Please note

1. The mileage rate for IME’s has been lowered to $.50 per mile. This number is effective until June 30, 2010. FYI, we don’t recommend anyone pay mileage for normal medical care or to get to a light duty job—the Illinois Act and Rules don’t provide it and we don’t feel it is owed.
2. The Commission is holding open houses for anyone interested on February 11 and April 6 from 9-12am. We applaud the Chairman and her staff for opening this administrative process to the public.
3. We recently learned that the Commission PPD/TTD maximum rates have remained the same, despite a drop in the State Average Weekly Wage. We could have guessed that the powers that be at the Commission would never allow a reduction in rates, even though such a decrease is entirely appropriate where the statewide average was depressed due to hard economic times.
4. The Commission had a wonderful worker leave the Collinsville hearing site at the end of last year. Her job is now open and the Commission’s news on their website indicates they are trying to fill the job. Your editor will personally donate $100 to Haiti earthquake relief in the name of anyone who can find that job listed on the Central Management Services website. We remain chagrined about how state WC jobs are seemingly hidden from the public to allow someone’s cousin’s brother’s uncle to quietly learn which rock to look under when they want to take applications only from a chosen few.

We have been asked by a number of readers whether we can support bringing older workers back into our work force in this state. As the stock market has waffled and the economy continues to struggle, lots of folks are looking for ways to make ends meet, particularly among the elderly.

We are sad to advise all of you it is a very problematic—so please don’t shoot the messenger on this one. We truly feel this has to be taken up in the legislature if the Illinois legislature is lucky enough to get some folks willing to tackle the issue after the November elections. Right now, we hate to tell HR and risk managers hiring the elderly is asking for financial disaster in this state.

Why do we make that claim? Well, we looked at a study from the stat-rats, NCCI titled Age as a Driver of Frequency and Severity that examined how frequency and severity vary by age of worker, focusing on workers between ages 20 and 64. Events since that study was published, especially the plunge in the stock market and the decline in home prices have sparked interest in the implications for workers compensation claims of persons working beyond age 64.

The study indicates for many persons in their late 50s and early 60’s whose life savings have been depleted and whose homes are now worth far less than anticipated, the idea of a “normal” retirement is now more in the realm of wishful thinking than an achievable reality. Workers aged 65 and older comprise a small share of employment and injury and illness cases, which is why the previous study limited its analysis to persons aged 64 and younger, however, the labor force participation rate of older workers (those aged 65 and older) has increased by nearly 50% since the late 1980s, and the rate for workers aged 55 to 64 has also increased from 55% to 65%. Further increases are expected in coming years in light of recent financial and economic disruptions.

This NCCI study examines how workers aged 65 and older differ from all workers in terms of their share of claims; indemnity and medical payments; frequency; and indemnity and medical severity (i.e., cost per claim). It also explores the implications for workers compensation claims management and loss costs. Their key conclusions are:

• Falls/slips/trips are by far the greatest cause of injury among older workers.
• Indemnity severity is less for older workers, largely because of the lower average weekly wage of such workers. There is a distinct (downward) break in indemnity severity between ages 60–64 and 65 and older.
• Medical severity is higher for older workers, although the differential between workers aged 65 and older and nearby age cohorts is small.
• Shares of indemnity and medical payments of older workers have a close relationship to their share of claims.
• Frequency is less for older workers, especially in the more hazardous manufacturing and construction-related industries and occupations.
• In contrast, claim frequency is higher for older workers in the leisure and hospitality industry and food preparation and service occupations as well as in sales and related occupations.

How does all of this affect Illinois WC claims? Well, the current theories of compensability do nothing to motivate employers to hire older workers. First, Illinois continues to adhere to the theory the work only has to be “a” cause and not “the” cause of the injury. Therefore if Uncle Dave or Aunt Sally get a sore [insert body part] at work, it can be very simple to demonstrate the work was a cause of their age-related problem. So, for one simple example, if Uncle Dave is a part-time sales person and is on his feet some of the day but now needs total hip replacement, you can be on the hook for the surgery and 60% LOU of the leg, regardless of the fact Uncle Dave has had documented hip problems for three decades—you may be determined to have aggravated it.

Next, remember the rates have all jumped, making it much more difficult to save costs if an elderly worker is brought back on a part-time basis. For a part-time worker who suffers an injury, their TTD and PPD rates will typically equal their average weekly wage. Most galling, if you are paying a part-time elderly worker $100 a week and they die from an arguably work-related event, the minimum weekly death benefit is $466.13.

The legal issue of accidents being “a” cause versus “the” cause isn’t in the legislation and could be changed by administrators willing to make things better for hiring the elderly. High rates isn’t truly an issue our administrators can change. We suggest all of it should be considered by a new administration, if one should land this fall.

We appreciate your thoughts and comments or post them on our blog.

Illinois employers should review and take note of this important Commission decision which indicates simply because a heart attack or other cardiac event occurs while a claimant is working does not necessarily mean the accidental injury is compensable under the Act. Claimant and their counsel still must meet their burden of proof in demonstrating a compensable event through expert testimony and a preponderance of the evidence. As we indicated when Twice Over Clean was issued, we were greatly concerned any and all cardiac events or dysfunction might be covered in Illinois because claimant in that ruling was found to have arteries that were 95% occluded and his own doctor said he could have had a heart attack while brushing his teeth. It would appear our Commission is still using strong common sense in deciding when and if to provide Illinois’ high death benefit.

In Dragovan v. Western Utility Contractors Inc., 06 IL.W.C. 31304, No. 09 I.W.C.C. 0969 the Commission reversed an arbitration decision which found Decedent to have sustained fatal cardiac arrhythmia. It was undisputed Decedent in Dragovan had a labor intensive job. On the date of claimed loss, he had in fact been digging and performing strenuous physical labor. However this work was performed several hours prior to his death. Decedent was not performing heavy physical labor of any kind when the fatal cardiac event began.

Although Petitioner’s expert opined Decedent’s physical activity “led” to the fatal event, both experts agreed Decedent had a globoid-shaped heart with a longstanding occlusion of the descending coronary artery that left only a pinhole-sized opening, a condition that greatly increased the likelihood Decedent would experience cardiac arrhythmias, thus increasing the risk of sudden death. More important, both expert physicians also agreed Decedent’s heart was in such a diseased state little or no physical activity was needed for cardiac arrhythmia to occur. Nevertheless, the Arbitrator found this case to be analogous to Twice Over Clean and Petitioner’s expert to be more credible and awarded full death benefits. As we have indicated death benefits in Illinois are start at over $600,000 and now cap at $1,615,900!! We consider Illinois to be the third highest state for death benefits in the entire country.

On review the Commission disagreed and clearly distinguished this case from Twice Over Clean in that Decedent in this claim was neither performing physical labor at the time of the incident nor was he working at or near the level of physical activity as claimant in Twice Over Clean. To be clear, in Twice Over Clean the claimant was actually performing physically demanding labor outside in the cold in Minnesota when symptoms related to a non-fatal heart attack were experienced. In this case Respondent’s expert testified the physical activities performed earlier in the day by Decedent were too far away from a temporal perspective to be relevant in causation. Thus even with medical testimony that physical activity could precipitate cardiac arrhythmia and later death, the Commission viewed the facts and testimony in their entirety and issued a well-reasoned thoughtful decision which provides significant insight into how such claims should be handled.

This case is of extreme importance to anyone who might find themselves handling and/or defending a fatal or non-fatal cardiac or stroke claim. Please note this ruling might not apply to firefighters with five years or more of seniority—in Illinois, cardiac problems for such workers are presumed to be related to work.

Although it may seem at times as though the Act provides all-encompassing coverage to any employee who happens to be working at the time of a heart attack, stroke or other cardiac problems, thorough investigation and reliable expert testimony may speak to the contrary. With that in mind, we never recommend blind acceptance of cardiac claims simply because the incident occurs at work, it is the employer’s duty and right to fully investigate and make their decision after reviewing the facts in their entirety. Please don’t hesitate to contact us about handling, reserving or defending such claims.

This article was drafted by law student and KC&A paralegal Michael F. Sullivan. Please do not hesitate to reply with thoughts and comments or post them on our blog.

What is happening out there in the real world is lots and lots of workers’ comp claims are being settled with WCMSA’s where the injured worker or their family are being given a sometimes large MSA trust account that has been approved by CMS for use to pay work-related medical expenses. Some claimant attorneys were advising their clients these funds are “part” of the settlement—that advice is sort of right and sort of misleading. It is misleading if the worker thinks they can take the money and casually use it for anything they want. Nothing can be farther from the truth. All monies in the WCMSA have to be used carefully and has to be reported annually to the Feds. Failure to do so may result in a claimant being audited and sued by them—and once John Q. Injured Worker gets into a problem with the Feds, they are certain to turn around and want to sue the attorney or insurance carrier/TPA if they can point liability at them. We recommend caution be used at every step of this path.

We have also heard of claimant attorneys who have sought to take a fee on the amount of the WCMSA—such a practice is specifically barred by U.S. law. For example, if the settling parties submit a WCMSA proposal to CMS which indicates claimant will need $100,000 worth of work-related medical expenses that would otherwise be reimbursable under Medicare and the settling parties assert it will cost $20,000 in administrative and attorney fees to establish and administer the Medicare set-aside arrangement proposal, CMS will only review the reasonableness of the $100,000 figure. CMS will not review whether or not the $20,000 in administrative and attorney fees are reasonable nor will CMS permit the settling parties to add $20,000 amount to the $100,000 WCMSA amount. Therefore, if CMS approves the proposal for a $100,000 WCMSA, the settling parties administrative and attorney fees cannot be charged to/against the WCMSA. We have also not heard of any rulings where an Arbitrator or the Illinois Commission has approved a settlement where the claimant attorney is seeking a fee on the future medical bills that have not yet been paid.

We caution our readers the injured worker has to be advised Medicare Set-Aside monies cannot be used until the worker is eligible for Medicare benefits. Once the worker is eligible to receive Medicare benefits, the monies supplant the federal benefit–the monies have to be used to pay Medicare-covered medical or other expenses related to the work injury or management of the MSA until they are used up. Most important, the injured worker has to annually report what they do with the money to CMS.

CMS recommends non-professional administrators look to Medicare’s publications, such as “Medicare and You,” for general guidance about Medicare issues. This document is available from their offices and on the web at http://www.medicare.gov/Publications/Pubs/pdf/10050.pdf. You may note this lengthy document does not directly address the issue that is the subject of this article. This document and any of Medicare’s other publications, are available from local Social Security office; or from Medicare, by calling 1-800-633-4227 or by visiting Medicare’s web site on the Internet at www.medicare.gov.

We are advised the folks who set up the WCMSA generally provide pamphlets and forms for the injured worker or their families to understand the rights and responsibilities they face in this process. In pro se settlements, we recommend the WC claims person discuss the issues with claimant and document those discussions to protect yourself from future liability. For lawyers on both sides who are involved in a settlement with a self-administered MSA, we suggest you insure claimant has been fully advised about the requirements.

For the statutory outline of what is going on, Medicare regulations found in Title 42 of the Code of Federal Regulations §411.46 state Medicare will not pay for covered medical services related to the work-related injury until the WCMSA funds have been exhausted. All WCMSA funds must be used to pay for all Medicare-covered services and supplies related to the work injury. Examples of some items that Medicare does not pay for are: acupuncture, routine dental care, eyeglasses or hearing aids. Therefore, these items can not be paid from the WCMSA account. If payments from the WCMSA account are used to pay for services other than Medicare-allowable medical expenses related to medically necessary services or supplies, Medicare will not pay injury related claims until these funds are restored to the WCMSA account and then properly exhausted.

A CMS Medicare contractor will monitor all expenditures from the WCMSA account upon receipt of the annual self-attestation letter the injured worker is required to submit. Once the lead contractor has confirmed WCMSA funds have been exhausted appropriately, Medicare then begins paying for Medicare covered-services related to the work-related injury.

Establishing and Using a Medicare Set-Aside Account

As part of the workers’ comp settlement, WCMSA funds are placed in an interest-bearing account, separate from the worker’s personal savings or checking account. This is typically done by the Medicare Set-Aside provider who prices the trust and sets it up with funds or an annuity paid for by the insurance carrier/TPA. That provider should also outline what the injured worker is to do with the monies, along with when and how to spend them and how to report all of it to CMS on an annual basis.

Record Keeping

As an administrator of the self-administered WCMSA account, the injured worker is responsible for keeping accurate records of payments made from the account. These records may be requested by CMS’ lead Medicare contractor as proof of appropriate payments from the WCMSA account.

The injured worker may use the WCMSA account to pay for the following costs directly related to the account:

• Photocopy charges
• Mailing fees/postage
• Any banking fees related to the account

Annually, the worker must sign and forward a copy of the form providing self-attestation that payment from the WCMSA account was made appropriately for word-related injuries that would otherwise be reimbursable by Medicare. The annual accounting has to be submitted no later than 30 days after the end of each year, beginning one year from the establishment of the WCMSA account. Annual self-attestation should continue through depletion of the WCMSA account to the CMS lead Medicare contractor.

CMS policies further restrict the use of MSA funds. Payment of fees for attorneys, trustees, custodians and administrators, as well as those of any other professionals engaged to assist in administration of the MSA, including any medical claims administrator or third party administrator, may not be made from the funds in the MSA. Separate arrangements must made for payment of those fees as part of the WC settlement.  Also, the funds in the MSA may not be used to pay premiums for Medicare supplemental (“Medigap”) insurance for the beneficiary.

In the case of non-professionals administering WCMSA’s, CMS will accept a completed annual self-attestation form in which the WCMSA administrator verifies all expenditures were for work-related medical expenses of the type normally covered by Medicare. CMS does reserve the right to demand and receive a complete accounting at its discretion. CMS policy requires the set-aside amount approved by CMS to fund a WCMSA must be placed in a separate interest bearing account.

State Law Requirements

CMS takes the position non-professionals administering WCMSA’s are subject to the same standards and duties as professional fiduciaries. Therefore, it is safe to say that anyone administering any type of MSA must comply with all applicable state trust and fiduciary laws.

Typical fiduciary powers include, but are not limited to:

• The power to invest/reinvest in securities such as stocks, bonds, or other property, including purchase/sale of annuities, life estates, remainder interests, options on securities, insured money market funds;
• The power to hold investments in the name of a nominee;
• The power to make distributions of the assets of the trust or custodial arrangement in money or in kind, or partly in money and partly in kind;
• The power to retain any property (whether or not income producing) that may be transferred to the trust or custodial arrangement;
• The power to borrow money for any purpose connected with protection, preservation or improvement of the trust or custodial arrangement, or enhancement of the benefits to beneficiaries; and the power to create one or more mortgages on, or pledges of, any part or all of the property held in the trust or custodial arrangement;
• The power to pay, compromise or adjust any claims by or against the trust or custodial arrangement;
• The power to pay tax obligations of the trust, custodial arrangement or beneficiary from assets held by the trust or custodial arrangement;
• The power to execute, acknowledge and deliver any and all instruments in writing that may be advisable or necessary to carry out any of the trustee’s or custodian’s powers and duties; and
• Other powers that may be allowed or granted under state law or in the governing trust or custodial agreement itself.

In making investment decisions, an MSA fiduciary must consider that the funds in the MSA must be highly liquid; and that there is little, if any, risk tolerance. The set aside funds in the MSA must be available for predicted future injury-related medical expenses of the type normally covered by Medicare. In addition, unexpected and significant medical expenses can, and often do arise.

CMS only requires MSA assets be placed in an “interest bearing account.” However, state fiduciary and trust laws require administrators to exercise due diligence in deciding on any investment of MSA assets. This requires a careful investigation and comparison of available investments, including analysis of each investment’s individual characteristics and performance history. Non-professional administrators are strongly advised to seek the help of a professional, certified investment advisor in choosing an appropriate investment portfolio for MSA assets. CMS does not require that MSA’s be administered according to any formal written instrument, such as a trust or custodial agreement.  As a result, many non-professional SMSA administrators act with only CMS’ self-administration guidelines as a reference.

Tax Requirements

IRC §104(a)(2) provides damages received on account of a physical injury or illness, including WC settlement proceeds, are excluded from the taxpayer’s income. Placement of the award into an MSA should not alter that exclusion. Therefore, the receipt of WC settlement proceeds will not result in income tax liability to the claimant or the claimant’s MSA. If the settlement is structured to provide payments over a period of time through a qualified annuity under IRC §130, even the interest portion of the annuity payment is excluded from taxation under IRC §104(a)(2). However, if the settlement is paid in a lump sum, only the lump-sum portion is excluded from the taxpayer’s gross income; the claimant is taxed on any interest earned. If the claimant accepts a lump sum in settlement of a WC claim and subsequently purchases an annuity to fund the MSA, the interest portion of the annuity payments will likewise be taxable to the claimant.

Because the claimant is treated as the owner of the MSA for income tax purposes, and is taxed on the net earnings of the MSA, regardless of whether any of the income was actually distributed, the payment of the claimant’s income tax by the MSA should not constitute additional income to the beneficiary. Further, CMS does not currently prohibit the payment of taxes from WCMSA’s.

We appreciate your thoughts and comments or please feel free to post them on our award-winning blog.

The world wasn’t safe while the legislature was in session. Our “liberal” Democratic House, Senate and Governor drop lots more regulations on us. Though 2009 was dominated by a state budget crisis that continues to have multi-billion dollar deficits, and they have not really addressed ethics reform in government, lawmakers approved hundreds of other new laws for Illinois’ citizens to adapt to. Most of them take effect at the midnight on Thursday when the New Year starts. Some legislative changes will hit drivers and others directly, but others are more obscure.

Lawmakers’ bent on keeping people from texting while driving enacted a law this year and it takes hold Thursday at midnight. Drivers caught emailing, “tweeting” or texting behind the wheel can be pulled over and ticketed for the offense. Please assume if an Illinois police officer now wants to stop anyone, they will be able to claim they thought you were texting or emailing.

“Bluetooth” or hands-free devices may be much more popular in Illinois. In addition to not texting, drivers can now be ticketed for talking on the phone without a hands-free device in a school or construction zone starting Jan. 1. The best way to avoid this is to find a way to talk without putting the phone to your ear.

A separate law increases the fine of speeding in a school zone by $5 and sends the extra money to help schools. The fine for not yielding to a pedestrian in a school zone goes up $50.

Trucking companies traveling in or through Illinois will be happy to hear semi-tractor-trailer trucks will now be able to go 65 mph on rural interstates Jan. 1 because of a change in law. However, it will take time for the state to take down the signs that continue to hold truckers to 55 mph.

As part of the state’s plans to help out Illinois’ road builders and the struggling construction industry and build more roads and bridges, the cost of registering a car goes up $20 in 2010. Therefore, a new license plate sticker will cost $99 instead of $79. We have already gotten January renewal bills with the higher cost.

For you outdoorsy types, the cost of hunting and fishing will go up to in an effort to help the state’s cash-strapped outdoors programs. On Jan. 1, the cost of a fishing license goes from $12.50 to $14.50. A deer permit goes from $15 to $25 and hunting license fees rise from $7 to $12.

New laws that we didn’t truly need include naming Feb. 5 Adlai Stevenson Day in Illinois. Adlai Stevenson was Governor of Illinois in the 1950s, unsuccessfully ran for President against Ike and later served as a United Nations Ambassador. The day honoring him won’t get people off of work but official state calendars will note the day.

And last but not least, starting on Friday morning, American flags flying on public property in Illinois, such as outside government buildings, will have to be made in America. No more “Made in China” U.S. flags. A company in Rock Island, Regalia Manufacturing Co. makes American flags. You can buy an unlimited number of Illinois-made U.S. flags, banners or other “regalia” by contacting them online at http://regaliamfg.com/. U.S. flags don’t have to be replaced immediately but after the old ones wear out, new ones have to be made in the U.S.

Now, let’s hope they can make sense of that budget thing. Please send your thoughts and comments.

One concept that routinely falls through the cracks of training and handling of legal issues for all lawyers is what you need to do when you are asked by a friend, family member or acquaintance about a matter that you don’t traditionally handle. For example, if you are house counsel for a major software company and handle IT and patent issues but your cousin calls about a real estate closing that isn’t going well and asks for “informal” advice. In such settings, we feel you are going to have to do one of two things;

• First, if you are not going to handle or comment on the matter in any way, tell the friend, relative or colleague you will not handle it and they should consider seeking other counsel;
• In the alternative, if you are going to affirmatively discuss, comment or provide any sort of direction or advice of any kind, open a file and let them know you are doing so.

In the first instance, you may want to keep a personal record of the inquiry and your response to it. In personal injury claims, you may actually want to advise the person both of the fact you aren’t handling the matter and also advise them of the applicable statute of limitations, as appropriate.

In the second instance, you have not one but two problems to consider. The preliminary issue in “odd jobs” for the lawyer working in-house or being asked to do tasks outside those you were hired by a law firm to provide, you need to consider is what to do in relation to your employer and job. We recommend all law firms and companies that hire attorneys address the concept with a clear written policy. At a minimum, the lawyer should advise the company or firm about all legal inquiries and how they are handling them. Second, the lawyer needs to create a file available for review by your employer and manage/maintain it to avoid either malpractice or ethical problems. Please note in-house counsels can buy “odd-job” legal malpractice insurance to avoid liability if side work goes sour.

We caution the lawyers, general counsels and law firm managers who read this KC&A Update to understand, if you don’t have a policy on “odd jobs,” your lawyers will still get inquiries but potentially fly under the radar on managing the matters—you don’t want that. We truly feel you need full disclosure so you don’t have corporate or partnership liability for claims you don’t even know about. If the attorneys receive any monies or gifts or other income for such work, it should also be disclosed to the main employer, whether you seek some or all of the compensation being provided to the attorney. Again, we recommend you anticipate this potential and address it first and not at a later time.

As to maintaining legal work for “odd jobs,” our recommendation is all legal files be updated no less than once a quarter with diary dates for the next action required. Failure to do so will always cause concerns about one of the three most important sources of ethical failures—failure to maintain and update files.

We are starting to see more and more assignments come in with a truly anomalous claims issue—claims that have been

• “Held” by the adjuster for weeks, months and years prior to being sent to defense counsel;
• Substantial TTD and medical bills have been paid; and

• No true accident investigation has been performed with interviews conducted or forms completed;
• The initial treating medical records have not been received and reviewed.

Please note Illinois is not a state that allows a great deal of pre-trial discovery in a meaningful fashion. The idea is the employer in Illinois gets to investigate what happened following the report of injury and medical records are out there for both sides to review—you don’t have to pay medical bills blindly in Illinois, the statute says you get to look at the records, coding and other documentation also.

So we all have some tools at our disposal to see if the claim is either questionable or bona fide. As we have told our clients, readers, Arbitrators/Commissioners and law students for years, the matrix every workers’ compensation hearing officer, attorney, claims handler, participant or risk manager has to review is to compare the initial report(s) of accident with the first medical history or histories to see if they “match” in a meaningful way. If the accident investigation and medical records don’t align, benefits shouldn’t be paid until the questions that arise get answered.

The problem we see across the country is claims adjusters are under the gun. They are handling lots and lots of files, many are at record-high levels to justify their jobs and pay in this demanding economy. The problem they face is it takes a little or a lot of time to get accident investigation protocols completed and medical records in their files. It is tough to match all of it up and make sense out of what they are doing on a file by file basis. Most veteran claims adjusters know the easiest way to quiet down a demanding file is to just take the initial report and just start paying benefits—by doing so, claimants and potentially their attorneys will stop calling/crabbing and sending penalty/fee petitions and making threats of one sort or the other. The problem this causes is files some times get accepted and lots of benefits paid with very minimal accident information and late or lacking medical documentation.

The problem for the defense attorney who later gets the file is multi-layered. In our experience, claims handlers don’t like to be “questioned.” They know if the defense attorney starts to ask pointed questions about the initial determination to simply start paying benefits without a minimal accident investigation; it may put the adjuster in a bad light. The defense attorney knows the claims adjuster usually handles the spigot that sends files—if you tell the adjuster the matter needs to be more fully investigated, they can go to a less aggressive attorney who won’t roil the waters, no matter how poorly the file has been initially set up. The problem for the corporate risk manager or insurance broker with a demanding account is you may be paying a lot of money on a claim when your claims staff and attorneys don’t have the very basic defense tools in the file—you aren’t sure an accident happened or if the medical care your adjuster is paying for relates to the claimed event!!

So what are the three Keefe, Campbell Claim-Acceptance Rules? We recommend the Illinois and possibly U.S. claims industry demand three simple things on every litigated claim or defense assignment. First, each file has to have some definitive accident report in it. The best of all worlds is a hand-written accident investigation report filled out by claimant in their own words and language and signed. If they can’t fill it out due to an inability to write, audiotape or videotape it. If union rules or other administrative issues block a statement from the injured worker, our first rule requires a handwritten accident investigation report completed by the supervisor to whom the event was initially reported. For insurance/risk managers and insurance brokers who watch claims handlers, you shouldn’t allow any adjuster to pay benefits without something other than a call from the account saying “claimant hurt at work.”

If the claim goes litigated early, what do you do about getting an accident investigation report filled out when claimant is represented by counsel? Tell the claimant attorney you have to have the accident investigation report and you are willing to interview their client on the phone with counsel on the line. Tell them your handling rules require it and you can’t pay benefits without a completed accident investigation report. While we don’t mean to talk for Illinois Arbitrators, we assure you most of them support the concept that an injured worker has to preliminarily cooperate with claims adjuster before you start paying lots of benefits. They will not require you to pay blindly.

Next, the claims handler has to have the initial medical treatment records; whatever they might be. As part of this process, we recommend having every injured worker sign a HIPAA-compliant medical release. After you have the signed release, if you don’t know where claimant went for care, ask them! If you know where claimant went for care, call and fax the HIPAA-compliant release and ask for the initial treating records. Please always remember the medical course starts on the date of loss—if they don’t get care for some time after the event, it is always a red flag—it doesn’t mean you can always deny the claim but it is always something to further review and consider. Please also remember to CYA—if you don’t have initial treating records and you aren’t paying benefits, write either claimant or counsel early and often to tell them where you are at in trying to get them. Make clear in all correspondence to tell them you follow the KCCA Rules and you can’t and won’t pay benefits until you have them.

Third and last, when you have an accident investigation report and the initial medical records with a clear medical history—read and compare them! It sounds simple but we get lots and lots of claims which indicate the claims or risk manager did not take these three simple steps. If the accident investigation report and initial medical history match, you can and should pay benefits. If they don’t match, you don’t and shouldn’t pay benefits. Sounds simple, doesn’t it?

We point out to everyone in the WC claims industry, if you send a file to defense and they aren’t asking these questions and confirming analysis of this matrix, they aren’t doing their job. If these three steps aren’t followed, you are almost certainly paying benefits totally in the dark—you and your defense counsel won’t be able to do most of the important claims steps such as fighting a phony accident, targeting MMI or return to work. When we audit claims files for our clients and potential clients, this is the first thing we look for—we are amazed at how many times it is missing. If it isn’t in the file early, you need to try to “rebuild” it later at usually a major disadvantage due to the passage of time. We recommend everyone look at your major litigated claim files to see if this matrix is present or let us do it for you in an audit.

If you need an accident investigation form, send a reply. If you need/want our recommended questions to interview an injured worker, send a reply. If you want a copy of our HIPAA-compliant release, send a reply. All of these documents are offered at no charge. And don’t hesitate to post your thoughts on comments on our award-winning blog—details are below.

Running a government isn’t a tough thing to do. You collect taxes and fees and spend what you bring in. All of it presumes you are wisely spending the tax money you are getting. At present, we are watching the wasteful Democratic administrations in the City of Chicago, County of Cook and State of Illinois struggling to find ways to pay for their institutional waste; including wildly inefficient, incompetent and ineffective workers’’ comp defense programs. Now it would appear they are attacking hospitals to try to make up their deficits.

Last week, the Chicago Sun-Times reported four hospital CEOs from South Suburban, Ingalls Memorial, St. James and Little Company of Mary Hospitals voiced their opposition to a proposed Cook County tax seeking to charge all hospitals in the county a fee if they fail to meet county-mandated criteria for charity care – the equivalent of 4.5 percent of their annual expenses. Few Cook County taxpayers want to steer more money to a county government that recently dished $14,000 to a sheriff’s employee who claimed a back injury twice after reaching to pick up a piece of toilet paper. In 2008, the county paid a whopping $69 million in litigation-related expenses, according to a report.

Because the majority of hospitals are exempt from paying property and income taxes and certain state and local sales taxes, they are expected to provide a commensurate level of free care to indigent patients. Although there’s no question hospitals are providing millions of dollars in free care every year, some of the larger ones that can absorb low-income patients are not meeting the burden as much as they should, claim county officials. And the same officials claim larger, wealthier hospitals are dumping uninsured patients on the already cash-strapped Stroger, Provident and Oak Forest hospitals that are run by the county.

The Hospital CEO’s say the last thing Cook County government needs is a new revenue stream when it can’t control its budget now. Costs are out of control. Represented by the Metropolitan Chicago Healthcare Council, the hospitals oppose the new proposed fee. The four CEOs said they also oppose such fees on their larger health-care counterparts because eventually smaller providers would be hit, too. Hardest hit under this proposal would be the Advocate Health Care Network, which provided in 2008 the equivalent of only 1.4 percent of annual expenses toward charity care – even with half of its bad debt included in the charity care figures.

If enacted, the tax could cost as much as $350 million annually for hospitals in Cook County, according to the hospital group. And the last thing Cook County needs is more revenue, it said. Travis Akin, executive director of Illinois Lawsuit Abuse Watch, compiled a report showing the rising litigation-related expenses in Cook County, which are 738 times higher than in DuPage County, even though Cook has six times as many people as DuPage.

The Cook County Board’s workers’ compensation committee chairwoman Elizabeth Doody Gorman claims her hands are tied by state laws. We respond to say balderdash. As we have outlined, Cook County doesn’t do any of the things other companies do to cut costs, like hand-written or tape-recorded accident reports and surveillance to catch its employees when they are abusing the system. The City of Chicago refuses to implement light work to make their employees return to work from injuries as soon as possible and get off the dole. Workers’ comp vendors at the Illinois state, county and city level are not competitively and fairly chosen to provide value—you still get the job when someone’s cousin’s brother’s uncle says you do. All three governmental bodies are regularly hit by the IWCC with penalties and attorney’s fees for mismanagement and litigating issues they can’t and shouldn’t fight. The politicians and administrators continue to randomly pick a “whipping boy” as they seek more reasons to justify throwing away taxpayer money.

Well, the Illinois state-wide primaries are a month away, folks. The general election is this fall. Please don’t hesitate to respond with your thoughts and comments.

Illinois employers and more particular truck leasing organizations should be aware of this important and peculiar decision. You may want to take steps to prevent the potential windfall that may come as a result of frivolous third party claims.

In U.S. Bank v. Lindsey, No. 1-07-2606 (1st Dist. Dec. 7, 2009) the Illinois Appellate Court affirmed a Circuit Court decision on appeal. Defendant Carmichael Leasing Company leased a vehicle to a company and their driver of the leased vehicle ran into and killed a co-employee whose job it was to load the truck. Only in Illinois would the leasing company now owe over a million dollars for their simple act of leasing the vehicle that allegedly caused injury.

To clarify, on the date of injury Decedent was an employee of the driver’s employer. He was unloading trucks when he was struck by the truck being operated by the driver. There was conflicting testimony as to what precisely caused the accident, however the prevailing testimony was the driver somehow negligently misused the truck’s brakes causing the vehicle to roll and pin Decedent against another vehicle. Decedent’s ribs were crushed and he passed from his injuries.

This was an unfortunate accident to be sure, and our hearts go out to Decedent’s children but it must be noted he was under the influence of heroin at the time of the accident. In fact, Defendant’s expert testified Decedent had 10-20 times the amount of morphine in his blood as would be given to a normal patient in severe pain. This amount of morphine is not only enough to kill a man but the fact that he was able to tolerate it was suggestive of chronic abuse. Defendant’s expert further testified the amount of heroin in Decedent’s blood was tantamount to “molasses on the brain” and his cognitive and motor abilities were undoubtedly significantly impaired. This was not lost on the jury who found Decedent to be contributorily negligent, but only 50%. Likely because of unusual jury instructions including the circuit court barring of some of Defendant’s expert’s testimony, this level of comparative fault may have been far less than we would have anticipated given someone working directly next to Decedent was able to smoothly avoid injury while Decedent was crushed.

Nevertheless, $3,000,000.00 was awarded to Decedent’s estate, less 50% for his own negligence. As the Illinois Worker’s Compensation Act is the exclusive remedy for recovery against an employer in workplace injuries, Decedent’s employer was released of all civil liability. It may be presumed they paid death benefits pursuant Illinois workers’ comp law. Similarly, the driver could not be held liable as the Act provides immunity for injuries caused by the tortious acts of a coworker.

Who was then left for decedent’s estate to collect from? Well why not a company with no relation to any parties involved, other than a vehicle lease agreement with Decedent/Defendant’s employer?

That’s right, Carmichael Leasing was found to be liable for the entire award. To our knowledge, Illinois has never been faced with facts similar to this. Our Appellate court opted to take the most liberal route possible and implement what is called “logo liability.” Essentially, this means a company providing a leased vehicle is blindly liable for the negligence of the driver of said vehicle who they don’t know, don’t train and don’t warn. There were no allegations of any problem or dysfunction with the equipment. Particularly disturbing in the case at hand is Decedent was found to be within the coverage of the Interstate Commerce Act which provides protection to members of the travelling public. It is beyond us how unloading stationary trucks in the course and scope of his employment rendered Decedent a member of the “travelling public.”

The legislative intent in providing protection to the travelling public was to provide a financial remedy for those without other recourse. It was almost certainly not to provide a windfall of benefits from multiple sources with minimal or no relation to the injured party. We also don’t see the need for strict liability for anyone leasing a truck—the risk should fall upon the person who is actually negligent. The Appellate Court, in our opinion, took as liberal an approach as possible and the floodgates will almost certainly be opened for excessive litigation and frivolous third party suits, all at the cost of Illinois truck leasing companies.

This article was written by Michael Sullivan, one of our top law students and paralegals. Please do not hesitate to reply with thoughts and comments or post them on the blog. If you need the cite of the case, send a reply.

We have all heard one or the other WC myth or urban legend across the years. As we begin the New Year, we truly feel analysis in an open forum is a great idea.

1. Whatever is good for the Plaintiff-Petitioner bar is good for workers’ compensation.
2. Defense attorneys can effectively represent Plaintiffs-Petitioners in work comp claims.
3. Total and permanent and wage loss claims have to be lifetime benefits and widow(er)s “need” WC benefits for 25 years.
4. The only way to “reform” workers’ compensation law and practice is in the legislature.

Please let us know if you have other thoughts or ideas on the myths underpinning our system.

A. Whatever is good for the Plaintiff-Petitioner bar is good for workers’ compensation is a myth that has been out there for decades. The main idea is getting injured workers to come to the system for adjudication of their rights and responsibilities under the law. We have repeatedly pointed out the fact the vast majority of workers’ compensation claims are not litigated and are handled as either medical only or medical and lost time claims without the need for litigation or other disputes. One aspect of the Illinois WC system is the rights and rules can be complex and we are sure some of the top Plaintiff lawyers insure their clients get all the rights the system provides. However, the other side of that coin is the need to simplify benefits and make the system more user-friendly for everyone on all sides.

The other concern with this myth is the growing perception in the state and national WC insurance and claims industry the Plaintiff-Petitioner’s bar so thoroughly dominates workers’ comp outcomes in Illinois that, no matter what it takes, don’t let any claim go into litigation or, once a claim becomes litigated, don’t let it go to hearing. We are hearing more and more clients tell us they will settle at the high end of the range, rather than take a chance with Illinois’ biased WC system. We feel only time will tell on that one but we are confident Illinois employers are going to continue to seek to counterattack the high litigation levels in this state.

And last but not least is the awful example of what is happening in Michigan where the Plaintiff-Petitioner bar won’t simply seek to win workers’ comp cases but has now gone federal in their efforts to vex and harass an Illinois employer who denied several WC claims in that state. In their effort to get triple damages, the Plaintiff lawyers have dropped the veneer that we are all in this together and need to amicably work out differences in the best interests of workers and their employers. The business-busting efforts by the Plaintiff lawyers in Michigan painfully highlight the rift that continues to grow between such zealot lawyers and the industry that uncomfortably feeds them.

B. Defense attorneys can effectively represent Plaintiffs-Petitioners in work comp claims is a myth we truly hate! The main issue for Illinois workers’ comp risk, safety and claims managers is the simple fact most “new” changes to Illinois workers’ compensation law and practice doesn’t occur in the legislature—we only change the “written” law once every other decade or so. What changes constantly is the way the law is viewed and implemented by the Commission and our reviewing courts.

So the problem with Illinois’ many “cross-over” firms happens when the law starts to morph from some silly theory which twists a former analysis of accepted workers’ compensation practice. The question is how long does the defense industry battle the issue. For example, overtime started to be included in the average weekly wage following the 1978 ruling in Edward Hines Lumber v. Industrial Commission. No one knew how the ruling would reach “acceptance” in the industry, particularly because the decision ran directly counter to the language of Section 10 which still excludes overtime from the calculation of the AWW. There was the possibility the claims industry would refuse to follow this law or continue to send lots of battles to the Commission to resolve the many questions raised.

What we saw that drove us nuts was the second case to reach the reviewing courts was handled by a defense firm that handled lots and lots of claimant cases. While their ethical responsibilities on the file were to their major defense client who they actively represented, everyone knew they didn’t want to have the Edward Hines Lumber ruling reversed. When the claim was orally argued, they quietly rolled over and lost.

Trust us, this is one that is relatively easy to sniff out—write your defense firm and ask them to disclose how many Plaintiff-Petitioner claims they handle. All of it is now online and they would be taking an enormous chance to lie to you. If you aren’t fully confident they are telling you the truth—“Google” the firm name. Trust us, the IWCC call sheets come up on www.google.com and it is pretty easy to figure out who represents who. If you need more tips, send a reply.

C. Total and permanent disability and wage loss claims have to be lifetime benefits and widow(er)s “need” WC benefits for 25 years is another monster Illinois WC myth. Guess what? Most states across the United States put caps on such benefits. What even the most ardent claimant lawyer will readily admit is very, very few T&P, wage loss or death claims are paid out as the Act clearly contemplates—on a weekly basis. Case after case is “lumped out” or paid on a one-time, one-check basis to allow the injured worker or the widow(er) to get their hands on the money faster. We still love to report the major Illinois Plaintiff-Petitioner firm that trumpets the fact they got not one but two life-changing wage loss differential recoveries for the same claimant.

We were also told by a veteran claims manager in Dallas last year that Illinois truly stands alone in providing such benefits for the supposed “lifetime” or 25-year basis. Almost every state she was aware of capped such benefits at a period of approximately 10-15 or even 20 years. She felt the lifetime or 25-year cap was one of the obvious reasons Illinois WC costs and underwriting were so totally out of whack with every surrounding state. As we have told all of you, the projected cost of most total and permanent disability, wage loss and death claims was now moving well into seven-figures to be multi-million dollar risks. We are confident more and more businesses and excess carriers will run screaming from this state when they see the potential exposures that we are certain are coming.

In summary, as the lifetime value of a T&P, wage loss or death case doesn’t normally provide any “comfort” or true protection for the injured worker or widow(er), it is just the starting point to create the lump sum value. If we are going to keep raising rates on a twice-annual basis, as we have done since the 1980’s, we suggest the legislature be called upon to cap the benefits for the period that would

Actually provide weekly protection to the worker or their family or

Simply provide a reasonable lump sum value in the right situation.

Either way, you should only be allowed to get one such settlement every lifetime.

D. The only way to “reform” workers’ compensation law and practice is in the legislature is another myth we want the various Republican candidates and all of our business readers to better understand. While the changes we outline in letter C above would have to come from the legislature, the vast majority of work comp law and practice in this state have little to do with legislation. We assert almost every major development in Illinois workers’ compensation law and practice came from either the reviewing courts or the Commission or both. We truly feel the “plain English” interpretation of the Workers’ Compensation Act is the exception and not the rule.

We want our readers to understand almost every major facet of Illinois workers’ comp law and practice has been molded and changed and sometimes changed again without any legislative amendments. Even the 2005 Amendments to the Workers’ Compensation Act aren’t being enforced in the fashion explained to the members of the business community who negotiated the deal—everything is molded to fit.

So we ask the rhetorical questions:

• Do you want work to be “the” cause of accidental injury and not just “a” cause—all you need are Commissioners who agree with that view, the statute doesn’t have to change at a bit.
• Do you want AMA Guidelines to determine permanency?—there is no rule against it; you just need the Commission to start using it.
• Do you want overtime kept out of the average weekly wage?—if the Commission started doing so, it would probably start to happen, if they won’t, good luck trying to write a law they will enforce.
• Do you want fewer penalty and attorney fee awards?—all the Commission has to do is stop writing them or provide clear guidelines on when to expect them.
• Do you want police officers who turn around to answer questions at work to not be able to get workers’ comp benefits as if they had an “accident?”—you simply need Commissioners who won’t award such claims.