August 07, 2017

8-7-2017; Another Simple Example of Why State of Illinois Government is Approaching an Inevitable Financial “Fail;” Indiana WC Update About Coming Enforcement of their Rules by Kevin Boyle, J.D.

August 07, 2017/ Eugene Keefe

Synopsis: Another Simple Example of Why State of Illinois Government is Approaching an Inevitable Financial “Fail.”

Editor’s comment: I am trying to get my readers to understand this State is like the good ship, RMS Titanic. Unless we unexpectedly discover oil or gold, this State is headed toward the bottom of the financial ocean. It isn’t a question of “if,” it is simply a matter of when. As I reported last week, the debt from this craziness was evaluated by Moody’s to already be a quarter of a TRILLION dollars. The amount of that debt is more than $250,000,000,000 and continuing to rise by tens of millions each day.

Last week, we saw an Illinois WC Commission Investigator who became the center of a racist email probe. In response to the allegations, he is simply retiring to accept his personal version of the fake IL gov’t pension pot-o-gold. Please understand this means he will shortly be making more tax-free money than he was while employed but he won’t need to show up any more or face further scrutiny.

The Chicago Tribune reported this Illinois Workers’ Compensation Commission employee sent personal emails alleged to be the source of racist, sexist and anti-gay emails that were regularly circulated among City of Chicago Water Department managers/employees. It appears obvious someone in the Water Department didn’t like them and ratted out, oops, I mean told on the State worker.

The IL WC Commission investigator gave notice he will retire effective today, the newspaper said. The IL WC Commission launched an investigation after the Tribune reported this worker’s AOL address was the source of at least four offensive emails that circulated among water department managers. One of the emails described a fake “Chicago Safari” adventure tour that made light of the shootings of children in black and Hispanic neighborhoods, according to The Tribune.

The paper indicated this soon-to-be former State worker was paid $114,000 annually. He was also the Republican Party Committeeman for the 27th and 26th Wards on Chicago’s West Side. Can it be a coincidence to learn a Chicago Ward Committeeman got a cushy, “do-close-to-nothing” State job? How many other do-close-to-nothing jobs are there at the IWCC where they are spending work hours and State network time emailing other State/County/City government departments with similar silliness? In working over three decades at the IWCC, I saw this worker on a regular basis, typically sitting at a desk, doing very little. He obviously had plenty of time to create and send silly/insulting/inappropriate emails. I have no idea what his job as an “investigator” might have been. I am personally shocked to hear how much you and other taxpayers were paying him to do as little work as I saw him do. If you keep reading, you may note that starting today, we are certain to pay him millions more.

Please note the IL fake government pension system will now provide him 85% of his highest pay or $114,000 times 85% equaling $96,900.00 in the first year of retirement. He will receive 3% compounded annual increases to the fake gov’t pension—in short, he will now be constitutionally guaranteed raises that he wasn’t guaranteed as an active State worker. In five short years after leaving government work this coming week, he will be back to making at least $114,000 a year from his fake gov’t pension. The State of Illinois used to tax his regular income while working—they do not tax State gov’t fake pensions, even when the money being paid dramatically exceeds pension contributions.

In about 24 years from today and he is almost certain to live 24 years, his fake IL government pension will be paying him approximately $200,000 a year or $1M every five years. In 48 years, if he lives that long, his fake government pension will be paying him more than quadruple the initial amount or $400,000 a year, all of it tax-free. At that time, his annual increases/raises to the gigantic fake pension payout will be $12,000 every year. He is certain to get millions more in retirement than he would ever have made if he continued to “work.” We can’t directly blame him but we need to first get everyone to understand how an IL State gov’t fake pension is like winning the lottery.

To my understanding, he will also have “Cadillac” health care coverage paid solely by IL State taxpayers, you and I for the rest of his days. Former Governor Quinn tried to get retirees like him to fractionally contribute to their healthcare plans and it was shot down by our IL Supreme Court with Illinois taxpayers forced to pay millions for the legal fees of the State workers who challenged and blocked the new law.

I point out to you and all my readers, this inevitable financial “fail” is simply math. All of this challenging math is guaranteed by the IL State Constitution and is aggressively protected by the IL Supreme Court. Unless changes are made and made some time soon, our State Gov’t is going to hit the financial ocean floor when Wall Street pulls the plug on continued borrowing. The math above isn’t truly political or a “Republican” or “Democrat” issue because both sides of the political matrix have caused and contributed to the issue over the last half-century. There are also lots of folks like this former investigator from each party that bask in this gov’t largesse.

What can be done about it? Well, the fake IL government pensions can and should be ended asap to try to avert or start to slow this financial gov’t shipwreck. The members of the IL General Assembly can and should stop their fake gov’t pensions for legislature newbies, which could occur in four short years, if they had the guts to do so. The IL judicial pension program would need twenty years for new and incoming judges/justices to end their lottery-like winnings, I mean fake gov’t pension payouts.

IL Senate President Cullerton has a detailed and well-researched plan to cut other state fake gov’t pensions and save something like $1B in doing so. We salute him for his hard work and see the plan as viable. That plan can and should be considered sooner rather than later. Another plan by the IL Policy Institute is to end all State fake gov’t pensions for newbies and rapidly move to a 401K type plan for incoming workers.

Will Illinois Republicans Ever Start to Cut the Size and Cost of our Insanely Expensive State Government?

Right now, the IWCC and other State agencies are being directed by Republicans who were selected by and report to Governor Rauner. I do not believe there are any restrictions on those State agency heads ending the jobs of unneeded and redundant staff. In my view, the IL WC Commission and all 87 of the other IL State Agencies should start to cut staff and get leaner to avoid the punitive future costs of these fake gov’t pensions. The fewer State workers there are, the less we will have to pay to “back-fund” these obviously unfunded fake government pensions. At present, the IWCC annual budget is about $30M. This year, the IL General Assembly wanted to strip out 1/3 of the IWCC annual budget to create a silly and tiny monoline WC insurance carrier. That signals to me and lots of folks who oppose bloated IL State government the IWCC can and would survive and thrive with less staff and a lower budget.

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

Synopsis: Indiana WC Update by Kevin Boyle, J.D.

Editor’s comment: In case you didn’t hear about it, there is some important news just in from the Indiana Worker’s Compensation Board (the “Board”).

The IN WC Board just put out a notice that the Board is set to formally begin its enforcement protocol concerning the untimely filing of statutorily required IN WC forms and payment of WC benefits. You may have heard in early 2016 that this was eventually going to happen, and now it finally is here.

Please check your procedures for timely filing some of the basic Indiana WC forms like the First Reports of Injury, 1043s and others. A late filing may suddenly become a more real problem than it has in the past, as a result of the new plans for stronger statewide enforcement. But, there is a grace period on penalties through September 30, 2017 so you still have time to work on it.

Their notice provides that “during this period, you may receive letters and notice of actions found to be in violation of IC 22-3-3-7, 22-3-7-16, 22-3-4-13(a) and 22-3-7-37 so that appropriate remedies can be put in place.”

After the grace period ends at the end of September, i.e. for all injury dates on or after October 1, 2017, penalties will be assessed. Pursuant to IC 22-3-4-15, escalation of penalties will apply where more than one violation occurs in a single cause concerning the same injured worker and the same injury date. The Indiana WC Board also noted that “in the future, violations of 631 IAC 1-1-26 shall also become the subject of notice by the Board” if the 15 day time frame is violated.

The IN WC Board also encourages your comments and concerns with this process so they may be addressed by the Board prior to October 1st, 2017. Their contact information is online at http://www.in.gov/wcb/2340.htm

You can also reach out to Kevin Boyle, J.D. at kboyle@keefe-law.com. Kevin has extensive experience and understanding of the internal workings of the IWCB. He can help with whatever an employer or insurance carrier might need in dealing with these intricate issues.

If you have any questions, or could use help with your forms, filings, these new rules, and/or violations, please contact Kevin to discuss.

Synopsis: IS IT MID YEAR ALREADY??--NEW IL WC RATES ARE POSTED—UPDATED RATE SHEETS AVAILABLE SOON FOR ILLINOIS WC RATE INCREASE!!!

Editor’s comment: Illinois WC Rates Jump Again So Please Be Aware Of The New Rates or Your Claims Handling Will Suffer and Penalties May Ensue.

Email Shawn at sbiery@keefe-law.com and Marissa at mpatel@keefe-law.com to Get a Free and Complimentary Email or Hard Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

We like to hope it’s a sign of a growing economy—even though rates continued to increase almost every cycle as we continue to watch the growth of IL WC rates. As we have mentioned in the past, since in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing WC rates continue to climb.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is $775.18. However, this rate is only through June 30, 2017 and the new max PPD will be published in January 2018. When it will be published in January 2018, this rate will change retroactively from July 1, 2017 forward. If you don’t make the change, your reserves will be incorrect--if this isn’t clear, send a reply.

The current TTD weekly maximum has risen to $1,440.60. A worker has to make over $2,160.09 per week or $112,366.80 per year to hit the new IL WC maximum TTD rate.

The new IL WC minimum death benefit only increased by about $5 but we have now cracked the $700k ceiling. That amount is now 25 years of compensation or $540.23 per week x 52 weeks in a year x 25 years or $702,299.00! The new maximum IL WC death benefit is $1,440.60 times 52 weeks times 25 years or a lofty $1,872,780.00 plus burial benefits of $8K. IL WC death benefits also come with annual COLA increases which we feel can potentially makes Illinois the highest in the U.S. for WC death claims.

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. AGAIN—If you want just one or a dozen or more, simply reply to Shawn at sbiery@keefe-law.com and Marissa at mpatel@keefe-law.com They will get a copy routed to you once we get laminated copies back from the printer—hopefully before they raise the rates again! Please confirm your mailing address if you would like laminated copies sent to your home or office!

August 01, 2017

7-31-2017; NCCI Again Proposes Lower IL WC Advisory Rates--Yawn!!!; National Safety Council Ranks Illinois as the Second-Safest State!! and more

August 01, 2017/ Eugene Keefe

Synopsis: Nat’l Council on Compensation Insurance or NCCI Proposes Their Zillionth IL WC Insurance “Advisory Rate” Decrease.

Editor’s comment: Last week, the World of U.S. Workers’ Comp again noted NCCI always recommends reducing IL WC advisory rates. I have been doing this job and reporting to my readers for almost four decades, I don’t ever remember NCCI recommending anything but lower advisory WC insurance rates. As you can’t buy WC insurance at the NCCI advisory rates, the purpose and reporting of them always seems confusing to everyone.

This year, they suggested a 10.9% advisory WC insurance rate decrease effective Jan. 1, 2018 because of improved experience in policy year 2015 by Illinois insurers and declining lost-time claim frequency. Along with that, NCCI recommended a 7.5% decrease for the “assigned risk” market.

I don’t ever remember NCCI recommending IL WC advisory rates should ever go up. In my view, if the insurance industry closely adhered to NCCI’s recommendations, IL WC insurance would be better-than-free and the insurers might owe their customers money!

The good news, sort of, is since the 2011 Amendments to the IL WC Act became law on Sept. 1, 2011, Illinois’ cumulative voluntary insurance rate level change decreased 36.5%, NCCI said in its advisory voluntary and assigned risk filings.

Those 2011 Amendments reduced medical fee payments across the board by 30% and expanded the use of the American Medical Association guidelines for assessing permanent partial disability. The legislation also limited a worker’s choice of medical providers to one if the employee chose non-emergency treatment from a provider who was not within a WC PPO or preferred provider program, and it cut permanent partial disability benefits for most carpal tunnel cases by 20%. The legislation, signed into law by Democratic Gov. Pat Quinn, also limited an award for a wage differential to when the worker reaches age 67 or five years from the date of the award, whichever is later.

For 2017, NCCI filed a 12.9% rate reduction in Illinois – the third-largest decrease in the 38 jurisdictions where the ratings firm operates. NCCI provides advisory loss costs for 34 states including the District of Columbia, and recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. In Illinois and Indiana, NCCI provides recommendations for both loss costs and full rates.

That said, please note Illinois WC insurers are not required to follow NCCI’s recommendations and generally ignore them. Beginning this past Jan. 1 in Illinois, all insurers must provide their rate deviations from NCCI when filing their proposed rates, according to an IL Department of Insurance bulletin.

NCCI’s latest advisory rate filings recommended decreases in 36 of its 38 jurisdictions.

The Illinois Manufacturers Association or IMA downplayed the proposed advisory insurance rate decrease, noting since the recession ended in 2009, our State lost more than 2,000 manufacturing jobs and we continue to bleed jobs across our borders. The forces for ITLA or the Illinois Trial Lawyers Ass’n again repeated their party-line, claiming this voluntary rate filing confirms IL WC costs are low and the fault lies with those wealthy insurance companies that somehow horde high profits only in Illinois. In my view, the truth lies somewhere betwixt and between.

I am sure Illinois Gov’t went two years without a state budget before Democrats in the IL General Assembly combined with cross-over Republicans to override Governor Rauner’s vetoes earlier this month and borrowed billions of new dollars and passed record high personal income and corporate tax increases. We already have the highest real estate taxes in the U.S. along with an estate tax that very few states have.

In those two years without a budget, the State of IL continued its inexorable march to Financial Armageddon as we accumulated nearly $14.6 billion in unpaid bills, $251 billion in unfunded/defunded fake gov’t pension obligations and the nation’s worst credit rating—that isn’t yet junk but is soon to get there. No one on either side of the IL political matrix is doing anything to block/stop/slow the financial engines that are bringing us further into an ongoing and informal government “bankruptcy.” Please note the State of IL can’t actually file for bankruptcy, as federal bankruptcy law doesn’t cover State governments. I call it an “informal” bankruptcy because we can’t possibly pay any bills in a timely fashion so all State creditors have to deal with years of waiting and begging to eventually get paid.

An NCCI circular explaining the proposed WC advisory rate decreases is here.

Synopsis: The National Safety Council ranks Illinois as the United States’ Second-Safest State!

Editor’s comment: The National Safety Council’s report gave Illinois an overall B grade with an A for Workplace Safety. No state received an overall grade of A.

Please note when States have relatively generous workers’ comp systems, employers create safer workplaces to avoid those costs. We also feel very few national blogs/writers note newly litigated IL WC claims have dropped dramatically over the last decade due in part to employer safety programs.

As we have advised our clients and readers, if you want aggressive defense attorneys that can close pending claims within your authority and reserves, send a reply. We hate badly aging IL WC claims and will work hard with you and your claims staff to close with lots of great techniques to do so.

Other B states were Maryland, Maine, Oregon, Connecticut, California and Washington. Eleven states got F grades: Kansas, Oklahoma, Arkansas, Arizona, South Carolina, South Dakota, Montana, Wyoming, Mississippi, Idaho and Missouri.

“The State of Safety: A State-by-State Report” is here.

Illinois ranked first for maximum duration of temporary disability benefits, second for lifetime permanent disability benefits and fourth for maximum weekly benefits for permanent disabilities at $1,398 a week. (That number was for 2016; the current maximum is $1,441.)

From their report:

WORKPLACE SAFETY | Grade A | Rank #1 | 2015 Work Fatalities - 146

· Prevention, Preparedness and Enforcement Developing

· Safety and health program for employers required (partial credit for incentivized)

· State/local government employee OSHA coverage

· State workplace safety committee law/mandate (partial credit for conditional, incentivized or recommended)

· State workplace violence law (partial credit for minimal or partial coverage)

· State enhanced 911 program for employers

· Workers’ Compensation On Track

· Maximum length of benefits in weeks (temporary disability)* Duration / Rank #1

· Maximum weekly benefit (permanent disability)** $1,398 / Rank #4

· Maximum length of benefits in weeks/amount (permanent disability)*** No Limit / Rank #2

· Worker Health and Wellbeing On Track

· Drug-free workplace law State Grants / Service

· Contractors

· Workplace anti-smoking law (partial credit for partial ban)

· Workplace wellness law

The complete benefit schedule is here.

July 24, 2017

7-24-2017; Clock ticking to Noon Today on Possible IL WC Reforms; Mike Lucci Joins Governor Rauner’s Team; Wassup with “Loss of Trade” in Reserving/Settling IL WC Claims? and more

July 24, 2017/ Eugene Keefe

Synopsis: Clock Ticking to Noon Today on Possible IL WC Reforms; WC Expert Mike Lucci Joins Governor Rauner’s Team.

Editor’s comment: Governor Rauner on Friday gave IL Senate Democrats a deadline of noon today to end a procedural maneuver and send him Senate Bill 1 for signature so he can sign an amendatory veto that would allow Illinois’ public schools to open in August 2017.

Our IL State budget that passed last month appropriates money for K-12 schools but did not include a legislative mechanism or formula to distribute school funds. Senate Bill 1 contains the mechanism, but it also includes an amendment that says the state will pick up the annual employer contribution for Chicago Public Schools’ pensions and the Chicago Public School’s unpaid pension debt.

Yes, if you haven’t been sleeping for the last six months, you might notice our IL General Assembly has already created massive state debt and is now adding even more billion-dollar debt to take over the existing and future debt of the Chicago Public Schools and their de-funded gov’t pensions. When it comes to debt, there doesn’t appear to be anyone in Springfield that doesn’t want more and more until the financial rubber-band on unlimited gov’t borrowing breaks and they can’t borrow any more, forcing punitive taxes on you and me.

Governor Rauner, who has line-item veto power, wants the CPS pension provisions removed from the bill and placed in separate legislation to ensure all IL schools open as taxpayers expect.

Business advocates say they have renewed optimism for reforms because Rauner recently replaced most of his staff with solid, knowledgeable candidates, including Mike Lucci, a Notre Dame grad and a workers’ compensation policy expert. Mr. Lucci, who was a vice president of the Illinois Policy Institute, a conservative think tank, joined Rauner’s staff as deputy chief of staff for policy and legislative affairs. Mr. Lucci advocated

· Modest reductions in indemnity payments;

· Better wage-replacement ratios;

· a stronger IL WC medical fee schedule and

· Abolition of physician dispensing of opioids.

I support the majority of his efforts. I also point out we can bring IL WC to the main stream by simply tweaking the system mildly. I also feel sure Mr. Lucci doesn’t want to win “the race to the bottom” to be hilariously cheap to leave IL widows/widowers and seriously injured workers on welfare in a few years after being killed at or disabled from work, as our cheap-o neighbors in Indiana WC do.

Per the 2016 State of Oregon WC Premium Rankings, Illinois is tied with Oklahoma for the nation’s seventh-highest premiums, at $2.23 per $100 of payroll. The Alabama WC system is smack dab in the middle at $1.85 per $100 of payroll—using simple math, we need to cut about .40 cents per $100 of payroll to win what I call the “race to the middle” of U.S. WC Premium rankings. We can do it or something close to it, if we feel growing better jobs and enticing new business to this State is important.

The Democratic majorities in the IL House and Senate passed two workers’ compensation bills during recent regular and special sessions, but I join with business and insurance spokespeople to characterize their efforts “fake reforms.” Governor Rauner has vowed to veto both bills but hasn’t yet. Under the state’s Constitution, the governor has 60 days to either sign or veto a bill, or it automatically becomes law.

House Bill 2525 calls for a drug formulary and would stop insurers from charging “excessive rates” that produce “unreasonably high” profits and to submit their rates to regulators for prior approval. That bill was delivered to Governor on June 29, so he has until Aug. 28 to sign or veto it.

HB 2622 would require the Workers’ Compensation Commission to take $10 million from its operations fund to create the comical and tiny “Illinois Employers Mutual Insurance Co.” to supposedly get started as a mono-line carrier at some future date and then immediately compete against multi-zillion-dollar global WC insurance carriers. We are sure everyone in the WC insurance industry is enjoying a wonderful belly-laugh to consider that effort as “real.” You might note that bill, if signed by the Governor would require cutting the IL WC Commission’s budget by about 1/3, generating the need for as many as 50 IWCC workers being fired. That bill was delivered to Rauner on June 23, so he has until Aug. 22 to sign or veto it.

Neither bill outlined above contains provisions sought by IL Republicans — a Medicare-based fee schedule instead of a charge-based formula, and a four-year freeze on maximum weekly benefits at $775.18.

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

Synopsis: Wassup with “Loss of Trade” in Reserving/Settling IL WC Claims?

Editor’s comment: We were asked by a reader about the concept of “loss of trade” and how to reserve/settle IL WC claims using it. We wanted to provide a couple of thoughts.

“Loss of trade” as a permanency concept in IL was first used to provide large amounts of PPD to police officers and firefighters who would receive line of duty disability pensions under the Pension Code. When a police officer or firefighter can no longer do their job due to life-changing injuries, they can’t simultaneously receive both the line of duty disability pension and a total and permanent disability award or wage loss benefits under the IL WC Act—the Pension Code bars that double recovery. I agree with that approach.

What I feel liberal hearing officers did it cook up the concept of “loss of trade” to justify large “going away presents” to seriously injured police officers or firefighters where they suffered life-changing injuries to then receive only a line of duty disability pension. I remember one claim where a now retired firefighter was seriously burned and it was felt the lifetime benefit wasn’t “enough” so the very liberal Arbitrator added 80% BAW or about $200,000 as a going away present for the seriously injured firefighter.

The problem with this concept as it relates to police and firefighters is our silly State doesn’t require them to be catastrophically injured to be entitled to a line of duty disability pension. All that is required is someone confirming then can no longer work as a police officer or firefighter. For a simple example, there is an IL firefighter who had poor hearing and was surprised to have the siren/horn on a fire truck go off. He suffered significant hearing loss and everyone agreed he would be a danger to himself, his co-workers and others to be unable to hear commands during a live fire or medical emergency. Rather than have a law that would require the fire district to find him other work where he could have hearing augmentation and actually do something for his pay, he was pensioned off. In my view, that approach directly violates the intent and coverage of the Americans with Disabilities Act but no one is going to bring a claim for it because the worker is getting so much money to not work.

So on top of being paid a line of duty disability pension, how much would you give such a worker for “loss of trade?” In my view, he hasn’t lost his trade, we are simply allowing him amazing largesse to be paid and never have to work again, unless he wants to. In fact, he can find lots of other jobs or start his own business with the money from his pension. Please note lots of firefighters and police do so—happy to provide examples on request.

Does this same “loss of trade” phenomenon apply to other IL workers?

Well, I am sure the term “loss of trade” doesn’t appear and isn’t defined in the IL WC Act. When and if you start to use it, you can give it any meaning or value you like. Let’s take a construction worker who undergoes cervical fusion surgery resulting in lifetime restrictions of no lifting over 50lbs. His employer agrees to accommodate the restrictions and he or she is successfully returned to regular work.

In my view, such a claim has a value between 15% to 30% LOU of the body. What I feel liberals around us will start arguing is the worker is “locked” to that employer as other employers won’t hire him. Please note anyone that won’t hire him with such restrictions is almost certainly violating the federal ADA. Either way, if you start increasing reserves to 40%, 50% or up to 80% BAW, what is that supposed to be formulated on? Why would loss of trade make a claim worth triple its ordinary PPD value?

In summary, my law partners tell our entire team, we have to let you know of litigation/insurance issues like this right or wrong. You have to decide what is best in setting reserves—we only make legal recommendations.

In my view, I routinely fight “loss of trade” as a negotiating concept and trial technique. Again, in my view, to have Claimant attorneys and IL WC Arbitrators start adding language to the IL WC Act that isn’t there and making awards in reliance on such concepts, they are violating the Due Process and Equal Protection provisions of the IL Constitution. As I outline above, they are also ignoring the ADA, as if you can “wish away” federal law.