2-20-2017; Governor Rauner Wishes IL WC Could Become Massachusetts??; AG Madigan Loses Bid to Shut-Down State Gov't and the IWCC; IL WC Fraud Enforcement Remains an Embarrassment and more

Synopsis: Governor Rauner Hopes to Rub a Magic Lamp and Turn Illinois Workers’ Comp into Massachusetts?? 

Editor’s comment: We strongly respect our fearless leader in Illinois Governor Bruce Rauner. We truly feel his efforts to make sense of the first- or second-worst run states in the United States would be entertaining if there wasn’t so much at stake. From last week’s budget speech, he said:

To bring good jobs to Illinois, we have to make Illinois a place where it is good to do business. We must fix our workers comp system, labor regulations, liability costs, and property taxes that make us uncompetitive, and push job creators out. The cost of worker’s comp is the biggest factor driving our job losses. If we simply aligned our workers’ comp costs with those of a state like Massachusetts – which is hardly a bastion of conservatism – we can save state and local taxpayers over $300 million per year, while protecting those who suffer workplace injuries, and grow more careers at higher wages.

Let’s get it done!

Other than to point to “The Bay State,” Governor Rauner provided no details or analysis on how to turn our WC system into something Bean-Town might like. Rauner also did not speak specifically about any element of the Illinois budget compromise package. But he said the compromise must include structural changes to avoid future deficits, term limits for state legislators, property tax relief and workers’ compensation reforms that will “get job creators excited.” With respect to Governor Rauner, it doesn’t appear he has a whole lot of solid planning and specifics to bring to the table. We prefer to listen to Wisconsin Governor Scott Walker who actually does his homework and makes concrete proposals to actually save Cheese-taxpayers money.

So All We Have to Do is to Make IL WC into Mas-Cha-Who-Setts??

Well, seems pretty easy to me so I looked up the Massachusetts WC Unit. Not very fancy but seems pretty utilitarian. In the every-other-year rankings by the State of Oregon, Massachusetts WC premiums were 44th out of 50 which is considered dramatically better than IL WC which remains fairly high, tied with Oklahoma at number 7.

So I took a deeper look. Unlike IL WC with its own agency and budget, the Mass WC Unit is a sub-set of the Executive Office for Administration and Finance. We have asked and begged our great Governor to work/fight to consolidate Illinois state agencies from 88 down to about 30, as other states do. Get rid of redundant and do-nothing state jobs. We are still waiting for someone to join with us in asking about it.

We thought Massachusetts wouldn’t have a lot of manufacturing workers—actually, they have a very sizable manufacturing presence. http://www.nam.org/Data-and-Reports/State-Manufacturing-Data/State-Manufacturing-Data/Manufacturing-Employment-by-State-March-2016/

Going back to state-to-state comparisons, Massachusetts WC has a five day waiting period to start work-related lost time benefits. They pay lost time benefits at 60% of the average wage which is less than the IL WC TTD rate at 66-2/3’s. They have a form-based system that typically makes me think their bean-counters are watching what the employers and insurance carriers do. Other than that, from the outside-looking-in, I can’t tell why Mass WC premiums are about ½ of what Illinois pays. I have to believe their traditions/benefits are lower than ours and Illinois needs to continue to make progress in cutting WC costs.

However, we don’t think the Governor is getting great advice on how to cut IL WC costs. As we have written over and over, all he has to do is talk to the IL WC Arbitrators and Commissioner who report to him and tell them to cut our state’s moderate to high WC costs. If they won’t do so, the issue lies with the Governor and not with them—he can find/select and retain new and improved hearing officers in his image and likeness. We are absolutely sure he can save the $300 million a year he wants to save for IL businesses by just doing that—we are happy to meet with him or his team to discuss this in greater detail any time anyone might want. If anyone wants easy legislative and administrative changes/reforms, we promise we have lots and lots of them too.

Another Bi-Partisan WC Cost-Saving Thought—Limit All IL WC Claims to Adjudication by The IL WC Commission?

Right now, IL WC claims can run on and on and on. Either side can clown around for at least three years before the Arbitrator and maybe more if Claimant’s counsel whines enough. After 3+ years, the matter gets tried and then can be appealed, effectively for free and then stall around for about another year “on review” before an IL WC Commission panel. By that time, the case can be five, six or more years old. From there, it can be appealed to the Circuit Court—another year wasted. Then the Appellate Court, WC Division to blow another year. After that, it is possible for a simple WC claim to make it all the way to the IL Supreme Court. As an example of endless litigation, you may note the ruling in Beelman Trucking v. IWCC took about 14 years to become final!

Watching all this over-litigious silliness, please note IL WC claims by many state government employees legally can’t and aren’t appealed to the courts—by law, they get a hearing at Arbitration and then a single appeal. In our view, if this were extended to all Illinois workers, things would move much quicker and outcomes be more certain. Faster and more certain benefits would save IL business and local governments lots and lots of bucks.

We could see a situation where the Commission panel might make a purely legal ruling and the panel ask for a decision by the Courts—that would hopefully be a once or twice a year type thing. If the Commission were to want such legal analysis of their rulings so be it but for decisions on the facts, the idea has always been for the Commission to make the final call and the chips lay where they lay. We see literally no value in clowning around over the “manifest weight of the evidence” in the IL reviewing courts.

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

Synopsis: In A Not-So-Shocker, IL Attorney General Lisa Madigan Loses Effort to Block Pay to State Workers. IL WC Commission to Remain Open for Business.

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Editor’s comment: As we have advised, everything was pointing to an IL government shut-down on Feb. 28. Government shutdown = IL WC Commission shutdown. Problem averted for now.

Late last week, news from St. Clair County came in that our plucky AG, Lisa Madigan lost her effort to put any pressure on the IL General Assembly to actually pass a “Grand Bargain” and institute a budget that might allow for our state’s bills to be paid. The last time we saw the math on this, the unpaid bills were way over $10 billion and rising by the millions each day.

St. Clair County Circuit Judge Robert LeChien refused to reverse a previous court order requiring Illinois to pay state employees in the absence of a spending plan. Madigan argued stopping pay would hasten a budget agreement.

Republican Gov. Bruce Rauner criticized AG Madigan’s legal move, suggesting the daughter of House Speaker Michael Madigan wanted to create a “crisis” that would shut down the government.

“We’re pleased our hard working state employees, who show up to work every day on behalf of the people of Illinois, will continue to be paid,” Rauner Administration General Counsel Dennis Murashko said in a statement, adding he hopes Madigan drops her efforts and allow negotiations in the Senate on a balanced budget to succeed.

Rauner and Democrats who control the Legislature have been fighting over how to balance the budget. Rauner repeated that he will support a tax increase to help close a multibillion-dollar budget deficit, but only if it is accompanied by measures he wants to help businesses, such as reduced workers’ compensation costs.

Democrats oppose Rauner’s agenda, with Speaker Madigan calling it “extreme” and harmful to the middle class.

Without a budget in place, social service agencies, higher education and other programs have suffered. Other spending has continued, however, because of court orders or state law. That has included employee pay.

We will continue to watch and report as this battle unfolds.

Synopsis: Everyone Continues to Note IL WC System Does a Rotten Job Ferreting Out Work Comp Fraud by Workers.

Editor’s comment: The proof is in the pudding—over a decade ago, the State of Illinois criminalized workers’ compensation fraud by workers. Despite the law, the agency created to “bust” WC Fraud by workers has managed only 42 convictions, or fewer than five a year. In short, the Illinois Workers’ Compensation Fraud Unit had three convictions in each of 2015 and 2016. In contrast, the State of Ohio, with 1.3 million fewer residents than Illinois, averages 11 convictions a month.

In 2015, the Illinois WC Fraud Unit dropped to two ineffective investigators, its lowest staffing level in five years, as the number of complaints more than tripled from 100 to 331.

“The WCFU is already in the process of hiring additional investigators; however, this decrease in staff, coupled with the length of time it takes to bring new investigators on board, has already negatively affected the number of investigations opened,” the WCFU 2016 annual report states.

“An increase in the WCFU’s appropriation would allow for the hiring of more investigators, allow for more investigations to be completed, and lessen the impact the departure of a single investigator has on the unit,” it states.

Illinois has been hampered by the lack of a full state spending plan for the past 19 months, the American Insurance Association said. “The budget impasse over the last couple of years, I believe, has restricted the department’s ability to prosecute workers’ compensation fraud,” said Stephen Schneider, AIA Midwest region vice president. “Anything in terms of resources that can assist them ought to be done.”

“We think Illinois should do it tougher and bigger and bolder in pursuing workers’ compensation fraud,” he said. “There’s certainly a lot more that can be done. When you look at states like Florida and Ohio, obviously they’re doing something right.”

Illinois criminalized workers’ compensation fraud and noncompliance for the first time with House Bill 2137 in 2005. HB 2137, which became Public Act 94-277, required the Illinois Department of Insurance to create the Workers’ Compensation Fraud Unit and identified eight specific fraudulent acts, whereas before they were not specifically defined as unlawful. (Those acts are described here.)

The General Assembly beefed up fraud enforcement again in 2011 with HB 1698, which became Public Act 97-18.

The IL WC Act added a ninth prohibition, making it illegal to “intentionally present a bill or statement for the payment for medical services that were not provided.” It introduced a new criminal penalty scheme, gave the WCFU subpoena power and removed the 120-day time limit for the Unit to complete an investigation.

In my view, the lack of any effort to stop IL WC Fraud by workers highlights how odd our state can be. If someone were to steal a large truck, everyone would expect SWAT units to be mustered and the bad guys/gals to be arrested and face heavy penalties. In contrast, if someone creates a phony WC accident or works while on benefits and steals the same amount of money, everyone in government says that is a “civil” matter and the employer should sue the employee in Circuit Court.

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

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!