3-5-2018; Birth Defect Claims by Children Not Blocked by WC "Exclusive Remedy" Proviso; Wisconsin Legislature Moves Rapidly to Block Appellate Court Ruling about Coverage for Temp Workers and more

Synopsis: Birth Defect Claims by Kids Based on Exposure to Parents at Work Not Blocked by WC “Exclusive Remedy” Proviso.

Editor’s comment: We consider this article required reading for the insurance/claims industry. In a ruling with potentially far-reaching implications, two Illinois teenagers who claimed to have suffered life-long birth defects because of their fathers' workplace exposure to toxins are not blocked by the concept of their parent’s WC “exclusive remedy” under Section 5 of the IL WC Act. In short, the children can and will pursue a civil suit against their parent’s employer, Motorola for millions in damages.

I assume these sorts of claims will potentially bring billions in new liability exposure to U.S. employers, as birth defects are lifetime medical/physical problems, causing decades of misery. Juries are generally very amenable to finding causation and awarding box-car verdicts.

In these claims, the Appellate Court of Illinois ruled workers' compensation was not the exclusive remedy for 18-year-old Claimant Finzer and 17-year-old Claimant Hardison, because they were seeking damages for their own injuries, not their parents. The decision reversed the Circuit Court of Cook County, which granted Motorola's motion to dismiss, following that legal concept.

Motorola successfully argued because “the children’s injuries were … derivative of a work-related injury to their fathers’ reproductive systems,” they should be required to adjudicate their claims through the IL workers’ compensation system, like their fathers would have had to. But this argument ignored the fact the children weren’t employees of or otherwise paid by Motorola, and they were suing over their own injuries, not their fathers.

“Because minor plaintiffs seek to recover not based on workplace injuries sustained by their employee-fathers, but for their own personal injuries, the exclusive remedy provisions of the Arizona and Texas workers’ compensation laws do not apply,” Justice Mary Anne Mason wrote for the unanimous three-judge Appellate Court panel.

In contrast, the circuit court reasoned because the validity of these claims depended on the validity of their fathers’ claims, the workers’ compensation exclusivity provision applied to the teenagers’ claims as much as it would have to their fathers.

The appellate court found no basis for this legal argument. The ruling compared these claims to a personal injury lawsuit brought by a Claimant named Woerth in 1984. Woerth was a Kentucky man who contracted hepatitis from his wife, a nurse who allegedly got it from work. “The court specifically noted that ‘[w]hile Woerth’s hepatitis may derive from his wife as a matter of proximate cause, his cause of action does not,’” Mason wrote in Ledeaux v. Motorola. “Because Woerth was not seeking relief relating to his wife’s injuries, his claim for his own injuries was not barred by the exclusive remedy provision.”

Claimant Finzer’s father worked at Motorola’s manufacturing plant in Mesa, Arizona, from 1997 to 1998. Finzer was born in April 1999 with a club foot.

Claimant Hardison’s father worked at Motorola’s manufacturing plant in Austin, Texas, from 1991 to 2001. Hardison was born in April 2000 with an underdeveloped jaw.

In 2010, alongside almost two dozen other plaintiffs, Finzer and Hardison filed a combined complaint against Motorola, claiming negligence, willful and wanton misconduct, abnormally dangerous activity and loss of child consortium. They alleged their fathers sustained injuries to their reproductive systems as a result of exposure to toxic chemicals on the job. They also alleged that Motorola knew that its “limited environmental and biological sampling” did not comply with federal occupational safety guidelines.

The lawsuit further alleges “high-level corporate employees” knew reactions between the chemicals used during Motorola’s manufacturing process and machinery at the plants “dramatically increased and/or compounded the likelihood of resultant injury to workers and their unborn children.”

When the lawsuit arrived at the 1st District Appellate Court, the court had to decide how Finzer's and Hardison’s claims compared to the concept of a “derivative claim,” or a claim that “would not exist in the absence of the injury to the employee.” Common derivative claims include loss-of-consortium and wrongful death claims, which are generally resolved through the workers’ compensation system.

The Appellate Court ruling decided the teenagers’ claims were not derivative claims, because they were claims for “injuries personal to them that exist apart from and regardless of a work-related injury sustained by their parent.”

You can review the opinion here. We appreciate your thoughts and comments. Please post them on our award-winning blog.

Synopsis: Wisconsin Legislature Acts Fast to Overturn Recent Appellate Court Case Addressing Remedies for Injured Temp Workers. Research and analysis by Matthew Ignoffo, J.D., M.S.C.C

Editor’s Comment: A month ago we reported on the January 2018 ruling in In Re the Estate of Carolos Esterley Cerrato Rivera v. West Bend Mutual Insurance Company and Alpine Insulation, No. 2017AP142. The Appellate Court held because a deceased temporary employee’s Estate had not made any claim for workers’ compensation medical or death benefits, it was not barred from pursuing tort claims against the borrowing employer and its insurer.

In less than a month after the court’s ruling, Senate Bill 781 was introduced and three weeks later it was enacted into law. It was published March 1, 2018. This bill changes the language of Section 102.29 of the Wisconsin Worker’s Compensation Act from an employee who “makes” a claim for compensation to an employee who “has the right to make” a claim for compensation.

The pertinent discussion in Rivera focused on the fact the decedent’s estate had never made a claim for WC benefits. Under the amended Act the fact the estate had the right to make a claim means it cannot pursue a tort action against the employer who accepted the loaned employee’s services.

We suspected the legislature would not let the ruling stand for long and applaud it for quickly addressing the matter as the amendment is a welcome relief to staffing agencies, their clients, and their insurers.

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.

2-26-2018; Are You Interested in Interest? IL WC App Court Clarifies Post-Decision Interest for IL WC; John Karis on Important EPLI Claim with Bankruptcy Twist; IL Senate Subcomm Hearing--Wassup?

Synopsis: Are You Interested in Interest? IL WC Appellate Court Clarifies Post-Decision Interest for Your IL WC Claims.

Editor’s comment: I admit to being mildly surprised by this important ruling and I think our IL WC textbook might need updating.

In Dobbs Tire & Auto v. IWCC, Nos. 5-16-0297WC and 5-16-0342WC, issued 2/16/2018, the IL Appellate Court, WC Division reviewed claims by two Claimants who separately obtained decisions from IL WC Arbitrators awarding significant workers’ compensation benefits. The first Claimant received his award in January 2010, and the second received her award in March 2013.

Their respective employers appealed but were unable to obtain relief or any significant change from the Illinois Workers’ Compensation Commission, the Circuit Court or the Appellate Court, WC Division. In such a setting, I have been teaching students and lawyers of my opinion interest was due at the rate set by the Arbitrator during the appeal from arbitration to the Commission and after the Commission ruled, “judgment interest” at 9% was then due.

I want all my readers and colleagues to understand the legal advice above was incorrect and should no longer be followed. It is difficult for me to admit I was incorrect but let’s all update our handling and recommendations moving forward. I salute the august justices of the Appellate Court, WC Division for this ruling that provides clarity on this topic that is important to all IL WC system participants.

In Dobbs, at the end of all appeals, the employers or their insurance carriers timely paid the final WC awards to both Claimants, plus interest at the relatively low statutory rate set by the Arbitrator in the arbitration decision. The first Claimant’s employer attached interest of 0.11%, and the second employer attached interest of 0.13%, pursuant to Section 19(n) of the Workers’ Compensation Act. As I indicate above, that is a relatively low interest rate and it is what the IL WC Act provides.

Claimants both objected and filed motions under Section 19(g) of the IL WC Act to enforce their final awards but adding a new claim for “judgment interest” at the much higher rate of 9% on the second half of the appeals, with the first Claimant proceeding in the circuit court of Fayette County, and the second proceeding in the circuit court of St. Clair County.

The trial judge in Fayette County found the first Claimant’s employer had fully satisfied her final award in a timely fashion and dismissed the complaint, but the trial judge in ultra-liberal St. Clair County ruled the second Claimant’s employer should have paid him interest from the date of the IWCC decision to the end of the claim at 9%. The employer appealed. The first Claimant separately appealed the dismissal of her complaint against her employer, but the Appellate Court consolidated her case with the appeal from Adams’ employer.

The IL Appellate Court, WC Division explained the Illinois Code of Civil Procedure Section 2-1303 provides judgments recovered in any court will draw interest at a rate of 9% per year until satisfied. However, Section 19(n) of the IL Workers’ Compensation Act provides IWCC decisions reviewing an arbitrator’s award “shall draw interest at a rate equal to the yield on indebtedness issued by the United States government with a 26-week maturity next previously auctioned on the day on which the decision is filed.” This interest, that I characterize as “post-Arbitration interest” is per statute “drawn from the date of the arbitrator’s award on all accrued compensation due the employee through the day prior to the date of payments.”

The Appellate Court ruling explained an injured worker becomes eligible for interest under Section 2-1303 of our Civil Code only “if and when the arbitrator’s award or commission’s decision becomes an enforceable judgment,” because the employer failed to pay any benefits due.

An employer that makes payment of an award, accrued installments and Section 19(n) interest before the injured worker files a motion to enforce will not be subject to interest under Section 2-1303, the Court said.

Since both employers tendered payment of what was owed to both Claimants before they filed motions for enforcement, the Appellate Court ruled the circuit court of Fayette County did not err in refusing to award interest to the first Claimant pursuant to Section 2-1303, but the circuit court of St. Clair County erred in awarding such interest to the second Claimant.

Please update your handling instructions to reflect the clarity provided in this decision. To read the decision, Dobbs Tire & Auto v. IWCC

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

Synopsis: Claims Adjuster Can Proceed on Personal Employment Claims Despite Failing to Report them on Bankruptcy Petition. Analysis and research by John Karis, J.D.

Editor’s comment: A federal trial court judge in Illinois ruled an insurance adjuster can proceed with his claims of discrimination and workers’ compensation retaliation against his former employer.

In the federal case of Buhe v. Amica Mutual Insurance Co., Timothy Buhe began working for the Amica’s Mutual Insurance Co. in 1994. His job involved investigating claims stemming from auto accidents and property damage to homes.

Buhe fell from a policyholder’s roof in February 2013, suffering injuries to his knee, ankle and shoulder. His supervisor informed Amica’s workers’ compensation insurance provider of the accident.

At the time of his injury, Buhe was on “probation” with Amica, having received an written warning of potential termination for dress code violations; missing an after-hours call while on on-call duty; slowness in completing auto expense reports, estimates and assignment downloads; and lax documentation in the claims files assigned to him.

In March 2013, Buhe requested an eight-week disability leave. In May, he requested an extension of his leave until late summer or early fall.

In September 2013, Amica contacted Buhe and informed him he had exhausted the six-months of disability leave allowed under the company’s leave policy, which was laid out in the employee handbook. Since Buhe had provided no indication that he might be able to return, Amica requested that he sign a separation agreement, resigning his position.

Buhe responded that he thought workers could obtain an extension of leave. Amica responded that it needed to fill his position soon and requested that he provide medical documentation to establish an anticipated date of return.

Buhe complied and verbally confirmed that he intended to return to work after his knee surgery in December 2013.

In November 2013, an adjuster from the comp carrier contacted Amica and reported that Buhe appeared to be working for Electra Mortgage Solutions (“EMS”). Buhe was the president and owner of EMS, which was in the business of originating mortgage loans. He had been operating the business as a second job since 2007, unbeknownst to Amica.

Amica asked Buhe about his operation of EMS. Buhe told Amica that he did not directly oversee EMS’ office activities and said he was unwilling to further discuss the matter without speaking to his attorney first. Amica later terminated Buhe for violating its policies on outside employment. It was noted in the last ten years, Amica had terminated two other employees for violating its policies on outside employment and holding an outside broker’s license. 

In October 2014, Buhe filed complaints with the Equal Opportunity Employment Commission and Illinois Department of Human Rights, asserting that Amica had discriminated and retaliated against him.

Three months prior to filing his complaints, Buhe filed a Chapter 13 bankruptcy petition. He did not disclose his discrimination claims against Amica in the bankruptcy proceedings, although he did disclose his workers' compensation claim. Buhe’s bankruptcy was discharged in July 2016.

After learning of the bankruptcy, Amica filed a motion for summary judgment dismissing Buhe’s claims of discrimination and retaliation, since he had failed to disclose them to the bankruptcy court. Buhe filed a motion to reopen his bankruptcy case, which the bankruptcy court granted. U.S. District Court Judge Jorge Alonso denied Amica’s motion for summary judgment, finding a triable issue existed as to whether Buhe had intentionally concealed his claims from the bankruptcy court.

Alonso further found there was a triable issue as to whether Amica had discriminated again Buhe by refusing to grant a reasonable accommodation. The judge said a rational jury could find that the extension of leave Buhe had requested was not excessive, as Amica had previously allowed other employees an extension of their disability leaves.

Alonso also said there was a triable question as to whether Amica’s stated reason for firing Buhe was a mere pretext for discrimination and retaliation, since there was evidence that the company did not always terminate employees for undisclosed outside employment that did not present a conflict of interest with Amica’s business.

The judge said Amica was entitled to summary judgment on Buhe’s claim of promissory estoppel, but only because Buhe requested dismissal of this claim.

As we have stated throughout our blogs it is always important to be consistent with how you treat employees. In this case the court found Amica’s history with other employees critical in finding a reasonable jury could conclude based on the company’s history that it may have discriminated. Furthermore, this court also found that simply failing to disclose employment claims during a bankruptcy proceeding is not enough for summary judgment. You have to show undisputed facts that these omissions were intentional to have judicial estoppel apply. 

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

Synopsis: IL Senate Subcommittee Meeting with IL WC Arbitrators???

Editor’s comment: It is an enigma, wrapped in puzzle surrounded by a conundrum. In short no one knows why 5 of our newest Arbitrators were called into a hearing in Chicago last week.

We are later advised by a reliable source Arbitrators Harris and Luedke will be appearing before the IL Senate Committee in Springfield on Feb. 27 or this Tuesday.

I am sure these are not confirmation hearings. These Arbs were appointed by the Governor and were confirmed and are now hearing claims and making important rulings.

In short, nobody knows what’s up.  

As this column is WC gossip central—if you know anything, please, please share!!!

2-19-2018; Odder then Odd--IL Senate Hearing to Grill, We Mean Question, New WC Arbitrators; Two New IL WC Reform Bills; Dan Boddicker on Active/Passive Prosthetics in Iowa and more

Synopsis: Odder than Odd—the IL Senate Sets a Hearing on Five New IWCC Arbitrators this Friday.

Editor’s comment: One never knows what is going on in this nutty State. We are sure there are lots less new IL WC claims being filed every year than in years past. I am sure there used to be around 75,000 new IL WC claims being filed annually about fifteen years ago. With a shelf-life of about three years, there were about 225,000 pending claims.

I am also sure there were a lot less Arbitrators when there were a lot more claims. When former Governor Blagojevich basically traded political and administrative control of the good ole “Industrial Commission” to the aggressive Plaintiff-Petitioner bar from southern IL, there were about 15 sitting Arbitrators covering about 225,000 IL WC claims across this State. Back in that day, there were six Commissioners who handle post-Arbitration administrative appeals.

About fifteen years ago, when the newly named Illinois Workers’ Compensation Commission took over for the good ole Industrial Commission, a new levy was placed on IL WC insurance premiums along with a similar levy on self-insured employers. This unprecedented levy more than tripled the budget of the IWCC. The number of IL WC Arbitrators increased to where it is now over 30. The number of newly filed claims is now just over 40,000 a year. Again, with a shelf-life of about three years, simple math indicates there are about 120,000 pending claims with more than 30 Arbitrators and 9 Commissioners who hear administrative appeals.

When does someone do a study and see if we are truly keeping around 40 hearing officers busy? Please remember I don’t want to challenge or question the hard work of the hearing officers myself and our other attorneys appear before—my worry is the State of IL is awash in red ink. Our crazy State government routinely overstaffs almost any and every job and service it provides. No one ever appears to care about efficiency or effectiveness in providing government services—all anyone in gov’t cares about is raising taxes and borrowing billions we don’t have and can’t afford.

The idea from the secret-powers-that-be that run the IWCC was more hearing officers would mean faster adjudication of IL WC claims. There isn’t a single defense client of our firm that believes IL WC claims move rapidly. Some of them feel we could have 200 Arbitrators and Commissioners and it would still run at a snail’s pace. The defense team at KCB&A takes pride in saying we move files faster than any of our competitors but there are still factors that stymie us and make it hard to get some claims closed if the other side wants to stall and stall and stall.

IL Senate Hearing to Meet Newly Appointed IL WC Arbs??? Wassup???

In an unusual move, we learned the IL Senate Judiciary Subcommittee on Tort Reform has scheduled a hearing for this Friday, February 23rd at 11 am to grill, we mean question the 5 newly appointed IL WC Arbitrators. I feel this is unprecedented and I am sure no IL Senate Committee or Subcommittee has ever done this in the past.  

·        Thomas Ciecko,

·        Robert Harris,

·        Robert Luedke,

·        Tiffany Nicole Kay, and

·        Charles Watts.

Please note these hearing officers are all Rauner appointees and are expected to be moderate and not wacky liberal. They have not been around for very long but it is our understanding they were all approved by the Senate for their appointments or they wouldn’t have started work.

The hearing will be held in room C600 Michael A. Bilandic Building 160 N. LaSalle St., Chicago.

We understand all 5 of these arbitrators were supported by the Illinois Chamber through the IWCC Advisory Board within the last year. We are also advised IL Labor and petitioner attorney representatives to the IL WC Advisory Board also supported these appointments. I encourage my readers to send someone to this odd hearing in support of these Arbitrators. Please also send me your best thoughts and I will print them with or without attribution to you.

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

Synopsis: Two new IL WC reform bills of interest to my readers were introduced into the IL legislature before the deadline.

Editor’s comment:

1.      HB 5240 This is an effort from the WC gurus at the Illinois State Chamber of Commerce that amends the IL Workers' Compensation Act to require a recipient of some pain management medications to sign a written agreement with the prescribing physician agreeing to comply with the conditions of the prescription.

The bill also prohibits additional prescriptions while the recipient is noncompliant. This bill limits the applicability of the lack of pain management as a consideration in awarding IL WC benefits. The bill also provides for the disclosure of violations of the agreement upon request by the employer. Finally, the bill requires the prescribing physician to file quarterly reports to obtain payment. I support most of the legislative efforts of the IL State Chamber of Commerce and I strongly support this one. I believe it is now in a Rules Committee.

2.      The other WC “reform” bill is HB 5354. It appears to be supported by the IL State Chamber but not by me. I feel it is an effort to make changes to allow the Republicans to claim it will magically bring IL WC costs down. It is possible it may make some costs and coverages go up.

This bill amends the Workers' Compensation Act and limits the scope of the longstanding term "arising out of and in the course of employment". In my view, why tinker with something that isn’t broken? Focus on great hearing officers that understand and apply the law.

The bill makes changes regarding recovery when an employee is travelling—I hate any effort to twist or skew the term “traveling employee.” Someday, our legislature may realize they can’t fix the impossible-to-understand WC term so stop “reforming” it.

The bill increases the duration of the period of temporary total incapacity supposedly necessary for medical recovery. Huh?

The bill provides returns injuries to the shoulder and hip to be considered as injuries to the arm and leg and not “body as a whole.” This implicitly reverses a controversial Appellate Court ruling.

The bill provides for the implementation of a closed formulary for prescription medicine. It also provides for electronic claims.

For reasons no one will ever understand the bill requires the posting of collateral when seeking judicial review of a decision of the IWCC and not just an appeal bond.

The bill also provides another penalty for vexatious delay in payment of IL WC benefits. The bill also increases criminal penalties for specified unlawful acts. This new bill requires the IL Workers' Compensation Commission to provide annual reports to the Governor and General Assembly regarding self-insurance. Yawn.

The bill amends the IL Freedom of Information Act to exempt certain workers' compensation related information from the scope of that Act. Finally, the bill amends the Criminal Code of 2012 to create the criminal offense of workers' compensation fraud and prescribe penalties.

Synopsis: Iowa Appellate Court holds a set of prosthetic devices includes both a passive and active prosthetic hand. Analysis by Daniel J. Boddicker, J.D., KCB&A’s Iowa Defense Team leader.

Editor’s Comment: A recent Court of Appeals of Iowa decision holds Iowa employers are legally obligated to provide both an active and passive prosthetic hand to an injured worker.

In the case of Nestle USA v. Conell, 2018 Iowa App. LEXIS 119 (Feb. 7, 2018), the Court held Iowa Code §85.27 required the employer to furnish no more than “one set” of permanent prosthetic devices. Section 85.27 states, in part, that “The employer shall also furnish reasonable and necessary crutches, artificial members and appliances but shall not be required to furnish more than one set of permanent prosthetic devices.” The employee’s hand was severely injured in an industrial accident. The employer supplied a mechanical prosthetic device that allowed the employee to manipulate his thumb and index finger. The employer argued section 85.27 obligated it to provide only one permanent prosthetic device. The court decided more was required.

The court pointed out the employee testified due to the weight and construction of the mechanical device, he could only use it a few hours per day. Additionally, according to a psychologist, the employee felt like a “Frankenstein figure” when using the mechanical prosthetic and avoided the general public when using the device.

The passive hand looked much more like a natural hand. The court held the active and passive prosthetics together were a set that allowed for the employee’s long-term health and functionality.

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