Keefe, Campbell & Associates, LLC

Editor’s comment: Please accept this as an Illinois Commission update.

On June 1, 2009, the Springfield office is moving

New operations will be at the Springfield Regional Office Building, 4500 S. Sixth St., Springfield, IL 62703-5118. The telephone numbers will stay the same, but there may be some disruptions in service. If Springfield numbers aren’t working, call the toll-free number, 866/352-3033.

In June – August 2009, Springfield arbitration status calls will be held at the Illinois Department of Transportation auditorium at 2300 S. Dirksen Parkway. Please be aware all attendees will need to sign in and show a photo ID. To get to the call, take the escalator to the basement auditorium.

In June, Springfield arbitration trials will be held in the IDOT Traffic Safety Annex Building, 3215 Executive Park Dr. This building is located south of the main IDOT building on Dirksen Parkway, first left turn. Enter the building on the west side. Sign in with the security guard and show a photo ID. Take the elevator to the 4th floor. Go down the long hallway to the first door on the left. There will be a sign posted on an easel outside the door.

Springfield oral arguments will be held at the new Springfield office. A security guard at the front of the building will direct parties to the hearing space.

Illinois Attorney General files objection to Chrysler sale

Illinois Attorney General Lisa Madigan filed an objection in federal bankruptcy court to the terms of Chrysler’s pending sale to Fiat, on behalf of the Illinois Workers’ Compensation Commission and the Illinois Self-Insurers Advisory Board. Chrysler is self-insured for workers’ compensation in Illinois. Under the current terms of the sale, neither Chrysler nor Fiat would be responsible for the payment of workers’ compensation benefits, leaving the Illinois Self-Insurers Security Fund to pay should the security posted by Chrysler be insufficient. Attorneys General in Michigan and Ohio have also filed objections. The IWCC has been monitoring the Chrysler situation, conferring with workers’ compensation administrators in several other states.

“The Commission and Board do not oppose the proposed sale of Debtors’ assets to the potential buyer,” the objection states. “However, the Commission and Board oppose any sale that does not provide full compensation for the Debtors’ injured Illinois workers.” To read the objection, go to http://www.iwcc.il.gov/Chryslerobjection.pdf

Chicago IWCC office getting new carpet

Between June 1-9, after hours, workers will be installing carpet in the front public area of the Chicago office. Operations will continue as before, and the elevator will always be available.

Editor’s comment: Why would our liberal Plaintiff bar give up the dominance they have with the judiciary? We point out there is no group in the Illinois body politic that has more money or a bigger stake in controlling the judiciary. Many Plaintiff firms donate literally hundreds of thousands of dollars to get judges favorable to their needs and desires. We assure you they will work quietly to avoid this reform as being “bad for their business.” What drives the defense industry nuts are the massive egos of the Plaintiff bar who strut around like they are geniuses when their rulings are bought and paid for long before oral argument takes place.

Everyone should note it is perfectly legal in Illinois for a law firm to donate $1 million to a judge’s campaign. If the judge doesn’t use the money in their campaign, he/she can cash the check, pay the income taxes and spend the money. If that isn’t legalized graft, we are not sure what would be. It is inconceivable to think such a judge could be fair and impartial in litigation involving such a lawyer but we assure you that same concept happens every day in this state. It is not considered a conflict of interest for a lawyer to appear before a judge to whom they have donated thousands of dollars—they don’t even have to disclose such contributions to the other side!!

Please remember in many types of litigation, judges approve the legal fees earned by Plaintiff lawyers. It is comical to think such judges aren’t influenced by campaign monies. Please recall the judge in tiny Madison County, Illinois who provided one of his “favorite” plaintiff lawyers with a legal fee of $1.1 billion dollars or what we felt would have been an hourly rate of over $100,000 per hour. The interest on the appeal bond on that judgment and attorney fee bought the county a brand-new courthouse and lots of other fun stuff no other Illinois county has.

An amendment to Senate Bill 352 is available for review online at http://www.reformillinoisnow.org/DB/IRC%20-%20Campaign%20Finance%20-%20Judicial%20Public%20Financing.pdf. The funding proposed is to come from assessing each Illinois lawyer a $50 surcharge on his or her ARDC registration fees and a $1 fee on litigants who file civil actions. The only problem is whether Illinoisans have the common sense and intelligence to push for its passage.

We vote for anything that creates an honest and independent judiciary in this way-too-crooked state. Please send your thoughts and comments.

Editor’s comment: While the duty to pay TTD when restricted from full work and after a job search shows lack of employability is in line with prior Illinois holdings, the denial of partially unrelated care resulting in penalties/fees appears to open a door to even more hardship for Illinois employers who will be penalized at times of what appears to be “true controversy” which should provide a defense to penalties. On a final note, the Court did note penalties and fees under the WC Act were sufficient to protect the injured employee’s interests and denied Supreme Court Rule 375 sanctions.

In Residential Carpentry v. The Workers’ Compensation Commission (No. 3-08-0122WC March 27, 2009), Plaintiff Tibbitts filed an Application for Adjustment of Claim alleging a work-related injury to his shoulder. The Arbitrator found Claimant credible and awarded him 28 weeks temporary total disability (TTD), existing and prospective medical expenses, as well as penalties and attorney fees. The Workers’ Compensation Commission adopted that decision, and the Will County Circuit Court confirmed its decision. Respondent Residential Carpentry appealed the TTD and penalties and fees.

The Appellate Court also noted claimant’s request for sanctions under Supreme Court Rule 375 (155 Ill. 2d R. 375) to “hopefully minimize the need for injured workers to have to endure this process to this extent in the future.” The Court noted imposition of sanctions under this rule is a matter “left strictly to our discretion” and further noted they believed the fees and penalties imposed by the Commission adequately protect that interest and rejected claimant’s request.

It was noted Petitioner worked light duty for a period of approximately 17 months prior to layoff and only requested TTD after layoff resulted in his claimed inability to locate employment. The layoff was for purely economic reasons and Respondent argued this fact should result in denial of TTD. From the decision, it appears TTD would more than likely have been denied except for the fact of a job search which met the standard of the Archer Daniels Midland case in which it was noted evidence of a diligent search for employment was sufficient to show claimant was not employable resulting in TTD being owed. This job search including search logs and ongoing union contacts to locate work shifted the burden to Respondent to show work would have been available and it does not appear any evidence was presented on behalf of Respondent to show there may have been work available.

In relation to the appeal of penalties and fees, Respondent asserted its refusal was reasonable under the circumstances because a portion of the condition of claimant’s shoulder was not related to his employment and Respondent did authorize the repair of claimant’s rotator cuff, and it only denied authorization for the clavicle resection portion of the surgery which was in dispute. The Court noted the Arbitrator correctly observed it would not be reasonable to have a doctor operate on one part of claimant’s shoulder, but not on another part that could be addressed during the same procedure. In essence, it was not reasonable for Respondent to attempt to subdivide a region of claimant’s body in a manner contrary to how it would be treated in the normal course of medical practice. The Court refused to state the Commission’s decisions to award claimant fees and penalties were against the manifest weight of the evidence due to testimony of the treating physician relating the entire condition.

This case is another example of the proposition confirming TTD will be due if work is shown to be unavailable to an injured worker. The more disturbing issue raised is the systemic penalty at every level to a Respondent who—while agreeing to pay for the portion of a procedure deemed related—refused full authorization based upon a medical dispute based upon a medical opinion from Dr. Betzelos who denied relation of a portion of the condition and was penalized for their decision to rely on a medical opinion providing the basis for the dispute. While we are sure most Petitioner attorneys will trot out the age old “IME doctor gets paid for his opinion” adage to pooh-pooh the legitimacy of the dispute, it should be noted that the treating physician also gets paid—generally at a higher rate of WC claims and also always has an “interest” in obtaining approval for expensive procedures. If Respondents are to now try to determine whether they will be penalized for relying on an expert, the employees of the state can start house hunting in our sister states now because the only thing slowing down the exodus out of Illinois will be the annual road construction which has started to slow the travel.

This article was researched and written by Shawn R. Biery, J.D. If you have thoughts and comments or need the case citation, please send a reply to sbiery@keefe-law.com.

Editor’s comment: We sent this to one of our readers and thought we should share it with all of you.

Summary:

1. Open claims generate new claims.

2. Your defense witnesses and defense case-in-chief may disappear.

3. Reserves sit and mess up your cash position and/or credit lines.

4. Costs and exposures rise as claims sit.

5. Doctors, doctors, doctors.

6. Why reward defense lawyers who don’t close claims effectively?

Open claims generate new claims.

The more claims a company has pending, the more employees you may have with pending claims. Those employees start to look at workers’ compensation claims as money in the bank with solid long-term potential. They know they will cash in some day and usually get the highest possible return in a state that usually rewards old claims.

When they see even a soft-tissue strain/sprain, the same employees are also likely to tell other employees to start “workers’ comp bank accounts” by filing whenever the other employee has an injury. They will caution their friends to expect to have to wait but also expect they will get a nice bonus some day when the case finally comes to a close. In the interim, the employee coaching new employees to file claims may also tell them to get lots of treatment to insure a solid outcome and settlement.

Employees with pending claims also know claimant lawyers. In Illinois, those lawyers give out business cards and may give “bonuses” to claimants who bring them more claimants. We would bet veteran risk managers see lots of the same lawyers handle claim after claim against your company—this demonstrates there may be a “mole” or “shill” at your facilities who are directing employee after employee to the same attorney.

You may be able to prevent all of it with a litigation avoidance plan and more aggressive litigation management approach.

Your defense witnesses and defense case-in-chief may disappear.

If you don’t push claims to closure, your defense witnesses and defense case-in-chief may disappear. We have seen bona fide disputes and strong cases made to refute any claim for benefits completely erode and potentially disappear when cases are allowed to sit for months and years. People come and go in your organization with expected rapidity—we are a mobile society. While you may have a willing supervisor or co-employee ready to testify and completely rebut a claim of injury this month, in three years or more, such individuals may be half-way around the world or retired or simply lose any interest in the matter. All of it works to the detriment of the company and not claimant.

Any veteran defense attorney will tell you even the most conniving claimants will typically remain interested in the case while it is pending. Claimants have a strong financial interest in a phony claim. Due to the financial potential, they are typically going to remember their stories and the “plot line” in a phony case. In Illinois, it is incumbent on the employer to locate and obtain the return of your defense witnesses to testify if you are going to maintain denial of a disputed claim. The longer you let a major disputed case sit, the lesser your chance of having the ammunition needed to demonstrate the dispute to the Arbitrator. Many veteran claims managers in Illinois have paid claims they know they might have won if the witnesses were present and testified consistent with their prior statements—this potential makes it imperative to try fully disputed cases earlier rather than later.

Reserves sit and mess up credit lines.

There is no question the more claims you have pending, the higher your reserves may be. Any accountant will tell you that your company is going to have to keep monies set aside, in either cash or lines of credit to reflect the loss and potential payout. When a company has numerous pending claims, the reserves clog up cash or credit that can be used for much better things. This year, we audited claims for a major hospital chain. They have several million dollars in reserves sitting for 3-5 years awaiting claim closure. Many of the claims were simple and undisputed matters but the corporate powers-that-be didn’t take action to move the files. This is what we assume you may be doing in handling claims.

So for one example, this hospital group had a claimant with a broken hand. The case had a settlement value of $15,000. The reserves were for “worst-case” value of $40,000. We took a look at the file, knew opposing counsel, called the attorney and settled the matter in ten days for $15,000. In doing so, we freed up $25,000 in reserves. If you assume the hospital group had 75 similar claims and we could work to close all of them in the same fashion, we would free up almost $2,000,000 in reserves by simply paying fair value on accepted claims.

Costs and exposures rise as claims sit.

When claims are allowed to intentionally age in Illinois, they usually age poorly. Claimants like to get lots of medical care to justify the value of the matter. Claimants will try to stay off work longer to insure they get the best possible outcomes. Some injured workers will also seek restrictions and limitations on their work as the years roll on.

We have seen a number of rulings in Illinois where hotly disputed claims finally get tried after two, three, four years of fighting. The employer or insurance carrier appeared to be making efforts to “wait out” the current liberal administration. When the matter finally got tried, the employee was awarded years and years of disputed TTD. For most of your employees who have generally favorable rates, an award of three years of TTD can force you to pay $100,000 or more in benefits. We feel you are much better served to drive to drive claims to rapid resolution to bring more predictability to the outcome.

We also hate to see hotly disputed and denied claims sit to the point the injured worker can come to the Commission and cry and moan about being broke due to the actions of the employer. The liberal administration likes to penalize employers and reward big money to such claimants in a punitive fashion. It can all be avoided simply by bringing the matter before an Arbitrator sooner rather than later.

Doctors, doctors, doctors.

We feel Illinois has a cadre of treating doctors who are notorious for over-treating patients. These doctors will order lots of tests and esoteric surgical procedures. If the patient keeps showing up and complaining the doctors will perform lots of trimming and then start replacing joints or fusing backs/necks. The medical costs can quickly escalate into the mid six-figure range.

These doctors/surgeons are very well-known in the Illinois workers’ compensation claims community. They have learned the system won’t typically slow them down and they expect to get paid under Illinois’ favorable WC medical fee schedule. Every veteran claims manager and defense attorney has used independent medical examination and utilization review to try to slow these physicians/surgeons down.

However, the best way to shut them off is to close accepted claims quickly or fight disputed claims faster. The best thing about Illinois workers’ compensation is you can effectively close medical rights if the employee has left your organization at the time of settlement.

Why reward defense lawyers who don’t close claims effectively?

We have learned over the years of auditing defense files and handling claims that defense lawyers love clients who will sit on claims. The costs of sitting on claims are a boon to the defense industry. There is no question the longer a claim is allowed to sit idle, the more your legal fees increase.

Such lawyers are thrilled to call and meet and regularly entertain such clients. They are hoping to keep making more money and get similar rewards as the years roll on.

To the contrary, we feel lawyers who get to the point and win or settle cases effectively are the sort of legal talent that should be rewarded and nurtured. Litigation is uncertain and expensive. The less litigation a company has, the more predictable your costs are. It is a challenge to close litigated files in Illinois but the harder a company works to close them and avoid what caused the litigation in the first place, the better suited you will be moving forward.

How to do it

Keefe, Campbell & Associates is devoted to closing WC, GL and EPLI claims faster than our competitors. We have an Illinois litigation management plan that should allow you to

• Avoid litigation in accepted claims in the first instance;
• Make every possible effort to keep your injured workers away from lawyers where possible;
• Focus on implementing pro se settlements whenever prudent;
• When the worker goes to a lawyer, move quickly to bring the matter to closure via trial or settlement;
• Conduct “settlement days” for litigated claims at the Illinois Commission to induce file closure;
• Conduct claim “exit interviews” to see if you can learn from the issues that led to litigation and lawyers and avoid it moving forward.

We would be happy to outline the overall approach for any of our readers. If you are interested in these suggestions, please let us know. If you know any defense competitor in Illinois that closes claims faster, please let us know how they do it!!!

Editor’s comment: We consider this a major development all risk managers should be aware of, even in union settings. Arbitration clauses in collective bargaining agreements can serve a greater purpose than the traditional resolution of contractual disputes arising from the terms of the collective bargaining agreement in grievance hearings. Now, U.S. employers may utilize arbitration clauses to expressly require resolution of statutory disputes, such as claims of age discrimination arising out of the Age Discrimination and Employment Act (ADEA). In a recent decision, 14 Penn Plaza LLC v. Pyett et. al., (No. 07-581 April 1, 2009), the Supreme Court upheld an arbitration clause that specifically mandated arbitration of any age discrimination claim and ruled that such arbitration clauses are enforceable as a matter of federal law. In other words, an employer can legally obligate the employee and their union to arbitrate an age discrimination claim rather than dealing with a charge of age discrimination from the Equal Employment Opportunity Commission, Illinois Department of Human Rights along with related litigation with flows from the administrative agencies.

It has been our experience most employment law claims are inherently anti-employer. You can fight even a bona fide claim and be forced to pay high defense fees to your typical employment-law defense firms who charge $400-800 per hour in handling them. In contrast, Keefe, Campbell & Associates charge less than $200 per hour to fight such matters. Even with more reasonable defense fees, you still may be looking at paying double-fees if Plaintiff prevails and even gets $1 from a jury! Our vote is to try to end the possibility of such litigation at the earliest opportunity.

In 14 Penn Plaza, the Service Employees International Union withdrew its request to arbitrate a grievance alleging age discrimination on behalf of employees that had been reassigned to less desirable positions, allegedly on the basis of age. The union withdrew its request because they agreed to allow the company to enter into a new contract for services that caused reassignment of the aggrieved employees. The aggrieved employees later filed an EEOC charge claiming age discrimination. Once the EEOC issued a “right to sue” letter the employees filed suit in Federal Court. The employer tried to compel arbitration of the employees’ age discrimination claims, however, the District Court and the Federal Court of Appeals ruled another Supreme Court case forbids enforcement of collective bargaining provisions requiring arbitration of ADEA claims. Prior to 14 Penn Plaza, the respective Courts of Appeals were divided on the issue of whether a clear waiver of statutory rights was legally enforceable. Some courts held a collective bargaining agreement could not waive covered rights to a judicial forum for causes of action created by Congress and other courts held the opposite. As a result of this dichotomy in the Courts of Appeals below, the U.S. Supreme Court in 14 Penn Plaza, accepted the case and agreed to decide the issue.

In this claim, two federal laws were at issue: the National Labor Relations Act and the Age Discrimination and Employment Act. The Supreme Court reasoned courts generally may not interfere with a bargained-for exchange in the collective bargaining context, rights guaranteed under the NLRA, and thus held the collective bargaining agreement’s arbitration provision must be honored unless the ADEA itself removes this particular class of grievances from the NLRA’s broad sweep. The Court reasoned ADEA does not preclude arbitration of claims brought under the ADEA. The Supreme Court specifically reasoned when the parties collectively bargain in good faith and agree employment-related discrimination claims are to be resolved in arbitration, this agreement constitutes a clear and unmistakable waiver of the employee’s right to pursue rights created by statute and thus is enforceable.

We again urge U.S. employers to avoid unnecessary litigation and concomitant costs and negotiate arbitration clauses that require your union(s) and employees to remedy any claim of age discrimination in arbitration. The basis of this obligation must be a clearly written arbitration clause that which outlines precisely which statutory rights are specifically waived. Employers with collective bargaining agreements should review the arbitration language and consider the feasibility of negotiating a modification or propose a change in the language during contract renewals.

Please forward your thoughts and comments on this new ruling.

Editor’s comment: As consultants to Illinois risk managers and claims handlers, we are constantly asked about one topic—how do we nail down accident investigation on every single claim? How do we make sure to pay the good ones and fight the bad ones? What is the best evidence for an Arbitrator to truly deny a phony case?

On a preliminary basis, we assure our readers accident investigation is a paramount importance in Illinois workers’ compensation claims handling and legal practice. Our system is very demanding—defense counsel is not allowed the right to depose or send written interrogatories or requests to produce to their opponents. If the employer doesn’t maximize the opportunity to investigate claims at the early stages of reporting, the claims handler and attorneys may be “flying blind” in trying to protect you from a questionable claim. The only true method to avoid paying WC or employment claims you may not owe is to insure you have an aggressive accident investigation system in place and insure all of your managers are keenly aware of its importance.

With that in mind, we want all of our readers to understand there is a very simple and somewhat inexpensive tool we feel would dramatically nail down and improve accident investigation protocols. It is called a video camera. We are so used to them and they are so ubiquitous, we almost forget how powerful they would be, if properly used in the claims environment. This is particularly important in Illinois where any opportunity to maximize accident investigation is so critical.

At present, we feel the vast majority of outside claims representatives and in-house risk managers focus on developing paper files. If a recorded statement is taken, it is transcribed onto paper. Accident investigation forms are all paper. Claimants, supervisors and witnesses are all routinely asked to fill out paper forms. Effective immediately, we are trying to get all of you to think about what investigating accidents on paper means. If the dispute is about the condition of a set of stairs—say for example, claimant says the stairs were damaged and in a state of complete disrepair; we consider of questionable value to have a supervisor look at the stairs and say they are in a state of good repair. Many Arbitrators in the state would routinely rule claimant was correct and will view the supervisor’s statements as suspect—the worker fell so something had to be wrong? In contrast, if the supervisor took out a camera phone and took ten pictures of the stairs, it locks in the facts. The Arbitrator can view the “independent” video evidence and see a much more accurate view of the stairs.

We will give you another example of a simple questionable claim. The matter involves a fully disputed cervical fusion for an Illinois truck driver. If you have any medical or claims background, rest assured, such a claim has a six or even seven-figure exposure. Medical care for a cervical fusion by itself may cost $50-300,000 in this state for surgeon’s fees, hospital charges, pre-surgical workup and post-surgical physical therapy. In this claim, the injured worker reported the disputed claimed event as occurring the Tuesday before Thanksgiving. He doesn’t tell anyone about the claimed event for three weeks. He fills out the report and says he strained his neck lifting freight.

Thereafter, three co-workers step forward and all three of them indicate the injured worker told them a dramatically different tale. All three independent witnesses confirm the injured worker told them he injured himself at home on Thanksgiving. This sets up a fraud case and a solid defense to compensability. However, at present, everyone in Illinois WC claims would have them write stuff down on a piece of paper.

We are telling all of you simply taking written reports is a minimalist thing to do when you are investigating major losses with six and seven-figure values. A much better approach would be to have all of the defense witnesses provide videotaped statements on a webcam or other video camera to the claims adjuster. The adjuster should then burn all of it to a DVD. If you have clear videotaped statements from all three witnesses who independently verify claimant is lying, what can you do with them? You could:

1. Send them to claimant’s counsel and tell him/her to drop the fraudulent claim and not waste their money getting medical records and IME’s for a phony;
2. Send them to the IDFPR and have them start a fraud investigation—the videos could be forwarded to the appropriate states’ attorney for prosecution of claimant;
3. Send them to your defense attorney for use in defense of the claim;
4. Send them to the IME doctor for their consideration in reviewing the medical chart.
5. Use them at pre-trials to get the Arbitrators to see how strong your defenses are and to try to get the other side to drop or discount their case.
6. Use them at any later hearing to support testimony given at trial.

Are such videotaped statements admissible into evidence? Well, you would need the person on the tape to be present to provide foundation and make themselves subject to cross-examination by Petitioner’s counsel. We are also suggesting a better “second-step” in phony claims is to get an expedited videotaped evidence deposition of your crucial defense witnesses. In so doing, defense counsel is locking in your case-in-chief. The concern we have is most Petitioner’s attorneys put questionable claims on the back burner—they want the claim to sit to avoid having to confront their clients and deal with the phony claimant. They also don’t want to invest time and money in questionable claims. This works directly contrary to insuring a defense attorney has a solid case.

Every day that goes by, defense witnesses quit, get fired, lose interest and forget details. In a major claim, every veteran risk manager knows claimant is certain to eventually come forward and tell a well-prepared tale of woe. It is much harder to track down and prepare a defense witness who has nothing to gain by participating. If you have videotaped evidence depositions of your lead witnesses, you are ready whenever the other side gets their ducks in a row. Our vote in major claims is take the extra step and be sure you are ready. Take advantage of your advantage.

Please let us know your thoughts and comments.

Editor’s comment: They are clearly trying to erase the influence of our last two misguided former Governors who may some day become cell-mates. A new bill may sweep out anyone and everyone that came to state government under the offices of either former Governors Ryan or Blagojevich. We assure our readers the honest folks will be swept out with the less-honest and the changes are going to be painful for many to stomach. If it happens, all of it will be chaotic for some time.

We have just received word HB 4450 was introduced by Speaker Madigan last week. Madigan is its lead sponsor which means it is almost certain to pass in the Democratic-controlled legislature. We are confident Governor Quinn will sign it the minute it hits his desk.

It is the Officials and Employees Termination Act of 2009. The new major bill provide the terms of office or employment of all designated officials and employees are terminated, by operation of law, effective on the effective date of the Act. The designated officials and employees are

(i)                   The heads, assistant heads, and deputy heads of executive State agencies who were nominated by either former Governor Ryan or Blagojevich between January 11, 1999 and January 29, 2009 for a position that requires the advice and consent of the Senate;

(ii)                 Members of executive boards or commissions who were nominated by either former Governor between those dates for a position that requires the advice and consent of the Senate;

(iii)                Employees of executive State agencies or executive boards or commissions, whose employment in a Rutan exempt position began between those dates;

(iv)                Employees of executive State agencies or executive boards or commissions, appointed to a term appointment between those dates, and

(v)                  Any other official or employee who was nominated by either former Governor between those dates for a position that requires the advice and consent of the Senate.

Executive State agencies and executive boards or commissions are those of the executive branch not under the jurisdiction and control of the Lieutenant Governor, Attorney General, Secretary of State, Treasurer, or Comptroller. The bill allows hold-over for no more than 60 days. This new bill allows the current Governor to make temporary appointments and to subsequently nominate or employ a terminated person. It is effective immediately.

Details are available for your review at the General Assembly website:

http://www.ilga.gov/legislation/billstatus.asp?DocNum=4450&GAID=10&GA=96&DocTypeID=HB&LegID=47879&SessionID=76

As introduced, the bill would terminate approximately 3,000 people who were hired or appointed to certain exempt positions between January 11, 1999 – January 29, 2009, and allows for a holdover for no more than 60 days during which time the Governor could reappoint/rehire.

Though the current language is somewhat unclear how exemptions may be applied (for instance, whether exempt employees who are in the union are included) and how reappointments are considered (original hire date which may have been before 1/11/99 compared to reappointment date), we have identified positions which could be eligible for termination.

Over 30% of the positions/people at the Commission may be terminated. These positions include Chairperson Masters, all sitting commissioners, some or all arbitrators (all arbitrators were either hired or reappointed during this time-frame), executive director, secretary, staff attorneys, and several other managers and staff. Some Commission staff have exempt positions, as they are not in policy-making positions.

Additionally, all appointments to the following boards may be terminated:

*           Workers’ Compensation Advisory Board

*           Workers’ Compensation Medical Fee Advisory Board

The Self-Insurers Advisory Board isn’t affected because its members are not appointed by the Governor.

There is talk this bill may be amended to include only double-exempt employees. This would then limit the scope to our Chairperson, commissioners, executive director, secretary, and a handful of other managers and staff but so far no amendments have been added, and five state representatives signed on as co-sponsors today.

We are told Chairperson Masters and other Commission staff are asking for support of the WC community in contacting legislators to try to keep their jobs. We are certain the bill would dramatically alter the Commission’s make-up and delivery of benefits if all sitting Commissioners and Arbitrators are terminated. They won’t be replaced for the foreseeable future. As we indicate above, we consider it a mistake to sweep out the honest and hard-working hearing officers in an effort to re-tool Illinois government. We are also certain lots of the folks who are in the Commission jobs got their appointed positions via the very folks who are sponsoring the bill!!

On the other hand, we will let our readers tell us your thoughts and we are happy to relay them to the powers-that-be. Should we completely re-tool the place? Can they change the name back to “Industrial Commission?” Can anyone imagine a balanced Commission with interests of both business and labor represented? Can they dump the totally stupid Second Injury Fund and all the other anti-business funds? Can the devil we don’t know be better than the devil we know?

Editor’s comment: Back in April, CMS issued a memo detailing its new drug pricing plans and putting a hard initial start date of June 1, 2009 into place. What we end up with is another scheme by the federal powers-that-be that may end up costing U.S. business buckets of money.

Anyone familiar with workers’ compensation settlements should be familiar with the concept of a Medicare Set Aside (MSA), and the government agency that approves them, the Center for Medicare & Medicaid Services (CMS). In the most basic terms, Medicare is a mandatory, federal government provided, medical insurance program for the disabled and Americans aged 62.5 and older. When a worker who is near that age is about to receive a workers’ compensation settlement of more than $25,000.00, the feds require a “set aside” of money to pay Medicare back any future costs it may incur that would otherwise be due to the underlying work injury.

After former President Bush passed the Medicare Part D bill into law back in 2006, everyone in the workers’ compensation industry knew that as soon as a form of implementation was concocted by our government overseers, prescription drug benefits would begin taking up a chunk of any MSA monies. It only took 3.5 years for the Feds to come up with what could potentially be the most outrageous “back door” penalty on employers we have seen in quite some time: average wholesale pricing (AWP).

Like the titles for most things the federal government wants to force feed you, it sounds reasonable on its face. Believe us when we tell you it is anything but. AWP is a pharmaceutical industry term which refers to the average price at which wholesalers report they sell prescription medication to customers. Right off the bat this gets confusing as there are several published lists of average wholesale pricing, but not all of the manufacturers provide data to all publishers, so the lists vary and there is no definitive standard.

The more disconcerting effect of AWP is that it is reliant on manufacturer reporting. Have you ever shopped for an automobile? Notice how the “sticker price” on the window is much higher than what one would expect to pay for the vehicle? Well, that is the type of figure AWP is based on. It is just like the sticker price on a car in a lot—it is the “manufacturer’s suggested retail price” but it is never the price paid by a savvy customer. Much in the same way medical insurance policies are able to discount medical services, the actual price of any drugs is the AWP less some sort of negotiated discount applied. The more buying power the purchaser has, the lower the final cost of the medication.

The big problem here is CMS will be requiring cost to be based on the AWP, so insurers are losing out on the benefit they already had built into place of the “haggling” they were able to do. Essentially insurers will lose out on the cost reduction they could achieve on the open market. Once you understand how much prescription medication can be required for long-term treatment in some cases, this becomes a gigantic cost increase that may effectively remove the option for insurers to settle claims. They would be better off leaving medical rights open, trying matters and paying the reduced cost of prescription medication using their much lower negotiated fees. There may also be an underlying problem with states that have already regulated prescription medication costs within a fee schedule, such as California. How can the feds justify implementing an essentially unilateral cost increase for already defined state law remedies? Our guess is the dispute may be resolved in a court of law.

Sounds a little like the debacle we had to deal with here in Illinois when we got the “benefit to business” of the medical fee schedule, doesn’t it? We caution, along a similar note to issues Illinoisans are facing with that delightful piece of legislative balderdash, what happens when drug companies begin inching their AWP up, while simultaneously offering larger discounts to insurers on the open market. In a  case like that, the MSA costs will continue to rise, while the actually market cost won’t. As we said above, this is probably all going into expensive litigation.

On a practical note, these changes go into effect on June 1, 2009, so if you have a case that is lingering waiting for an MSA, please do yourself a favor and get all the necessary paperwork submitted prior to May 25, 2009 to be safe. We have been told that if the MSA application is submitted prior to the deadline, it will not have to take the new pricing into account.

If you have thoughts and concerns about average wholesale pricing or issues relating to MSA’s, please send a reply. This article was drafted by Arik D. Hetue of our office.

Editor’s comment: We are somewhat amazed, dazed and confused by this ruling. There is nothing technically “wrong” with the ruling and it isn’t a sweeping new change but, as defense observers, we can only shake our heads at what the members of the Court may have been thinking. We have to caution everyone on the defense side of the industry to modify settlement contract boilerplate language to protect your claims from the possible impact of this ruling. As part of your Illinois lump sum settlement contracts, we now suggest claimants be required to expressly waive rights under Sections 8(a), 19(h) and 4(c).

In Burzic v. Illinois Workers Compensation Commission (No. 1-08-2303 April 28, 2009), the Workers’ Compensation Division of the Appellate Court considered a claim where a Section 4(c) Petition was filed by claimant. The battle was over termination of vocational rehabilitation. If you read the decision, we feel the vocational counselor did a generally below-average job of what we call a “Plan B” vocational effort. If you need want specifics or need our thoughts on Plan A and Plan B in Illinois vocational counseling, send a reply.

In response to termination of vocational counseling, the employee then filed a 4(c) Petition attacking the insurer’s right to insure Illinois WC claims. The Section 4(c) Petition went to a full hearing with witnesses. The matter later settled for a lot of money. Settlement contracts were approved, probably by the same Commissioner who conducted the 4(c) hearing. Everyone in the Illinois defense industry would assume all pending workers’ compensation issues were over, right? Well, not so fast—remember this is Illinois!

Claimant continued to press the 4(c) Petition and actually demanded a ruling from the same Commissioner who approved the settlement contracts. The Commission panel contradictorily ruled they didn’t have jurisdiction due to approval of the settlement contracts and also denied the Petition. If you have any idea what “jurisdiction” means, you can’t do both. Claimant then appealed—we can imagine how happy the claims manager was to receive notice of appeal of the otherwise “settled” claim and the need to reserve legal fees to continue to manage an otherwise “closed” file.

Thereafter, the Cook County Circuit Court also demonstrated an unusual level of legal largesse by effectively doing the same thing the Commission did—the judge ruled the Commission didn’t have jurisdiction and affirmed the ruling the Commission didn’t have jurisdiction to enter.

The Appellate Court, Workers’ Compensation Division unanimously ruled the Commission retained jurisdiction of the Section 4(c) Petition despite the global settlement of all workers’ compensation rights. As we indicate above, we have no idea why they made such a ruling. The problem we all face is settlements in Illinois are traditionally supposed to bring complete closure to pending workers’ compensation claims. With respect to all of the august members of the Appellate Court, they keep sporadically leaving rights open and issues unanswered after settlements are approved.

In February 2009, another division of our Appellate Court ruled in Hagene v Derek Polling Construction, if one checks a box that “all medical bills are paid” by Respondent, Petitioner can eternally return to seek payment of medical bills that were otherwise unsubmitted and which the employer or the insurance carrier may have had no prior knowledge. We know the claims manager who got hit with that one and she is still hopping mad about it and we completely agree with her. So, ooops!—don’t check that box.

In this case, having found the settlement didn’t deprive the Commission of jurisdiction, the Court ruled dismissal of the petition was not against the manifest weight of the evidence because Section 4(c) petitions require proof of unfair handling of more than one claim. The Act requires demonstration of a “policy” of unfair handling so several claims have to be shown to be handled unfairly. As there was only one claim involved, the Petition was meritless.

However, the practical impact of the ruling the Commission retained jurisdiction of the Section 4(c) Petition despite the settlement means we now have to address such Petitions and be certain they are addressed in settlement contracts. One never knows when a zealous claimant files a 4(c) Petition. No one wants to pay to litigate such claims after settlement contracts are approved. So, our word to the wise is to be certain to address the issue in all settlement contracts moving forward.

One of our partners asked another obvious question—can one ever settle a claim to include the right to bring or join in a Section 4(c) Petition? Can the Arbitrators or Commission approve settlement contracts and close their files but then consider such petitions complaining of the actions of employers or insurance carriers in advance of the settlement? Our answer is no one knows—the decision in Burzic outlined above implies the Commission may always have “jurisdiction” to consider 4(c) petitions even if they settle and close the case. We assure our readers this sort of administrative confusion, unending litigation and uncertainty is a glaring reason Illinois is considered so anti-business in many circles.

If you have thoughts and comments, please send a reply. If you need the web site of the ruling, let us know.

Editor’s comment: Amy Masters, our acting Chairperson of the IWCC, has demonstrated a remarkable desire to bring transparency to IWCC Operations early in her watch. She sought out the viewpoint of various stakeholders at a meeting last Tuesday at the Chicago IWCC office. This meeting was separate from the politically appointed IWCC Advisory Committee.

Valerie McGregor, a practice leader at CS STARS assembled a small roundtable of interested observers to meet with Ms. Masters, who was eager to listen to the concerns of stakeholders who had a vested interest in improving the operations of the IWCC. Ms. Masters is advocating for a new sense of openness on the part of the IWCC. Ms. McGregor selected one person from a variety of disciplines that are impacted by the IWCC:

By happenstance, Dr. David Fletcher was an invitee who was returning from taking a chronic pain patient to the Cleveland Clinic. The patient suffered a crush injury in October 2006 and developed Stage III RSD. This patient is still on narcotics, had several surgeries and has a peripheral nerve stimulator installed, has gone through multiple adjusters and case managers, had surveillance conducted and had several negative utilization review decisions. Since this patient had to wait for Dr. Fletcher to drive him to downstate Illinois, Chairperson Masters welcomed this patient to have a seat at the table since he was the ultimate IWCC stakeholder–the injured worker with a legitimate and severe compensable claim. It turned out the majority of topics discussed; utilization review, case managers and medical cost control directly affected this injured worker who vocalized his own unique experiences.

There was general consensus from the committee there are needed rules and regulations regarding nurse case managers to govern conduct of this important advocate role for the injured worker to protect some abuses that have been going on. It was felt that potential rule-making could overcome some Petitioners’ attorneys’ stoic resistance to having a nurse case manager assigned to their injured workers. It was also felt rules may encourage an injured worker to request a nurse case manager to advocate on their behalf.

Similar sentiments were echoed regarding adjusters. Many in the committee advocated for rules and regulations or even licensing of Illinois claims adjusters. One participant confirmed she had fired four adjusters recently for incompetence.

The petitioner’s attorney in attendance at the meeting urged the IWCC do more in the realm of prevention of work injuries and cited the material on Dr. Fletcher’s SafeWorks Illinois website as examples of what companies could do to prevent injuries.

The defense-employer faction of the committee objected to implementation of utilization review in Illinois, stating present rules were ineffective and there was no accountability.

Dr. Fletcher spoke about the importance of FCEs and how they were an important claims resolution tool. Dr. Fletcher also spoke about Clayton v. Ingalls Memorial Hospital ruling. He outlined the decision was widely used by firms to attempt to extract records from physicians for $20 subpoena fee way below the actual cost of copying records. The group suggested that Record Copy be part of the MFS and reimbursed at a reasonable cost. Dr. Fletcher also spoke about arbitrators’ decisions on medical evidence that often times were not scientific. He suggested a medical evidence advisory board that arbitrators could consult for assistance on weighing scientific evidence on difficult cases.

Finally, in regards to opening up transparency of the IWCC, the group suggested the IWCC post arbitrator openings on the website. They also felt the IWCC should post existing arbitrator bios and photos. Our concern would be framing such photos with a big bulls-eye—we want Illinois arbitrators to be kept completely safe from harassment by the public.

The panel also urged Chairperson Masters to adopt a policy requiring arbitrators to make at least quarterly one tour of an employer that was within their jurisdiction to get a better of the worksite issues. The panel felt injured workers sometimes paint a distorted picture of an employer’s operations to paint a doom and gloom perspective. In contrast, the panel felt the majority of Illinois employers care greatly about safety and want to prevent injuries.

Moderator McGregor commented: “I appreciate everyone taking time from their busy days to come out share their thoughtful comments and insights into making the IWCC an agency in Illinois that reflects the hard work and good intentions of all the people who try to do what is right for the injured workers of this state. I am especially grateful Ms. Masters gave us this opportunity to work with her and for her willingness to listen to our concerns.”

After the meeting Chairperson Masters sent a note inviting committee members to suggest rule revisions or additions. All in all, this meeting represented a fresh start for the IWCC that is directly soliciting the input of its stakeholders to improve operations for the benefit of the injured worker. This report was sent to us by Dr. David Fletcher. Please forward any thoughts or comments and we will relay to Dr. Fletcher.