8-1-2016; Arik Hetue on Federal Lawsuit Challenging OccAcc Coverage; Shawn Biery's New IL WC Rate Sheets Available For the Asking!!; Brad Smith on Important Discrimination Ruling

Synopsis: Don’t Panic! While Not Precedent, Thanks to New Ruling, OccAcc or Occupational Accident Insurance May No Longer Insulate Companies From WC Exposure. Analysis by Arik Hetue, J.D. Commentary/editing by your gracious editor.  

Editor’s comment: We published several articles in the past discussing the concept of “jobbing-out” some tasks or whole corporate departments and moving them to independent contractors, however we have always cautioned this was a risky thing to do. The primary focus of past articles was to ensure you weighed the “multi-factor control test” such that a reasonable hearing officer would find the contractor to be just that – a contractor – as opposed to an employee. In the past we have advised the primary concern was to have such individuals or groups obtain their own WC insurance coverage. With this new ruling by the Southern District Federal Court, this may no longer be a green light option. This may signal the “Independent Contractor” status being relegated to only those classic examples of hiring a professional to perform a specific one-time task.

The Independent Contractor is a work classification status long used in the American workforce. Individual contractors are retained to perform specific one-time tasks, or a series of similar tasks which are outside the normal business operations of a hiring company. This is the most well-known variant. Over the past 20 years, there has been a rise of a different kind of “independent” contractor both in Illinois and also in other high-dollar WC venues. We have previously opted to use the term of “dependent” contractor, somewhat tongue-in-cheek, as the IL courts have hammered and chiseled away at the concept since its inception. The entire concept is most easily understood by considering a trucking company as opposed to a logistics company.

Numerous U.S. trucking companies have selected OccAcc or Occupational Accident insurance for all or part of their workforce. Such WC-like coverage doesn’t match statutory requirements and comes with challenges and risks for any company using it. To better understand the concept, take a look at this website:

http://www.occacc.biz/what-is-occupational-accident-insurance.html

The new federal court lawsuit is going to be required reading for this industry and anyone in a different industry considering similar concepts for “independent contractors.”

To better understand it, we will use a fictional company for an example: DEF Transportation, Inc. – this fictional company has a warehouse with an attached office and the following employees: 6 office workers, 8 warehouse personnel, and 15 drivers. The drivers show up at the warehouse, take the trucks that are pre-loaded by the warehouse staff and deliver the goods pursuant to a route designed by the office staff. Easy peasy – everyone is an employee and DEF Transportation will need to provide WC coverage for all such workers who may come with varied risk for injury.

Presume DEF Transportation wants to get away from the high cost of insuring their truck drivers from WC. As the drivers are the ones assuming the most risk in this set of employees (driving on highways, removing the goods from the truck without the assistance of a forklift or material other than a dolly, entering onto private property to deliver said goods), DEF Transportation could likely see a significant cost reduction in work comp insurance if they can remove these folks as “employees” from their books. How this is done is to change from a trucking company into a “logistics” company – they don’t deliver the goods themselves anymore, they just facilitate the delivery. The company would still employ the office staff and warehouse personnel, but the drivers would now be “Independent Contractors” and would need the following in place in order to continue to contract with the company:

·         A vehicle which in some cases could be leased from the company, or the company could facilitate a financed purchase of the truck,

·         Their own WC insurance which again is often obtained through the company, or via their required company insurer,

·         Potentially a requirement the individual driver incorporate or create a personal LLC for his new venture, and

·         All the attendant expenses for the gear – vehicle insurance, maintenance of the vehicle, gas, etc, and the drivers are now paid via 1099, and as such responsible for their own taxes and deductions.

When these factors are present, DEF Transportation “contracts” with the driver to deliver the goods they previously “employed” a similar driver to deliver.

Where you can fall into pitfalls is the ever-present “multi-factor control test” which governs classification of an employee v. independent contractor. In Illinois, there are many issues to look at including:

•         The right to control the manner in which the work is done (who sets routes);

•         The nature of the work performed as it relates to Respondent’s business;

•         The method of payment (1099 for tasks/hourly wages);

•         The right to discharge (can they be “fired”);

•         The skill required in the work to be done;

•         Who provides tools, materials, or equipment;

•         The label given to the contractor by the parties in a written agreement;

But the caveat we have always stated was the primary concern in such cases is whether Claimant provided their own workers' compensation insurance. We have often touted this as the number one concern for employers looking to maneuver their “logistics” company into this system – if the contractor has their own WC insurance, if injured they will likely file a claim against said personal insurance and proceed as one would expect, leaving what used to be the “employer” in the clear. While it seems arcane, and as though it is an end-around the simple issue of having to provide coverage, there is a long history of this being allowed as long as the facts line up properly.

In the recent order from the U.S. District Court for the Southern Illinois in the matter of Thomas Frederking v. Zurich American Insurance Company and Triple Crown Services Company, Federal Judge Staci M. Yandle allowed a portion of a lawsuit to go on beyond the Motion to Dismiss stage, and while it is certainly too early to tell, this may signal the death knell of the concept in Illinois and possibly the Federal Seventh Circuit.

It should be noted at the outset, in the interests of full disclosure, Plaintiff Frederking’s counsel is Lee Barron, who is a veteran and solid litigator in Southern Illinois. Your author had the pleasure of trying a case against Attorney Barron in the Southern District some 5 years ago. With utmost respect to Mr. Barron, who is an excellent attorney, we couldn’t disagree more with the mental gymnastics necessary to get to the legal conclusions alleged in the complaint. That said, his arguments have survived dismissal, and this case will move forward.

Plaintiff  Frederking was a Missouri citizen and driver for Defendant Triple Crown, a company which had a terminal based out of Madison County, Illinois. Frederking alleged Triple Crown misclassified him and other "owner-operators" as independent contractors and committed a fraudulent act by requiring them to purchase workers' compensation insurance coverage via an insurance contrivance titled as an "occupational injury" plan through Zurich, or an equivalent policy from another carrier. It should be noted Triple Crown took deductions from the drivers' paychecks to pay for the coverage, and as such it can be argued the insurance was not obtained independently of Triple Crown, but through them. The complaint goes through the facts to demonstrate the multi-factor control test was weighted in favor of finding Mr. Frederking as an employee.

Frederking’s second amended complaint contained 7 counts – two counts for a violation of the Illinois Deceptive Business Practices Act against Triple Crown and Zurich individually, two counts of unjust enrichment against each individually, a count of a count of civil conspiracy against both defendants, a Federal RICO count against both defendants, and a count for a preliminary injunction to cease the practice pending the resolution of the matter at bar. We note the complaint is not the proper vehicle for an injunction and it was summarily dismissed with an instruction to assert this issue via motion.

The primary allegations Frederking made, which are the bases for all counts, presuppose he and his fellow drivers were actually employees of Triple Crown at all times, and as such they should have already been covered by the Illinois Workers' Compensation Act. In this scenario, they did not require the coverage Triple Crown required and Zurich offered to sell them. There were numerous other allegations in the complaint, but this appears to be the crux of the argument – Triple Crown and Zurich conspired to force the drivers into purchasing their own “occupational accident insurance” which was overpriced and did not absolve Triple Crown of its liability under the IWCA.

Zurich filed a motion to dismiss all counts against it, and the order entered was in relation to this motion. Zurich argued Frederking did not allege any fraud with enough specificity to maintain a cause of action, there were not sufficient acts plead to maintain a count under the RICO statute or for conspiracy, and that the unjust enrichment count should be dismissed as there was no underlying improper conduct. For the purposes of this analysis, we ask our readers to remember – when dealing with a motion to dismiss, as in the matter at bar, all facts need to be looked at in the light most favorable to the non-moving party – in this case, Mr. Frederking.

The order of Judge Yandle is disheartening to the defense bar, as she disagreed with Zurich and found the complaint alleged sufficient facts to allow the claim to proceed under the Illinois Consumer Fraud Act count and the unjust enrichment count. Part of her reasoning included a letter from a Zurich claims professional attached to the complaint stating that the occupational accident coverage is not a workers' compensation policy. We caution our readers – you will want to take note of this specific issue, as it may result in a simple change of requiring an actual WC policy.

While Judge Yandle agreed with Zurich the conspiracy and RICO counts were insufficiently plead and therefor dismissed. They were dismissed without prejudice, and the Judge outlined in her order the reasons the claims failed – effectively that Plaintiff had not plead sufficient facts to confirm who discussed the alleged fraudulent acts between Zurich and Triple Crown, when those discussions took place, where and when they occurred, etc. She further outlined for the RICO count there was no pattern of racketeering alleged. There was a final concern on the RICO count with respect to a possible statute of limitations issue dependent upon when Frederking became aware of the alleged misdeeds.

We note this is only a motion to dismiss, and not a dispositive ruling. We also note the claims Judge Yandle dismissed can easily be resurrected upon inclusion of relevant facts consistent with her outlined reasoning. As a matter of law, there is nothing (outside a possible time bar on the RICO action) preventing Plaintiff from asserting these claims. We will be watching this case closely (along with the rest of the insurance and trucking industries) to see what further information comes out of the Southern District, as it has significant bearing on any company using this style of workforce, inside and outside of Illinois. We are the heartland, many trucks cross our borders en route to another state and a legal attack on OccAcc coverage may be sweeping.

We would appreciate your thoughts and comments, feel free to reply to Arik Hetue, J.D. at ahetue@keefe-law.com or post them on our award winning blog.

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Synopsis:  HERE WE GO AGAIN--NEW IL WC RATE SHEETS ARE HERE AND ILLINOIS RATES INCREASE AGAIN!!! 

Editor’s comment: Illinois WC Rates Jump Again So Please Be Aware Of The New Rates or Your Claims Handling Will Suffer and Penalties May Ensue.

Email Shawn at sbiery@keefe-law.com and Marissa at mpatel@keefe-law.com to Get a Free and Complimentary Hard Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Maybe it’s a sign of a growing economy—even though rates continued to increase almost every cycle as we continue to watch the growth of IL WC rates. Starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing—WC rates continue to climb and climb some more.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now a whopping $755.22. This rate is only through June 30, 2016 and the new max PPD will be published in January 2017. When it will be published in January 2017, this rate will change retroactively from July 1, 2016 forward. If you don’t make the change, your reserves will be incorrect--if this isn’t clear, send a reply.

The current TTD weekly maximum has risen to $1,428.74. A worker has to make over $2,143.11 per week or $111,441.72 per year to hit the new IL WC maximum TTD rate. Does any state in the United States have a TTD maximum that sky-high?

The new IL WC minimum death benefit is 25 years of compensation or $535.79 per week x 52 weeks in a year x 25 years or $696,527.00! The new maximum IL WC death benefit is $1,428.74 times 52 weeks times 25 years or a lofty $1,857,362.00 plus burial benefits of $8K. IL WC death benefits also come with annual COLA increases that we feel potentially makes our state the highest in the U.S. for WC death claims.

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. AGAIN—If you want just one or a dozen or more, simply reply to Shawn at sbiery@keefe-law.com and Marissa at mpatel@keefe-law.com  They will get a copy routed to you before they raise the rates again! Please confirm your mailing address if you would like laminated copies sent to your home or office!

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Synopsis: The Seventh Circuit Denies Employee Sexual Orientation in Title VII Action, Cautioning of Things to Come. Analysis by Bradley J. Smith, J.D.

Editor's Comment: In An Opinion Imploring Changing Title VII Sexual Orientation Laws, the Federal Seventh Circuit Remains with Applicable Stare Decisis. On July 28, 2016, the Seventh Circuit issued an opinion in Hively v. Ivy Tech. Justice Rovner authored the ruling affirming the Federal District Court’s dismissal of Plaintiff Hively’s Title VII discrimination claims. In doing so, the Seventh Circuit cited its precedents of Hamner v. St. Vincent Hosp. & Health Care Ctr., Inc., 224 F.3d 701, 704 (7th Cir. 2000) and Spearman v. Ford Motor Co., 231 F.3d 1080, 1085 (7th Cir. 2000). Both of those cases held sexual orientation is not a protected class pursuant to Title VII’s protections.

The Seventh Circuit embarked on an extensive assessment of the current state of all the Federal Courts’ precedence on sexual orientation discrimination. It also analyzes the EEOC’s recent opinion in Baldwin v. Foxx, EEOC Appeal No. 0120133080, 2015 WL 4397641 (July 16, 2015), which identifies sexual orientation as a protected category under Title VII. Justice Rovner explicitly invites SCOTUS or the federal legislature to change the history of sexual orientation’s applicability to Federal Title VII employment laws.

In embarking on that endeavor, the Seventh Circuit identifies a myriad of precedential opinions from other jurisdictions in an effort to invite SCOTUS to say “yes” or “no” to sexual orientation discrimination. Justice Rovner also identifies multiple opportunities when the legislature has passed on amending Title VII to reflect a protected category for sexual orientation. Notably, the Seventh Circuit identifies the various state court jurisdictions that provide or do not provide sexual orientation workplace protections. Indeed, states with laws that prohibit this are: California: Ca. Gov't. Code §§ 12920, 12940, 12926 & 12949; Colorado: Colo Rev. Stat. § 24–34–401, et seq.; Connecticut: Conn. Gen. Stat. sec. 46a–81c(1); Delaware: 19 Del. C. § 711; Hawaii: Haw. Rev. Stat. Ann. §§ 368–1, 378-2; Illinois: 775 ILCS 5/1–103 & 775 ILCS 5/1–102; Iowa: Iowa Code Ann. 216.2(14), 216.6; Maine: Me. Rev. Stat. Tit. 5 § 4571, § 4572, § 4553 9-C; Maryland: Md. Code Ann., State Gov't § 20–606; Massachusetts: Mass. Gen. Laws Ch. 151B, § 3(6), § 4; Minnesota: Minn. Stat. Ann. § 363A.02, § 363A.08; Nevada: Nev. Rev. Stat. Ann. §§ 613.330, 610.185, 613.340, 613.405, & 338.125; New Hampshire: N.H. Rev. Stat. Ann. §§ 354–A:6, 354–A:7; New Jersey: N.J. Stat. §§ 10:5–3, 10:5–4, 10:5–12; New Mexico: N.M. Stat. § 28–1–7; New York: N.Y. Exec. Law § 296; Oregon: Or. Rev. Stat. Ann. § 659A.030; Rhode Island: 28 R.I. Gen. Laws §§ 28–5–5, 28–5–7; Utah: Utah Code Ann. § 34A–5–106; Vermont: Vt. Stat. Ann. tit. 21, § 495; Washington: Wash. Rev. Code Ann. §§ 49.60.030 49.60.010, 49.60.040; Wisconsin: Wis. Stat. Ann. §§ 111.31, 111.36, 111.325. Some states even have this type of protection for government employees: Alaska: Alaska Admin. Order 195; Arizona: Executive Order 2003-22; Indiana: Indiana Governor Mitch Daniel's Policy statement of 4-26-05; Kentucky: Kentucky Executive Order 2003-533; Louisiana: Executive Order No. JBE 2016–11, Governor of Louisiana, 13 April 2016; Michigan: Michigan Executive Directive, No. 2003-24; Missouri: Executive Order 10-24; Montana: Montana Executive Order No. 41-2008; North Carolina: Executive Order 93 (2016); Ohio: Executive Order 2011-05K; Pennsylvania: Executive Order No. 2003-10; Virginia: Executive Order 1 (2014). The jurisdiction that Hively lived in (Indiana) does not provide a state law protecting employees from sexual orientation workplace discrimination.

Importantly, Illinois does have a state law protecting workers from sexual orientation discrimination, so employers within this state should be well aware and have a cultural history of guarding against sexual orientation discrimination in the workplace. Employers in this state are also cognizant of this protected class when making all employment decisions.

One of the interesting evaluations in the opinion is the discussion as to how differing Federal Circuits and District Courts have reasoned out their respective opinions related to sexual orientation. Some of the courts have completely thrown out any case where there is an entanglement of sexual identity and sexual orientation allegations. However, the Seventh Circuit Court cautioned against this reasoning, identifying the risk of “throwing out the baby with the bath water.” Inapposite, other courts have taken on the difficult task of drawing distinctions between sexual identity discrimination and sexual orientation discrimination. The Seventh Circuit cautioned on this reasoning too, because it often includes a distinction without a difference. As you may know, sexual identity discrimination falls under Title VII’s protections falling under the category of discrimination based on sex. Whereas sexual orientation discrimination is based on whom the individual shares an intimate relationship with. In other words, sexual orientation discrimination is based on discriminating against the individual by whom the employee selected as a partner, etc.

Justice Rovner also discusses the difficult task of drawing a distinction due to its effect on the flamboyancy of a gay man or the masculinity of a lesbian. In his assessment, if the distinction were more drawn between the two, then the more extreme the individual’s flamboyancy or masculinity, the more likely the discrimination will fall under sexual identification analysis, and thus, would be protected under Title VII. Justice Rovner predicts this analysis as leaving the more gender conforming homosexuals unprotected.

Based on the Seventh Circuit’s discussion, they expect—and indeed, are advocating for—a change in the law. However, despite this, the Seventh Circuit comes to the ultimate conclusion that due to the principles of stare decisis, they must afford due respect to their prior opinions and affirm the dismissal of Hively’s case.

The research and writing of this article was performed by Bradley J. Smith, J.D. Bradley can be reached with any questions regarding the employment law and general liability defense at bsmith@keefe-law.com.

7-25-2016; IL Appellate Court "Pops" OccDisease Claim for COPD; David DePaolo of WorkCompCentral RIP; State Work Comp Payout May Not Be The Measure of Employer Liability Under This Administration

Synopsis: IL Appellate Court, WC Division Affirms IWCC Denial of Claim for Lung Issues Allegedly Caused by “Popcorn-Worker’s-Lung.”

Editor’s comment: When it comes to Frye and IL Rule of Evidence 702, all IL WC attorneys on both sides and risk managers/adjusters/brokers should read this precise and well-reasoned but complex Appellate Occupational Disease decision.

In Durbin v. IWCC, issued July 17, 2016, a unanimous Illinois Appellate Court, WC Division ruled an Archer Daniels Midland factory worker failed to establish the compensability of obstructive lung disease because he did not adequately or scientifically link his condition to the workplace exposure to a buttery-smelling chemical compound named Diacetyl.

The majority ruling by Justice Harris accurately pointed out such claims aren’t actually “workers’ comp” rulings—this is an occupational disease claim where the worker has to demonstrate an “exposure” to an arguably deleterious chemical or other substance due to work.

There was no dispute Claimant Durbin worked for Archer Daniels Midland for approximately 30 years. During most of that tenure, Petitioner Durbin claims he was exposed to Diacetyl, a chemical used as butter flavoring that has been occasionally linked to lung problems in workers. Claimant also admitted to being a cigarette smoker.

NIOSH or the National Institute for Occupational Safety and Health has suggested Diacetyl, when used in artificial butter flavoring (as used in many consumer foods), may be hazardous when heated and inhaled repeatedly over a long period. Workers in several factories that manufacture artificial butter flavoring have been diagnosed with bronchiolitis obliterans, a rare and serious disease of the lungs. The cases found have been mainly in young, healthy, nonsmoking males. As with other end-stage lung diseases, lung transplantation is currently the most viable treatment option. However, lung transplant rejection is very common and happens to be another setting in which bronchiolitis obliterans is  expected to occur.

The disease has been called "popcorn worker's lung" because it was first seen in former workers of a microwave popcorn factory in Missouri but NIOSH refers to it by the more general term "flavorings-related lung disease.” People who work with flavorings that include Diacetyl are at risk for flavorings-related lung disease, including those who work in popcorn factories, restaurants, other snack food factories, bakeries, candy factories, margarine and cooking spread factories, and coffee processing facilities.

Either way, Claimant Durbin testified he first began having breathing or lung problems around year 2000 or 2001, and after he retired from ADM in 2003, his problems worsened. Things in the occupational disease litigation sat around for a long time. By the time of the WC arbitration in 2013, Durbin said he was unable to engage in activities that required exertion because he would lose his breath.

Former Arbitrator Zanotti found Claimant Durbin failed to prove an occupational disease caused by a workplace exposure. The Illinois Workers' Compensation Commission panel upheld the Arbitrator’s decision, as did the Circuit Court judge.

The IL Appellate Court, WC Division found the causation opinion of Claimant Durbin's medical expert was not clearly admitted or rejected from evidence under the ruling in Frye and IL Rule of Evidence 702. The majority decision took up the issue to provide clarity and they ruled the opinions were properly excluded from evidence. The Court carefully and thoroughly explained the admissibility of any expert's opinion depends on whether the underlying method used to generate the opinion by the expert is one reasonably relied upon by the experts in the field.

In this case, the Court noted the opinion of Claimant's expert was based on two publications regarding Diacetyl exposure at microwave popcorn plants. The majority opinion ruled the New England Journal of Medicine article upon which the expert relied was peer-reviewed, the Court’s decision further noted that article involved workers with a specific condition known as bronchiolitis obliterans, whereas Claimant Durbin had been diagnosed with chronic obstructive pulmonary disease or COPD.

"While there may be evidence that exposure to Diacetyl can cause bronchiolitis obliterans," the Court said the expert's "leap to finding a causal connection between Diacetyl exposure and COPD is arguably supported only by an editorial." The Court’s ruling said "an editorial in a medical journal is not the equivalent of a peer-reviewed article based upon medical studies" and as such, it is insufficient to [legally] serve as a basis for an expert's opinion on causation.

The Appellate Court’s members further found the medical expert's theory Claimant Durbin suffered a harmful exposure by simply “smelling” a buttery scent was "speculative and lacked support in the relevant scientific literature."

As the only evidence Claimant presented to support a causal link between his work and his COPD was the opinion of this expert, and the opinion was inadmissible, the Court ruled the IL WC Commission's denial of his claim was supported by the evidence in the record.

As defense attorneys, we have numerous claims brought by Petitioner’s attorneys for occupational disease claims. Our common response follows this great decision’s review of such claims—what is the exposure? How long or how much is the exposure? What is the scientific literature supporting a medical condition related to such an exposure? For most OD claims, if the other side doesn’t have a solid expert, the claim is usually going nowhere fast.

We caution our readers and law students and others, the IWCC and courts don’t necessarily need an expert opinion if the relationship is clear and well-settled. That said, they are typically skeptical to leap to contusions, we mean conclusions over causal connection when such claims are presented.

If you are a risk manager or claims adjuster with questions or concerns about OD claims, please send them along and the defense team at KCB&A can provide strong guidance on testing, experts and strategies to best defend such claims.

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Synopsis: God Bless and Keep the Memory of Great U.S. WC guru David DePaolo.

Editor’s comment: David DePaolo, founder, president and chief executive officer of WorkCompCentral, died too early this month. He was 56.

DePaolo was riding his motorcycle—a Honda 250 that he had nicknamed "The Sewing Machine"—in the Santa Monica Mountains near Malibu Hills, California on Sunday afternoon. He veered right into shoulder of Yerba Buena Road, hitting a dirt embankment shortly after 4 p.m., according to a report in the Ventura County Star.

The cause of the accident and DePaolo's death was still under investigation as we go to press.

We remember David calling KCB&A about 5 years ago and asking to be able to use our articles and assistance for the WorkCompCentral wonderful publication. We have always treasured our working relationship with David and this wonderful national industry resource and encourage all WC industry folks to consider subscribing to it.

DePaolo obtained a Juris Doctor from Pepperdine University School of Law in 1984, a Master’s in Business Administration from California Lutheran University in 1997 and a Bachelor of Arts in English from San Diego State University in 1981. He practiced as a workers' compensation defense attorney and as a sole practitioner, before founding WorkCompCentral in 1999. DePaolo is survived by his wife Anne, daughter Nichole and son Anthony.

A public memorial service for David DePaolo will be held Saturday, Aug. 6 at the Camarillo Airport in Southern California. The memorial service is scheduled for 1-5 p.m. at Channel Islands Aviation Hanger 265 on Durley Avenue. From U.S. Highway 101, exit Los Posas Road southbound, turn right on Pleasant Valley Road and right on Airport Way to Durley Avenue.

DePaolo was a pilot who often blogged about his adventures in "41 Mike," a 1979 Beechcraft Bonanza. He also volunteered for Angel Flight, a charity that provides transportation for families with medical emergencies. In lieu of flowers, the family would appreciate donations to Kids Chance of California or Angel Flight.

For planning purposes, persons wishing to attend the services are asked to email or call Valeria Garcia at vgarcia@workcompcentral.com or 805-484-0333, ext 127. Your editor may be there—let us know if you plan on attending.

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Synopsis: State Work Comp Payout May Not Be The Measure of Employer Liability Under This Administration.

Editor’s comment: We were mildly amazed to see a Federal Judge ordered an IL employer to make a payment of $350,000 in “restitution” to decedent’s family following a worker's death. We are uncertain how the federal judge measured the proper amount in restitution that appears to us to be “additional damages” over and above the statutorily required state workers’ comp payout. We have no true idea if court-ordered “restitution” would be a benefit covered under a typical workers’ comp insurance policy—the insurance brokers among our readers might want to reply with their thoughts. Some of our readers assume the extent of state WC benefits is your only concern when a worker suffers an untimely death in your workplace—this assumption may not be accurate in light of rulings like this one.

News from South Beloit, IL confirms a federal judge has ordered a scrap-processing company based in Rockford to pay $350,000 in “restitution” to the family of a man killed in year 2014 at one of its plants. Behr Iron & Steel Inc. also was placed on five years of probation under the sentence handed down in U.S. District Court for the Northern District of Illinois, based in Chicago.

Federal prosecutors charged the company with violations of OSHA or Occupational Safety and Health Administration requirements in connection with the untimely death of decedent Reynaldo Hernandez-Ortega, following a March 2014 accident at Behr’s plant in South Beloit. Decedent Hernandez-Ortega, 39, was cleaning a discharge pit for a metal-shredding machine when his arm was caught and he was pulled into machinery, the Rockville Register Star reported. Behr's plant recycles items such as refrigerators and cars. Behr Iron & Steel Inc. was cited for one serious and seven willful safety violations by the U.S. Department of Labor’s Occupational Safety and Health Administration following the death in March of a worker at the company’s scrap metal shredding and sorting facility in South Beloit.

A willful violation is committed with intentional disregard for the law’s requirement or “plain indifference to employee safety and health.” A serious violation is determined if death or serious physical harm could result from a hazard an employer knew or should have known exists. According to OSHA, Behr Iron & Steel knowingly exposed Hernandez-Ortega and at least three other workers to highly dangerous equipment with no safeguards during cleaning operations. Hernandez-Ortega and other workers were responsible for shoveling metal scrap material accumulated in a shredder discharge pit onto a conveyer system as part of their cleaning duties. OSHA found when workers entered the pit, the conveyor was running and the OSHA requirement to “lock out” the shredder, or ensure that no energy flowed to the machine, was not being followed.

"This isn't the turn of the century. This should never happen in 2014 in this country," U.S. Magistrate Judge Iain D. Johnston claimed during the sentencing. The company already paid Decedent’s family $268,000 through a workers' compensation settlement and $19,369 in workers' compensation expenses, according to court documents. We cannot find that settlement listed on the IWCC’s website but not it appears very low based on normal exposures/benefits due in an IL WC death claim.

In addition, the company paid $520,000 in fines to the federal Occupational Safety and Health Administration, and agreed to correct 36 safety violations.

If you need assistance defending OSHA claims, Brad Smith of KCB&A is our top defense team member and knows the ropes. You can reach Brad at bsmith@keefe-law.com.

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Synopsis: Short but Sweet Update on Indiana Worker’s Comp from Kevin Boyle, J.D.

Editor’s comment: We were somewhat surprised to hear the IN WC Board has provided notice effective Monday, August 1, 2016, the mileage reimbursement rate is increasing from $0.36 per mile to $0.38 per mile.

If you have questions or concerns on any IN WC claim, please direct them to our IN Defense Team Leader Kevin Boyle, Esq. at kboyle@keefe-law.com.

7-18-2016; Getting One's Mind Around "Causation" in IL WC; Matt Wrigley on Important Traveling Employee Ruling; Brittany Pendry on Review of Must-Read ADA Decision and more

Synopsis: Trying to Get One’s Mind Around The Troubling Issue of “Causation” In IL Workers’ Comp.

Editor’s comment: We had several readers recently bring this issue up and we wanted to give everyone our best thoughts. As you read this, Governor Rauner and the IL State Republican reform forces are struggling to change our IL WC Act to reform the concept of “causation” in this state. Our great Governor’s “Turnaround Agenda” says:

Workers’ compensation is a no-fault system. To recover on a workers’ compensation claim, the employee bears the burden of showing s/he has sustained accidental injuries arising out of and in the course of employment. Currently, if the employment is related at all to the injury, no matter how indirectly, the employee’s injury is compensable. If a work injury aggravates a pre-existing condition even slightly, the employer is 100% liable for the workers’ compensation claim. Twenty-nine states have a higher causation standard than Illinois. Missouri, Kansas, Oklahoma and Tennessee recently passed laws requiring the workplace to be the primary cause for workers’ compensation to be compensable. Florida’s major contributing cause standard is identical to the one we are proposing. Proposal • The causation standard should be raised from an “any cause” standard to a “major contributing cause” standard. The accident at work must be more than 50% responsible for the injury compared to all other causes.  

In our view, the problem with the IL WC Act isn’t the language (or actually the lack of any language) on causation, it is the hearing officers. Again, in our respectful view, if you make the language “major contributing cause,” liberal hearing officers can make any problem at work into a major contributing cause. If you change the language to “predominant cause” or 50% responsible for the injury, liberal hearing officers and our reviewing courts can still find any typical kneel, twist, lift, strain to be the predominant cause or 50% responsible for the injury.

Remember There Are Many Illinois WC Terms/Concepts Made Up and Sometimes Modified By Liberal Hearing Officers and Reviewing Courts

Please note the legal terms “traveling employee” and “odd-lot total and permanent disability” and “risk of the street” don’t appear anywhere in the IL WC Act. The liberal reviewing courts who started these concepts and later changed/expanded or sometimes ended the concepts did so at their whim. They weren’t reviewing any legislation in doing so—there was no legislation to review. These are made-up terms by hearing officers and reviewing courts to supposedly define something in the IL WC arena.

In the last year, for the first time in over 100 years of IL WC history, the shoulder suddenly and without any warning became part of the “body” instead of part of the arm. Literally thousands of earlier and very routine decisions ruled the shoulder was part of the arm. The Appellate Court, WC Division unanimously ruled the dictionary required that outcome, as if the dictionary suddenly changed what an arm is, after over 100 years of the shoulder being part of the arm! We assure our readers most people still think if you punch someone in the shoulder, you have struck then in the bicep muscle that we all feel is part of the arm. Only in Illinois WC does a punch to the shoulder magically mean you have punched them in the “body.”

In Beelman Trucking v. IWCC, the IL Supreme Court, for the first time in IL history, allowed a claimant who clearly was a statutory total and permanent disability claimant to also assert a claim for amputation of one of three limbs, as the complete loss of the first two limbs clearly entitled him to lifetime benefits. As all IL WC benefits are paid weekly, this is the first time anyone ever conceived of the idea of someone being entitled to a weekly benefit for T&P along with a “stacked” weekly benefit for amputation loss. This largesse from our highest court provides the staggeringly high T&P benefits to some claimants along with our staggeringly high amputation values. As we have told our readers, it is hard to be cheap in providing high benefits to someone with what was hopefully a rare but catastrophic injury, as suffered by Claimant in Beelman Trucking but such benefits cause our state to be out of whack when comparing us to our sister states.

As we reported last week in Chlada v. IWCC, for the first time in IL WC history, what we feel is a very liberal IL Appellate Court, WC Division, “stacked” or awarded simultaneous wage loss differential benefits and total and permanent disability benefits for the same claimant. As we have told everyone, it makes literally no sense to us at all how a claimant can get “wage loss” benefits when the Court’s distinguished members agreed claimant will not have any “wages” but will be getting T&P benefits from the same employer. The Court’s members justified this decision because of their unusual view that Claimant’s T&P weekly award would be lower due to the earlier claim. This anomaly makes their award into “total and permanent disability differential benefits.” Again, there is no provision in the IL WC Act which we feel provides for such benefits—in our respectful view, the concept was made up for the first time by this reviewing court—they reversed the IWCC precisely because the Commission’s administrative hearing officers wouldn’t do what the reviewing justices decided to do.

The definitions of all these terms can be changed on a whim because all of isn’t in the IL WC Act or Rules. For the IL WC Appellate Court to blame the change on evaluating shoulder claims from “shoulder” to “body” on the dictionary was unusual to say the least. We assure you no one on the defense side saw that one coming. We can say the same thing about the unusual, unprecedented and sweeping  changes to  made in Beelman Trucking and Chlada, as outlined above.

Looking at the bigger picture, we assure you not one of those WC concepts above are defined or otherwise appear in the IL WC Act. For example, what in tarnation is an “odd lot” as it relates to IL WC total and permanent disability awards. Are there “even lots?” Why and how did this concept start in our courts in the early 90’s and how does IL business and local government make sense of whatever-it-might-be?

In the unusual ruling in Chlada mentioned above, while writing for a unanimous majority, one of our illustrious Appellate Court justices who has been on the WC Division of that court for decades wrote a plea to our legislature asking for guidance, as if the IL General Assembly ever provides guidance to our courts in this arena. For anyone who knows what is happening in Springfield with the General Assembly and our current Governor, almost nothing may happen for the next six years while the Governor and the Democrats fight out the simplest things one can imagine these two branches of government could disagree on. We are confident clarifying unusual judicial rulings aren’t high on the agenda when our legislative and executive branches can’t agree on a plan to fund our schools!

Solid Causation Concepts and Enforcement Need to Come From IL WC Hearing Officers—Forget the General Assembly

Our worry for IL business and local governments is we all might think legislatively changing the causation standard might “work.” Without intending to talk down to you, the proposed causation standard change only works if the hearing officers follow the simple language that you are reading and expect the legal terms to mean what our grade school and high school teachers told us they mean. The defense team at KCB&A would expect the new hearing officers appointed by our Governor to provide a similar outcome but we have years and years of dealing with this silly system and some of the IL WC hearing officers don’t always follow common sense or what you might expect. If you see a current and challenging IL WC causation ruling that makes your head spin—please send it along and we are happy to write about it.

In short, Governor Rauner may not have to change the language of the IL WC Act to effectively change the causation standard, he may need to change the people who are enforcing the IL WC Act to match what we think is common sense. That is the simple point, we are trying to make—causation is common sense. If you aren’t “injured” in an unforeseen work “accident,” you shouldn’t get WC benefits.

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

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Synopsis: A police officer is denied benefits under the Illinois Workers’ Compensation Act for injuries sustained driving his personal vehicle to a mandatory training session in hazardous weather conditions and outside normal workhours. Analysis by Matt Wrigley, J.D.

Editor’s comment: In Allenbaugh v. Illinois Worker’s Compensation Comm’n and City of Peoria Police Dep’t, 2016 IL App (3d) 150284WC (decided July 12, 2016), the Illinois Appellate Court, WC Division upheld a decision of the Peoria County Circuit Court which denied benefits to Petitioner holding the “traveling employee” doctrine does not cover a Claimant injured on his way to or from his normal workplace when he is not performing duties incidental to his employment and when Claimant’s regular work shift was different that day.  

Petitioner was a sworn police officer employed by the City of Peoria (Respondent). Petitioner was ordered to report for mandatory training at police headquarters outside his usual duty hours. Petitioner was directed to bring various items of police gear to the training session. The weather was poor and roads were hazardous.

While en route from home to the training session a motor vehicle struck the left front side of Petitioner’s personal vehicle, which caused injuries to Petitioner’s neck and back. At arbitration Petitioner testified police officers were on duty 24 hours per day. The Assistant Police Chief testified Petitioner was not on duty at all times. 

The Arbitrator found Petitioner sustained injuries which arose out of and in the course of his employment. The IWCC reversed this decision, holding at the time of the accident Petitioner was not responding to a report of unlawful conduct or an emergency. Petitioner was required to travel to and attend training outside his normal duty hours but this was insufficient “to avoid the general rule that an ‘employee’s trip to and from work is the product of his own decision as to where he wants to live, a matter in which his employer ordinarily has no interest.’” At the time of the accident Petitioner was not required to drive a particular route, he was not performing any employment activities, and Respondent did not retain control over Petitioner. The IWCC held the “traveling employee: doctrine does not apply when a Petitioner is simply driving his personal vehicle to his normal workplace for whatever mundane reason.

On appeal to the reviewing courts, Petitioner alleged at the time of the accident he was under Respondent’s control and he was a traveling employee. As the material facts were undisputed and susceptible to but a single inference, the courts ruled their review was de novo. The Appellate Court, WC Division noted “all employees are required to go to work . . . we fail to see how the fact that claimant was going someplace he was required to go for work distinguishes his situation from normal commuting.”

Petitioner proffered no evidence supporting the assertion his obligation to go to the place where he works supports an inference he was within the scope of employment while commuting. The Appellate Court, WC Division noted none of the items Petitioner was required to bring to the training session allowed Respondent to maintain control over him. Further, the Appellate Court, WC Division acknowledged the “traveling employee exception” to the general rule accidents which occur when an employee is traveling to and from work are non-compensable. However, Petitioner failed to establish the fact he regularly drives as part of his job duties brings his commute within the scope of employment. Although he was required to travel to the police station at the time of the accident he was merely driving from his home to the station.

Finally, the Appellate Court noted although Respondent required Petitioner to travel in hazardous conditions “we fail to see how this distinguishes claimant’s situation from that of any other commuter in the northern half of this country.”

This article was researched and written by Matt Wrigley, J.D. Please direct questions or concerns to Matt at mwrigley@keefe-law.com.

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Synopsis: First Things First! Are You Disabled under the ADA? Analysis by Brittany Pendry, J.D.

Editor’s Comment: Recently, the Illinois Appellate Court upheld a Circuit Court’s decision to grant defendant-employer’s motion for summary judgment, finding plaintiff could not meet her burden of showing she was a qualified individual under the Americans with Disabilities Act (ADA). What follows it an assessment of the basics of ADA accommodations in the workplace, and what to expect when an employee files a complaint.

In Plaintiff v. Factory Card & Party Outlet, No. 15-2083 (issued June 13, 2016), the Appellate Court affirmed the Circuit Court’s granting of summary judgment in favor of the defendant-employer. In doing so, the Appellate Court agreed with the Circuit Court in reasoning plaintiff failed to present sufficient evidence to allow a jury to find plaintiff was a qualified individual with a disability under the ADA.

Plaintiff injured her foot at home in March of 2009, and was subsequently off work while she treated with multiple doctors over the course of several months. Plaintiff treated with her first doctor, who said she could return to work without restrictions. After continued complaints, she was taken off work and eventually treated with a second doctor. He permitted her to return to work on July 6, 2009 with no restrictions. She disagreed with this assessment and saw a third doctor, Dr. Fleischli, who said she had no ability to work, and would need to be off until August 15, 2009. During this time period, Plaintiff was off on leave under FMLA, and after using up all of her leave, her employer granted her an additional four weeks. However, Plaintiff’s supervisor advised Plaintiff’s employment would be terminated if she could not return at the end of those four weeks, on July 11, 2009. Her supervisor stated Plaintiff would be eligible for re-hire when she could return to work.

However, Plaintiff contended she had a conversation with Dr. Fleischli, who said she could return to work on July 11, if her foot were in a medical boot. Plaintiff claimed she informed her employer’s Regional Resources Manager of this medical recommendation, and the manager indicated it would not be possible as Plaintiff would need to climb a ladder. Plaintiff also submitted an affidavit asserting these same statements of Dr. Fleischli. However, Plaintiff did not list Dr. Fleischli as a witness, but instead intended to assert her own testimony with regard to what the doctor stated. 

Subsequently, Plaintiff applied for disability benefits through Aetna Insurance, and the company determined she was totally disabled. Subsequently, Plaintiff filed a suit claiming a violation of the ADA by her employer.

In coming to its conclusion, the Court looked to the merits of the summary judgment motion granted by the Circuit Court, and found the Circuit Court was correct in holding “Plaintiff presented insufficient evidence to allow a jury to find that she was a qualified individual with a disability under the ADA.” The Court looked to Section 12112(a) of the ADA, stating discrimination is prohibited against a qualified individual, and defined a qualified individual, pursuant to the Act, as an individual who “with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” The Court further stated there is a two-prong test in determining whether a person is a qualified individual, including:

(1) “whether the person satisfied the prerequisites for the position, such as possession of the proper educational background, employment experience, skills, or licenses”; and

(2) “whether or not the individual can perform the essential functions of the position held or desired, with or without reasonable accommodation.”

Plaintiff acknowledged her evidence was limited to her own observations, and while “she stated in her affidavit that Dr. Fleischli had informed her that the use of the medical boot would allow her to return to work by the July 11 deadline, she chose not to present evidence from Dr. Fleischli to that effect.” Therefore, a jury would have been presented with evidence consisting of Plaintiff’s own statements, and while she contends her testimony would be enough to allow a jury to conclude she could perform the essential duties of her job while wearing a medical boot and delegating the task of climbing the ladder, the Court disagreed due to obvious hearsay and trustworthiness concerns with that testimony. 

While the Court admitted a plaintiff does not necessarily have to produce expert testimony in order to demonstrate she is a qualified individual, the need for the evidence depends on the facts of the case, and the Court found the evidence she presented failed to meet her burden.

Employers should have a basic understanding of what the ADA covers, and how it could affect their company. The ADA “prohibits discrimination and ensures equal opportunity for persons with disabilities in employment.” Under the ADA, a disability can be a physical or mental impairment that is so substantial it limits at least one major life activity of a person and there is record of an impairment; or, if the individual is regarded as having a physical or mental impairment. 42 U.S.C. § 12102 (1). A person is regarded as having a mental or physical impairment if that person can establish that she has been the subject of an action that is prohibited under the Act because of a perceived physical or mental impairment, regardless of whether impairment actually limits a major life activity. 42 U.S.C. § 12102 (3).

If an individual is covered under the ADA, no entity can “discriminate against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.” 42 U.S.C. § 12112 (a). This includes not making “reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee.” Id.

The EEOC is responsible for enforcing Title I of the ADA with all employers who have 15 or more employees. Employers are responsible for providing reasonable accommodations to qualified individuals, unless the accommodation would cause undue hardship. If the accommodation causes an undue hardship, the employer must still try to identify another accommodation that will not pose such a hardship, including if there are high costs, whether funding for the accommodation is available. In the event that an employee files an ADA charge with the Commission, the Commission will investigate and initially attempt to resolve the charge through conciliation. The remedies under the ADA can be substantial, including hiring, promotion, reinstatement, back pay, compensatory damages, and attorneys’ fees. Employers should be aware that employees have 180 days to file a charge of discrimination, or 300 days in some states that provide for local or state laws.  

This article was researched and written by Brittany Pendry, J.D. You can reach Brittany at any time for questions about ADA accommodations, defending ADA complaints, EEOC charges, employment law, general liability defense, and workers’ compensation at bpendry@keefe-law.com.

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Synopsis: Short but Sweet Update on Indiana Worker’s Comp from Kevin Boyle, J.D.

Editor’s comment: We were somewhat surprised to hear the IN WC Board has provided notice effective Monday, August 1, 2016, the mileage reimbursement rate is increasing from $0.36 per mile to $0.38 per mile.

If you have questions or concerns, please direct them to our IN Defense Team Leader Kevin Boyle, Esq. at kboyle@keefe-law.com.