7-16-2019; Illinois WC Death Claim Bungled and Employer Penalized--Consider Better Defense!; Have Your Settlement Contracts Totally Clear on Cutting Off Medical Bills and more

Synopsis: Illinois WC Death Claim Bungled and Employer Penalized.


Editor’s comment: Please consider asking the defense team at KCB&A or me about any IL/IN/WI/IA or MI death claim/concern you might have. I have handled dozens of such significant claims and I know the ropes backward and forward. Getting a newbie defense attorney to handle these multimillion dollars risks who doesn’t know the ropes can cost thousands of unneeded claims dollars. If you aren’t sure, my law partner Shawn Biery’s IL WC Rate Chart outlines most IL WC Death claims are worth $700K+ to a widow/widower and can be over $2M! If you want a free copy of Shawn’s handy IL WC Rate Chart, send a reply.

Please note this claim occurred in year 2013 and hundreds of thousands in unpaid death benefits are probably due to Claimant—I truly feel with my advice that giant payout might have been avoided or ameliorated. If you are interested or are working on a WC death claim, send a reply and I will be happy to provide veteran guidance.

With respect, this IL WC death claim one looks like a smoking mess to me. In Ravenswood Disposal Services v. Illinois Workers' Compensation Comm'n, 2019 IL App (1st) 181449WC (June 28, 2019) Cook Co., WC Div. (opinion by Justice Hoffman), the worker was, while working with Respondent’s equipment/trucks, pinned between 2 vehicles sadly resulting in his untimely death. I cannot see any basis in the ruling for the employer to fight employer/employee but they did so and lost. For diligent members of the Claimant bar who read this blog, if you get a dispute about employment, consider filing a common law claim and protect the interests of your clients and yourselves in doing so.

In Ravenswood Disposal, after fighting employment, the employer fought the medical bills incurred from the passing of Decedent and then disputed the status of the minor child of decedent as a “child” under IL WC law. In my view, there are three types of children in IL WC:

  • “DNA kids” who are the genetic offspring of the male/female decedent;

  • Adopted kids—the scion has to be legally/formally adopted following the required rules.

  • “In loco parentis” children—these are kids that are being maintained/paid for by decedent prior to their passing. The precise definition isn’t truly know but one rule of thumb I have read is the decedent has be providing 50+% of the child’s support.

In Ravenswood Disposal above, Decedent had a “DNA kid” at the time of his passing. After Decedent passed, the minor child came into the care of his mother and another person. The child was later legally adopted by the couple. For reasons I consider odd, the employer then fought the child’s status as a child/dependent of Decedent due to the adoption. I couldn’t disagree with that approach more, in light of the simple language of the IL WC Act.

The Appellate Court, WC Division ruled the employee/Decedent's minor son qualified as a “dependent” under Section 7(a) of the Workers' Compensation Act, even though he was later adopted by his stepfather after his father's passing. The IL WC Act contains no express language terminating a minor's right to benefits by reason of adoption where he otherwise qualified for benefits based on his status as a “child” and age at time of accident.

The ruling notes ample evidence supported the Commission's determination the minor was dependent on his father at the time of the accident. With respect to the members of the Appellate Court panel, I consider this finding wholly irrelevant and confusing in the case of a DNA kid—the status of being the child of a given decedent is all that is required by our law. That status can’t be “extinguished” by a later marriage or adoption. I am happy to explain if you have interest; send a reply.

As outlined above, the unanimous Appellate Court ruling also confirmed the employer lacked a reasonable basis for challenging the existence of an employment relationship, and Decedent's status as an employee gave rise to employer's obligation to pay his medical expenses. Thus, the members of Court ruled it was not irrational for the IL WC Commission to impose penalties and late fees on the employer for failure to pay Decedent's medical expenses. While I am not happy to see penalties levied against an employer, I cannot understand what they were thinking and strongly agree with our Appellate Court panel.

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


Synopsis: Have Your Settlement Contracts Totally Clear on Cutting Off Medical Bills That May Be Owed. Our Best Thoughts for Both Sides of the Entire IL WC Matrix.


Editor’s comment: I want the IL WC industry to note how settlement contracts should be handled by all claims handlers/risk managers. I point out one of the strongest aspects of IL WC law and practice is we have the ability to end/cut off medical bill liability completely. In some of the other states, that can’t happen.


The defense team has a clear protocol on settling any WC claim in any of the five states we cover—we draft the contracts and send for the client to approve from a claim/risk standpoint. When we have approval from our clients, we then sign and send contracts to OC for countersignatures and Arb. approval.


From the perspective of cutting off medical liability, I won’t approve or send a client an IL WC settlement contract that doesn’t limit the client’s responsibility to “treatment of which we are/Respondent is aware” based on an Appellate Court ruling that allowed $40K in medical bills to be presented and paid after settlement approval for care the employer/TPA/insurance carrier had no knowledge.


I consider it malpractice for an IL WC lawyer to not have a cut-off based on the client being aware of the care.


I have seen Claimant lawyers intentionally hide unpaid medical bills until after contracts are approved to then, for the first time, send medical bills and demand payment.


On the other side, if we have the language I recommend in the contracts and our client is aware of medical care/provider and there are outstanding bills after settlement approval—I tell the client we have to pay/process such bills.


Whatever we do, we don’t want to be globally responsible for all medical care up until a certain date because that sets up the “hidden bill” concept.


My law partner Joe D’Amato recommends you/we use this language:


Respondent has paid or will pay all known and submitted reasonable and related medical expenses incurred up to X date. Irrespective of date of service, the parties agree no medical expenses received by Respondent for the first time after approval of these contracts will be paid by Respondent.


What language do you use or recommend? The goal is to be fair and cover what the employer owes while also avoiding “hidden bills.”


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

7-9-2019; Understanding the HIPAA Battlefield in WC; Sedgwick is Acquiring York Risk Services Group and more

Synopsis: Understanding the HIPAA Battlefield in Work Comp.

Editor’s comment: I read a great blog from a Chicago-area Claimant attorney on what he asserts are the rights and rules relating to HIPAA in WC claims. To paraphrase, he indicates under workers’ compensation law, your employer or their insurance company has a “right” to medical records related to your injury. As a result, it’s very common after a worker gets hurt for them to get a letter that asks the worker to sign [and return] a “medical release form” that authorizes them to have access to your medical records.

The blogger indicates these medical release forms are written by insurance companies [and me, one of their lawyers] in a way that favors insurance companies. If insurance carriers/TPA’s could, they’d see every medical record of the worker’s life since they were a baby. Counsel claimed it’s a “fishing expedition” for insurance carriers/TPA’s to look for something that might possibly give them a reason to deny a given case.

The good news is counsel admits insurance carriers and TPA’s are entitled to medical records that relate to work injuries, he then asserts we have “no right” to look at any and all medical records from the injured worker’s life. So, he recommends if a worker want your insurance carrier/TPA to know the worker had cancer or was bi-polar or see what happened when the worker was pregnant, under HIPAA, the worker and/or counsel can restrict insurance carriers and TPA’s from seeing such records.

What is the HIPAA Battlefield?

Counsel confirms when his firm gets these requests, they strike out any language that says “any and all medical records” and their staff replace it with language that limits a medical record request to the accident and treatment that relates to the same body part. He asserts insurance carriers/TPA’s have a “right” to see records from a car accident where a worker hurt their back five years ago if they are claiming back pain now. Counsel also indicates insurance carriers/TPA’s don’t have a right to records from a car accident that hurt your back if you are now claiming carpal tunnel.

My only issue with the great blogger is the continued insistence on asserting there are “rights” or “no rights” on access to medical records following an injury. The advice from the defense team at KCB&A is get all the medical records you can get and try to figure out what is “relevant” in defense of the claim and what is not. A great example of this is a simple rotator cuff tear. Obviously, all records relating to shoulder, arm and hand care would be relevant. Would medical records for treatment for cancer? In my view, it would be critical evidence, as the health of your body is illustrative In managing one WC claim.

The defense team at KCB&A has a great and expansive HIPAA release for your use and consideration. This release has been used across the country for over a decade by numerous insurance carriers/TPA’s and self-insured employers. If you want a free copy, send a reply.


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


Synopsis: Sedgwick to acquire York Risk Services Group

Editor’s comment: Sedgwick has signed an agreement to acquire York Risk Services Group. The transaction is subject to customary conditions and regulatory approvals and expected to close in the latter part of 2019.

York is a premier provider of risk management, claims administration, managed care and absence management solutions. They serve a variety of clients, including corporations, the insurance industry and public entities. The company has nearly 5,000 employees in more than 60 offices across the U.S., as well as a strong international presence. York offers customized claims solutions and has specialized experience to handle even the most complex claims across all liability lines. Their offerings notably complement Sedgwick’s existing market capabilities.

Joining forces with York marks another milestone in Sedgwick’s storied 50-year history of growth and enhances their industry position as a leading global provider of innovative risk, benefits and integrated business solutions. Bringing together the expertise and capabilities of Sedgwick and York will allow them to serve more customers in more places. After the close of this acquisition, the Sedgwick family will be nearly 27,000 colleagues strong!

Until the close of the transaction, York will continue conducting business as usual.

The defense team at KCB&A provides defense work for both York and Sedgwick and all major U.S. TPA’s. We salute them as they grow and thrive.

7-2-2019; Holy Smokes—IL Appellate Ct Rules FELA Damages for Lost Wages Are Taxable Income!!! Will WC Benefits/Settlements Follow?; Good News and Bad News from The Second City and more

Synopsis: Holy Smokes—IL Appellate Court Rules FELA Damages for Lost Wages Are Now Taxable Income!!! Will WC Benefits/Settlements Follow?


Editor’s comment: In Munoz v. Norfolk Southern Railway Co, No. 1-17-1009, issued June 28, 2019, the Appellate Court of Illinois, First District considered a claim by a railroad freight conductor claiming negligence for injuries during his work at a RR conductor. A jury awarded him $821,000, including $310,000 for past and future lost wages. After the verdict, Norfolk moved for a setoff, claiming Munoz owed taxes on the lost wages under the Railroad Retirement Tax Act (RRTA) (I.R.C. § 3201 et seq. (2012)). The trial court denied the motion, relying on cases holding that, like personal injury judgments under section 104(a)(2) of the Internal Revenue Code the RRTA does not require employers to withhold taxes for FELA personal injury awards.


Norfolk RR appealed, arguing section 104(a)(2) only applies to nonrailroad employees' personal injury awards. Moreover, Norfolk asserted because the RRTA funds employees' retirement benefits provided by the Railroad Retirement Act of 1974, the statutes should be read together. That makes a FELA award for lost wages taxable "compensation" subject to a withholding tax. Alternatively, Norfolk contended if the IL Appellate Court found the applicable RRTA language ambiguous, we should look to Internal Revenue Service (IRS) regulations, which have interpreted "compensation" in the RRTA to include payments for lost wages.


The IL Appellate Court initially rejected Norfolk's arguments and affirmed the trial court. The Appellate Court found the RRTA defines "compensation" as money paid to an employee for "services rendered" and lost wages cannot be paid to an employee for "services rendered."


After the first decision by the IL Appellate Court, the United States Supreme Court held in BNSF Ry. Co. v. Loos, FELA lost-wages awards constitute compensation subject to withholding taxes. The Illinois Supreme Court entered a supervisory order directing us to vacate our initial judgment and consider the effect of Loos. Munoz v. Norfolk Southern Ry. Co. Based on Loos, the IL Appellate Court conclude Munoz's lost wages award was compensation taxable under the RRTA. Thus, the Court vacated their prior disposition, reversed the order of the trial court, and remanded.




Plaintiff Munoz injured his shoulder and neck when a train he was working on in Norfolk's Calumet Yard came to a sudden stop. Munoz sued Norfolk for negligence under the FELA, and sought damages for lost wages, medical bills, loss of future earning capacity, and pain and suffering. Norfolk admitted liability, leaving damages as the only issue. Norfolk asserted in a trial brief any lost earnings award must be offset by Munoz's share of RRTA taxes, which, under the RRA, fund railroad employees' retirement benefits. The trial court instructed the jury, in part, "If you find for the Plaintiff, any damages you award will not be subject to income taxes and therefore you should not consider taxes in fixing the amount of the verdict." The jury returned a verdict in Munoz's favor, awarding him $821,000 in damages, including $310,000 for past and future lost wages.


Norfolk filed a posttrial motion arguing it had a $14,560.79 statutory lien on the verdict for "sickness benefits" it paid Munoz and asking for a $16,610.23 set off from Munoz's $310,000 lost wages award for his share of RRTA taxes. Munoz did not contest the lien for sickness benefits; however, as to his lost wages portion, Munoz contended lost wages should be treated no differently under the RRTA than other personal injury awards, which are not subject to income tax withholding under the Internal Revenue Code. After a hearing on the motion, the trial court followed the Missouri Supreme Court in Mickey v. BNSF Ry. Co., which held, in part, that like the exclusion for personal injury awards under Internal Revenue Code, a FELA lost wages award does not constitute income and, therefore, does not qualify as taxable "compensation" under the RRTA.




Norfolk contends the RRTA is not ambiguous, asserting that the plain language of the statute, when read in conjunction with the RRA, supports a finding FELA lost wages award is compensation subject to withholding taxes. Alternatively, Norfolk asserted if RRTA language was ambiguous, the Appellate Court should look to IRS regulations and RRA information notices, which support withholding.


When Congress enacted the RRTA in 1937, it defined "compensation" to include lost wages. But, Congress amended the statute in 1975 and again in 1983, removing all reference to "pay for time lost." Section 3231(e)(1) of the RRTA now defines compensation as "any form of money remuneration paid to an individual for services rendered as an employee to one or more employers." Several state supreme courts held FELA lost wages awards constitute compensation subject to RRTA taxes.


In Loos, Plaintiff sued his employer, BNSF, alleging the railroad negligently caused his knee injury. The FELA claim resulted in a jury verdict in Loos's favor for pain and emotional distress, lost wages, and past medical expenses. BNSF moved to offset the lost wages award by the amount of Loos's share of taxes owed under RRTA. The trial court denied the motion, finding that no RRTA tax to be owed on the award, and the appellate court affirmed.


The Supreme Court (or SCOTUS) reversed. Our highest court noted taxes under the RRTA are measured by an employee's "compensation," which the RRTA defines as "any form of money remuneration paid to an individual for services rendered as an employee". The Court found this definition textually similar to the definition of "wages" in the Federal Insurance Contributions Act and the Social Security Act. SCOTUS found its earlier holdings were helpful in defining the term "compensation" under the RRTA. The Court noted, "wages" under the SSA and FICA included awards of backpay and severance payments, respectively, because those awards represented pay for active service as well as pay for periods of absence from active service. In line with those cases, the Court concluded "compensation" under the RRTA can encompass pay for periods of absence from active service, as long as the remuneration in question "stems from the `employer-employee relationship.”


The Court found that damages for lost wages awarded under the FELA "fit comfortably" within that definition. Like backpay, lost wages damages compensate an employee for time during which he or she is "`wrongfully separated from [work].'" Thus, just as backpay falls within the definition of wages, FELA damages for lost wages qualify as "compensation" and are taxable under the RRTA.


The Court rejected Loos's assertion that FELA damages should not be deemed "compensation" because they are "involuntary payments" that compensate an employee for an injury rather than for services rendered. The Court noted, an award of backpay compensating an employee for his wrongful discharge were "wages" under the SSA, even though it was "occasioned by `the employer's wrong.'" "Applying that reasoning," the Court stated, "there should be no dispositive difference between a payment voluntarily made and one required by law.”


The IL Appellate Court followed the ruling by SCOTUS in Loos and found the compensation was taxable income.

Summary by Gene Keefe


It is my feeling as a veteran WC defense lawyer that lots of awards in WC across our country involve wage replacement benefits. In IL, we have TTD and TPD and total and permanent disability awards. On a similar note, all death awards provide the surviving spouse and children wage replacement benefits that are missed due the passing of decedent. I ask my readers how the SCOTUS ruling in Loos wouldn’t apply to such awards in this State. I ask readers from other states how this ruling by our highest court wouldn’t apply to WC claims in other states.


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



Synopsis: Great News and Less-Than-Great News from The Second City.

Editor’s comment: Let’s start with Great News!!!


For the first time ever, the City of Chicago has an actual risk manager!! Tamika Puckett, an executive from Atlanta recognized as one of the nation’s top risk managers, has been named the city of Chicago’s new Chief Risk Officer, I have learned. I am told she is a brilliant manager and is very strong on statistics and data-based handling of ERM or enterprise risk management. I wish her every good thing and stand ready to help her in any and every way. I am sure she will provide great oversight of Gallagher Bassett, the new WC adjusting company. Chicago Mayor Lori Lightfoot announced the 42-year-old former director of enterprise risk management for the City of Atlanta who was overseeing workers’ compensation and property and casualty insurance programs will head a newly created Office of Risk Management. Her first task will be to overhaul the City’s $100+ million-a-year workers’ compensation program, and stop spiraling multi-million-dollar city settlements and verdicts from police misconduct lawsuits that last year hit a record $113 million. We hope she is also going to manage the City’s Police and Fire Disability program that has been as badly run as the WC defense program.


“It is imperative for the city of Chicago to have a rigorous and robust risk management office to identify and mitigate potential threats to the economic viability of our city,” Mayor Lightfoot said in an emailed statement. “Tamika is an accomplished professional who has proven she is ready to lead this charge and create a proactive, multi-layered strategy that will protect the city of Chicago and its residents,” the mayor said of her new hire.


Now the Less-Than-Great News: Service Taxing Lawyers and Accountants—Yucch.


Mayor Lightfoot tried hard to get our new Governor and IL State Government to take over the giant gaping morass that is her inherited fake gov’t pension program and billions in debt. If you don’t know why I call it a fake gov’t pension program, send a reply and I will be happy to explain. I do not and cannot blame Mayor Lightfoot for the mess but the financial clean-up is going to be close to impossible. When Governor Pritzker put the kibosh on the Mayor’s pleas for the State to take over the City’s pension morass and allowing them to raise money by taxing the fake pensioners who are getting over $100K a year, Mayor Lightfoot is now focused on another approach that I consider grossly counter-productive. She announced she wants to raise billions by taxing legal and accounting services. Please don’t do that, Mayor!


Understanding I am a lawyer and have been one more than half of my life, I assure our brilliant Mayor she is making a giant mistake in focusing on taxing lawyers and accountants to bail out the City’s fake pension issues. I remember former Mayor Harold Washington (who spent a part of his career as an IL WC Arbitrator, if you can believe it) who imposed a “head tax” on all employees in the City. His comment was the “head tax” on each worker for a company would be a “mere drop in the bucket” for businesses. Well, rather than pay the “drop in the bucket,” thousands of companies pulled up stakes and fled from Chicago and never came back. If this new tax lands, I am certain it will happen again.

Here are some simple thoughts:


It is double taxation for a company to have to pay massive IL corporate taxes and then have to pay additional taxes for the necessary services of their lawyers and accountants when they have to be in Chicago.


It will be virtually impossible for lawyers and accountants to “pass-through” such costs to our clients—if we try to do so, national and regional clients could care less about our firms being in Chicago and will move their business to other offices/lawyers/accountants outside Chicago.


The simple reason no one is talking about service taxing the financial industry and particularly stock/bond traders is they have already quietly made it clear they will take the Chicago Stock Exchange and the Chicago Mercantile Exchange to Dallas or some other southern city the moment anything this dopey is proposed, much less enacted. The City of Dallas, Texas has already vowed to provide them anything and everything they need to move.


Plaintiff-Petitioner lawyers are all going to move their operations and staff out of the City (and maybe out of the State) very rapidly. The only reason such lawyers work in Chicago is basically tradition—Claimants are used to “coming downtown.” Such operations can rapidly be moved to neighboring cities.


Defense lawyers don’t have to work in Chicago right now—many of them already “remote in” and can continue to do so. They can move their offices and staff out of the City to handle all the “remoting” that has been going on for more than a decade. Yes, they will have to bill when they go to the Courts—we can all expect the Chicago federal, state and admin courthouses to be more digital and allow for attorneys to “virtually” try claims without having to come into the City to do so. If you aren’t aware of it, New York state is already doing this and has been doing it for some time.


Here are Gene Keefe’s Thoughts on this Financial Mess:

  • First and foremost, the City of Chicago is hilariously overstaffed and has redundant government, just like State government. Start by cutting costs/staff and non-essential stuff. Consider announcing what you are doing to give us all hope someone is doing something—tell all Department heads to cut budgets by 15% immediately. Next year, consider doing it again. Trust me, the City will get along fine.


  • Consider blending the Police Department and Fire Department into a single “Community Service” Department. Travel to Glencoe, IL and ask how they have been doing it for decades. The lines between cops, firefighters and EMTs should be eliminated. When you have a fire, the cops put on the funny red fire-hats and pick up hoses and “put the wet stuff on the red stuff.” When the fire is out, some of the cop/firefighters go back to being cops. The City of Chicago would save zillions to do this.


  • Bring every injured City worker rapidly back to work and get all City workers off the taxpayer’s dole—the City has hundreds of sedentary and light jobs. Don’t hire anyone to fill such a position until everyone on WC or disability is offered such a position.


  • Please, please stop/reform the Fake Unfundable Pension issue for incoming/new workers. Bring in a 401K program! The old Fake Pension system has bankrupted the City. If you don’t do something about it for new workers, there is no hope of any future mayor ever getting back to financial normalcy.


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

Synopsis: New Laws to Watch Out For In Illinois.

Editor’s comment: In the next six months, these new developments are hitting the risk and claims industry:

  1. Recreational marijuana lands in Illinois on January 1, 2020. Please start a drug and alcohol free workplace program—if you want my draft program, send a reply. If you know someone who wants an old marijuana bust/conviction expunged from their record, send a reply.

  2. Stalking behavior now includes sending unwanted messages via social media. The new law expands the provision of who can bring a petition under the anti-stalking law to include an authorized agent of a workplace; an authorized agent of a place of worship; and an authorized agent of a school.

  3. Our kids are going to be in active shooter/threat school safety drills to be conducted within 90 days of the start of the school year. The new law requires the drills be conducted on days and times when students are present in the building. The law also requires participation from all school personnel and students present and for law enforcement to observe the drill.

  4. The IL Department of Financial and Professional Regulation shall require each new applicant complete a sexual harassment training program provided by the Department and each licensee complete a sexual harassment training program provided by the Department before renewal of his or her license.

  5. Be careful holding your cell phones while driving or even stopped at a light—you are now supposed to be ticketed if you have your phone in your hand. No warnings!