Synopsis: Continuing Education Units—Does Your Claims Team Need Presentations on Ethics for Adjusters 2013-2014? Do You Want the Needed CEUs This Year??

Editor’s comment: We had a reader approach us at the recent smash presentation by Accelerated Rehabilitation Centers® about the need for adjusters to get CEUs, particularly on Ethics. In response to her suggestion, we have worked hard and developed Ethics for Adjusters 2013-2014. Our goal was to touch on all the ethical issues important for your claims staff. As you read this, we have sent a draft of the presentation to a number of clients and claims managers for their final review, comments and suggestions. Our goal is to provide an entertaining and informative presentation that will meet your CEU requirements.

Some of the topics we will cover include:

· Defining Ethics for Claims Handlers;

· Who’s On First--No Side Deals or Dealings;

· Ethics in Handling Medicare Set-Aside Accounts;

· Ethical Considerations in Dealing with Resignations;

· How Do You Insure You Are Talking to an Attorney?;

· What If a Lawyer Starts to Act Unlike a Lawyer?;

· Understanding HIPAA in Handling Personal Injury/WC Claims;

· Avoiding Conflicts of Interest;

· Always Tell the Truth;

· Be Clear and Open about Important Claims Decisions;

· Don’t Leave Your Defense Attorney Dangling;

· Be Crystal-Clear about Settlement Demands and Offers;

· Keep Your Claims to Yourself, Account and Company;

· Bad Faith Claims Handling;

· You May Be Responsible for Vendors Acting in Bad Faith;

· Attack Claims Fraud When You are Sure of It;

· And more!!

We are happy to present these comprehensive and thoroughly researched materials in a lunch and learn at your offices. We can tailor the time involved to your needs. If you want that presentation communicated to claims staff across the country in a webinar, we are happy to assist to set that up. Our presentation team includes your editor, Shawn R. Biery, J.D., M.S.C.C. and John P. Campbell, Jr., J.D. who all teach Workers’ Compensation Law and Ethics at The John Marshall Law School in Chicago.

If you have interest in a presentation, please reply. Please feel free to post comments and thoughts on our award-winning blog.

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Synopsis: The Illinois Appellate Court rules a subcontractor’s liability carrier had no duty to defend the general contractor from a negligence claim brought by the subcontractor’s injured employee alleging the general contractor alone was directly negligent. Analysis by Chris St. Peter, J.D.

Editor’s comment: We feel the Illinois Appellate Court correctly applied the plain language of the policy to the facts alleged in the original underlying complaint—and not to additional facts in the general contractor’s third-party complaint—to hold there was no duty to defend where there were no allegations of vicarious liability. Any other result would allow a party seeking coverage to plead additional “self-serving” facts in a third-party complaint for the sole purpose of obtaining coverage.

By way of background, in November 2009, R. A. Cullinan & Son, Inc. (“Cullinan”) became the general contractor of a construction project for the Illinois Department of Transportation in Peoria, Illinois. Cullinan entered into a subcontract agreement with Durdel & Sons Tree Service & Landscaping, Inc. (“Durdel”) to clear trees and logs at the work site. In June 2010, one of Durdel’s employees, Charles Hill, Jr., was injured when the equipment he was operating struck a live overhead power line.

In May 2011, Hill filed a two-count negligence complaint in Peoria County against Cullinan and another defendant alleging both defendants were directly negligent in supervising, maintaining, and/or providing warnings regarding the live overhead power lines near the work site. Of note, Hill’s complaint did not contain any allegations that his employer, Durdel, was negligent in any manner. In April 2012—nearly a year after the original complaint was filed—Cullinan filed a third-party complaint alleging Durdel was solely negligent for Hill’s injuries. Cullinan then contacted Durdel’s liability carrier, Pekin Insurance Company, Inc. (“Pekin”), claiming it had a duty to defend Cullinan as an additional insured under Durdel’s policy. Pekin refused to represent Cullinan, claiming Durdel’s policy did not cover Cullinan when the complaint alleged Cullinan was directly negligent for Hill’s injuries, and not vicariously liable for Durdel’s negligent actions. Pekin sought declaratory relief asking the court to find Pekin had no duty to defend Cullinan. However, the trial court ruled against Pekin and held it did, in fact, have a duty to defend Cullinan under the terms of the policy.

In Pekin Insurance Co. v. United Contractor Midwest, 2013 IL App (3d) 120803 (Sept. 18, 2013), the Illinois Appellate Court, Third District, reversed and remanded the trial court’s ruling. The Appellate Court first looked to the plain language of the insurance policy and noted it only provided coverage for vicarious liability proximately resulting from Durdel’s “ongoing operations performed for that Additional Insured during the Policy Period.” In interpreting this provision, the court noted the general rule that a person who employs an independent contractor is not vicariously liable for the acts or omissions of an independent contractor except under very specific circumstances where the general contractor retains control over the independent contractor’s work.

Next, the Appellate Court looked to the underlying allegations of Hill’s negligence complaint to determine whether it alleged sufficient facts that the injuries occurred during Durdel’s “ongoing operations performed for that Additional Insured during the Policy Period.” In doing so, the Court noted the complaint did not allege any facts identifying a negligent act performed by Durdel which resulted from the directives of the general contractor. Instead, the court noted the complaint alleged Cullinan, acting alone, negligently failed to supervise and warn Hill of the dangers posed by the live overhead power lines on the work site. Accordingly, the Court held that the failure to specify a negligent act committed by Durdel not only failed to trigger coverage to an additional insured in Durdel’s insurance policy, but also defeated a theory of vicarious liability.

Of note, the court further declined to consider Cullinan’s “potentially self-serving, third-party complaint” for allegations of Durdel’s negligence, as such a complaint filed after declaratory relief was sought could be used “to supply the missing allegations from the original complaint in an attempt to gain coverage as the additional insured under the policy.”

As noted above, we feel this is the correct result. The allegations of the original underlying complaint contained no facts that would trigger coverage as an additional insured under the theory of vicarious liability. Simply stated, if the insurance policy does not cover an additional insured’s direct negligence, then there is no duty to defend in an action alleging the additional insured was directly negligent. Moreover, an additional insured should not be able to plead additional “self-serving” facts as an end-around to obtain coverage.

This article was researched and written by general liability and employment practices liability law specialist Chris St. Peter, J.D. Contact him at cstpeter@keefe-law.com or (312) 756-3714 and ask him to review your insurance policies and other contracts.

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Synopsis: The Fun Bunch at NCCI Provide More WC Statistics Than You Can Shake a Stick At.

Editor’s comment: If you can’t sleep some night and want to do some in-depth analysis of how the IL WC system compares to the rest of the country, take a look at this excellent statistical treatise from NCCI that is online at: https://www.ncci.com/documents/SAF_IL.pdf

Titled Illinois State Advisory Forum and dated September 13, 2013, the report is lengthy, detailed and challenging to fully comprehend. We do note our solid and hard-working IWCC Chairman Michael Latz participated in creating and presenting this analysis. Illinois highlights are listed as:

· Approved loss costs are 14% below their level prior to the 2011 IL Workers’ Compensation Reforms—we consider this very positive news;

· Despite lagging economic recovery, increases in payrolls are contributing to workers’ compensation premium increases;

· Our Combined Ratio is below 100% for the first time in more than a decade.

The report confirms when many businesspeople already know about our state—job losses in the past two recessions greatly exceeded the national average and show no signs of lessening. Further, the IL unemployment rate and lack of growth in recovery is well over the U.S. average—there is a pronounced and growing gap we feel is due to the miserable way our State and City of Chicago governments are run.

We were mildly aghast to see IL State Rep. Barbara Flynn Currie attacking long-time Illinois-based agri-processor Archer Daniels Midland for seeking tax incentives from State government—she specifically characterized it as “blackmail” in a fashion we consider ludicrous. Obviously, she could just stand opposed and avoid the hysterical attack on this major IL employer. We are certain how elated other states and cities might be to have ADM move their HQ there. As the vast majority of IL taxes are now going to fund and pay what some people call “government pensions” for folks that no longer work for our state, certainly State government can’t lose any tax dollars to keep major businesses here or have them expand their operations in our state. One has to wonder how long our government unions can continue to block “pension” reform in Springfield and whether that might occur before the hollow house of cards falls into the same dark hole in which the City of Detroit’s pensions are currently sitting.

The NCCI report also provides clear documentation of the industries in IL that continue to struggle. Construction employment is down over 30%--this may be exacerbated by the silly new court-created “traveling employee” rule that extends WC coverage of non-work-related accidents/illnesses to all construction workers in our state. Manufacturing jobs are also down more than 13%. We were mildly surprised to see jobs in the information industry demonstrate a 13.7% loss, as it seems that job sector continues to grow. Trade/Transportation and Utility jobs showed an almost 5% loss—again this sector is certain to continue to show more job losses as the “traveling employee” concept takes hold.

Other statistical metrics of note include:

Illinois lost time claim frequency is down 35.2% for the period from 1997-2011 (we feel this is one of the main reason overall WC claims are down);

Average claim frequency in IL is down and remains under the level of our sister states;

IL Permanent Partial Claim Frequency is higher than all of our bordering states and close to double the national average;
Indemnity benefits in IL are dramatically higher than medical benefits—we pay so much for PPD and lost time compared to other states and the national average;

Indemnity severity in IL has noticeably declined since 2008.

All of it continues to change and morph as we move into the rest of this decade. We are sure most of the current IL Arbitrators/Commissioners are greatly improved and are doing their best to keep Illinois in line with other states.

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

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Synopsis: Chairman Latz and the IWCC announce the 2014 Arbitration Assignments.

Editor’s comment: Whoever the Arbitrator might be that is currently handling your downstate claims right now is almost certainly going to change. Most business observers feel the changes are relatively reasonable—please remember you can’t pick 30 Arbitrators that I might like and I can’t pick 30 Arbitrators that you might like—we are all human and the nature of litigation is resolving differences fairly and amicably. We again assert the IL WC Arbitrators are dramatically honest, generally fair and professional. They are much more sensitive to WC fraud by claimants than in years past. We encourage all business representatives to attend pretrials and hearings and meet our hearing officers to insure you are getting solid value from our state WC administration that you pay for.

2014 IL WC Arbitration assignments announced

Effective January 1, 2014, these IL WC Arbitrators will have the following assignments:

Zone 1: Collinsville, Herrin, Mt Vernon:

Lee, Lindsay, Zanotti

Zone 2: Springfield, Quincy, Urbana:

Dearing, Gallagher, Pulia

Zone 3: Bloomington, Peoria, Rock Island:

Erbacci, Holland, McCarthy

Zone 4: Geneva, New Lenox, Ottawa:

Granada, Mathis, O'Malley

Zone 5: Rockford, Waukegan, Woodstock:

Andros, Falcioni, Fratianni

Zone 6: Chicago, Wheaton:

Cronin, Doherty, Luskin

Zone 7: Chicago:

Black, Carlson, Dollison, Flores, Huebsch, Kane, Kelmanson, Mason, Simpson, Steffen, Thompson-Smith, Williams

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

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Synopsis: Dr. Steven Delheimer, rest in peace

Editor’s comment: Dr. Steven C. Delheimer, MD, 64, of Peru died last week in his home. He was a longtime participant in the IL WC system and testified in numerous hearings and reported decisions. He was a positive and healing force in many people’s lives.

Dr. Delheimer was born in Streator, IL. He earned his undergraduate degree from the University of Illinois at Urbana-Champaign and earned his doctorate in medicine from the University of Illinois Rockford School of Medicine. He completed a surgical internship at Dartmouth College in New Hampshire and a neurosurgical residency at Mayo Clinic in Rochester, Minn. After finishing his studies, he was a practicing neurosurgeon in Rockford for several years then in La Salle-Peru and Bloomington. In lieu of flowers, memorials may be directed to the charity of the donor’s choice or the family of Steven C. Delheimer. Online condolences may be directed to the family at duffyfuneralhome.com.

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KCBA Blog

10-7-13; If You Need Ethics for Adjusters CEU's, Let Us Know!; Subcontractor Off the Hook on Defending General Contractor, Analysis by Chris St. Peter, J.D.; Stat...