Keefe, Campbell & Associates, LLC

Editor’s comment: In what we consider a fascinating development, Governor Blagojevich has already appointed Ms. Masters who is not an attorney but has demonstrated she is a capable administrator. We are happy to see the secret executive search team located a suitable replacement. It would appear the representatives of Illinois business on the Workers’ Compensation Advisory Board already signed off on the appointment. We do not expect Ms. Masters to be as active or challenging as chairperson as her predecessor who came from the same southern Illinois political slipstream.

It is also fascinating to learn Ms. Masters’ photo and resume is on the web at http://www.linkedin.com/in/amymasters#h150-371. If you have time to look you will note she has the support of southern Illinois Representative Jay Hoffman and Ms. Masters used to work for Speaker Michael Madigan. It is not common to see the political pedigree of any candidate for IWCC posts and we hope this concept continues.

We also assume Ms. Masters may be one of the leaders of the “tech” revolution that has brought the Commission and its website from the Stone Age to this century in computer competence. If that is so, we hope she continues the effort. We also hope she starts to cut the IWCC budget that more than doubled under her predecessor. And we assure her we will applaud anything that refocuses the Commission on fairness, impartiality and WC fraud-busting.

Along with the appointment of Ms. Masters, Bertha E. Parker will serve as Acting Secretary during the time Masters serves as Acting Chairman. While she didn’t open the place, Secretary Parker has worked at the Commission since 1978 when gasoline was 68 cents a gallon. Ms. Parker most recently managed the Arbitration Support Staff and will continue to oversee that area—she also will get served with process, albeit in her official capacity, when appeals are taken from the Commission to the circuit courts.

For our readers who have been asking, the Chicago arbitrator calendars are online. Future Will County Circuit Court Judge Paula Gomora still is listed for the December 2008 call and trial dates—someone clearly will handle her call, as we are advised she is no longer at the IWCC. Former Chairperson Gerald Jutila has his own status call and trial dates for December 2008 and all of 2009.

While we always wonder why they use the term “acting” in such appointments, we wish Ms. Masters and Ms. Parker all the best in their challenging new posts. If you have thoughts or comments on these new appointments, please send a reply.

Editor’s comment: It has been a blurring week of meetings and symposiums and partying at a cool desert oasis in Nevada. Here are some of the lead topics:

Massive Job Program may boost U.S. economy.

President-elect Barack Obama’s job program was a big point of discussion in legal circles where lawyers are getting laid off in droves. Mr. Obama has to turn around the U.S. job market to be successful in his first term. He has outlined a non-specific plan to create 2.5 million jobs with public works programs that will rebuild roads and bridges, modernize schools and create alternative energy sources. The new recovery plan being developed aims to create millions of new jobs by January 2011. Mr. Obama wants Congress to approve it quickly so he can sign it shortly after his inauguration. We applaud these efforts.

Conservatives remain concerned about the mounting U.S. debt that our current administration rode to over $10 trillion dollars—we have no idea where the money is going to come from for this major jobs push but you can bet the minting/printing presses will be working overtime. It is unusual to hope for fiscal responsibility from the Democrats after having watched the current administration make a mockery of the concept for the last eight years. If we have to raise taxes to pay off this debt, we should raise taxes to do so and not mortgage the future of this country.

B. Fitness for duty exams and wellness programs.

1. Can you as an employer require initial and regular, periodic fitness for duty exams? The short answer from the gurus at the convention was yes but you need to exercise caution and create needed documentation.

If you have safety concerns about someone’s fitness to perform work, you should be able to ask them to submit to periodic or return to work testing to insure the worker isn’t a health and safety risk to themselves or others. We recommend to all of our clients that you have a clear focus on when you will require such testing. Like drug testing, it has to be done in a neutral and non-discriminatory fashion. You also have to balance the cost against the risks involved in not testing.

What happens if you lack objective evidence of health and safety risks and your safety concerns regarding particular individuals are based on limited information and/or speculation? If your company has safety-sensitive positions, you should be able to justify periodic across-the-board examinations as long as you apply them evenly to everyone in the safety-sensitive positions.

ADAAA may present some concerns but should not block updated fitness for duty exams. Please remember the sweeping changes brought about by the ADAAA will go into effect on January 1, 2009 or 37 days from today. There are lawful ways for you to get this information:

• You may institute an across-the-board, post-offer medical exam requirement for all job applicants in safety-sensitive positions.
• If you have sufficient current factual or medical evidence suggesting an employee poses a threat to health and safety, you may investigate and ask the individual disability-related questions or require a periodic medical exam.

Under ADAAA, please note you may be required to reasonably accommodate restrictions for workers who have physical limitations first disclosed in the examination.

According to the EEOC, such periodic medical exams for safety positions are permissible when they are “narrowly tailored to address specific job-related concerns and are shown to be consistent with business necessity.” Such a statement highlights the necessity for documentation, documentation and more documentation so you can defend the decision to require a fitness for duty exam.

Moreover, in certain industries such as trucking or the railroad industry, periodic fitness for duty examinations are mandated by federal law or regulations. In such cases, it is a defense to a charge of discrimination under the ADAAA that a challenged action is required or necessitated by another federal law or regulation. If you have questions or concerns about fitness for duty examinations, send a reply.

Wellness programs

Corporate wellness was a continuing issue of discussion at the convention. We encourage all of our clients to work on getting their employees to be health conscious. We feel corporate wellness programs readily demonstrate a solid return on investment in reducing both group health care and workers’ comp costs. As one expert noted, there’s little downside—even small improvements make a marked difference. Healthier workers need less care and recover more quickly when care is required.

Please note it is possible for an Illinois employee to file a workers’ comp claim for injuries that occur during wellness programs. Our vote is to understand that risk from the get-go but understand wellness is better than worrying about an occasional injury and bogus claim. Remember, under Section 11 of the Illinois Workers’ Compensation Act, it may be problematic for a worker injured in a wellness program to get WC benefits. The best tool in such settings is a release confirming participation is voluntary and the employee is not “ordered or assigned” to participate. If you need such a release, send a reply and we will email it to you for your consideration.

Violence in the workplace

The Illinois Appellate Court ruled an unarmed security guard and her employer could not be held liable for terminated employee using a gun to get back into workplace, “going postal” and killing workers. While we extend our sympathy to the families of those killed, we strongly agree with the legal outcome and consider this ruling a “must read” for our security clients and similar companies. Unarmed security officers cannot have encompassing liability for random and unexpected violence.

In Aidroos, et. als, v. Vance Uniformed Protection Services and Diamond, (Nos. 1-06-2009 & 1-06-2126 October 31, 2008), the Appellate Court, First District ruled the trial court correctly rejected Plaintiffs’ claims the security company hired by Navistar to protect its Melrose Park facility had a duty to warn or protect them from one of the corporation’s discharged employees who came to the corporation’s offices and killed four people and wounded others prior to killing himself. Navistar hired Defendant Vance Uniformed Protection Services Inc. to provide unarmed, uniformed security-officer service. Vance employed Defendant Diamond as a security officer at Navistar’s Melrose Park facility, where there was no history of any workplace violence.

The terminated employee had been fired for theft and later came to the security gate with a gun hidden in a golf bag, claiming to be a delivery man. When the security guard turned around, the gunman put the gun to her head and forced her to let him into the facility. Once there, he murdered a number of workers and then killed himself.

Defense observers were concerned about the potential outcome due to the fact Plaintiffs were represented by a major Chicago Plaintiff law firm with strong political ties.

The decision is on the web at http://www.state.il.us/court/OPINIONS/AppellateCourt/2008/1stDistrict/October/1062009.pdf.

More violence in the workplace

Can/should employers be allowed to ban guns from cars parked on their property? There is an Oklahoma law that allows employees to bring guns to work and leave them in their cars. These types of laws pit the rights of gun owners against the rights of private property owners, in this case, employers to control their own property.

The Oklahoma law blocks employers from the ability to bar employees and other visitors from keeping guns in locked cars on their property, but a federal district court issued a permanent injunction against the law’s enforcement on the basis the law was preempted by employer obligations to maintain a safe workplace under the Occupational Safety and Health Act. Most legal observers consider the use of the OSHA regs as a creative method to side-step the requirements of the state law.

The case does involve the Oklahoma operations of ConocoPhillips, a refining company that has a large Illinois presence. We understand the controversy arose when a number of workers of a different company were fired when it was learned they had weapons in their cars. There are concerns that, if the Oklahoma law is not blocked, many states may follow suit and pass such laws. Please also understand the litigation about who is liable for injuries when a worker takes a gun out of a trunk on company grounds and starts to use it for either legal or illegal purposes could continue for decades to come.

The main concern voiced by most health, risk and safety managers is balancing an employee’s right to try to protect themselves in relation to the problems caused by having lots of guns on and/or near the workplace. Most folks feel you can’t truly “protect” yourself from a sudden and random action by a lunatic by having to first learn of the attack and then go out to your car to unlock it, get the gun and come back to stop an armed threat.

The other related problem caused by this scenario is local police and SWAT teams come to the workplace in response to calls about an armed lunatic expecting to have to seriously injure or kill the perpetrator. There is a dramatically heightened risk of an attack on an otherwise innocent worker if he or she has decided to arm themselves in a layperson’s effort to stop the initial attack. And most safety and risk managers simply don’t want guns in the workplace for about five hundred reasons.

The case being argued is ConocoPhillips, et. als. v. C. Henry (case number 07-5166). It won’t be decided by the Federal Appellate Court until next year. Please send your thoughts and comments.

Editor’s comment: Illinois, which may be the “bluest” of the United States, will continue to have a “public” Commission member who is very, very liberal.

We salute the Illinois State Chamber of Commerce Employment Law Council that challenged the reappointment of Commissioner Dauphin as a member of the Illinois Workers’ Compensation Commission. Dauphin’s reappointment was considered and eventually approved by the Senate Executive Appointments Committee and the full Senate last week.

Through the State Chamber’s Workers’ Compensation Committee and other sources, they note Commissioner Dauphin had been acting nothing like a middle-ground “public” member of the Commission panel she serves on. An analysis of nearly 300 of her decisions the past year indicated the vast majority of the time she joined in lockstep with the labor commissioner and rarely joined the management commissioner unless it was a unanimous decision of her panel.

The Chamber’s researchers found two cases where Commissioner Dauphin actually dissented from a decision that the labor and management commissioners agreed on!

At their request, questions also were raised for the Senate Committee about her reappointment being reviewed by the Workers’ Compensation Advisory Board as required by law. The Advisory Board had not considered her reappointment prior to the Governor’s reappointment message.

We point out to all our readers and to Commissioner Dauphin; it doesn’t help either side to have a Commission that is totally one-sided. Fairness and an even-handed approach to outcomes is what Illinois business seeks of our administrators.

Please note we still consider the Illinois State Chamber of Commerce to be the main force for Illinois employers interested in working for reform in workers’ compensation. Please consider joining the State Chamber and their Employment Law Council. And as we have advised our readers, the next true chance to get any real change in the makeup of the Commission will be in the fall of 2010. We are about 100 weeks away from that election.

Editor’s comment: We have heard the cry from hundreds of workers, “I have worked hard all my life and now I am injured from it.” As defense attorneys, we despise the claim “repetitive work” is a supposed “cause” of disc degeneration and back problems—the opposite conclusion may be more scientifically accurate. Workers who work regularly and lift properly may be healthier and have stronger discs than workers who lead more sedentary lifestyles. What could be a better comparison than birth twins?

To attack this truly non-scientific concept, researchers at the University of Alberta studied the effects of work on twins and reached some surprising conclusions. Michele Crites Battié, Ph.D. from the University of Alberta’s Faculty of Rehabilitation Medicine was the lead researcher in a long-term project they called the Twin Spine Study. Dr. Battié learned that when it comes to the world of disc degeneration, one should move slowly.

Dr. Battié: “In the last half-century the predominant model of disc degeneration was wear and tear from environmental influences, such as heavy lifting, smoking and exposure to whole-body vibration from motorized vehicles. Yet, there were conflicting findings about the effects of these environmental influences. In many epidemiological studies it is difficult to isolate the effect of a particular factor to determine whether it really contributes to an outcome of interest, in this case disc degeneration. With this in mind, we set out to conduct highly controlled studies.”

The Twin Spine Study, which began in 1991, was an international effort that grew to include researchers from the U.S., Finland, Canada, and the UK. Dr. Battié explains, “[w]e started off with a series of studies of identical twins who were exposure discordant, meaning that one twin was heavily exposed to the factor of interest, such as smoking or heavy lifting, and the other twin was not. Otherwise, the pairs of twins were the same gender, had the same genes, and were raised in the same childhood environment, so they shared many early exposures. It turned out that whether someone had a sedentary, light, or heavy physical job like logging actually had quite a modest effect on disc degeneration, even when exposed to these conditions over a lifetime. In one study we looked at 45 pairs of identical twins, with one twin of each pair having spent much more time driving (the issue being whole body vibration). Our results did not reflect any significant difference between twins where one drove and the other did not.”

As the researchers gathered around the MRIs from these early studies, they were particularly struck by one thing, says Dr. Battié. “We were quite surprised by the strong resemblance in disc degeneration between twin siblings, not only in the degree of degeneration, but also in the types of findings and locations involved. My colleagues and I then became very interested in exploring a genetic component to disc degeneration. To this end, we collected data on non-identical twins (same sex) who were raised in the same household. Thus most environmental exposures were similar as in the case of the identical twins. However, non-identical twins share only 50% of their genes on average. We found a very substantial genetic influence on disc degeneration in the lumbar spine. Also, the results of one of the recent studies indicate that the effect of factors such as body weight and muscle strength on disc degeneration, although modest, may be greater than that of physical exposures. Furthermore, regularly experienced physical loading may actually have a beneficial effect on disc degeneration.”

Dr. Battié continues, “Using both monozygotic and dizygotic twins we were able to conduct ‘classic’ twin studies on disc degeneration. Through these studies we were able to estimate the overall genetic contribution to disc degeneration and back pain history. We also looked at whether disc degeneration is a pathway through which genes influence back pain. Making this all more complex is that pain is subjective and difficult to measure. However, we did find evidence that disc degeneration is one pathway through which genes influence back pain, but it is only a small part of the back pain story.”

Getting to the nucleus of the issue, Dr. Battié states, “We looked at disc desiccation (drying), a primary aspect of disc degeneration, and found that routine loading is actually associated with less [drying]. So it may be that the disc isn’t totally unlike other musculoskeletal structures, but it is responding in a positive way to routine loading. It is sort of like a training effect. If you load a musculoskeletal structure gradually and routinely, it will strengthen, as is the case with muscles, tendons, and bones. Also, various environmental and behavioral exposures appear to have somewhat disparate effects on different signs of disc degeneration, such as disc desiccation and narrowing. In the past it was often thought that greater physical loading was bad for the disc across the board.”

In the future, says Dr. Battié, the field will have to expand its thinking beyond a biomechanical or simple wear and tear model of disc degeneration. “Going forward it will be important to understand that while we’ve been focused for decades on biomechanical factors as the cause of back problems, and the place to look for the answer, if we want to make headway we’ve got to broaden our approach to the problem. We also need to look in new ways at biomechanical factors; for example, not just looking at heavy or light physical demands, but at their interactions with other factors, such as genetics.”

As many things do, these new ideas about the origins of disc degeneration could involve a bit of a butterfly effect…one “small” change has implications for wider society. “There are definitely policy implications to this research,” states Dr. Battié. “Back pain was once attributed to degenerative findings and degenerative findings were attributed to work or leisure time physical demands. This implied an injury model―physical demands cause structural damage, which in turn leads to pain. Our data, however, suggests that the injury model may not be the most appropriate model for back pain and the degenerative changes seen on spine imaging. Some of the systems that operate on an injury model, such as North American workers’ compensation systems, will have to grapple with this issue. The bottom line is that if we don’t have a reasonable model or understanding of the problem we’ll never have a good solution.”

And with such a solid foundation, the team of North American and European researchers is marching forward. “We are embarking on research to identify the specific genes and biological mechanisms that influence disc degeneration and back pain problems, and we aim to clarify the role of environmental factors. It is also important to gain a sense of how degeneration occurs over time, and tease out what represents the natural progression and what can lead to back pain.”

Their research is continuing and we will continue to watch and report updated results. This is based on an article from the web at: http://ryortho.com/NEWSSHORTS/volume4/issue35/11-04-08-Double.html.

Please reply with your thoughts and comments.

Editor’s comment: In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Act, Title 18, United States Code Sections 1961-1968. At the time, Congress’ goal was to eliminate the ill-affects of organized crime on the nation’s economy. To put it bluntly, RICO was intended to destroy the Mafia. Throughout the 1970′s, RICO’s intended purpose and its use ran parallel to each other. Seldom was RICO used outside of the context of the Mafia, and civil claims under RICO were simply not brought.

In the 1980′s, however, Plaintiff lawyers noticed section 1964(c) of the RICO Act, which allows civil claims to be brought by any person injured in their business or property by reason of a RICO violation. Any person who succeeded in establishing a civil RICO claim would automatically receive judgment in the amount of three times actual damages and would be awarded their costs and attorneys’ fees. The financial windfall available under RICO inspired lawyers across the nation, and by the late 1980′s, RICO was a commonly asserted claim in federal court. Everyone was trying to depict civil claims, such as common law fraud, product defect, and breach of contract as criminal wrongdoing, which would in turn enable the filing of a civil RICO action. RICO’s broad application was the result of Congress’ inclusion of mail and wire fraud as two crimes upon which a RICO claim could be brought. Given the activities that had historically been criminally prosecuted under mail and wire fraud statutes, it was not difficult for creative civil attorneys to depict practically any wrongdoing as mail or wire fraud.

During the 1990′s, the federal courts, guided by the United States Supreme Court, engaged in a concerted effort to limit the scope of RICO in the civil context. As a result of this effort, civil litigants must jump many hurdles and avoid many pitfalls before they can expect the financial windfall available under RICO, and RICO has become one of the most complicated and unpredictable areas of the law. Today, RICO is almost never applied to the Mafia. Instead, it is somewhat randomly applied to individuals, businesses, political protest groups, and terrorist organizations. In short, a RICO claim can arise in almost any context.

Last week, the Sixth Circuit Court of Appeals handed down a stunning decision. For the first time in U.S. history, a federal court ruled injured workers may pursue civil claims for damages under RICO based on an alleged scheme to “wrongfully deny” the workers’ claims for workers compensation benefits. In Brown v. Cassens Transport Co., (October 23, 2008 No. 05-2089), the Court considered workers’ compensation claims by a group of six injured workers who claimed their employer, the TPA that administered their workers compensation claims and an examining physician, “employed mail and wire fraud in a scheme to deny them worker’s compensation benefits.” More specifically, the injured workers alleged the employer and TPA deliberately selected and paid supposedly unqualified doctors to give allegedly fraudulent medical opinions that would support denial of worker’s compensation benefits, and defendants ignored other medical evidence in denying benefits.

The court, in reversing a district court decision dismissing the case, ruled the workers pled a pattern of racketeering activity based on commonalities of the defendants’ acts:

(1) The common purpose of reducing the employer’s payment obligations towards worker’s compensation benefits by fraudulently denying worker’s compensation benefits to which the employees are lawfully entitled;

(2) The common result of denying worker’s compensation benefits to certain employees who are entitled to such benefits under Michigan law;

(3) Common participants including worker’s compensation officials at the employer and the TPA along with a doctor who the plaintiffs allege, with regard to some of the predicate acts, fraudulently recommended ineligibility of benefits at the request of the employer and TPA;

(4) Common victims in the injured employees eligible for but wrongfully denied worker’s compensation benefits; and

(5) Similar methods of commission, the fraudulent application of legal standards to wrongfully deny worker’s compensation benefits to eligible employees.

The court further held Defendants’ predicate acts were continuous under both closed or open-ended theories because they had gone on for a time span “well over three years” and were alleged to have been Defendants’ standard way of doing business: “fraudulently denying benefits to which the employees are entitled through the use of fraudulent communications by mail and wire.” We point out an employee is not “entitled” to workers’ comp benefits unless and until an arbitrator rules you are.

The court also addressed two other RICO issues. First, detrimental reliance by the injured workers on defendants’ allegedly fraudulent misrepresentations was not an element of a civil RICO claim based on a Supreme Court ruling in Bridge v. Phoenix Bond & Indem. Co., (No. 07-210 June 9, 2008). Second, the workers pled a compensable RICO injury because “[d]efendants’ fraudulent acts were a ‘substantial and foreseeable cause’ of the injuries alleged by Plaintiffs: the deprivation of their workers’ compensation benefits and expenses for attorney fees and medical care.”

Ouch. We remain amazed, dazed and confused by this ruling. Initially, we want all of our readers to note this is an attack on a long-time Illinois employer that doesn’t need these unnecessary costs, legal fees and exposures while doing work in Michigan. We laughingly note how the Michigan Governor’s office is literally begging employers to come to Michigan—this case represents a giant “Go Back” sign to companies from outside Michigan who might consider setting up operations there.

Second, we want everyone to understand we don’t feel there is any need to bring such matters to a federal forum. The respective state administrative agencies do a modest to marvelous job making sure injured workers are protected in their workers’ compensation administrative bodies. If an injured worker has a complaint with denial of a claim, they should bring it to the correct state body and get relief to which they may be entitled under their Act. As we have urged everyone in the Illinois system, if hearings and rulings are ramped up and resolved in a timely manner, employees shouldn’t be able to complain about unnecessary delays.

Third, please also remember the burden of proof in most WC systems remains on the injured worker—this RICO action clearly shifts that burden to the employer, its TPA and examining physician. As academicians, we assert an injury isn’t “covered” under workers’ compensation unless and until the employee makes the claim and an Arbitrator makes a ruling which agrees with the employee’s assertions. Trust us; thousands of workers every day of every year waive workers’ compensation claims and benefits for hundreds of reasons—there is no duty in any WC Act we are aware of that forces the employer to provide benefits an injured worker doesn’t seek nor want. We also note there are lots of solid claimant lawyers out there who know the ropes and navigate questionable or difficult claims to a proper conclusion—is it “fraud” if an employer doesn’t anticipate every conceivable theory or concept that may lead an injured worker to get benefits?

Fourth, we hate the presumption brought to every aspect of the pleadings in this case that summarily defines it as “fraud” when any workers’ compensation claim is ever denied. It is not illegal and clearly not “fraud” to deny a workers’ compensation claim. We caution the many Petitioners’ attorneys who are zealots to remember you won’t typically be able to get work from injured workers with rapidly accepted claims—claimants don’t need lawyers when their claims are quickly accepted and all benefits are paid in a timely fashion. If Plaintiff lawyers start to routinely threaten every employer, every TPA and every doctor in the WC systems across the U.S. with monster, class-action-type RICO claims and the concomitant costs, treble damages and double attorney’s fees, you are going to put an enormous industry-wide emphasis on rapidly accepting even questionable claims and driving everyone away from lawyers on both sides. Is that what you want?

Fifth, please remember U.S. business can counterattack. We understand three of these Plaintiffs lost their workers’ compensation claims before the Michigan WC board. Could this employer counter-sue under RICO for their arguably fraudulent claims?

We caution everyone to understand this ruling merely found the federal claim under RICO would not be dismissed and will proceed to hearing, if it is not otherwise dismissed or settled. We will continue to track the outcome and to the extent possible, report it to all of you. We appreciate your thoughts, comments and concerns about this ruling.

Editor’s comment: Plaintiff alleged permanent disability and inability to work due to a workplace injury on the railroad. His subsequent intentional contemptuous disregard for discovery deadlines, improper interference with evidence, and intentional deceptive and false statements constituted grounds for dismissal. Any subsequent gasp of righteous indignation heard did not emanate from the defense bar.

In Negrete v. National Railroad Passenger Corporation (Amtrak), (No. 07-3287 October 27, 2008), a male track-repair worker (Plaintiff) sued his employer (Defendant) in the United States District Court for the Northern District of Illinois, Eastern Division. He alleged permanent disability as a result of a fall off a welding truck. Defendant conducted an investigation into the allegations in Plaintiff’s law suit to determine the extent of Plaintiff’s injury and whether he was able to work. In response to Defendant’s request for the names of each treating doctor, Plaintiff provided only those names of the doctors whose findings helped his case and withheld the names of those who found him able to work.

In response to Defendant’s request for medical records kept by the Railroad Retirement Board (RRB), an entity which will only disclose records to the patient, Plaintiff provided 12 pages as a “complete record.” In response to Defendant’s Motion to Compel, Plaintiff produced an additional 236 pages of documents, including formerly undisclosed documents, as a complete record. The 236 pages did not include the 12 pages formerly produced.

In response to the U.S. District Court’s order to obtain and produce a sealed copy of his RRB file, Plaintiff submitted an envelope which purported to be the file. However, the envelope had been opened twice prior to its production.

At his deposition Plaintiff testified he had no post-accident income. He later admitted owing an apartment building with two tenants. Plaintiff testified each tenant paid him $450.00 per month in rent. However, Plaintiff’s tax returns from 2002 through 2005 established at least $160,000.00 in income from three apartment buildings. Plaintiff’s own rental receipt book indicated he received $650.00 per month from each tenant. Additional investigation established Plaintiff had 15 tenants. The District Court found Plaintiff’s hiding of his rental income relevant because he alleged an inability to earn a living due to his injury.

In addition, Plaintiff alleged an inability to perform even minor housework. However, his tenants told an investigator since the accident Plaintiff had personally “painted, changed windows, repaired a floor, laid tile, and installed a new toilet.” The District Court noted at his deposition Plaintiff testified his brother had maintained the apartments “in exchange for beer.” Finally, the District Court noted Plaintiff happened to miss 21 discovery deadlines. The District Court dismissed Plaintiff’s lawsuit under FRCP 37(b)(2)(A)(v) as a sanction for discovery violations. Plaintiff appealed.

The U.S. Court of Appeals for the Seventh Circuit upheld the District Court’s dismissal. The Appellate Court noted dismissal is a “drastic” penalty but in this case was no abuse of discretion in light of Plaintiff’s “repeated, willful efforts to hide evidence.” Plaintiff argued his mistakes were “innocent.” The Appellate Court found him a “poor liar.” In addition, Plaintiff argued dismissal was too harsh a penalty because he was “uneducated” and “lied only about collateral issues.” The Appellate Court found “it does not take a graduate degree to understand that is it unacceptable to hide evidence and lie . . . “ There were no dissenting opinions.

This article was researched and written by Matthew A. Wrigley, J.D. Please direct comments or inquiries to Matt at mwrigley@keefe-law.com.

Editor’s comment: We were surprised to hear former Chairman Dennis Ruth made a comment at a state-wide presentation about wanting open disclosure of defense counsel fees. His point was claimant attorneys had to disclose their fees to the Arbitrators so why shouldn’t defense attorneys? In response to Chairman Ruth’s unprecedented suggestion, one pundit suggested all WC attorneys across the state should have to post their tax returns on the web so we can see who makes the real money in workers’ comp and who doesn’t.

The Florida claim we mention began with a claimant who was a certified nursing assistant for a health care provider in Florida. While helping to lift a patient, she allegedly suffered a uterine prolapse, which required a hysterectomy. She filed for workers compensation benefits, but her claim was denied because the carrier felt the condition was not work-related. We assure all of you we agree with denial.

Based upon a favorable independent medical exam, claimant prevailed on appeal and was awarded $3,244.21. The award was not the issue—the claimant attorney filed an appeal of the award of attorney fees to the Florida Supreme Court.

Under the most recent reforms to the Florida comp statute, attorneys are supposed to be paid according to a very simple schedule. Based upon the award of $3,244.41, her attorney would collect $649 under the schedule. Most defense observers would suggest the attorney think carefully before taking such a tenuous claim. The attorney then claimed 80 hours of legal work went into the file and counsel complained it would be an hourly rate of $8.11.

The Florida Supreme Court then went to a long-time Florida WC tradition. They found “ambiguity in the statute.” Having looked for and found “ambiguity” in what seems to be a very clear fee schedule, the Supreme Court then began to try to find some way to increase claimant counsel’s fees. In rooting around for a strategy, the court noted defense attorneys billed $16,000—we don’t agree such fees should be disclosed as public record and broadcast on the web. The court then reasoned if you multiply the claimed 80 hours of work performed by claimant’s attorney with the court’s view of a “usual and customary fee of $200 per hour,” the resulting fee would be about $16,000.

So what did they do? The court ordered the insurance carrier to not only pay their own defense attorney’s fees; they also ordered the carrier to pay claimant’s attorney $16,000 in fees for securing a $3,244 settlement! So the resolution of this quizzical and disputed claim results in the carrier paying $3,244.41 to claimant and $32,000 in attorney’s fees!! The Florida insurance community is naturally buzzing with outrages at such an outcome.

There are so many things unwise about such a ruling and the legislation that fostered it, it boggles the mind. First and foremost, we point out the vast majority of claimant attorneys make lots more money that defense attorneys so the courts don’t need to “even the playing field” by trying to award equal fees to claimant attorneys when they take on marginal workers’ compensation claims. There is an adage in workers’ compensation that you make $500 per hour on the average as a claimant attorney and $100 per hour as a defense attorney. Those economics make some of our defense competitors “cross-over” to quietly do both defense and claimant work and causes problems with their loyalty to the defense side of the force in complex legal battles.

How do claimant attorneys make bigger bucks? Well, please understand many litigated claims don’t have defense attorneys. The cases are settled by claimant counsels directly with the insurance adjusters. The claimant attorneys and adjusters love this setting because there is no “interference” from defense attorneys who sometimes worry about the law and rules. The claimant attorneys make millions in such settings and clearly don’t expend thousands of hours in doing so.

Even when the matter is in litigation, claimant attorneys may also settle major claims in many states and get very substantial fees with very, very little time expended. We know of one case where a claimant attorney got a single phone call from a claimant, signed him up via mail, made one call to an adjuster and settled a wage loss claim and got a fee of $25,000 in about a week. When that happens, in contrast to the silly claim about making $8.11 per hour above, the attorney isn’t going to the courts or anywhere else to complain his fees are too high.

Next, in Illinois and most states, something has to be done about claimant attorneys taking what we call a “Seven Dwarfs” claim—workers compensation claims that are dopey, goofy, sleepy and silly. As we have pointed out many times, it doesn’t cost anything to file even the most bogus and unfounded workers’ compensation claim. Right now, KC&A has at least five pending hotly disputed WC death claims that range from questionable to completely unfounded. By that we mean, we are sure claimant is dead but we have no idea, none, why claimant’s counsel feels the death might be in any way related to work. What is happening with all five of these claims is the “status call dance” that infuriates our defense clients.

The “status call dance” begins with defense counsel writing letters to claimant counsels for several years asking for medical and/or accident documentation. The cases roll and roll on the Illinois status calls until the Arbitrators start to get firm about continuances and demand claimant counsel take some definitive action, such as disclosing experts. Please also understand disputed death claims where no benefits are paid are arguably “emergency” hearings at every status call because there is a widow(er) and possibly children not receiving benefits. We point out to our readers; competent claimant attorneys should not even file a death claim until they have expert medical opinions in place. As defense attorneys have to travel to and attend hearings across the state, we have to bill our clients and ask them to be patient while the claims age badly.

When and if our opponents get solid to slippery documentation, we can then try to close the files via settlement or hearing. Please note we sometimes settle disputed death claims for $3,200 like the uterine prolapse claim above. But if we have billed $5-10,000 to track the file for the years claimant’s counsel fools around doing nothing and we then have to get defense experts and depose them, we assure our readers our defense clients aren’t happy with us and they are furious with opposing counsel. We assure you they would be even more furious to have to pay attorneys on both sides to simply appear in court repeatedly when nothing but nothing is happening other than claimant’s counsel is not prepared and shouldn’t have brought the claim until it was ready.

So we ask the question, is the Florida Supreme Court ruling bad for workers comp? Some observers note claimant attorneys might reject some small cases and this may be felt to be bad for claimants. We point out this is a critical aspect of keeping workers’ compensation costs down—we don’t need dopey, goofy and silly claims clogging the dockets so injured workers with bona fide claims have to wait. The more dumb claims we receive the more we want to ask our legislators to institute a filing fee so claimant attorneys have to have some rational basis to file and manage litigated claims. But whatever happens, it is a bad, bad idea to double-penalize insurance carriers for disputing questionable claims.

If you have questions or comments, please send a reply.

Editor’s comment: In a move that surprised his followers and Commission-watchers, former Chairman Jutila reported personal health reasons as the cause for leaving a post he held for just over thirty days. His resignation was immediate. There are at least 12 zillion rumors flying around and we aren’t going to publish any of them. We are confident Arbitrator Jutila will continue to bring his veteran view of the industry to his prior position.

The Chairman’s job pays just over $100K with benefits including a nice pension; all of it comes from fees and taxes levied on Illinois business. We searched the Central Management Services and Workers’ Compensation websites and note the job hasn’t yet been posted. Take our word for it, following longstanding Illinois hiring practices, it won’t be. We remain confident the secret forces that get to fill such posts will clandestinely meet and surreptitiously select from an undisclosed list. You won’t have to worry about an open executive search committee as many states do to get a nationally renowned candidate who has demonstrated expertise—somebody’s cousin’s brother’s uncle will more probably get the nod. As we have said in the past, Illinois business won’t get a say in such decisions until they make demand in the political arena and force it to happen.

The Commission is closed on November 11 in honor of Veteran’s Day. If you have thoughts and comments about the Chairman’s position or the selection process, send a reply.

Editor’s comment: We salute President-elect Barack Obama who won a tidy victory over his Republican challenger. We are also happy his party didn’t get a super-majority so both sides will remain engaged in the current crisis facing all of us.

We are certain Mr. Obama brings enormous intellect and drive to the Office of the President. We all trust he is up to the daunting task of righting the U.S. economy that may sink or swim before he gets sworn in on January 20. We are confident the need to carefully help the U.S. economy is his first and most abiding goal. It is our strong hope he defers the pro-union and anti-business laws that may be streaming onto his desk—U.S. business needs a break in every way and they don’t need the misnamed “Employee Free Choice Act” and other similar laws. And we agree strongly with one of our readers who hopes the government will follow the model of Franklin Roosevelt and start a “roads and bridges” program to put U.S. workers back to work in solid and reasonably paid jobs while improving our economy. We consider that concept strongly preferable to misspending way too much money in the continued military occupation of Arab lands the current administration insists on calling a “war.”

We agree strongly with mercurial stock picker Jim Cramer who points out “jobs trump everything” in economic stimulus packages. It doesn’t matter how low mortgage rates and gas prices drop; if you don’t have a job, you can’t afford to buy. With unemployment rates rising every day, we are watching Christmas retail sales to see if the economy gets a much-needed boost or slumps even further. Our vote for all human resources, insurance, risk and safety managers, if you have been waiting for the right time to make any major purchase, please buy American and buy now.

For those of us in the Illinois workers’ compensation and employment law industry, here are election results of note:

A. Democrat Pat Rogers defeated Republican Maureen H. Masterson-Pulia for the Fourth Subcircuit Schultz vacancy. While we hoped Arbitrator Pulia would be able to rise to the Circuit Court bench, we remain happy to have someone as sharp and as smart in her continuing role as an Arbitrator. We are confident she got the same short-end of the stick the larger legal community routinely hands veteran and capable workers’ compensation Arbitrators and lawyers. If you want to read her analysis of the topic, go to http://www.chicagotribune.com/news/opinion/letters/chi-081021judge_briefs,0,3369157.story.

B. Arbitrator Paula A. Gomora won her race to become a Judge of the Circuit Court for the 12th Judicial District in a more than 2-to-1 margin over Derek W. Ewanic. We understand Arbitrator Gomora is leaving the Commission before the end of November. We wish her all the best in her return to the bench.

C. In southern Illinois, risk and safety manager Dwight Kay lost his race against Jay Hoffman for the 112th District seat. We salute Dwight for his hard-fought efforts in trying to stem the tide in that part of Illinois.

D. Former IWCC chairman Dennis Ruth squeaked out a 100% victory for Circuit Court judge due to the absence of any opponent. We are confident any number of Commission folks are happy to see he will be working anywhere but at the Commission. We wish him all the best in his new challenge.

If you have thoughts and comments about the election, please send a reply.

Editor’s comment: The first thing an adjuster must do when a new claim has been made is to evaluate whether the loss is covered by workers’ compensation law (versus general liability or some other common law or statutory remedy). If so, the next inquiry is whether Illinois workers’ compensation law applies versus the law of some other state. Finally, if the case is properly an Illinois workers’ compensation claim, the adjuster must determine whether the policy in force at the time of the accident or disability covers the particular loss alleged.

A. Is this a workers’ compensation claim?

This basic question is often overlooked. The assumption is that if a workers’ compensation claim is filed, the case necessarily involves a loss that should be compensated under workers’ compensation law. However, in order to recover benefits under workers’ compensation law, the claimant must be at or close to work and “working” to obtain benefits. The traditional WC injury occurs when the employee is injured while incurring risks which they only incur at work vis a vis the risks of daily life and discourse. If it can be established that the accident or disability occurred outside the employment or as a result of a risk of everyday life (regardless of work), the claim for workers’ compensation benefits should be denied.

One exception to the general rule above is the “traveling employee” rule. Claims involving employees who are traveling on a special mission for their employers are said to be protected by workers’ compensation coverage for all activities they could reasonably be expected to partake in while on the road.

Also, it is important to understand that the employer and its carrier and TPA have in some instances an “‘option” with regard to payment of benefits under either workers’ compensation or general liability. For example, if an employer has an employee become injured as a result of slipping on ice and snow while working on company property, it is possible that you could successfully deny the claim for workers’ compensation benefits only to then face a premises liability lawsuit which is possibly much more expensive to defend and potentially explosive due to the unpredictability of jury awards. The employer can opt not to fight the workers’ compensation claim and voluntarily pay workers’ compensation benefits which would block any third party claim against the employer if the employee knowingly accepts such benefits.

B. Illinois jurisdiction

Once it has been established the claim properly involves workers’ compensation benefits, the adjuster must determine whether Illinois is the proper jurisdiction for the claim to be heard. It is critical to understand a claimant could have a claim for workers’ compensation benefits in a multitude of states or jurisdictions. The employer should receive credit for any benefits paid in any state or under federal law under the full faith and credit clause of the United States Constitution. You should never have to double or triple pay benefits. But remember, payment of Illinois benefits does not block the filing of a claim in another state or under federal law, if applicable.

Illinois has proper jurisdiction if one of the following tests are met:

1. The accident occurs in Illinois. This concept applies even if the employee executed a written agreement prior to employment to only seek benefits in another state;

2. The accident occurs outside Illinois but the “contract for hire” was formed in Illinois. This is the tactic most commonly used to bring out of state claims into Illinois. The contract for hire is said to be finalized where the employee accepts the offer of employment which leads to a number of factual disputes;

3. Employment was principally localized in Illinois. This is utilized when the employer may have an out of state headquarters for employees who really perform the majority of their work in Illinois. This situation frequently occurs in trucking claims where the petitioner establishes the principal localization of work in Illinois by logs indicating the aggregate number of miles driven in Illinois versus other states.

Other factors sometimes cited by the Commission and the courts in jurisdiction claims include the state of petitioner’s residence, the location of the principal work site and the level of business conducted by the employer in Illinois. These concepts are not contained in the Illinois statute but seem to be utilized by the courts looking for factors considered in other areas of law involving jurisdictional fights.

C. Pre-injury agreements with regard to jurisdiction

Be wary of pre-injury agreements to have an employee select or agree to the jurisdiction where benefits will be received upon suffering an injury. Some employers with multi-state operations or traveling employees will routinely require employees to execute such agreements. These documents will generally be ignored in Illinois and we do not feel that they have any real legal effect. However, we are not aware of any prohibition with regard to such agreements. It is possible that an employee will not become aware of his or her ability to make a claim for benefits in Illinois or may honor they commitment and may act consistent with the agreement with regard to jurisdiction. If workers’ compensation benefits will be paid timely in the state that they have agreed to and a dispute does not arise, this concept may be successful.

D. Multi-state settlements

Also, when any workers’ compensation claim is settled, you may attempt to block the filing of other claims by indicating that the settlement is for claims in any state. This technique is employed more for the perception of the employee and his attorney than for its legal effect. For technical reasons which do not bear repetition here, this concept probably wouldn’t be legally effective. It does leave petitioner and his counsel with the sense that closure has been reached and may cause them to refrain from filing subsequent claims in other states.

E. Insurance Policy Coverage

The adjuster must also consider whether the specific policy written for the employer covers the loss. The date of accident or disability must fall within the dates of coverage although this issue becomes clouded in repetitive trauma claims where no specific incident is identified. It is not uncommon for two or three different insurance carriers to argue that the actual manifestation of injury occurred during a different carriers’ policy. If a coverage question is precipitated by the lapse of the workers’ compensation policy prior to the accident taking place, the insurance carrier must prove that the policy was properly terminated. This requires notice to the employer/respondent as well as the Workers’ Compensation Commission. Otherwise, the Workers’ Compensation Commission will require extension of coverage through the date of accident to ensure the injured party gets benefits.

An additional consideration in policy coverage is the employment position of petitioner. If petitioner is a sole proprietor, owner or partner of a business, coverage for injuries must be elected. If there is no election for coverage, the principal may not be entitled to workers’ compensation benefits paid by the carrier. This does not mean benefits might not be sought; they would just not be covered by the insurance policy. This also would not affect any other common law rights available.

If you have thoughts or questions about jurisdiction, coverage of the Act or any other workers’ compensation or employment law issue, send a reply.