10-14-13; Did Rising WC Costs Kill Dominick's Finer Foods; What the Credit Default Might Mean to WC and You; Important PSEBA Ruling, analysis by Nathan Bernard, J.D. and more

Synopsis: Did Rising IL WC Costs Kill Dominick’s Finer Foods?

Editor’s comment: Our readers were saddened to hear Safeway, the parent corporation of Dominick’s grocery stores pulled the plug on 72 grocery stores and approximately 8,000 workers who all had generally excellent union jobs in our state with pensions and other benefits. One concern voiced by a reader is whether their climbing WC claims and costs took them out of business.

Dominick DiMatteo was born in Sicily and founded the grocery chain in 1918. In 1950, the DiMatteos opened their first supermarket, a 14,000-square-foot store. By 1968 the chain had reached 19 stores. The DiMatteos continued to operate the chain under the financial backing of Fisher Foods. The DiMatteos continued to expand and acquired both Kohl's Chicago area locations and Eagle stores. In 1993, Dominick DiMatteo, Jr. died from lung cancer. News sources indicate his daughters and son did not have the same passion for the supermarket business. Safeway bought Dominick's in 1998 and kept it open until right now.

Supermarket chains live in a business with fierce competition and razor-thin margins. Dominick’s would have had numerous employees who are truck drivers and transportation workers of various sorts. They also have managers and other workers that provide support for more than one location and visit several stores, when needed. Following current IL WC law, all such workers are now “traveling employees” and would be covered as a matter of law for non-work-related risks, like falling in your own driveway or getting into a motor vehicle accident miles away from your job. You don’t have to be “traveling” to be covered; you just have to establish “traveling employee” status and have any injury or illness. Such workers are now covered in a global and no-fault fashion while workers who don’t “travel” or only work at one store are limited to only work-related risks. With respect to the members of our judiciary who created this unsustainable concept, we are certain it is going to result in skyrocketing WC costs, particularly for cash-strapped municipalities and government bodies, as most of their workers are now “travelers.”

As we have advised, no other state in the U.S. provides such coverage but Illinois employers are currently being forced to do so while we await a ruling from our IL Supreme Court in The Venture-Newberg-Perini, Webster and Stone v. IWCC decision. Their ruling is expected next month. It is the hope of all business observers that our highest court will reject the judicially created concept and return our state to traditional principles of WC law.

On the IL WC front, Dominick’s Finer Foods has lots and lots of pending IL WC claims. Most of the claims are for actual work injuries. Their WC claims and defense team has been appropriately fighting the IL workers’ comp claims that didn’t “arise out of and in the course of” employment. Now, that limit-switch no longer applies and such claims have to be automatically accepted and paid for their “travelers.”

In our view, the managers at Safeway, their parent corporation are watching our state continue to get more and more business unfriendly. We are seeing our Illinois legislature fighting and kicking to keep unfunded government worker “pensions” in place that is certain to cost billions for our kids, grandkids and great-great-grandkids. Our favorite government “pension” tidbit is the recent news confirming the highest “pension” in our state is held by Dr. Leslie Heffez who was a professor at the U. of IL Hospital in Chicago. Reports indicate he is now being paid $516,413 per year from our state government “pension” program. Dr. Heffez doesn’t appear to need the taxpayer cash, as he is still working at not one but two different medical offices in Chicago and Highland Park. His “pension” will continue to receive compounded COLA increases at over $15K per year. In 23 years, his annual “pension” payout will exceed $1M per year.

One reason we put “pension” in quotes is 60% of the money or more than $300,000 per year Dr. Heffez is currently receiving isn’t from personal contributions, matching state funds or interest on his “pension” investments—the money is “unfunded” which means he is being paid by you and me with our current tax dollars! Over the next 23 years, Dr. Heffez is certain to receive at least $15-25 million dollars from Illinois taxpayers in exchange for what had to be a fraction of that amount in pension contributions. Please don’t focus solely on this great physician; thousands of other former state workers are getting billions from us in the same fashion. And we don’t and can’t blame Dr. Heffez for taking the tens of millions of taxpayer dollars to which he is clearly entitled—our criticism is focused on those who created, didn’t properly fund and are fighting to keep this unsustainable mess intact.

On another front, our judiciary remains the highest paid in the United States and they are guaranteed 3% annual raises in the IL Constitution. Cook County Board Chair Toni Preckwinkle noted the 432+ judges and justices in this county were paying less than $1 per month for family healthcare contributions that cost the county as much as $1,700 per month! One has to wonder if the effectively free benefits shouldn’t be subject to income taxes. Someone noticed the bailiffs and clerks who worked for the judges/justices were paying over 100 times more for their healthcare share than their judicial bosses! We applaud Ms. Preckwinkle for working to change that anomaly and get “fair share” contributions from our judges. On a similar front, after only eight years of service, all IL judges and justices could retire and get “free” or taxpayer-paid lifetime family healthcare coverage. Governor Quinn passed a law requiring them to make reasonable contributions and four class actions were filed by our judiciary to try to block any contributions. That matter is now moving directly to our IL Supreme Court for their ruling.

Business leaders see these sorts of shenanigans in our state and shake their heads and wonder how it could get much worse. If you don’t feel the “traveling employee” expansion was the sort of thing that caused Safeway to drop their interest in doing business in our state, you don’t know much about business. We hope the secret-powers-that-be that run the Illinois Workers’ Compensation Commission start to understand the “traveling employee” idea, like government worker “pensions” and the freebies accorded to our well-paid judiciary, are brought into line with other states.

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

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Synopsis: The United States at the Precipice of Global Financial Disaster—What Does It All Mean for Workers’ Comp?

Editor’s Comment: If you have been reading about the “government shutdown” at the federal level, you might not understand the brinkmanship going on has little or nothing to do with you, as our readers—we aren’t truly affected by government workers being furloughed with or without pay for several months. What might be coming October 17, 2013 (or in four short days) is truly ominous and dangerous. At that time, it is possible our heavily leveraged federal government that is now almost $17 trillion dollars in total debt may default or not timely pay some of what it owes to borrowers. If you aren’t sure, very few people across our globe like to even think of the massive financial tsunami that might follow. We aren’t trying to scare anyone but we do think you should at least know the battlefield in which you may soon be deployed. Basically, what has to happen is the U.S. President and legislature have to negotiated and agree to timely pay our debts or we may be, for lack of a better term, smoked.

We Have Actually Defaulted in the Past, Contrary to Popular Belief

·         The U.S. first “defaulted” on what they owed in 1790, when our newly formed nation deferred until 1801 interest obligations on debt it assumed from the states. We did make the late payments when due.

·         In 1933, our country suddenly refused to make payments in gold to redeem bonds that gave holders the option of requesting gold in payment. While investors were paid on time and in full with cash, many argued it was a “default” because bondholders weren’t paid in the fashion to which they were entitled.

·         In 1979, the U.S. was late on about $122 million of bills, in part because of “severe technical difficulties” the Treasury Department claimed was due to a word-processing failure.

If you recall what the popular movie Despicable Me called the Bank of Evil, i.e., Lehman Brothers Holdings Inc. and their collapse about five years ago meant, you might understand the global financial disaster that lies before us this Thursday. A U.S. government default could be a worldwide economic calamity unlike any in recorded history. Failure by the United States, the world largest borrower to timely pay its massive debt will

      Devastate stock markets around the globe;

      Halt an erstwhile $5 trillion lending mechanism for investors who rely on U.S. Treasury bonds;

      Immediately skyrocket borrowing/mortgage costs for billions of people and employers large and small;

      Decimate the U.S. dollar along with many other countries’ currencies; and

      Throw U.S. and world economies into a recession that probably would become a depression.

The $12 trillion of currently outstanding U.S. government debt is 23 times the $517 billion Lehman Brothers owed when it filed for bankruptcy Sept. 15, 2008. The U.S. stock market lost almost half its value in the five months following Lehman’s collapse. The country had its worst recession since the Great Depression that our fathers and mothers lived through, taking the global economy down with it. In 2008-9, U.S. unemployment surged to the highest levels in three decades. If those things happen, starting this Thursday, our personnel, workers’ compensation and human resource systems are certain to be strained. Massive layoffs and other nasty things may happen in the coming months, if our politicians can’t get their acts together.

In 2008, the Second Great Depression was prevented only by unprecedented action by the Federal Reserve, which again borrowed the money and recycled $3 trillion into the financial system. The U.S. Treasury provided about $300 billion of capital for the nation’s banks to put them back on their feet.

What is on the line

The U.S. Treasury Department has $120 billion of short-term bonds coming due in four days on Oct. 17, 2013. An additional $93 billion of bills are due in ten days on Oct. 24. On Halloween, $150 billion needs to be paid to bondholders, including two-year and five-year notes that mature. The total due from Oct. 17 through Nov. 7 is $417 billion. The President and Congress have to agree to pay it. We also hope they start to see

What does all this mean to Workers’ Comp?

In short, remember the government shutdown is boring and has almost nothing to do with anything other than for the furloughed federal government workers who can all catch up in their normal, snail-like fashion. In contrast, a U.S. credit default will be a financial cataclysm of historic proportions.

From a workers’ comp perspective, a credit default will insure rapidly rising interest rates for companies borrowing cash and folks taking out mortgages. If it happens, it is going to cost jobs, jobs and more jobs. Expect and plan ahead for layoffs—consider using our KCB&A pre-layoff disclosure report to have your employees confirm they aren’t injured, don’t know any other worker that is injured and don’t need accommodation for injuries, other than as outlined. We are happy to provide our form for your review and consideration; send a reply.

Finally, our advice to all of our readers is to consider writing a NastyGram to your U.S. Senator and Congressman and then basically hold your breath. We feel we owe it to you to tell you this is looming financial catastrophe is out there and may affect your lives in a very significant way. We are certain if our leaders in Washington can’t get their ducks aligned, things are going to go badly in lots of directions starting this Thursday. If you have one, you might want to talk to or at least email your stock broker for their thinking. Either way, there isn’t a whole lot you or I can do about it, so hang in there while hoping for the best and prepare for the worst.

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

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Synopsis: Moving Loose Asphalt Chunks is an “Emergency” if Our Courts Say So. We Feel Such Rulings Have a Major Financial Impact in Providing Lifetime Healthcare for Police Officers/Firefighters Employed on the “Highway to the Danger Zone!” Analysis by Nathan S. Bernard, J.D.

Editor’s Comment: The Illinois Appellate Court in Springborn v. The Village of Sugar Grove, 2013 IL App (2d) 120861 (issued September 25, 2013), considered a claim for pension and healthcare benefits out of Kane County, confirmed the employer of a full-time law enforcement officer must pay the entire lifetime premium of the employer’s health insurance plan for that injured employee suffering a “catastrophic” injury. Please note for a young or middle-aged officer, lifetime healthcare benefits could cost several million dollars for taxpayers.

In the case at bar, the critical issue was whether an “emergency” component was met in a given situation. Specifically, the Court concluded an officer attempting to clear a two-lane highway in traffic of 15 chunks of 20 pounds of asphalt a piece which fell into the roadway was improperly denied benefits under Section 10. The officer requested assistance from the village public works department for assistance in removing the asphalt but their reply was the Illinois Department of Transportation (IDOT) had responsibility for clearing the road. Instead of waiting for IDOT to arrive and believing the asphalt in the roadway presented an “emergency” and an “immediate safety hazard,” the officer took it upon themselves and activated his lights, positioned his vehicle in the roadway, then attempted to remove the asphalt by hand, and sustained a strain injury that will disable him from such work for life.

Additionally, in a different scenario, an officer responded to a traffic accident with potential injuries and arrived to find a 10-15 foot traffic signal light pole lying across the road after it appeared to have been struck by a vehicle. Instead of waiting for a tow truck to arrive and believing the pole with live wires presented an “emergency” and an “immediate safety hazard,” two officers assisted in removing the pole manually and one sustained injury.

Section 10 of Public Safety Employee Benefits or PSEBA provides in relevant part:

“(a) An employer who employs a full-time law enforcement, correctional or correctional probation officer, or firefighter, who, on or after the effective date of this Act suffers a catastrophic injury or is killed in the line of duty shall pay the entire premium of the employer’s health insurance plan for the injured employee, the injured employee’s spouse, and for each dependent child of the injured employee

b) In order for the law enforcement, correctional or correctional probation officer, firefighter, spouse, or dependent children to be eligible for insurance coverage under this Act, the injury or death must have occurred as the result of the officer’s response to fresh pursuit, the officer or firefighter’s response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the investigation of a criminal act. Nothing in this Section shall be construed to limit health insurance coverage or pension benefits for which the officer, firefighter, spouse, or dependent children may otherwise be eligible.”

Accordingly, the injury or death must have occurred as the result of the officer’s response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the investigation of a criminal act.

In each scenario, both officers were ostensibly concerned for both the public’s safety and their own safety while positioned on the road. Additionally, they were concerned with vital resources being improperly allocated and prevented from being used elsewhere while they provided traffic direction waiting for other village services. The taxpayers are going to pay for lifetime duty disability pay—should they also have to pay healthcare benefits, as if these relatively innocuous events were a true “emergency.”

The Appellate Court noted Section 10 requires a determination of

(1) whether there was a subjective belief that they were facing an emergency and

(2) whether that belief was objectively reasonable.

The subjective component was met by testimony whether they felt they were in an emergency. The objective component was met if a reasonable person would find an instance involving imminent danger to a person or property requiring an urgent response. It also requires an unforeseen circumstance or event requiring that immediate action. The requirement of an unforeseen event is shown by the illustration stating, “they were far from help when the emergency overtook them.”

Although in both the above mentioned scenarios, the officers conceded it would have been possible to wait for assistance, the Court noted it would not have been “appropriate” given the hazards of the situation. In each case, manual removal was the most readily available means and so the most suited to the pressing need to clear the roadway of both the obstruction and the squad car. From the defense side, it is hard to understand how it is an “emergency” if the officers involved had lots of options and are calmly making calls and asking when appropriate assistance to arrive. We ask what a police officer or firefighter might do in the course of their work that might result in injury but isn’t an “emergency.” From our view, our Courts are bending over backwards to insure such workers always receive lifetime healthcare coverage, paid by the taxpayers.

Please contact expert defense attorneys at Keefe, Campbell, Biery and Associates, LLC for an analysis on whether a specific example of a catastrophic injuries or death sustained to a full-time law enforcement, correctional or correctional probation officer, or firefighter is applicable to Section 10 of Public Safety Employee Benefits requiring payment of the entire lifetime premium of the employer’s health insurance plan. Upon receipt of complete file materials, we can determine whether aggressive handling of the claim is appropriate, or acceptance preventing unnecessary litigation expenses.

This article was researched and written by Nathan S. Bernard, J.D. who can be reached at nbernard@keefe-law.com or 312-756-3726.

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