10-30-2017; Governor's Veto Blocks Two IL WC "Deforms" and The Focus on Lower WC Costs Turns to Our Hearing Officers

Synopsis: Two Kooky WC Legislative Efforts Die a Peaceful Death And The Focus on Lower IL WC Costs Turns To Our Hearing Officers.

Editor’s comment: To my understanding, this dumb idea started with the public relations forces of ITLA or the IL Trial Lawyers Ass’n. In response to high costs in the IL WC system being a source of criticism by Governor Rauner, the IL State Chamber and other business groups, some ITLA rocket scientist came up with the idea that multi-zillion dollar insurance carriers were somehow manipulating “profits” and thereby causing IL WC premiums to be higher than other States. It couldn’t have been all the favorable rulings and high awards and ever-spiraling rates that happened in the Blagojevich era when he traded votes for control of the IWCC to the nice Claimant bar from Madison and St. Clair County. NOOOOO!! It was those unnamed insurance carriers—in response, the idea was to snip $10M out of the IWCC’s annual budget to start a tiny, truly miniscule State WC Mutual insurance carrier that would put all the industry giants to shame. Right?

Wrong. I truly doubt this idea would have ever actually been implemented, even if the IL General Assembly had passed it. I think it would have gone to the same junk heap the IL State WC Oversight Panel For State Workers Committee is on—they spent hours and hours debating the makeup of that panel and what it would do and they never met, not even once. It all sounded good when it got passed but fizzled in execution while the State still shovels millions to our IL government workers who then support and vote for the politicians shoveling them money.

Either way, last week, you and I and all my readers hailed another victory when the bill that would establish an IL State workers' compensation mutual insurance company funded by a $10 million loan from the Illinois Workers' Compensation Operations Fund failed to receive 71 votes required to override Governor Rauner’s veto. Under the proposal, the $10 million was to be an intergovernmental loan to be paid back to the IWCC with interest. As I indicate above, financial repayment in our State gov’t is usually a wish and a prayer.

The amazing WC gurus at the IL State Chamber also opposed the proposal because it required this new State insurer to be included in the State's Guaranty Fund which pays claims made against insolvent insurance companies in all lines of insurance, not just workers' compensation. Should the State WC Insurance Fund be declared insolvent for their liabilities in unlimited amounts, this exposure/loss would be absorbed by the Guaranty Fund and then assessed back against all private property and casualty insurers, including homeowners' insurers, whose customers would likely share the new and unprecedented cost burden. Illinois homeowners and auto insurance customers would also have the potential responsibility to bail out this State workers' compensation insurance fund should it be poorly run and then fail.

The Other Dopey IL WC “Deform” Was HB 2525.

This bill would place price controls on workers comp insurers selling policies in Illinois. Steve Schneider of the American Insurance Ass’n said: “It's the harshest and most opposed regulatory type of structure that I have ever seen because we are going to have to seek permission from the government to charge a final price on the workers compensation insurance that we provide to our customers. Part of the decision-making by the state ... is whether those premiums are reasonable, and we just think that is an extraordinarily broad reach of power for the government to assume … we are opposing H.B. 2525 on that basis,” he continued. “The sponsors of the bill have put in some weak language designed to give us the gloss of reform, but it is simply insufficient. There is no independent verification of the amount or types of savings that this legislation would produce.”

This bill also tried to codify the “traveling employee” concept for the first time, as if the Supreme Court hadn’t rejected that concept when they last considered it.

The motion to override the veto of HB2525, a bill sponsored by Rep. Jay Hoffman (D-Swansea)/Sen. Kwame Raoul (D-Chicago), was not called for a vote. Consequently, under the IL Constitution the 15 day period to call a veto override expired. Good riddens to bad rubbish.

What Was Bad About These Nutty Bills?

They were designed to and did deflect any real WC legislative change or reform in this State. This important debate went down an endless side-track to nowhere with consideration of these two “fake” bills.

What is Good About The IL WC System?

We have lots of very solid Arbitrators and Commissioners who are dedicated to bringing this State back to the middle of the U.S. in terms of WC costs and premiums. We also feel the message has made it to the IL Appellate Court, WC Division that is taking a more traditional role in overseeing the IL WC system—happy to explain. Please note the impact of these new and improved hearing officers, judges and justice won’t happen in a day or three. It will be a couple of years for their rulings and settlements to show improvement for our WC risk, business, claims and insurance community. The hearing officers also want truly injured workers to be properly taken care of and protected under the IL WC Act and Rules.

As we have asked in the past, if you or your claims team see a rotten or shockingly bad IL WC decision, send it along for our complaint box.

That said, we truly feel things are looking up and ask our readers to be patient. We appreciate your thoughts and comments. Please post them on our award-winning blog.