2-13-2017; Grand Bargain Remains Stalled--IWCC Still May Close; OSHA Going Quiet on Enforcement-Penalties-Citations; When is a Loss Covered by the IL or Another State’s WC Act? and more

Synopsis: It is February 13, The Illinois Workers’ Compensation Commission and all IL State Offices To Stop Paying Their Workers in Just 15 Days from Today!

Editor’s comment: The “Grand Bargain” to create an IL State budget remains completely stalled. The two parties remain at odds and negotiations are officially going nowhere. Our IL General Assembly and more specifically, the IL Senate won’t be publicly dealing with the issues this week that you or I will be able to watch. Lots may be happening behind closed doors and our sources continue to watch and learn.

Governor Rauner appears to be sitting on the sidelines, hoping for spending cuts and structural change but not making concrete proposals.

Whatever happens, we hope any income tax or other new taxes will be linked to strong curbs/limits on runaway spending, hilariously high government compensation/retirement and appropriations. The main issue is that if curbs/limits don’t happen, just because taxes increase, it isn’t going to “cure” anything to possibly keep pace with a history of years of over-spending.

From all participants on both sides of the IL WC matrix, the odd proposed IL WC reforms appear to be on the sidelines where they belong. The bigger issues of multi-billion dollar debt, unpaid state government bills and skyrocketing income, real estate, sales and other taxes are on the forefront.

We will continue to report any developments as we learn of them. We appreciate your thoughts and comments. Please post them on our award-winning blog.

Synopsis: OSHA Website and Management Going Quiet on Enforcement and Penalties; Focusing On Positives In Workplace Safety.

Editor’s comment: The Occupational Safety and Health Administration is changing its emphasis from enforcement to employer compliance assistance under the Trump administration. As an indication of the change, the U.S. Department of Labor hadn’t issued a single news release regarding OSHA enforcement since Jan. 18, two days before President Trump’s inauguration on Jan. 20.

Before this dearth of enforcement news started, workplace reporters like us would see several OSHA releases every day, detailing strong fines and punitive citations issued to U.S. employers for workplace safety violations. In contrast to the “quiet” from OSHA, the U.S. DOL has continued to issue news releases on other topics.

More may be known about OSHA’s enforcement philosophy when/if Andrew Puzder’s nomination as the new secretary of the DOL is confirmed. Our new President nominated Mr. Puzder, chief executive officer of CKE Restaurants Inc., the parent company of the Carl’s Jr. and Hardee’s burger chains.

Many observers forecast that OSHA under the new administration will focus more on workplace safety education and less on enforcement and punitive action. This move would be a reversal of what was seen under the Obama administration when OSHA staff was moved from training and education into enforcement.

Most veterans again feel the frequency of workplace injuries will continue a long-term gradual decline. From the perspective of Illinois employers, WC claims are steadily dropping.

We are getting lots of questions and gossip about many OSHA rules from the last administration—in response, we predict a kinder, gentler OSHA under the new administration. We are certain you can expect a reversal of OSHA’s recent hike in penalties, or an easing of restrictions on post-accident drug testing and safety incentive programs that were part of a OSHA’s new electronic reporting rule. If you were planning on getting into training or changing your work rules/employee handbooks to address the “old” rules, we recommend you relax and hold off for now.

The electronic reporting itself, in which OSHA would make public safety records of larger employers, was described as a way to “shame” businesses into improving worker safety. To us, that was a facet of the anti-business environment of the old administration. We think it is going, going, gone…

Even if OSHA shifts its focus from enforcement to voluntary compliance, another variable is how states with their own OSHA programs will respond. Twenty-two states or territories, including Illinois, have OSHA-approved state plans that cover both private and public sector workers. The state programs must follow certain OSHA requirements, but also have some latitude in how they operate.

As OSHA-Watchers, we might find clues about OSHA’s future in the agency's twice-monthly newsletter, Quick Takes. The top story for the Dec. 15 edition under the Obama administration was “Alabama auto parts supplier, staffing agencies face $2.5 million in fines after robot fatally crushes young worker.” In contrast, the top story of the Feb. 1 edition has a more positive and pro-business tone, discussing how the OSHA’s free On-site Consultation Program “helped more than 27,000 employers create safer workplaces in 2016.”

We appreciate your thoughts and comments. Please post them on our award-winning blog.

Synopsis: When is a Loss Covered by the IL or Another State’s WC Act??

Editor’s comment: The first thing an attorney, risk manager or adjuster must do when a new claim has been made is to evaluate whether the loss is covered by Illinois workers’ compensation law (versus the various federal acts, 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 or the federal system. 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, if an Illinois workers’ compensation claim is filed, the case involves a loss that should be compensated under Illinois workers’ compensation law. However, in order to recover benefits under workers’ compensation law, the activities must be covered by the IL WC Act and not under any other benefit provision in a different system that may be considered exclusive.

For example, if an Illinois employee is working to maintain a commercial watercraft when injured and the vessel is on a navigable waterway, such injuries would be covered by the exclusive provisions of the federal Longshore Harbor and Workers’ Compensation Act, administered by the OWCP. Such injuries would not be appropriately covered by the state Workers’ Compensation Act, even though the employee was hired by and working for an in-state employer. U.S. Postal workers are also covered by a similar federal-only WC Act. There are similar laws that have exclusive coverage to eliminate jurisdiction of the State WC Board or Commission to hear the claim.

Another aspect of the WC system coverage question is when the employee can bring a workers’ compensation claim against an employer and when the employee can also sue the employer for the same injuries in civil court. This concept is a possibility but under very limited circumstances. The basic model in the development of workers’ compensation throughout the industrialized world is the injured employee gave up his/her right to bring a common law action against the employer in exchange for workers’ compensation benefits that are more certain and more rapidly provided but potentially lower than what a jury might be able to provide for a similarly severe injury.

There have been a number of strange and complex legal devices that have allowed U.S. employees to maintain common law claims against third parties that might require the employer to pay a part of a jury verdict, but the general rule is supposed to be that the employee cannot sue the employer at common law if he/she is entitled to workers’ compensation benefits.

One clear exception to this concept is when an employer commits an intentional act or hires another to commit an intentional act to injure an employee. For example, if the employer were to hire a ruffian to injure/attack an employee due to a work-related dispute, the employee could seek workers’ compensation benefits and also sue the employer for the injuries suffered in the intentional attack.

In specialized circumstances, the employer and its carrier/TPA may have 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 might successfully deny the claim for workers’ compensation benefits only to then face a premises liability or other general 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 should block any third party claim against the employer if the employee knowingly accepts such benefits.

B. State Subject Matter Jurisdiction of a Work Injury.

Once it has been established that the claim properly involves workers’ compensation benefits, the adjuster, attorney, or risk manager must determine whether a given state is the proper jurisdiction for the claim to be heard versus a different state or the federal government.

It is critical to understand a claimant with a single injury, a worker could have a claim for workers’ compensation benefits in a multitude of states. The employer should receive ‘credit’ for any benefits paid in any state under the full faith and credit clause of the United States Constitution and not have to double or triple pay multi-state benefits. There is not much guidance on this legal principle, as such issues aren’t litigated often. Sometimes common sense prevails.

But remember, payment of state WC benefits does not necessarily block the filing of a claim in another state or states. Conversely, the filing of a claim in another state for benefits or the receipt of such benefits does not preclude an Illinois claim.

Most state have proper subject matter jurisdiction of a work injury if one of the following tests are met:

            1. The accidental event occurs in a given state. This concept applies even if the employee executed a written agreement prior to employment to only seek benefits in another state or forum;

            2. The accident occurs outside a given state but the ‘contract for hire’ was formed in a different state. This is the tactic most commonly used to bring out of state claims into a favored or liberal state. 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 a given state. This is utilized when the employer may have an out of state headquarters for employees who actually perform the majority of their work in your state. This situation frequently occurs in trucking claims where Petitioner/Plaintiff establishes the principal localization of work in a given state by logs indicating the aggregate number of miles driven in one state versus other states. There are also cases that hold where work is “centered” in one state—employment may be established so as to create jurisdiction. The concept of “centered” work would mean the employee comes to or calls for assignments in their favored state but does most of their work outside the state.

Please also note the employment cannot be for the various branches of our federal government, nuclear industry or U.S. armed forces. Such workers are almost always exclusively covered by the federal OWCP or Office of Workers’ Compensation Programs. State law does not regulate WC benefits for such workers.

Other factors sometimes cited by a given WC Board or Commission and the courts in subject matter 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 a given state. These concepts are not contained in the applicable WC statute and shouldn’t be germane. The facts are sometimes utilized by a WC Board or Commission or courts stretching to find jurisdiction by looking for factors considered in other areas of law involving jurisdictional fights.

C. Pre-injury agreements with regard to subject matter jurisdiction of all the employer’s WC claims across the country.

Several years ago, this was an interesting trend among some employers but has waned in recent years. We caution you to 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. We have seen employers with multi-state operations or traveling employees routinely require employees to execute such agreements.

These documents may generally be ignored at hearings and do not have any real legal effect in many states. However, we are not aware of any prohibition in any state with regard to such agreements. If they are designed to confuse unsuspecting workers after they suffer injury, they may be considered an attempt to defraud the worker of benefits under the law and we consider them unethical for that reason.

It is possible an employee or their attorney will not become aware of his or her ability to make a claim for benefits in a given state 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. Most hearing officers won’t approve such agreements.

For technical reasons which do not bear repetition, this concept probably wouldn’t be legally effective. It does leave petitioner and their counsel with the sense that closure has been reached and may cause them to refrain from filing subsequent claims in other states.

For neophyte lawyers, please remember you can’t ethically provide legal advice and counsel about workers’ compensation rights in states in which you aren’t licensed. If you are asked to do so, you need to tell the client of this concern or join with the client in seeking assistance from a licensed lawyer in the other state.

E. Insurance Policy Coverage

The adjuster or risk manager must also consider whether the specific policy written for the employer to cover the injured worker covers the loss. The date of accident or disability must fall within the dates/states 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 the actual manifestation of onset of pain 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 the policy was properly terminated. This requires notice to the employer/respondent and possibly to the local WC Board or Commission. Otherwise, the Workers’ Compensation Board or Commission may require extension of coverage through the date of accident to ensure the injured party gets WC benefits.

An additional consideration in policy coverage is the employment position of a given petitioner. If petitioner is a sole proprietor, owner or partner of a business, it is legally possible for such executives to opt out of insurance coverage for injuries and thereby save the premium cost. 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 WC benefits might not be sought—they would just be not covered by the insurance policy, but by the company the executive worked for. This also might not affect any other common law rights available.

One interesting quirk in some states’ workers’ compensation claims practice is the insurance carrier may be named as a party respondent by petitioner in filing the pleading. If there are concerns about the financial status of the employer, it may be a prudent thing for the attorney for a claimant to include the insurance carrier as a party to insure any award or settlement is paid.

Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need To Be UPDATED RETROACTIVELY(!). Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. As mentioned twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $775.18. When it was published, this rate changed retroactively from July 1, 2016 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong. If you have a claim with a date of loss after July 2016 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. WORD OF CAUTION: There is pending legislation which Gene reported last week and this week which currently states “The maximum compensation rate for the period July 1, 2017 through June 30, 2021, except as hereinafter provided, shall be $755.22. Effective July 1, 2021 and on July 1 of each year thereafter the maximum weekly compensation rate, except as hereinafter provided, shall be determined as follows: if during the preceding 12-month period there shall have been an increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act, the weekly compensation rate shall be proportionately increased by the same percentage as the percentage of increase in the State's average weekly wage in covered industries under the Unemployment Insurance Act during such period.” THIS NEW LEGISLATION WOULD POTENTIALLY CHANGE THIS PPD MAX AGAIN. If this isn’t clear, send a reply to Shawn at sbiery@keefe-law.com.

The current TTD weekly maximum has risen to $1,435.17. A worker has to make over $2,152.76 per week or $111,943.52 per year to hit the new IL WC maximum TTD rate. Does any state in the United States have a TTD maximum that high?

The new IL WC minimum death benefit is 25 years of compensation or $538.19 per week x 52 weeks in a year x 25 years or $699,647.00! The new maximum IL WC death benefit is $1,435.17 times 52 weeks times 25 years or a lofty $1,865,721.00 plus burial benefits of $8K. On top of this massive benefit, Illinois employers/governments have to pay COLA increases.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa with your mailing address if you would like to be mailed a laminated copy at mpatel@keefe-law.com and they will get a copy routed to you before they raise the rates again!

Synopsis: Happy Valentine’s Day from the Gang at KCB&A!!

Editor’s comment: Like the Boy Scouts—Be prepared!