is send a memo, call a meeting or send up smoke signals telling the above administrators and hearing officers to bring the costs down. If they don’t do it and the results aren’t measurable in, let’s say a year, find others who will. Seems like a no-brainer to me.

While he is at it, we suggest he consider cutting the IL WC Commission’s budget along with the budgets of the other 87 state agencies. If he orders the Agency heads to cut costs, for example, 10, 15 or 20%, the impact on spiraling/skyrocketing debt would be almost immediate. I vote fire the IL gov’t agency heads that don’t get the message—seem easy, Gov?

Why Should WC Reform Be the 33d Thing in “Turning Around” IL State Gov’t?

We saw this brief study on the web from CTBA or the Center for Tax and Budget Accountability. We agree with some of it. If you look at the CTBA Board of Governors, you may see there are several union officials but there are also representatives of industry and government. We aren’t completely buying into all their concepts but we think you might want to consider their thoughts and research.

This is taken from http://ctbaonline.org/reports/turnaround-fact-sheet-1-workers-compensation. If you want their footnotes, please go to the link.

Turnaround Fact Sheet #1: Workers’ Compensation

About This Series

This is the first in a series of CTBA Fact Sheets reviewing the proposals in Governor Bruce Rauner’s “Turnaround Agenda.” These initiatives have taken on great significance in Illinois, given the Governor’s decision to make enacting his Agenda a condition of passing a final General Fund budget — something the state has failed to do in the first two years of Rauner’s gubernatorial term.

As many of the policies included in the Turnaround Agenda are not traditionally part of the state budget process, the Rauner Administration has justified their inclusion in a budget deal by arguing that they will speed economic growth, thereby increasing the tax base and easing the state’s revenue shortfalls.

This series will identify whether there is evidence to indicate that the individual elements of the “Turnaround Agenda” will promote economic growth, and identify how Illinois compares to other states in these policy areas.

1. INTRODUCTION

1.1 Workers’ Compensation Background

Workers’ compensation insurance plays two critical roles. First, it helps ensure that employees who are injured on the job and either unable to work (those with “total disability”), or are limited in their ability to work (“partial disability”), are not impoverished. Second, it limits the exposure of businesses to liability as a result of injuries suffered by their workers while on the job.

Originally mandated by state laws in the early twentieth century, workers’ compensation systems generally require employers to pay premiums to either public or private insurance funds.[i] In Illinois, these insurance funds are private.[ii] When an employee is injured, they are eligible to receive benefit payments based on a schedule set by state law. These schedules are generally prorated to a standardized measurement of the extent to which the injury limits the employee’s ability to work. In exchange for paying into this system, employers are protected from lawsuits alleging negligence leading to worker injuries, significantly mitigating their risk.[iii]

1.2 Workers’ Compensation Reform in Illinois

Workers’ compensation insurance has long been criticized by business groups, which claim that its premiums unduly burden employers, and therefore reduce employment and business growth. In 2011, the Illinois General Assembly passed, and Governor Pat Quinn signed, a major reform bill aimed at reducing workers’ compensation insurance costs by cutting reimbursement rates to medical providers by 30 percent, among other measures.[iv]

As part of his Turnaround Agenda, Governor Rauner has proposed further reducing the fees paid to medical providers, as well as limiting the benefits paid to workers. This would be accomplished by requiring that work activities be the “major contributing cause” of an injury. That is a much higher standard than current law, which simply requires that work activities be a cause of the injury suffered. In addition, Governor Rauner would narrow the types of work-related travel that are eligible for coverage under workers’ compensation.[v]

In justifying his workers’ compensation initiatives, Governor Rauner has identified increased economic growth as the intended outcome, maintaining that: “We need to make Illinois a growth state again. That means structural reforms to major cost drivers for businesses.”[vi]

However, there is very little independent research linking lower workers’ compensation costs to higher rates of employment or economic growth. In addition, the strategy of reducing the cost of workers’ compensation to employers by cutting worker benefits is dubious, as recent national trends show employer costs rising even as worker benefits fall.

2. Workers’ Compensation Costs in Illinois Versus Other States

2.1 Employer Costs

There are two primary ways to evaluate the costs of workers’ compensation: the direct costs to employers, and the benefits paid to covered workers. Since the goal of Governor Rauner’s proposals is to reduce employer costs, those will be analyzed first.

According to data collected by the National Academy of Social Insurance, worker compensation costs for employers in Illinois are slightly less than the national average. (For more on the choice of data in this Fact Sheet, see the Methodological Note.) In 2014, Illinois employers paid $1.31 in workers’ compensation costs per $100 of covered payroll, just under the national average of $1.32, as shown in Figure 1. However, employer costs in Illinois are higher than some other Midwestern states, which have workers’ compensation costs that are significantly below the national average, including Indiana ($0.85) and Michigan ($0.94). Wisconsin ($1.67) is a notable exception, with employer costs that are higher than Illinois’. Other large industrial states also tend to have higher employer costs than Illinois, such as New York ($1.44), Pennsylvania ($1.49), and California ($2.00).

2.1 Employee Benefits

As with employer costs, Illinois’ employee benefits are also just below the national average.

In 2014, Illinois workers’ compensation insurance paid $0.90 in benefits per $100 of covered payroll. The national average was $0.91. Meanwhile, the state’s Midwestern neighbors Michigan ($0.55) and Indiana ($0.49) had much lower benefits — among the lowest in the country — while Wisconsin ($1.00) had slightly higher benefits, as shown in Figure 2. Other large industrial states, such as New York ($0.97), Pennsylvania ($1.08), and California ($1.32), also have higher worker benefits than Illinois.

2.2 The Divergence of Employer Costs and Employee Benefits

This distinction between employer costs and worker benefits is important, as the reforms proposed by the Rauner Administration aim to shrink costs to employers by further reducing benefits to workers. However, as Figure 3 shows, worker benefits per $100 of covered payroll have fallen precipitously in Illinois between 2010 and 2014, dropping over 20 percent from $1.13 to $0.90. But at the same time, employer costs have fallen just 4.4 percent, from $1.37 to $1.31 per $100 of covered payroll. In other words, for each one percent decline in worker benefits, employer costs have fallen just 0.2 percent.

Even more strikingly, while workers’ compensation costs for employers in Illinois have been declining, employer costs nationally have actually increased by 8.2 percent. Moreover, that national spike in workers’ compensation employer costs occurred despite the fact that worker benefits fell by 10 percent over the same period. In other words, substantial reductions in worker benefits have been associated with very weak declines in employer costs in Illinois, and increases in employer costs nationwide.

Therefore, the assumption that reducing benefits for injured workers will result in concomitant reductions in workers’ compensation premiums for employers is simply not supported by the real world evidence. This is troubling, given that the Rauner Administration’s proposed reforms make precisely this assumption, and rely on lowering worker benefits as a path to reducing employer costs.

3. Research Shows Little Connection Between Workers’ Compensation and Economic Growth or Employment

Workers’ compensation reform, though not a budgetary issue in the sense that it is not directly related to state expenditures or revenues, has nevertheless been included as part of the “Turnaround Agenda” that the Rauner Administration says must be part of any agreement to end Illinois’ budget crisis. The Administration argues that workers’ compensation is crucial to any budget solution because it will spur economic and employment growth, increasing the size of the state’s tax base.

This argument, however, does not appear to be supported by independent analysis of the link between workers’ compensation costs and economic growth. In fact, there has been surprisingly little research on the question.[vii] But what has been done mostly suggests that there is no significant link.

In a 2005 paper, the Federal Reserve Bank of Kansas City found that “workers’ compensation costs are not a likely cause of jobs woes in most states.”[viii] The paper found that a 10 percent increase in workers’ compensation benefits reduced employment by just 0.11 percent, and wages by 0.10 percent. By contrast, gas prices had a five times greater effect on wages. A 10 percent increase in employer costs reduced employment by even less — 0.07 percent, with an even smaller effect on wages. The author concluded: “Recent claims by policy makers, businesses, and chambers of commerce that workers’ compensation costs are driving away jobs probably is unwarranted.”

Another study by researchers at Marshall University’s Lewis College of Business found that in nearly half of all states, there was no correlation between workers’ compensation benefits and economic development. Furthermore, even in those states that showed a statistically detectable correlation, the authors concluded that “the impact is so small that it is economically insignificant.”[ix]

Moreover, according to the Workers’ Compensation Research Institute, an independent research organization based in Cambridge, MA: “Our researchers note that workers’ compensation is a very small percentage of total compensation, so the impact of changes in workers’ compensation on a state’s fiscal health is presumably negligible.”[x]

It is necessary to go back to the early 1990s to find a study that suggests that higher workers’ compensation costs have economically significant effects on employment.[xi] And that study was undertaken at a time when workers’ compensation costs nationwide were significantly higher than today, and so presumably a more important cost factor for businesses. Indeed, between 1994 and 2014, workers’ compensation costs fell by 57 percent.[xii] Since that significant national decline in workers’ compensation costs, research has found no meaningful correlation between workers’ compensation costs and economic growth.

4. Conclusion

Governor Bruce Rauner’s “Turnaround Agenda” has made workers’ compensation reform a major priority for any Illinois budget deal. Although workers’ compensation does not directly affect state expenditures or revenues, the Rauner Administration has argued that reducing workers’ compensation costs for employers is key to improving the state’s economic growth and building the tax base. The Governor proposes to reduce employer costs principally through cutting benefits for injured workers.

CTBA’s review of the evidence suggests that this plan is flawed in a number of ways. First, recent trends show that the connection between worker benefits and employer costs is weaker than is often assumed. Between 2010 and 2014, worker benefits in Illinois fell by over 20 percent, but employer costs fell just 4.4 percent. At the same time, employer costs actually increased nationwide, despite the fact that worker benefits declined. There is no evidence that further reductions to worker benefits will yield significant savings to employers.

Furthermore, most independent studies have found that there is no economically significant relationship between workers’ compensation costs and either economic growth or employment. This seriously calls into question the appropriateness of making workers’ compensation reform a critical part of a budget deal.

Methodological note

Reports on workers’ compensation costs by state commonly cite either the National Academy of Social Insurance (NASI) or the Oregon Department of Consumer and Business Services (Oregon DCBS). NASI and Oregon DCBS use different methodologies that lead to sometimes widely differing results. Specifically, Oregon DCBS creates an index of workers’ compensation employer costs based on a sample of 50 industries common to Oregon, and then applies weights based on the industry mix of Oregon’s state economy.

Because workers’ compensation costs vary substantially by industry, these weights and sampling are significant. For example, Illinois’ workers’ compensation cost ranking is quite high in industries related to logging (it has the highest costs of any state in the Saw Mill sector, for example), but is much lower in some other areas (34th highest costs in Clerical Office Employees, and 36th in Home/Public Healthcare, according to Oregon DCBS). A weighting system that reduces the significance of Clerical Office Employees and increases the significance of Saw Mill workers will make Illinois’ workers’ compensation costs appear to be higher.

The Oregon DCBS itself warns that “Because not all premium classes were included in the study, the actual average premium rate for a state will differ from the weighted premium rate index, which is based on the characteristics of Oregon’s economy. If different classes had been selected, or payroll from a state other than Oregon had been used to weight the rates by class, the results would be somewhat different.” (Emphasis added.)

The NASI data, on the other hand, report true average costs and benefits based on the existing industry mix in each state. For that reason, CTBA has chosen to use NASI data in this report.

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Synopsis: If An IL Claimant Wants Penalties/Fees on Medical Bills, They Have to be Tendered! IL WC Appellate Court Overturns 19L Penalties Awarded by the Commission.

Editor’s comment: In Brittany Theis v. IWCC, No. 1-16-1237WC, issued March 17, 2017 was originally tried before the Arbitrator in April 2014. Shortly thereafter, an award was issued for permanency, temporary total disability and medical bills. Neither party appealed and after the award became final. Thereafter, Petitioner’s counsel filed a petition for 19K and 19L penalties and Section 16 fees before the Commission for non-payment of the award. These penalties/fees could have dramatically increased the award by approximately 70% of the amounts owed!

Petitioner’s allegation claimed medical bills which were awarded at trial had not been paid for several months following the decision becoming final. Petitioner, until October 2014 about six months after the award became final, repeatedly refused to “tender” medical bills to opposing counsel as required by the IL WC Act and simply submitted them for the record at earlier hearing. Petitioner counsel’s unusual argument was it was incumbent upon Respondent counsel to order a copy of the arbitration transcript or subpoena Petitioner’s providers to obtain full copies of all medical bills including needed documentation.

It was admitted during oral arguments that Petitioner’s attorney had not provided copies of Petitioner’s exhibits to Respondent, prior to, during or subsequent to the trial commencing. No reason for failure to tender copies of the bills was outlined in the record.

Respondent presented arguments and evidence submitted for the record specifically addressing this argument. Respondent argued it was Petitioner herself who created any delay in payment by failing to “tender” medical bills to Respondent or its counsel. This conclusion is one that utilizes common sense; how can a Respondent subpoena medical bills when they may not even know which medical providers Petitioner may have been seen by? Furthermore, the IL WC Act and prevailing case law is extremely clear as to the burden of proof resting upon Claimant. Requiring Respondents/insurance carriers to seek out medical bills unilaterally would impermissibly shift the burden of proof.

The Commission panel agreed and specifically found Petitioner herself was the cause of the delay in tender and payment of the medical bills. They confirmed the IL WC Act specifically requires a Petitioner “tender” medical bills prior to the accrual of any liability for Section 19K and 16 penalties/fees and by refusing to send these medical bills to Respondent, Respondent’s insurance carrier or Respondent’s counsel, Petitioner could not “hide the ball” and collect 19K penalties or Section 16 fees as a result of her inactivity.

Despite coming to this very specific conclusion, the Commission confusingly awarded 19L “late fee” penalties from the date of the award through the date the bills were eventually paid per the IL WC Medical Fee schedule. This period of time included several months where Respondent did not even know bills were still outstanding as they had not been presented with copies of any allegedly unpaid bills.

Respondent appealed to the Circuit Court and argued the Commission’s decision was inherently contradictory. The Commission appeared to have come to a very specific conclusion that a Petitioner should not be able to hide medical records from a Respondent and expect to collect penalties. Then the Commission panel contradictorily awarded 19L penalties.

The Circuit Court agreed with Respondent’s common sense arguments and vacated the award for penalties finding the Commission’s decision was against the manifest weight of the evidence and based upon the Commission’s own findings and conclusions, 19L penalties would be inappropriate.

The IL Appellate Court, WC Division agreed in their ruling in Theis v. IWCC. Petitioner cross-appealed the decision of the Circuit Court and again attempted to argue that Respondents should be expected to prove a negative. According to Petitioner, a Respondent should be held responsible for obtaining medical bills, possibly without knowledge of all medical bills existing and relying solely on a providers’ custodian of records that bills may be complete and provide needed documentation to allow processing.

This argument begs a number of questions. If a Respondent is expected to subpoena medical bills, when would the clock begin to run on penalties? At the time the subpoena is issued? What if a provider is non-compliant? Should the deadline start at trial? At the time a transcript is order or received? The purpose of this ruling may be to simplify future proceedings and provide concrete answers. This Court came to the abundantly correct conclusion in answering these questions as “none of the above.” The penalty clock should only begin to run after medical bills are “tendered” to a Respondent, as the Commission had stated originally. The IL WC Appellate Court affirmed the finding of the Circuit Court and vacated all penalties awarded as the Respondent had an adequate justification for the delay of bill payment, namely that Petitioner created the delay.

We appreciate your thoughts and comments. Please post them on our award-winning blog. This article was researched and written by Timothy O’Gorman, J.D. You can reach Tim with questions, concerns or to assign new claims at togorman@keefe-law.com.