Keefe, Campbell & Associates, LLC

Editor’s comment: If you closely follow developments in Illinois WC, you may have had time to read last week’s KC&A Update on this new unanimous ruling by our Illinois Supreme Court. We are completely baffled about most aspects of the decision. We want to assure our readers there are attorneys on both sides who are shaking the heads and wondering what to do now. Our readers have sent us other defense firms’ reviews of the ruling and we haven’t seen a single one that provides any real insight on what to do next.

Does TTD now equal MMI when it never did before?

What is so unusual about the ruling that our entire community is in shock? Well, there are two major issues. As we advised last week, for the first time in about 100 years of Illinois WC history, the Supreme Court created a completely new “rule” that possibly equates the period temporary total disability or TTD is potentially due to be the entire period of medical care. If that is what their ruling means, we truly feel this contradicts literally thousands of Workers’ Compensation Commission decisions/rulings over the ages. Everyone in the Illinois workers’ comp community on both sides along with Arbitrators and Commissioners has always viewed the period TTD is due to be all periods a doctor says you have to be off work. TTD has never been due the entire time you are under the care of a doctor when that doctor says you can work at either full or light work while treating.

Please also remember some folks never lose any time from work despite some times severe injuries—are they entitled to TTD? Can that make any sense? We knew a salesman who was hit by a car and severely injured with multiple surgeries and periods of recovery—he was still on his cell phone and selling widgets while in the intensive care unit and during all periods he was conscious. That same person is still under the active care of doctors to present and has never stopped working. The idea he would be owed TTD is blurring to most seasoned WC professionals. Trust us, he didn’t want it when he was first injured and doesn’t want it now.

In fact, one of the main reasons independent medical exams have been used in TTD disputes from time immemorial is to set up a legal dispute over the proper period a doctor on one side or the other says an injured worker can and should be off work and therefore entitled to TTD. Arbitrators have been taught to lean towards the treaters in resolving the dispute but their focus has never been on whether claimant is MMI or not—they always focus on what the competing medical opinions have been in analyzing what to do about cutting off or continuing TTD long prior to claimant being MMI. We think most Arbitrators will be somewhat baffled about what to do now in light of what may or may not be a new rule that may or may not “stick.”

This is a direct quote from the new ruling:

The Act provides incentive for the injured employee to strive toward recovery and the goal of returning to gainful employment by providing that TTD benefits may be suspended or terminated if the employee refuses to submit to medical, surgical, or hospital treatment essential to his recovery, or if the employee fails to cooperate in good faith with rehabilitation efforts. See 820 ILCS 305/19(d) (West 2004); R.D. Masonry, Inc. v. Industrial Comm’n, 215 Ill. 2d 397 (2005). Benefits may also be suspended or terminated if the employee refuses work falling within the physical restrictions prescribed by his doctor. See 820 ILCS 305/8(d) (West 2004); Hartlein v. Illinois Power Co., 151 Ill. 2d 142, 166 (1992); Hayden v. Industrial Comm’n, 214 Ill. App. 3d 749 (1991) (TTD justifiably terminated by the employer, under the Act, when the injured employee was unwilling to cooperate with vocational placement efforts).

The court then goes on to say being terminated from light work while an injured worker is still treating does not end the right to TTD.

What is ‘foreign’ and what is ‘domestic’ in our statutory scheme?

The second and more baffling aspect of this Justice Burke’s new ruling is the word “foreign” that appears twice in the ruling. The Court first says:

A thorough examination of the Act reveals that it contains no provision for the denial, suspension, or termination of TTD benefits as a result of an employee’s discharge by his employer. Nor does the Act condition TTD benefits on whether there has been “cause” for the employee’s dismissal. Such an inquiry is foreign to the Illinois workers’ compensation system.

They later say:

Whether an employee has been discharged for a valid cause, or whether the discharge violates some public policy, are matters foreign to workers’ compensation cases. An injured employee’s entitlement to TTD benefits is a completely separate issue and may not be conditioned on the propriety of the discharge.

Well, now. When the injured employee is released to light work, thousands of prior Illinois WC decisions at every level indicate benefits may be suspended if the employee refuses work within the physical restrictions prescribed by a doctor. You may note that language is lifted from the first box quote above where the court cites both Hartlien and Hayden. We assure you the language in the second sentence of this paragraph is “foreign” to our Act because it comes solely from judicial rulings—the specific language is not contained in any provision of the Illinois Workers’ Compensation Act. It clearly isn’t contained in 820 ILCS 305/8(d) because TTD benefits are outlined in 820 ILCS 305/8(b).

Lots of legal concepts that we all debate every day at the IWCC are arguably “foreign” to the Act. For one simple example, you may note there is no provision of the Act which specifically allows Arbitrators to evaluate permanent disability and their actions to do so are arguably “foreign” to the Act; in most states evaluation of permanent disability is done only by doctors. We are fairly confident we aren’t going to see lots more decisions from reviewing courts that continue to debate what is “foreign” versus what is “domestic” or clearly outlined in Illinois workers’ compensation law.

Prior to the issuance of Interstate Scaffolding on January 22, 2010, most folks in our industry felt the worker was “refusing work” when he/she did something dopey and got fired for a bona fide reason while still being treated but on full or light work. We think the reason the issue never was litigated is the claimant side of the bar agreed with that approach.

So Waddawedonow?

Well, we sometimes feel you have to see what will ‘stick’ in this industry and what won’t. We want our readers to understand a couple of things. First, in our view, only the forces of the Illinois Trial Lawyers Ass’n have the pull to get the current Illinois Supreme Court to take on a workers’ comp dispute over a measly $5,000.00 and then obtain a majority decision that is completely galling to all employers across the country. That issue by itself is cause for concern; please remember the majority of the members of this Court are currently up for re-election. The Illinois citizenry and voters have to carefully weigh whether we want to continue to insult existing and potential employers when our state is struggling in the worst economy of our lifetimes.

Second, we have no idea if the Supreme Court has killed light duty—our concern is what to do if claimant’s counsels become wily and tell their clients to start pulling shenanigans to get fired while on light work to insure they get TTD and maybe qualify for very lucrative wage loss benefits. Our approach is to continue to follow the quote above that continues to be good law and solid advice for all risk, insurance, safety and benefits folks to remember: “Benefits may also be suspended or terminated if the employee refuses work falling within the physical restrictions prescribed by his doctor.” The question is will Arbitrators and the Commission truly view an employee’s actions in derogation of their right to work at full or light duty while still treating to be a refusal to work.

Third, if you have to fire an injured worker on light duty for even the most bona fide reason, immediately consider either an informal or formal labor market survey to document work available within their restrictions. An informal labor market survey is one you do on www.monster.com or another similar web site or three. A formal LMS is performed by a certified vocational counselor with concomitant expense. We hope either one may protect you from penalties or fees in any future dispute that becomes litigated in the fashion of Interstate Scaffolding. Please understand we are not confident about anything in the Illinois WC matrix right now and this is one approach—let us know if you have any others.

Fourth, whatever we do, start driving MMI to avoid this debate. How do you drive MMI? We still feel the best and cheapest way is UR or utilization review. Other tools are independent medical exams or setting up your own workers’ comp doctor’s network that can be done in a number of ways. If you have interest in these concepts, send a reply.

Finally, try like the dickens to avoid this whole mess by simply settling disputed claims and/or avoiding workers’ comp litigation to begin with—we hate to say it but the Commission and reviewing courts continue to be mildly to wildly unfriendly to the needs and concerns of Illinois business. We are certain you don’t want to fire an injured worker on light duty for committing a crime and then have to restart TTD. If your injured workers don’t come to the Commission and courts, they aren’t going to hear about these concepts from anyone. If you want our thoughts and ideas on how to minimize workers’ comp litigation, send a reply.

As always please send your thoughts and comments or post them on our award-winning blog.

Editor’s comment: We keep getting asked so we want to outline the legal issues relating to general release/resignations in Illinois. Some of this advice will relate to workers’ compensation claims and the rest will relate to employment practices liability.

Definitions:

1. Release: To give up a right as releasing one from his/her obligation to perform under a contract, or to relinquish a right;
2. Resignation: An oral or written statement that one is resigning a position.

Of great concern to the human resources professional is getting all mutual rights and responsibilities to end when the worker leaves your place of employment. Illinois generally remains an “at-will” state which means an employer can arguably terminate an employee for any reason and at any time, so long as there is no discriminatory action. Conversely, the typical employee can leave employment at any time and for any reason, be it personal or professional. To avoid or greatly minimize litigation, whenever and wherever you see trouble brewing when you are trying to get rid of a nettlesome worker, consider a written general release/resignation signed by the employee. If you need a sample form, we are happy to share ours, so simply send a reply requesting one and we will email it back.

In the workers’ compensation area, there are various concerns about the legal effect of resolution of the workers’ compensation claim when the employee simultaneously resigns at the time the workers’ compensation claim settlement is approved by an Arbitrator or Commissioner. Coincidental resignation by an employee can occur as a combination of a multitude of factors including a personal decision not to return to work, the lingering physical or social effects of the workers’ comp injury, labor disputes with the employer, problems with fellow employees or the union and loss of job due to plant or company closing.

A prudent workers’ compensation professional must understand workers’ compensation benefits are only one of a variety of benefits or claims which an employee might receive at the end of the employment relationship. If one resolves only the worker’s compensation claim, you may be leaving all employee’s other employment rights, benefits or claims ‘unresolved.’ As attorneys we always seek certainty in an uncertain world. An excellent example of this concept occurs when an employee resigns as ‘part’ of the settlement of a work injury claim. Your concern is the employee might later claim they were ‘coerced’ into the resignation to receive any workers’ compensation settlement at all. While we have not yet seen a reported workers’ compensation case on a claim for retaliatory discharge as a result of a coincidental resignation, your organization does not want to have to litigate the issue as a matter of first impression in the Illinois courts.

Second, an employee may have labor disputes pending. These disputes might be pending at the local grievance level or at a national level as a result of an appeal of local determination. Obviously, a resignation as part of a workers’ compensation settlement leaves such labor disputes ‘pending’ without a proper resolution.

Also, it is important to recognize workers’ compensation benefits arise from state statutes. The settlement of a state workers’ compensation claim has no direct impact on the employee’s federal rights. There is a plethora of federal statutes which impact on an employee’s rights while working and the employee’s rights at the time of termination and resignation. These include the American with Disabilities Act, Title VII of the Civil Rights Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employment Retirement Income Security Act and the National Labor Relations Act, to name a few.

The obvious response of the HR or claims professional when presented the above list is to remark, “What does that have to do with my claims?” The reply has to be your organization pays you to recognize and anticipate claim-related problems and to forestall them, if at all possible. Therefore, it is our recommendation that you do not ignore an employee’s claim or rights with regard to any common law or statutory claim whether it is a federal or state statute. In an appropriate claim, when the employee resigns, we recommend that you obtain a common law release as part of that resignation which specifically outlines both federal and state rights and ‘terminates’ (or in some instances, reserves) rights at the time of resignation/settlement. Use your knowledge and expertise to control the situation as much as possible.

An appropriately drafted general release, based upon appropriate consideration (in lay terms, usually money), should effectively defeat or block an employee from maintaining any suit or claim following resignation. We do not feel that you are sufficiently protected in obtaining a resignation with a general release if it is not supported by consideration paid by the employer.

A. There may be rights which you want to survive the resignation

At the time that the employee resigns, there are major issues which you should certainly address as you may want to work with the employee and not extinguish all of the employee’s rights when he or she resigns. The most important of these rights are pension benefits. An employee may be part of a pension or profit sharing plan which he or she should certainly be entitled to due to contributions by your organization and the employee. We have generally advised there is a west coast decision which ruled a general release blocked an employee’s pension claim–a result which may have been unintended by either employee or employer and which would certainly result in a fountain of litigation. Where an employee has pension rights or benefits available, it would seem appropriate to preserve such rights at the time of resignation. The general release should be tailored to cover the possibility.

A second concern is COBRA—you are going to have to allow the employee to maintain health care coverage if such coverage was afforded while the worker was employed. A general release/resignation should cover this federal requirement.

A third and more delicate issue is unemployment benefits. With the recent changes in this law, such benefits may provide substantial benefit to an employee who has left employment. However, such benefits allow the employer to dispute such a claim following application by the employee. If you are willing to allow the employee to make such a claim and not contest the question of resignation versus termination, you may be placing your organization in a contradictory position. If you want the employee’s unemployment benefits to be treated as if he or she resigned and thereby render the employee unable to obtain benefits until after the waiting period for a resignation, it should be clearly outlined in the general release. Therefore, it is our suggestion that such a determination be made in conjunction with counsel and all matters should be covered in settlement negotiations. Be certain to confirm the final decision on unemployment benefits is up to the applicable state agency.

B. When should a general release/resignation be utilized?

Any time an employee is leaving your employ for any reason and is simultaneously entering into a workers’ compensation settlement, we recommend that a combined general release/resignation strategy be considered. As a workers’ compensation professional, even if you settle a “small” claim where a petitioner is changing jobs, it is a prudent idea to consider obtaining a common law release and resignation. The worst nightmare of any workers’ compensation professional would have to be resolving a total and permanent disability claim with a coincidental resignation. Immediately following completion and payment of the settlement, petitioner indicates they are withdrawing the resignation and seeks accommodation consistent with the Americans with Disabilities Act, claiming to be unaware of their disabled status and the requirement the employer accommodates the worker. Even worse would be a claim the employer coerced the resignation as part of settlement to take advantage of the disabled status and thereby retaliatorily discharged them.=

These are just two of the examples which might conceivably occur. There are a variety of other potential scenarios which could just as easily develop which might leave the workers’ compensation professional in an embarrassing or annoying position. Your highest priority must be to insure that once you have settled the workers’ compensation claim with a coincidental resignation, every effort is made to insure the resignation ‘sticks.’ You do not want petitioner to return with any sort of litigation or benefit claim which you have not contemplated and have ‘allowed’ him or her to make (such as the claim for pension benefits outlined above). Every possibility should be considered as part of settlement negotiations. It is our recommendation the only way to insure this has taken place is to obtain a written general release/resignation with appropriate consideration to support same.

C. One caveat: workers’ compensation lawyers may not be well-versed in employment law

One interesting aspect of utilizing a general release in conjunction with a workers’ compensation settlement is the workers’ compensation attorney is not typically retained to provide advice with regard to the wider range of employment law issues and may be ill-informed with regard to same. Illinois workers’ comp attorneys are retained by their clients pursuant to a specific statutory language on a Commission approved form. This form sets out the narrow scope of the attorney’s retention and limits the fee to the workers’ comp claim only. It is an open question as to the amount of the fee the attorney might receive on monies paid to support the general release/resignation.

Many workers’ compensation lawyers will balk at being asked to review the broader employment law issues if you tender a general release and resignation at the time of the worker’s compensation settlement. It becomes incumbent upon you to insist the attorney provide the client/employee with appropriate legal advice or refer the matter to an employment lawyer competent to advise the employee.

Remember the workers’ compensation lawyer when settling a total and permanent disability claim typically receives a hefty fee. As part of the services which earn the fee, the lawyer should be equipped to fully and properly advise the client with regard to the bundle of rights which may be affected by the settlement of the workers’ compensation claim along with relinquishment of employment coincidental thereto. If the attorney gives you any indication they are unable or unwilling to properly advise the client, you should insist it is their responsibility to do so to avoid any claim by the employee they did not receive effective representation by counsel. Do not allow the workers’ compensation lawyer to claim ignorance or apathy and utilize it to the benefit of the client. You have to insist and insure the attorney has fully advised petitioner of the rights being preserved or being given up to avoid later confusion or litigation.

Please also remember the workers’ compensation hearing officer in Illinois and most states will not consider, review nor approve a release/resignation—it is outside their statutory authority. Trust us; they have enough headaches in dealing with the many forces that pull on them from every direction. They don’t need to be involved in general employment law concerns.

D. A note of caution in setting up the settlement with a release/resignation

When you present the settlement to opposing counsel, it is our suggestion you do so by first splitting the workers’ compensation settlement and monies reserved to support the general release. For example, if it is your intention to settle the case for a total of $150,000 to include monies to support the release/resignation, present the settlement to counsel by indicating you will pay $145,000 to settle the workers’ compensation case. You should also indicate you will provide an additional $5,000 to support the coincidental general release and resignation.

The purpose of bifurcating the finds in advance is to avoid the suggestion you are intimidating or coercing the employee to settle the worker’s compensation case and part of the plan was you would not pay any monies in settlement unless petitioner was forced to resign. You want the monies that legal effect to the resignation and release to be “fresh money.”

E. Do you need two defense lawyers to effectuate a general release/resignation?

There is a major U.S. insurer that requires its accounts to hire separate defense counsel when they are seeking a general release/resignation. For our clients who require it, we are happy to participate. But in all candor, we consider it a complete waste of time and money. The problem is workers’ compensation insurers aren’t paid to resolve general employment rights but when they hire defense counsel to represent you, the attorney’s responsibility is to ethically protect you in every way possible. If that ethical responsibility includes spending some time covering your employment liability, so be it.

F. Your overall goal in obtaining a release/resignation.

The goal of the workers’ compensation professional in settling a claim where petitioner has left employ is to be certain the employee does not come back or cost you thousands after they leave. You also want to be similarly satisfied you have no exposure to litigation or administrative claims subsequent to the resolution of the employment status. We strongly suggest you consider a strategy employing a coincidental general release/resignation in conjunction with the workers’ compensation settlement to insure this necessary result. We also strongly caution that you should always discuss this with counsel whether petitioner is represented by an attorney or not.

If you have questions or concerns about handling a general release/resignation or if you want our form, please send a reply or forward your comments and concerns.

Editor’s comment: This decision is so defense and common-sense oriented; it is hard to believe it will actually be followed by the Commission and our courts in the future. We are going to have to take a wait-and-see approach on this one, folks. Trust us, the question gets asked all the time.

In Interstate Scaffolding, Inc. v. The Workers’ Compensation Commission, (No. 3-07-0801WC October 15, 2008), a 3-2 split appellate majority was faced with a claimant who was on light duty work. Claimant was employed by Respondent as a union carpenter. On July 2, 2003, he suffered a work-related injury to his head and neck and sought medical treatment. His physician eventually authorized claimant to return to work subject to certain lifting restrictions, and claimant began working light duty for Respondent at one of its facilities. At the arbitration hearing on his application for adjustment of claim, claimant testified the work provided by Respondent was within the restrictions prescribed by his doctor.

Claimant continued to work light duty on a regular basis until his employment was terminated. With respect to the events leading to his discharge, claimant testified he had written religious inscriptions on the walls and shelves in a storage room on respondent’s premises. Claimant stated he wrote the inscriptions with permanent marker and some of his coworkers were aware of the writings. Claimant also indicated there was other graffiti and drawings on the storage-room shelves prior to when he made the inscriptions. Nevertheless, claimant acknowledged he did not have permission from respondent to write on the walls and shelves. He also stated the writings did not pertain in any way to his job duties with Respondent and, aside from the storage room, at no other location on respondent’s premises did non-work-related slogans or writings appear on the walls, affixed shelves, or elsewhere.

On May 25, 2005, claimant brought his paycheck to an employee in respondent’s payroll department. Claimant contacted the payroll department because he had been overpaid and because no federal taxes were being withheld from his paycheck. Claimant testified he had received other paychecks that contained overpayments and he “didn’t want to get accused for not saying anything.” After claimant spoke to the payroll worker, she contacted an assistant to Respondent’s president. According to claimant, the assistant to the president approached him, called him a “hypocrite,” and stated that if he believed the religious slogans he had written on Respondent’s premises, he would have brought the erroneous paychecks to respondent’s attention. Weeks earlier, the assistant to the president testified claimant responded he “deserved those wages” and he was a “union worker.”

In response to the confrontation, claimant contacted the police department, complaining he was being harassed and discriminated against because of his religious beliefs. A police officer came to Respondent’s facility, interviewed various individuals, and wrote a report. However, no arrests were made, and no one was charged with any crime.

The president was later contacted to report the incident and the fact claimant had contacted the police. At that time, the assistant informed Respondent’s president for the first time about the writings claimant had made on the walls and shelves in the storage room. The president subsequently instructed claimant’s supervisor, to terminate claimant for defacing company property.

The Arbitrator denied benefits and the Commission reversed. The Circuit Court affirmed the Commission. Most defense observers assumed the Appellate Court would state something about the “manifest weight of the evidence” standard and affirm. Instead, the appellate majority ruled that after the employee was discharged from employment, for reasons unrelated to his work related injury, defacing company property, he was no longer entitled to TTD benefits, despite his continued medical inability to return to full duties as carpenter.

The questions that remain unanswered and will continue to be asked are what to do when the employee is given light work that is clearly within his/her medical restrictions and refuses to do it, misses work or otherwise fights the process. Our recommendation in such situations is to document, document, and document. Don’t hesitate to email or call us for legal guidance on these tough cases. Get a video camera if possible and take lots of pictures of the employee so you can demonstrate to the Arbitrator and Commission failure to comply. Provide oral warnings and then write the employee up to make sure he or she understands what you are doing and why. Terminate as a last resort. And we will then have to wait and see if the Commission and courts follow this ruling.

If you have thoughts or comments, please send a reply. The web link for the ruling is: http://www.state.il.us/court/Opinions/AppellateCourt/2008/3rdDistrict/October/3070801WC.pdf