1-22-2018; IL Employer/WC Carrier Can Pay the Lowest Medical Rate; Do Undocumented Workers Get WC Benefits?; Matt Wrigley Reports on New Michigan Magistrate and more

Synopsis: Illinois Employer Saves Money on Medical Costs by Legally Using Lowest Rate Negotiated by Injured Worker's Insurance Carrier. 11-year-old Knee Injury Claim May Finally End!!

Editor’s comment: The Illinois Appellate Court, WC Division ruled the Illinois employer’s liability for an injured worker’s medical benefits was limited to the amount actually paid to the treatment providers, even if they were paid at a discounted rate negotiated by the worker’s personal health insurance carrier.

In Perez v. IWCC, issued 1/9/2018, Claimant Perez worked as an assistant manager at a Wendy’s restaurant. She allegedly injured her left knee in June 2007 when she slipped on a wet floor at work. She received medical care, including surgery, which was paid for by her private healthcare insurance.

The insurance carrier made payments of $17,597.96 for Perez’s care, and she made copays of $260, but Counsel for Wendy’s conceded the IL WC Medical Fee Schedule would have required payment of $37,767.32 to the healthcare providers and surgeons.

In April 2011, former Arbitrator Kinnaman found Claimant Perez’s knee injury was not work-related. The Illinois Workers’ Compensation Commission agreed, as did a circuit court judge.

Claimant Perez sought review by the Appellate Court, WC Division. In March 2014, the Appellate Court reversed in one of their unusual and controversial “secret” or “non-published” rulings, finding Claimant Perez’s injury was compensable.

Having reviewed that 20-page “sort-of-unpublished” ruling, the Court’s members made all sorts of important evidentiary findings and legal determinations that, in my respectful opinion, should always be published.

On remand, the IWCC determined Claimant Perez was entitled to about four and a half weeks of temporary total disability benefits, as well as 43 weeks of benefits in the amount of $288 per week for the permanent loss of use of her leg.

The Commission panel also ordered Perez’s employer to pay her medical expenses but did not specify the amount. An appeal followed and a circuit court judge later ordered the Commission to determine the amount of medical benefits due to Perez.

After the case was remanded again, the IWCC ordered the employer to pay Claimant Perez’s medical providers $17,857.96. The circuit court upheld the Commission’s decision.

In their second ruling on this never-ending knee claim, the Appellate Court, WC Division explained the Illinois Workers’ Compensation Act obligates an employer to pay a care provider’s negotiated rate, if applicable, or the lesser of the provider’s actual charges, or the IL WC Fee Schedule amount.

Claimant Perez’s care providers accepted a low negotiated rate from her private health insurance carrier. The Court said that meant the employer was liable only for the amount of medical expenses actually paid, pursuant to the negotiated rate, even though it hadn’t been involved in the negotiations.

The Court’s ruling said “there is no limiting language that requires the employer to pay the negotiated rate only when it is negotiated by the employer or the employer’s own insurance carrier.” Had the legislature intended to limit negotiated rates and agreements to those between the employer or the employer’s own insurance carrier, the court posited, it could have included the restriction.

To read the decision, click the protected link: Perez v. IWCC.

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

Synopsis: Do Undocumented Workers/Illegal Aliens Get U.S. State and Federal WC Benefits?

Editor’s comment: This is a very active political football, particularly under the current federal administration. We had a client who found out an injured worker got the job under fraudulent circumstances with fake identification and a false social security number. Our client learns after the injury their former employee fraudulently submitted a dead guy’s personal info when hired. The client now wants to deny the WC claim, confirming the employer wouldn’t have hired the employee because it appears the employee wasn’t legally in the US. If you face such issues, send a reply or contact any defense lawyer at KCB&A. If we can’t help you because you are out of our five states, we will locate someone who can in your state.

By way of background, the U.S. Supreme Court in a claim known as Hoffman Plastics v. NLRB ruled the act of becoming a “phony employee” stripped the worker of the protections of the National Labor Relations Act. It was felt this same sort of proscription would apply to other benefits/protections like workers comp.

Remember one of the preliminary aspects of any WC claim in any state or country is “employer-employee.” The parties have to agree or the hearing officer has to take evidence and find the worker is a “valid” employee under a valid employment contract with the employer to obtain benefits.

In Hoffman Plastics, the U.S. Supreme Court appears to indicate a worker can’t be a fake or fraudulent employee and be entitled to the statutory benefits of being an employee.

Many states, particularly those with liberal legislatures, don’t agree and don’t cite the federal ruling in Hoffman Plastics when they rule. If they want to award benefits, they simply call the worker an employee and write/affirm an award.

I am fairly confident there is an IL Appellate Court ruling where a woman who was not properly or legally employed injured her shoulder, had permanent restrictions and returned to a foreign company. As a U.S. worker she could make as much as $10 an hour or more. In the foreign country, she might make a dollar and change a week. In short, under some state work comp plans, such a worker would get very substantial benefits due in part to the fraud being perpetrated on the employer.

In the claim I am referring to, I believe the IL WC Appellate Court awarded lifetime “wage loss differential benefits” at the highest possible rate. In my respectful view, the Court’s members were unconcerned about the fact the worker was illegally employed in this country and could not legally be placed in other work in the U.S.

The award was almost certainly worth more than a million dollars—I believe the IL WC Commission and reviewing courts wanted such a ruling to make clear the risk IL employers face in trying to save a couple of buck to hire an undocumented or illegal worker.

From my perspective, I can also see a federal or state RICO action being brought to counter the WC claim. The damages could be the benefits awarded. I have no idea how that would come out.

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

Synopsis: Governor Rick Snyder has announced the appointment of attorney John M. Sims to the State of Michigan’s Workers’ Compensation Board of Magistrates. Reporting by Matt Wrigley, J.D.

Editor’s Comment: Magistrate Sims was admitted to the State Bar of Michigan in 1977 and has 40 years of experience in the field of workers’ compensation law representing both Claimants and Defendants. Magistrate Sims has practiced before all tribunals from the Magistrate level to the Supreme Court of the State of Michigan.

The 17-member Board of Magistrates resolves disputes and hears administrative claims for workers’ compensation disability benefits, survivor benefits, and occupational diseases arising under the Michigan Workers' Disability Compensation Act.

New Magistrate Sims holds a bachelor's degree in political science, history, and literature from the University of Michigan and Juris Doctor from Wayne State University Law School. He fills a vacancy and will serve a four-year term expiring Jan. 26, 2021. His appointment is subject to the advice and consent of the Senate.

Matt Wrigley, J.D. is one of our top veteran Michigan Workers’ Comp Defense lawyers. Feel free to reach out to Matt for assistance and counsel on your toughest MI WC claims at mwrigley@keefe-law.com.

Learn how to protect your company and your employees from the dangers of Workplace Violence!

Date: This Wednesday, January 24th

Time: 10:00 A.M. - 11:30 A.M. CST

Join us!

Workplace violence is a growing concern for employers and employees nationwide. Corkill Insurance Agency, Inc. is hosting a complimentary webinar followed by a Q&A on Workplace Violence. 

You will not want to miss this event!  Our speakers will bring you the knowledge and tools you need to reduce your exposure to liability and Worker's Compensation Claims.  Topics to be addressed include:

OSHA on Workplace Violence

Although there are no specific Federal OSHA standards to address workplace violence, the Occupational Safety and Health Act (OSH Act), in Section 5(a)(1), provides that "each employer shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." 

What actions must I take to be in compliance with OSHA?

What liabilities do employers face by allowing guns in the workplace?

-Employer's right to control its property and workplace vs. the right to own and bear firearms
-Additional potential liability for employers allowing guns at work
-Possibility of claims based upon unsafe work environments or even OSHA safety violations
-Negligent hiring, retention, or supervision claims
-Potential liability remains unknown because the laws are new and untested
-Litigation costs and costs of settlement to avoid the unknowns of trial
-Vicarious liability for the wrongful acts of employees under common law principles

Strategies to prevent Workplace Violence, including - 

-The importance of conducting comprehensive safety and security audits,

-Setting up a zero-tolerance policy toward workplace violence,

-Implementing workplace violence emergency protocols,

-Training employees on how to respond to incidents of violence and how to identify risk factors which may lead to violence

-Practicing active shooter emergency drills.

Our Speakers

Eugene Keefe and Bradley Smith

To register for the Workplace Violence webinar, contact:

Christina Anderson, ARM, Safety Manager

Corkill Insurance Agency, Inc. | Website: www.corkillinsurance.com  

Direct: 224-239-6762 | eMail: CAnderson@corkillinsurance.com

25 Northwest Point Blvd. Suite 625 | Elk Grove Village, IL 60007

There is no cost to attend this program.  

1-15-2017; Subrogation--Difficulty Increases when Claimant Doesn't Take the Initiative by Shawn Biery; Lindsay Vanderford on the Importance of Documenting Absences and more

Synopsis: Subrogation--Difficulty Increases When Claimant Doesn’t Take the Initiative!! Research and Analysis From Shawn Biery, J.D., M.S.C.C.

Editor’s comment: We advise our clients, law students and seminar attendees to always pay attention to subrogation issues and to insure close awareness, sometimes even intervening after Petitioner files a third party claim. It is even less common when a Petitioner in a WC claim has a potentially viable third party claim which isn’t pursued until the employer files the third party action. In a recent case, the Illinois 1st District Appellate Court has sent the question back to the Cook County trial court to determine whether an injured worker would be adequately represented in a subrogation case if she were not allowed to directly intervene.  

In A&R Janitorial v. Pepper Construction Co., 2017 IL App (1st) 170385 (December 27, 2017) (HOWSE) the appellate court reversed and remanded a matter finding the hearing court erred in denying employee's petition to intervene in action filed by her employer against Defendants as employee's subrogee pursuant to Section 5(b) of Workers' Compensation Act.

Factually, Teresa Mroczko was working for A&R Janitorial at a Blue Cross Blue Shield building in Chicago when a desk fell on her. Pepper Construction Co. was hired to replace carpeting as part of a renovation project, and it is alleged an employee of its subcontractor, Perez & Associates, moved the desk that fell on Mroczko.

Mroczko filed a WC claim against her employer for which she has received more than $342,000 in benefits to date of the initial decision, according to the appellate court’s decision. In June 2015, Mroczko filed a personal injury claim against Pepper Construction, Perez & Associates, Interface America Inc., and the Blue Cross and Blue Shield Association. The claim was dismissed as untimely in December 2015 as she had not filed within the applicable WC two year statute of limitations. Her  argument was the injury was the direct result of construction work, and said the four-year statute of limitations for bringing such a claim was applicable. However the circuit court said the two-year statute of limitations under the Workers’ Compensation Act applied to her third-party claim for liability.

Her employer however timely filed a complaint to protect its subro rights against Pepper Construction Co. and Perez & Associates in August 2014. So Mroczko, in November 2016, petitioned the court to intervene in her employer’s claim, saying she would not be adequately represented by attorneys for A&R Janitorial—arguing they would only seek their recovery for amounts paid in workers’ compensation benefits. She argued she should still be entitled to additional damages for pain and suffering.

The trial court in December 2016 denied the petition to intervene under the doctrine of res judicata (or claim preclusion to some) which prevents a party from filing the same claim against the same party after a court has already ruled on the merits in an identical case.

Mroczko filed an appeal, and while the case was pending, her employer filed an amended complaint seeking damages to cover pain and suffering, which the circuit court allowed. The underlying case settled for $850,000 while the appeal was pending.

The appellate court said whether Mroczko’s interests would be adequately protected if she were not allowed to intervene is a threshold issue the trial court neglected to answer. As such, the trial court abused its discretion by applying an improper legal standard in denying the petition, the appellate court said. The appellate court said Mroczko clearly has an interest in her employer’s case, because the employer was seeking to recover damages for her pain and suffering.

The court in part noted “Appellant contends plaintiffs cannot adequately represent her interests based on her argument that plaintiff has an incentive to settle for an amount less than, or equal to, what plaintiff paid in the workers’ compensation claim”. “On appeal, plaintiff contends it will adequately represent appellant’s interests because plaintiff may not be fully indemnified if it does not pursue maximum damages.”

Mroczko also argued her employer’s attorney had a conflict of interest—and the employer argued to refute the allegations of a conflict by arguing it never represented Mroczko, a statement the appellate court said was “incongruent” with its argument that it has every incentive to pursue maximum damages in the third-party liability case. In short, the appellate court said the statement called into question whether Mroczko’s employer was adequately representing her interest in the subrogation case.

The appellate court remanded the case for the trial court to reach a decision on whether Mroczko’s rights will be adequately represented if she is not allowed to directly intervene in the case.

We will report on any follow up decision as it becomes available. The takeaway for interested observers regardless of the final decision in this particular case, is how important it is to ensure timely filing of any third party claim when subrogation is potentially viable. We track the subrogation deadlines in claims with any potential viability and report same to our clients on all claims we defend to ensure any potential recovery is not lost due to a lack of filing.

This article was researched and written by Shawn R. Biery, JD, MSCC, who also testified as an expert witness in the underlying claim. You can reach Shawn with any questions about subrogation issues or any other employment or workers’ compensation related questions at sbiery@keefe-law.com.

Synopsis: A Recent Federal District Court Decision Echoes Our Recommendation – Document, Document, Document. Thoughts and Analysis by Lindsay R. Vanderford, JD. 

Editor’s comment: On October 31, 2017, the USDC for the Middle District of Pennsylvania granted summary judgment against an employee claiming age-based harassment and a hostile work environment after being terminated for an overabundance of non-FMLA related absences.

Mary Beth Bertig was a nurse’s aide working for a hospital named Julia Ribaudo Healthcare Group. She suffered from cancer and asthma. In a one year period from 2013 – 2014, while she was certified for Family and Medical Leave Act (FMLA) leave for her cancer and asthma, she incurred thirteen intermittent absences. Though some of these absences were related to her cancer and asthma, several others were unrelated. Due to the employer’s diligent documentation of these absences, litigation ended at the summary judgment level, well before major ongoing litigation and its related costs would be realized.

Under the hospital's policies, employees were subject to termination when they accrue seven absences in a rolling twelve month time frame. When Claimant Bertig reached and exceeded this allowance, the hospital terminated her employment.

The question before the court, and a consistent issue for employers, is whether an employee can lawfully be terminated for non-FMLA absences while others are authorized under the FMLA. Employer concerns include whether an employee will later claim they reported leave under an FMLA basis, so termination should not have been a consideration.

The Ruling

The USDC for the Middle District of Pennsylvania (Judge James Munley) summarized its reasoning as follows:

Bertig was entitled to take leave under the FMLA; however, by her own admission, most of her absences between April 2013 and April 2014 were unrelated to her cancer and asthma. Setting FMLA approved absences aside, Bertig still missed ten days of work for unrelated reasons, three absences more than allowed by employees prior to consideration of termination. (Bertig v. Julia Ribaudo Healthcare Group, 3:15-cv-2224-JJM).

Thoughts for Employers – Document, Document, Document

Judge Munley’s decision to dismiss Bertig’s claims was largely facilitated by her employer’s diligent policy for documenting absences and discipline. Therefore, three critical strategies are:

Document Absences In Detail

Bertig’s supervisor documented each absence and the reasons for the absence on an endorsed one-page report. These reports became the key to later consideration of termination and central to the court’s grant of summary judgment, as the employer had an actual document explaining why the employee was absent on any of the thirteen occasions discussed supra.

We at KCBA would be happy to provide thoughts and documentation to help you document absences in detail and gain success should a similar situation ever arise for your business. Just send a reply to Lindsay at her email below.

Audit Absences Prior to Making a Decision on Termination

While termination is being considered, be sure its basis is supported by those detailed reports. Confirm the pertinent absences serve as the basis for the termination decision, and verify neither approval under the FMLA or the Americans with Disabilities Act (ADA) could have been involved.

Conduct Ongoing and Interactive Discipline Processes

Unfortunately, some employers have not had sufficient dialogue with an employee to advise of expectations and whether or not they are being met. Engaging in “progressive discipline” and supporting an argument the employer did all it could to help the employee succeed leading up to termination adds a strong defense against an FMLA or ADA claim.

This article was researched and written by Lindsay R. Vanderford, JD. Lindsay can be reached with any questions related to workers’ compensation defense and employment law defense at lvanderford@keefe-law.com.

1-9-2018; Will IL WC Wage Differential Claims Disappear for Low-Medium-Level Workers?; Will IL, IN, WI, MI and IA Work Comp Systems Ever More to Virtual Hearings; New IRS Mileage Rate and More

Synopsis: Will IL WC Wage Diff Claims Disappear for Low and Medium Wage Workers?

Editor’s comment: We have been asked repeatedly about Illinois workers’ comp odd concept of wage differential benefits. I have attacked/criticized this concept repeatedly during my years as a defense attorney. The problem with wage differential awards is the concept strongly encourages malingering, hiding and other balderdash by injured workers to get on the gravy train.

Here is how that works. You have an injured worker who has to be able to occasionally lift up to 75lbs to do their job. There is no dispute they unfortunately blow out a shoulder in a job that pays them $11 an hour. The worker gets shoulder surgery and ends up with a 40lbs. lifting restriction. Thereafter the injured worker disappears from sight.

Some Claimant attorneys in this nutty State will ask for total and permanent disability benefits, asserting the worker cannot return to the prior job due to the post-accident work restriction. Most Arbitrators and Commissioners, in pretrial settings, will quickly put the kibosh on T&P awards/settlements because the money is simply too high and the outcome egregious because the worker will be asking for lifetime benefits at our high minimums and maximums for T&P awards plus our goofy Rate Adjustment Fund benefits. It is not impossible for exposure on a mid-range IL WC T&P claim to exceed $2M. That is wildly high for a worker who simply had one operation to one shoulder! Most hearing officers balk at such claims.

Plan B for some Arbitrators and Commissioners are wage differential awards. Some of the hearing officers will say Claimant can and should be making “minimum wage”—the current federal minimum wage is fairly low at $7.25 per hour. There is no sign the federal minimum wage is going up under the current conservative folks in the White House and U.S. Congress. Since Claimant has disappeared and no one knows if he/she has a job, the Arbs and Commissioners will “impute” a minimum wage job to the worker and argue the worker should get the benefit of hiding to receive wage loss diff benefits.

In the case of the worker above, they were making $11 per hour and “imputing” a $7.25 per hour minimum wage would entitle the worker to wage diff of $100 a week or $5,200 a year. For a 25-year-old worker with a 50 year work expectancy, they could receive an award worth $260,000. Most folks, including me, consider that a LOT of money for a single operation to one shoulder.

New IL Minimum Wage Never-Ending Increases May End Wage Diff for Mid and Low-Paid IL Workers

Please note the next Illinois state-wide election is in 11 months. All Democratic gubernatorial candidates have signed off on a minimum wage of $15 per hour or $600 a week. If a Dem wins and gets into the Governor’s mansion, the IL minimum wage will almost certain rise dramatically within a month of the election.

Cook County raised their minimum wage to $10 an hour on July 1, 2017. The wage rises to $11 on July 1, 2018 and to $12 in July 2019. It hits $13 an hour in 2020, and subsequent annual increases will be at the rate of inflation, not to exceed 2.5 percent. The suburbs will be a year behind the city, which will reach $13 an hour by July 2019.

The City of Chicago's ordinance already raised the hourly minimum wage to $12 in 2018, and $13 in 2019, indexed annually to the Consumer Price Index (CPI) after 2019.

So jobs in Chicago are at no less than $480 a week right now and $520 in one year and should continue to rise basically forever. It mildly boggles the mind on how an Arbitrator or Commissioner can accurately ascertain the values of Section 8(D-1) benefits when the amounts of future wages are certain to increase and may eventually double based on legislatively required increases in the minimum wage based on the CPI.

In short, wage loss for middle and low wage workers appears to be ending. For IL WC Arbitrators and Commissioners, it would be challenging to “set” a wage diff award, as the minimum wage is going to be spiral for the rest of the lives of all IL workers.

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

Synopsis: Will IL, IN, WI, MI and IA Workers’ Comp Systems Ever Move to “Virtual WC Hearings?”

Editor’s comment: As I have told my readers repeatedly, IL Workers’ Comp adjudication costs are very high for a State of our size. Everything also moves very, very slooooooooowwww. We also have more hearing officers than any of our sister States. The State of Illinois, as one of the five states where KCB&A provides great defense work, remains reluctant to implement Virtual Hearing technologies to streamline hearings and save money.

Disputed IL WC claims can be torturous to litigate for the defense--we have lots and lots of defense clients who truly cannot stand coming to IWCC arbitration hearings to sit around all day and then find out their contested claim is continued. This is even tougher with a contested claim and lots of defense witnesses—no one wants to take a number of supervisors away from their work sites to sit and sit and do nothing. Our clients would love to have virtual hearings set by the hearing officer and proceed online as planned.

We recently became aware the State of New York has moved to Virtual Hearings to prevent long auto drives, insure hearings are actually conducted and save lots of extra unneeded expense. We consider this concept a model for all states to follow.

Take a look at this link: http://www.wcb.ny.gov/virtual-hearings/

You will learn New York WC Virtual Hearings allow injured workers, attorneys/representatives, witnesses and other participants to attend hearings online. Participants will no longer have to travel to a hearing site to attend their hearing.

Virtual Hearings will be rolled out gradually to districts throughout New York State after the successful completion of the Board's Virtual Hearing pilot.

When a New York citizen, attorney or witness is eligible to attend a hearing virtually, they will see a notification of "Virtual Hearing Available"  at the bottom of your hearing notice, along with detailed instructions.

Virtual Hearings for Claimants

To take part in a New York Virtual Hearing, they must:

• Meet all of the requirements to attend virtually.
• Read the Virtual Hearings Guide for Claimants.
• Test the system at least 48 hours before your virtual hearing.

How they attend a Virtual Hearing

1.      Enter their Hearing ID, first name, last name and email address; select continue

2.      Select their Role

3.      Wait for the hearing to be called

Webinar Virtual Hearing Training

The New York WC Board is hosting a series of webinar training sessions for attorneys and representatives to provide instructions on how to attend their hearings virtually, as well as how to use the new check-in procedure when appearing in person.

Virtual Hearings for Witnesses and Other Participants

• They have to meet all of the requirements to attend virtually.
• They need to read the Virtual Hearings Guide for Witnesses/Other Participants to learn how to attend the hearing virtually.
• They have to be sure to test the system at least 48 hours prior to your first virtual hearing

We hope the powers-that-be get moving on using technology to streamline hearings, save money and bring our WC systems to the 21st Century. We appreciate your thoughts and comments. Please post them on our award-winning blog.

Synopsis: IRS INCREASES MILEAGE REIMBURSEMENT RATE EFFECTIVE 1/1/18

Editor’s comment: On December 14, 2017, the Internal Revenue Service released the optional standard mileage rates to use for 2018 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.. Beginning January 1, 2018, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

•54.5 cents per mile for business miles driven—this rate is used for IME’s or what some call Section 12 examinations.

•18 cents per mile driven for medical or moving purposes

•14 cents per mile driven in service of charitable organizations

The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. The business mileage rate and the medical and moving expense rates each increased 1 cent per mile from the rates for 2017. The charitable rate is set by statute and remains unchanged.

Synopsis: The KCB&A Monday Law Updates are archived on the KCB&A blog!

Editor’s comment: If you are looking for any article previously written in this update, or just want to browse through a host of insightful articles dealing with our Illinois Comp system, stop on over to KCBA Blog and take a look. The blog currently includes archived articles dating back to August 2008.

Synopsis: Another of Gene’s Friends Publishing an Amazing New Book—take a look online at www.ShellyKewWrites.com!!