2-5-2018; Matt Ignoffo on Surprising WI "Exclusive Remedy" Ruling; Diversity/Inclusion/Mental Health and Substance Abuse CLE's Now Req'd for IL Lawyers; Shawn Biery's New + Free IL WC Rate Sheet

Synopsis: Surprising Wisconsin Court of Appeals WC/GL Decision!!!! - Temp Employees Can Bring Tort Claims Against Their Temp Employers.

Editor’s Comment: This unexpected holding was filed recently in In Re the Estate of Carolos Esterley Cerrato Rivera v. West Bend Mutual Insurance Company and Alpine Insulation, No. 2017AP142 (issued January 9, 2018). The facts involve a single-vehicle accident where Decedent Rivera and two other individuals died. Rivera was a passenger in a vehicle owned by Alpine Insulation and insured by West Bend. At the time of the crash, the vehicle was traveling from one Alpine job site to another. Rivera was employed by Alex Drywall, which provided him to perform work for Alpine Insulation. The vehicle’s driver was a temporary employee of Alpine. This was a single-vehicle accident and the driver’s negligence was alleged to be the cause of the accident.

Decedent Rivera’s estate brought a wrongful death lawsuit against Alpine Insulation and its insurer, West Bend. It does not appear the Estate sought, or was paid, workers’ compensation death benefits. In the Circuit Court, Alpine and West Bend moved for summary judgment arguing Alex Drywall, Rivera’s employer, was a temporary help/employment agency. They asserted due to the fact Rivera was an employee of a temporary help agency, the Estate was prohibited from bringing a tort action against Alpine, the temporary employer. The Circuit Court agreed and granted summary judgment in favor of Alpine and West Bend. The Estate appealed.

The Court of Appeals noted, while the exclusive remedy provision applies to claims by an employee against his or her “employer,” it does not prohibit an employee from pursuing claims against third party tortfeasors. If Alpine had been Rivera’s “employer” under the WI Act at the time of his death, the exclusive remedy provision would unquestionably bar the Estate’s tort claims against Alpine and West Bend.

It is undisputed that Rivera’s “employer,” was Alex Drywall, the temporary help agency that Alpine Insulation compensated for Rivera’s services. The exclusive remedy provision therefore prohibits the Estate from bringing tort claims directed against Alex Drywall. However, the Court held it does not prohibit the Estate from pursuing tort claims against Alpine and West Bend.

Next the Court addressed the section of the WI Act stating, “…No employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against any of the following: Any employer that compensates the temporary help agency for the employee’s services” (emphasis added by the Court of Appeals). The Court stated the necessary implication of this bolded language is that a temporary employee who does not make a claim for compensation under the WI Act is not prohibited from bringing a tort claim against his or her temporary employer.

Alpine and West Bend argued the exclusive remedy provision should shield employers from tort liability whenever an employee has the right to make a worker’s compensation claim.

The WI Appellate Court indicated to adopt such an interpretation would require it to either:

1.      Read words into the statute that currently aren’t there—specifically, the words “has the right to make”; or

2.      Read the phrase “who makes a claim for compensation” out of the statute entirely.

The WI Appellate Court’s conclusion is that because the Estate had not made any claim for workers’ compensation medical or death benefits, it was not barred from pursing tort claims against Alpine and West Bend.

Wisconsin employers need to recognize this significant development. Unless this legal concept is overturned on further appeal, they have exposure for tort liability where prior to this decision they likely presumed exclusive remedy protection. General liability carriers likewise would not have anticipated this exposure and premiums may need to be adjusted and agreements revised.

We have a unique set of facts here where WC benefits were apparently not paid and the driver who was at fault just happened to be an employee of the temporary employer. Remember this was a single-vehicle accident. The first issue that came to mind when reading the fact pattern is what would have been the result had Alex Drywall offered and paid death benefits under the WI WC Act, and why didn’t it? If it had automatically paid would the Decedent’s Estate therefore have made a claim for compensation, precluding it from bringing the tort action?

We would not be surprised if this is further appealed to the Wisconsin Supreme Court or if the legislature steps in to address the Court’s holding. Stay tuned.

This article was researched and written by Matthew Ignoffo, J.D., M.S.C.C., who is licensed and practices in Illinois and Wisconsin. Matt is one of KCB&A’s top Medicare Set-Aside experts. Please feel free to contact Matt on a 24/7 basis at mignoffo@keefe-law.com.

Synopsis: Warning to IL Lawyers—Diversity/Inclusion/Mental Health and Substance Abuse CLE Courses are Now Required to Keep Your License!

Editor’s comment: For the past decade, the Illinois Supreme Court has encouraged attorneys to take diversity CLE courses and mental health and substance abuse CLE courses and activities to fulfill part of their professional responsibility requirement. Over that decade, the percentages of those courses offered and taken in Illinois remained practically unchanged.

Due the lack of response, our highest Court recognized what they feel is the profession’s challenges in the diversity/inclusion along with concerns in the mental health and substance abuse arena. To reverse what they felt was a “trend,” the Court adopted the recommendation of the Illinois Supreme Court Commission on Professionalism requiring Illinois attorneys to now take one hour of diversity and inclusion CLE and also one hour of mental health and substance abuse CLE during each two-year reporting period. This adoption comes in light of national efforts, particularly by the American Bar Association, to encourage all states to require lawyers to take courses in diversity and mental health and substance abuse.

As a veteran IL WC attorney, I would comment our IL Workers’ Compensation Commission is not particularly diverse or inclusive, in my opinion. I hope they start to hear this message. I would further opine, with due respect, the IL Appellate Court, WC Division is about the least diverse group of justices I can remember in almost four decades of practice. To my knowledge, the IL Supreme Court controls appointments to that panel and one might hope our highest Court’s members would work to make that group of justices more diverse and/or inclusive.

I may start working up a course on these important topics for interested attorneys and the public. Watch this space for developments.

FAQs for Attorneys

1. What is the new diversity/inclusion and mental health/substance abuse CLE requirement? Under Amended IL Supreme Court Rule 794(d), Illinois attorneys will be required to take one hour of diversity and inclusion CLE and one hour of mental health and substance abuse CLE as part of their six hour professional responsibility requirement. The amended Rule describes the substantive areas in slightly different language than used in current 794(d) and the new language will be referred to in these FAQs as “diversity/inclusion” and “mental health/substance abuse.”

2. What is the rationale for this new requirement? In Supreme Court Rule 794(d), the Supreme Court requires Illinois lawyers to take six hours of professional responsibility CLE, which includes, as two of five optional areas, the topical issues of both diversity and mental illness and substance abuse. Data collected by the Illinois Supreme Court Commission on Professionalism supposedly demonstrates few attorneys take courses focused on either of those two areas. The new requirement will use education as a tool to encourage attorneys to seek more information and engagement on diversity and mental health and substance abuse issues.

3. When does the new requirement go into effect? The Rule’s effective date was July 1, 2017 and begins with the two-year reporting period ending June 30, 2019. No courses offered or activities taken prior to July 1, 2017 will be eligible for the new diversity/inclusion and mental health/substance abuse CLE requirement.

4. Who will administer the new requirement? The Illinois Supreme Court Commission on Professionalism will continue to administer the entire professional responsibility requirement.

5. Do newly-admitted attorneys have to fulfill this requirement? No, this new requirement will not apply to newly-admitted attorneys. New attorneys will continue to have to complete their newly-admitted attorney requirement.

6. Does completing the Supreme Court’s lawyer-to-lawyer mentoring program meet the diversity and mental health and substance abuse CLE requirement? Yes. Under Amended Rule 794(d)(2), completing the Court’s mentoring program as a mentor or mentee will fulfill the new CLE requirement. Attorneys can find out more information about the mentoring program on the Illinois Supreme Court Commission on Professionalism’s website.

7. What courses will qualify for diversity/inclusion or mental health/substance abuse CLE credit? The provider offering the course will identify the course as offered to fulfill the diversity/inclusion or mental health/substance abuse CLE credit, in the same way that courses are currently identified for professional responsibility CLE credit. The Commission on Professionalism will continue to review and approve the content of such courses as fulfilling the professional responsibility CLE requirement. The Commission on Professionalism’s Professional Responsibility Education Guide explains courses geared to promoting diversity, inclusion, and increased mental health and preventing substance abuse are approved by the Commission (and will continue to be approved) for professional responsibility CLE credit.

8. Do out-of-state courses qualify for diversity/inclusion or mental health/substance abuse CLE credit? Yes. Under Rule 795(c)(5), attorneys can receive Illinois CLE credit for CLE courses taken outside of Illinois as long as the provider did not seek Illinois credit for the program. Attorneys seeking credit for a professional responsibility course must first complete an MCLE Board application. Once they receive approval from the Board, they must then complete a professional responsibility out-of-state CLE 3 application with the Commission on Professionalism and request diversity and inclusion or mental health and substance abuse CLE credit.

9. Do non-traditional courses qualify for diversity/inclusion or mental health/substance abuse CLE credit Yes. Under Rule 795(d), attorneys can receive CLE credit by attending or participating in certain “nontraditional” courses or activities. To request diversity/inclusion or mental health/substance abuse CLE credit, attorneys must complete a professional responsibility non-traditional CLE application and request such CLE credit.

10. How can attorneys locate courses offered for diversity/inclusion or mental health/substance abuse CLE credit? Attorneys can locate courses through their customary providers, including the Lawyers Assistance Program and the Commission on Professionalism, or use the MCLE Board Course Search to search for courses that offer diversity/inclusion or mental health/substance abuse CLE credit.

11. Are there any free online diversity/inclusion or mental health/substance abuse CLE courses? The Lawyers’ Assistance Program offers several one-hour mental health/substance abuse online courses. The Illinois Supreme Court Commission on Professionalism offered a one-hour diversity and inclusion online course that began in summer 2017.

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

1-29-2018; Shawn Biery on New IL WC Rates With Free Rate Sheet!!!; Lilia Picazo on Tax Concerns about Confidential Harassment Settlements and more

Synopsis: Illinois WC Rates Jump Again—even with jobs leaving the state, there was a significant and regular jump in the Statewide AWW and Your existing PPD Reserves May Need To Be UPDATED RETROACTIVELY(!).

To any of our readers and/or fans, Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. Please don’t shoot the messenger for telling you how to get them right.

As mentioned before, twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our IL WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $794.56 (up from $775.18!!).

When it was published, this PPD Max rate changed retroactively from July 1, 2017 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.

If you have a claim with a date of loss after July 2017 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies.

If this isn’t crystal clear, send a reply to Shawn for clarification at sbiery@keefe-law.com.

The current TTD weekly maximum has risen to $1,463.80.

An IL worker has to make over $2,195.70 per week or $114,176.40 per year to hit the new IL WC maximum TTD rate.

We still don’t believe any state in the United States has a TTD maximum that high? If you know of one, let us know.

The new IL WC minimum death or T&P rate also went up.

The IL WC minimum death benefit is 25 years of compensation or $548.93 per week x 52 weeks in a year x 25 years equaling a staggering $713,609.00! Yes, if Claimant makes $100 a week in a part-time job and dies in a work-related accident, the benefit is over $700K.

The new maximum IL WC death benefit is $1,463.80 times 52 weeks times 25 years or a lofty $1,902,940.00 plus burial benefits of $8K.

On top of this massive benefit, Illinois employers/governments have to pay COLA increases under the Rate Adjustment Fund that may double that already-high benefit, depending on the CPI.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet.

If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa at mpatel@keefe-law.com and include your mailing address if you would like to be mailed a laminated copy and he and his great team will get a copy routed to you before rates rise again.

Shawn remains your go-to defense source on any issue relating to IL WC rates!

Synopsis: Tax Cuts and Jobs Act – Important Provisions for Employers to Understand About Tax Deductions in Sexual Harassment and Sexual Abuse Claims. Research and Analysis by Lilia Y. Picazo, J.D.  

Editor's Comment: On December 22, 2017, the Tax Cuts and Jobs Act was signed into federal law. It is a seminal change to U.S. law that is required reading for all HR managers.

Within the Act is a provision that significantly impacts confidential settlements in connection with the settlement of sexual harassment or sexual abuse claims.

Under Section 162 of the prior Tax Code, employers were generally allowed to deduct as a business expense, settlement or attorney's fees incurred in defense of confidential settlements reached in sexual harassment and sexual abuse cases.  

Section 13307 of the Tax Cuts and Jobs Act dramatically modifies Section 162 of the Tax Code adding:

"No [Tax] deduction shall be allowed under this chapter for --

(1) Any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or

(2) Attorney's fees related to such a settlement or payment."

See 26 USC 162(q). 

The amendment applies to all covered settlements paid or incurred after December 22, 2017. 

The IRS has not provided any additional regulations or guidelines leaving many questions unanswered, including potential double taxation.

For one, the amendment does not clarify if a tax deduction can be allocated to other portions of a settlement where a confidential settlement is reached for multiple and varying claims, inclusive of sexual  harassment or sexual abuse claims.

Based on the plain language of Section 13307, employers may still request confidential provisions as part of a settlement agreement; however, they will need to decide between a confidential settlement or a non-confidential settlement to insure they are getting a tax deduction. 

Additionally, employees previously able to deduct the portion of the confidential settlement apportioned for their attorney’s fees to avoid taxation of monies they didn’t receive would no longer be able to deduct such fees.  

Again, based on the plain language of the amendment, settlements obtained by the employee, including the portion allocated to attorney’s fees would be taxed to the employee receiving the settlement, and to the defending attorney.

KCBA encourages ongoing trainings and seminars to prevent such claims.

We are happy to provide additional thoughts to assist with the development of reporting policies and ongoing training.

We will continue to monitor Section 13307 and provide you updates should the IRS develop additional regulations or guidelines.

This article was researched and written by Lilia Y. Picazo, JD. Lilia can be reached with any questions related to workers’ compensation defense and employment law defense at lpicazo@keefe-law.com.

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.