8-22-2016; Can IL Taxpayers Stop Being GPP'd By State Workers; Can the IWCC Be A Model of Efficiency to Survive?; New IL Law Changes "Mod Rate" and Ratings for Staffing Cos and more

Synopsis: Can IL Taxpayers Stop Being GPP’d by Former State Workers? Can Our IWCC Be A Model of Gov’t Efficiency in Doing So?

Editor’s comment: I wrote an article in last week’s KCB&A Monday Law Update about taking the staffers out of the four “remote” or satellite IL WC Commission offices across our state. The article appears to have hit a chord with attorneys and readers on both sides of the IL WC matrix who want the gov’t staffers to remain in the offices, despite a changing landscape where technology allows for the elimination of brick-and-mortar offices and people to perform tasks that can actually be done on-line.

With respect to these staffers, we don’t consider those tasks to comprise full time work. Their combined salaries are significant. That said, we are even more concerned about the staggeringly high future cost of GPP Former State Workers.

What Is A GPP Former IL State Worker?

Well, GPP stands for “Ghost Pension Payroller.” What is a Ghost Pension Payroller? That is easy to understand—it is an IL state worker that spent enough time working in a state job to become vested in our unconscionably lucrative state pensions to then receive more current tax money not working than they made while working with 3% compounded annual increases and lifetime “free” or taxpayer-paid health care coverage. In our view, becoming a GPP is the equivalent of winning the lottery because the Ghost Pension Payroller puts in so little to then get millions in return later in life. Please note we aren’t blaming the GPP’s in our state, as they didn’t create this mess but we don’t see lots of them calling for changes to end this welfare-like largesse at a staggeringly high cost to taxpayers. Either way, the less state workers we have now, the fewer GPP’s we will have in the future.

Who Are The Worst IL GPP Former State Workers?

I also want to make it clear, the math underlying these statements is immutable—it is simply math. I can back up the math with more details for anyone interested.

• A married IL legislator is fully vested in four years of service and will contribute about $24,000 to the IL Legislative Retirement System. If they remain at base pay (and very few of them do so), their fake pensions start at $57,800 each year, so they go through their entire $24K contribution in about six months of retirement. That means they are not actually getting “pension” payments after about a year because they will have completely exhausted their contributions and the State’s matching contributions during their service. They become “Ghost Pension Payrollers,” as they are back on your and my payroll, even though they are no longer working. After 23 years of retirement, they will be getting $115,000 each year. After 46 years of retirement, they will be getting $230,000 a year. If you note the math, they can receive several million dollars in retirement for their fake gov’t pension contribution of only $24K. I think that is a lot like winning the lottery—it certainly isn’t a “pension.”

• A married IL judge or justice is fully vested in only nine years of service. Their total pension contributions to the Judicial Retirement System will be about $180K over 9 years. A vested IL judge/justice retiring today will receive $174,250.00 in the first year of retirement. Noting the math, that judge will have exhausted their entire fake pension contribution in about a year and will be back on the payroll of folks like you and me and every IL taxpayer on this email chain in two years. With compounded 3% annual increases, a retired judge’s first annual raise will be more than $5K. In just 23 years, they will be receiving $348,500 each year. If they live 46 years into retirement, they will be getting almost $700K a year and their annual raises will be $20K a year. Again, to see a retired judge eventually getting as much as $15 million or more in retirement for an initial contribution of less than $200K is like winning the lottery to me.

All IL State employees can bask in this coming taxpayer-fed benevolence at whatever level—they all get un-funded state pensions that aren’t truly pensions. What I don’t think most folks understand is this “hidden” aspect of GPP’s or Ghost Pension Payrollers on IL State government. There are about 50,000 current State employees. To my understanding, there are about 250,000 folks on IL State fake government pensions. All employers have more retirees than active workers. Only IL State gov’t has literally hundreds of thousands of Ghost Pension Payrollers who get paid but don’t do any current work for their pay.

Actually, being vested and then retiring to become a Ghost Pension Payroller is a better financial deal than actively working for the State. Regular state workers don’t always get raises. In contrast, Ghost Pension Payrollers get annual, guaranteed 3% raises. They get the raises every year for the rest of their lives. Lots of folks are retiring right now from gov’t work to start getting paid more to NOT work.

I don’t feel some folks believe the GPP pension payout will double (and then quadruple) every 23 years. The math isn’t debatable. Try it out: https://www.investor.gov/tools/calculators/compound-interest-calculator. I just don’t think many folks understand how lucrative these fake pensions have become and how they are almost certainly going to bankrupt our State. This same killer math applies to secretaries, cleaning people, anyone with a IL State job that comes with a fake gov’t pension. Does it make sense to eventually pay the admins working at the Collinsville, Rockford, Peoria or Springfield call $100K+ a year in retirement?

What Does This Have to Do With the IWCC And Remote Office Staffing?

The IL WC System is under attack in every direction. At least one source is now calling for IL business to have an “opt-out” choice that would replace the current IWCC with another admittedly inconsistent and confusing approach to injured workers’ needs. I feel one way to quell the attacks and allow the system to remain in place is to start looking at the IWCC and make tough calls on what is needed and what we can live without.

The current budget of the IWCC is paid for entirely—every nickel—comes from IL business. That budget is about $30 million each year. If our IWCC Chairperson and General Counsel Ron Rascia and the many IWCC advisory boards want to show our great Governor and all the business leaders in this state they care about work comp costs, one way to do so would be to cut costs and staff by 10-20-25%. A 25% cut would be an immediate savings to IL business of $7.5 million. The longer term savings could be even greater because you would end the hiring of some GPP’s that are certain to end up costing double or triple or even quadruple what they are paid while working! Either way, such actions are sure to make national WC headlines in the very best way.

It is our hope the IWCC becomes a model for the other 87 IL State agencies in cutting costs by taking the lead and making headlines doing so. Please remember our State government debt is over $200 billion, yes billion. Our State’s unpaid or late-paid bills are nearing $10 billion dollars. I hate being in a state where we laugh at outside vendors who diligently work for taxpayers and then State gov’t laughs at them and is forcing some suppliers into bankruptcy waiting to get paid. One major reason for the unpaid bills are all the GPP’s.

How do we stop this embarrassing situation? Well, it starts with reducing or eliminating staff where possible, especially with the emergence of on-line filing capability at the IWCC, which we understand is in the works. We can also consider eliminating items like the IL WC Second Injury Fund and Rate Adjustment Fund and start to actually notice IL WC claims have dropped dramatically while administrative staffing and budgets keep going up. When e-filing starts, we hope even further cuts can be made as paper forms and libraries go on the cloud.

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

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Synopsis: New IL Law Changes WC Rules for IL Staffing Companies.

Editor’s comment: Staffing/Logistics and similar companies are exploding in growth. Governor Rauner just signed a new bill that is required reading for anyone in that part of the WC matrix. If you read the new law below, you may note it appears to block fiddle-fooling with “experience mods” or insurance ratings for staffing agencies.

The new law says: Section 5. The Employee Leasing Company Act is amended by changing Sections 25 and 30 as follows:

Sec. 25. Record keeping and reporting requirement.

    (a) A lessor shall maintain accounting and employment records relating to all employee leasing arrangements for a minimum of 4 calendar years. A lessor shall maintain the address of each office it maintains in this State, at its principal place of business.

    (b) A lessor shall maintain sufficient information in a manner consistent with a licensed rating organization's data submission requirements to permit the rating organization licensed under Section 459 of the Illinois Insurance Code to calculate an experience modification factor for the lessee.

    (c) Upon written request of a lessee with an annual payroll attributed to it in excess of $200,000, the lessor shall provide the lessee's experience modification factor to the lessee within 30 days of the request.

    (d) Upon request of a lessee with an annual payroll attributed to it of less than $200,000, the lessor shall provide the loss information required to be maintained by this Section to the lessee within 30 days of the request.

    (e) Nothing in this Section shall preclude a licensed rating organization from calculating the experience modification factor for each lessee nor an insurer from maintaining and furnishing on behalf of the lessor, such information as required by this Section.

    (f) In the event that a lessee's experience modification factor exceeds the lessor's experience modification factor by 50% at the inception of the employee leasing arrangement, the lessee's experience modification factor shall be utilized to calculate the premium or costs charged to the lessee for workers' compensation coverage for a period of 2 years. Thereafter, the premium charged by the insurer for inclusion of a lessee under a lessor's policy may be calculated on the basis of the lessor's experience modification factor.

    (g) A lessor that does not provide workers' compensation insurance coverage for leased employees of a lessee under an employee leasing arrangement shall not be subject to compliance with subsections (b) through (f) of this Section.

    Sec. 30. Responsibility for policy issuance and continuance.

    (a) Either a lessor or lessee may provide workers' compensation insurance coverage for leased employees under an employee leasing arrangement. When a workers' compensation policy written to cover leased employees is issued to the lessor as the named insured, the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees. The endorsement shall, at a minimum, provide for the following:

        (1) Coverage under the endorsement shall be limited to the named insured's employees leased to the lessees.

        (2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25.

    (b) (Blank).

    (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee.

    (d) The insurer shall provide proof of workers' compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed.

    (e) Calculation of a lessor's or lessee's premium shall be done in accordance with the insurer's rating manual filed with the Department.

    (f) When the lessee provides workers' compensation coverage for leased employees under an employee leasing arrangement, the lessor shall notify the Department in a manner specified by the Department to ensure proper and timely notification of coverage to the Department.

Effective Date: 1/1/2017

If you are with a staffing company or handle insurance for staffing companies and need assistance with the new law, send a reply. We appreciate your thoughts and comments. Please post them on our award-winning blog.

8-15-2016; New Rules For IL WC Folks to Know; IL WC E-Filing Vendor Bids Are Out and E-Filing Will Be Comin'; Lilia Picazo Reviews Important Fee-Splitting Ruling and more

Synopsis: Proposed New IL WC Commission Rules May Be Changing Lump Sum Settlement Contracts, Disciplining Attorneys and Other Hearings.

Editor’s comment: The Illinois Workers’ Compensation Commission has proposed several amendments to the Rules Governing Practice before it at 50 Ill. Adm. Code 9070, Settlement Contracts and Lump Sum Petitions. Under filing requirements, in addition to settlement contracts being filed in quadruplicate on the IWCC form, one copy must be provided for each additional case number listed on the contract, the proposed amendment states.

Another proposed amendment makes settlement contract forms available on the web at: http://www.iwcc.il.gov/forms.htm We would comment most IWCC forms have been available on the IWCC website for a number of years so we are unsure of the basis for this new amendment to the Rule. 

Will the IL WC Commission Ever Close the Unneeded “Remote” Offices?

The continuous availability of the forms on the IWCC website has been one source of criticism of the “remote” or “satellite” offices the IWCC maintains at our cost—the main task of these remote offices was to print and make paper forms available to the public. The same forms are always available on the web and could be printed at a local library or other government office. The IL WC Commission continues to maintain “information offices” in Collinsville, Rockford, Peoria and Springfield. The Rockford and Peoria offices appear to be open on a part-time basis, as the IWCC website cautions readers to call to insure they will be open on any given day. The Collinsville office wasn’t staffed for a very long time, indicating it is not needed.

Under Governor Rauner, we feel all “remote” government offices be immediately and permanently closed to save IL business money. We do not think they would be missed by IL injured workers or business people. We feel if the IL WC Commission took a poll to ask our citizenry if they want this service, no one would respond.

Lump Sum Settlement Contracts Rules May Change

Attorneys and claims managers need to know IL WC lump sum settlement contracts on cases originating in Cook County may be assigned randomly to an Arbitrator in the appropriate venue by a computer program. When the venue is outside Cook County, the parties may present settlement contracts by appearing personally before an Arbitrator assigned to that venue.

Under Section 9070.40, Action by Commission under Contested Petitions for lump sum settlement approval, two amendments were proposed:

When a Settlement Contract has been rejected by a Commissioner and re-assigned to an Arbitrator for hearing, no settlement contract may be approved by any Arbitrator. Any additional settlement contract must be presented to the Commissioner who rejected the prior settlement contract for consideration and possible approval.

Parties may reserve the right to amend an approved settlement contract by stipulation and order of a Commissioner to conform with regulatory requirements including, but not limited to, those of Social Security and Medicare. In no event may those amendments abridge the substantive rights of the parties as listed in the previously approved settlement contract.

Proposed Change to Rules on IWCC Attorney Discipline—What/When Was There Ever IL WC Commission Attorney Discipline?

Under Section 9090.10, Disciplining of Attorneys: Procedure, items b and c would be removed from the Rules Governing Practice. As these provisions relate to appropriate notice of a disciplinary hearing conducted by the IWCC, we have no idea why they need to be removed. In 36 years of practice, your editor is not aware of a disciplinary hearing being conducted in relation to an attorney appearing before the IWCC.

Proposed New Rules on Self-Insurance and Work-Stop Orders

There also are proposed amendments relating to the solvency of self-insured employers and work-stop orders. The new Rule would require notice of work-stop hearings to list the specific statute violations and periods of non-compliance, and confirm failure to appear at a hearing would trigger findings employers have knowingly failed to comply with the statute and such failure constitutes an immediate serious danger to public health.

Public comments will be accepted by the IWCC until Sept. 12, 2016 and should be submitted to Ronald Rascia, general counsel, IWCC, 100 W. Randolph, Suite 8-200, Chicago, IL 60601, or by telephone at 312-814-4932, or by email at IWCC.Rules@illinois.gov.

All of the proposed amendments can be found here.

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Synopsis: E-Filing Continues to Approach and Come Online for the IL WC System. Is This Then End of IL WC Status Calls?

Editor’s comment: The Illinois Workers’ Compensation Commission later this month should unveil a vendor to institute their e-filing model that will culminate in an e-filing system. As odd as it sounds, the monies to  pay for e-filing will come from the settlement of a lawsuit over business fees imposed by former Governor, now jail-bird Rod Blagojevich.

The e-filing project will encompass filing of

·         New Applications for Adjustment of Claim;

·         All motions;

·         Status call management including calendaring and docket management;

·         Decisions.

Is E-Filing the End of Humans Attending IL WC Status Calls?

One of our lawyers wondered if all status calls will be conducted partially or completely online. Please note the IL WC Commission, like those of many other states, has a monthly status call where each month all cases assigned to an Arbitrator are reviewed with clerks or lawyers present to report developments including settlements and the need for hearings. For a time, many cases are automatically continued unless an emergency arises. After 2-1/2 years that an IL WC claim has been pending, attendance by someone on behalf of the law office is required to confirm the reasons for delay.

If the status calls are conducted in an online or web setting, it might mean attorneys at “out-state” or what is inaccurately termed “downstate” status calls do not have to appear. As fast as that happens, we feel many insurance carriers and TPA’s may hold back assigning such claims to defense attorneys because they would be able to watch/track developments from the nearest computer.

Our best answer to this question is “we don’t know.” We are sure the Federal and IL County Circuit Courts have gone to e-filling protocols. Both judicial systems still have status calls where the judges seek status reports from the parties litigant to insure cases are moving forward and being handled appropriately. Email and web handling hasn’t replaced the specter of judges pressing lawyers to be prepared and ready to act on their claims. We feel that is going to continue at the IWCC but we will all have to wait and see.

The Weird Way E-Filing in IL WC Will Be Funded

The initial cost of e-filling won’t be made public until the IL WC Commission releases the winning bid for the e-filing vendor selected. The IWCC put out a 52-page RFP earlier this year and accepted sealed offers from vendors until May 11, 2016. The money to fund e-filing will come in part from a $44 million settlement the IL WC Commission agreed to with the Illinois Chamber of Commerce, which filed a lawsuit against business fees imposed by  the Blago administration in 2003 to combat a $5 billion budget shortfall.

We sadly note U.S. District Court Judge James Zagel recently resentenced Blagojevich to the same 14 years in prison for his many remaining convictions. You may recall a federal appeals court last year threw out five of the 18 corruption counts, but Judge Zagel affirmed the former governor’s criminal actions were egregious enough to remain in a federal prison for about 8 more years until at least May 2024, when he may be 67 years old. This projected release date factors in a reduction of two years for good behavior.

The IL State Chamber Fought for Their Members Against the Fees and Got an Amazing Settlement They Are Putting to Good Use.

In response to the State Chamber’s lawsuit, the Cook County Circuit Court ruled in favor of the Chamber’s position. They ruled Blagojevich’s anti-business taxes violated the uniform taxation rules by creating classifications that singled out business groups to bear the cost of operating general government functions. After some additional fussing, the State agreed to settle for the $44M.

Part of the $44 million settlement was set aside to repay loans used to provide cost-of-living increases to permanently injured workers and to pay claims owed to others. The bulk of the settlement $26 million then and now $30 million was earmarked for IL WC Commission capital improvements, to include a new electronic filing system, and to increase staffing in the agency’s anti-fraud unit. None of the settlement money was intended to cover normal Commission operating expenses that are paid under a separate levy on IL business..

The IL State Chamber said its members have saved $19 million a year since the anti-business fees were rolled back. The 1.5% surcharge imposed on employers’ insurance premiums generated two-and-a-half times the amount needed to operate the IL WC Commission. 

Rules the IL WC Commission proposed to implement electronic filing were published in the July 29, 2016 edition of the state register, and are available here. Public comments will be accepted until Sept. 12 and should be submitted to Ron Rascia, general counsel, Illinois Workers’ Compensation Commission, 100 W. Randolph, Suite 8-200, Chicago, Ill., 60601. Stakeholders can call 312-814-4932 or email IWCC.Rules@illinois.gov.

The Commission's request for proposals is online here. The digital transformation project will be done in two phases. The first phase will determine the steps needed to craft system requirements and parameters, and developing an RFP for the second phase. The second phase will be the actual development and implementation of the solution identified in Phase 1. The successful bidder in the first phase is excluded from bidding on the second phase.

Will the New Electronic Filing Efficiencies Result in Actual Savings for IL Business and Local Gov’ts?

Again, 100% of the cost of everything at the IL WC Commission is paid for via levy after levy on IL business. Labor doesn’t pay a penny. Along with the levy that funds the IWCC, there are lots and lots of lesser-known “funds” at the IWCC that could be eliminated at a dramatic and immediate cost savings to IL business. We hope the new e-filing protocols will result in actual and demonstrable savings to include limited layoffs but we are going to have to wait and see.

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

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Synopsis: IL Appellate Court Reinstates Plaintiff/Petitioner Law Firm's Claim Pursuant to Attorney Fee-Splitting Agreement. Research and analysis by Lilia Picazo, J.D.

Editor’s comment: The Illinois Appellate Court overturned a trial judge's finding an IL personal injury law firm's fee-splitting agreement with a workers' compensation attorney was not enforceable. In Ferris, Thompson & Zweig v. Esposito, No. 2-15-1148, 08/10/2016, published, the personal injury law firm of Ferris, Thompson, & Zweig ("FTZ") had a long-standing relationship with attorney Anthony Esposito under which the firm would refer potential workers' compensation clients to Esposito in exchange for a share of the attorney fees Esposito would receive if the client hired him to pursue a claim.

The relationship between the parties eventually soured when fee-splitting may have stopped. The firm sued Esposito for failing to pay their share of attorney fees pursuant to the terms of two written and executed fee-splitting agreements between them. In response, Attorney Esposito moved to dismiss the action, asserting sole jurisdiction of the workers' compensation fee dispute was within the jurisdiction of the IL Workers Compensation Commission, not a state trial court. We note there is no provision, rule or form for the IWCC to consider fee-splitting agreements. Such agreements would appear to exist separate and apart from the IL WC Act and Rules Governing Practice before the IWCC as they relate to the breach of an agreement.

The trial judge denied Esposito's motion, and the Appellate Court later affirmed this decision. The IL Supreme Court did so as well.

While this dispute was pending, Esposito balked at paying FTZ attorney fees pursuant to 10 other written agreements executed between 2007 and 2010. FTZ then filed a second complaint against Esposito, and Attorney Esposito again moved to dismiss this second lawsuit. Esposito argued the fee-splitting agreements were not enforceable because they did not expressly provide that he and FTZ would share financial responsibility for representing the clients.

This time a trial judge agreed with Esposito’s approach, and, in response to the motion, the judge dismissed FTZ's complaint. Ferris, Thompson & Zweig thereafter appealed. 

For any attorney referral agreement to be held enforceable, the IL Appellate Court ruled, the attorneys involved in the agreement must strictly comply with Rule 1.5(e) of the Illinois Rules of Professional Conduct. The Rule provides division of an attorney fee among lawyers who are not in the same firm may be made if

·             The primary service performed by one lawyer is the referral of the client to another lawyer;

·             Each lawyer assumes joint financial responsibility for the representation;

·             The client agrees to the arrangement, including the proportionate share each lawyer will receive;

·             The agreement is confirmed in writing; and

·             The total fee is reasonable. 

In examining the history of Rule 1.5(e), the Court read referral agreements must be in writing, but there was no indication the referral agreement must expressly state the parties assume joint financial responsibility when representing clients. The Court also stated “joint financial responsibility” applied similar to attorneys engaged in a general partnership. Joint financial responsibility in such case would apply regardless of whether it was expressly included in a written referral fee-splitting agreement.

If the client agrees to the arrangement, including the share each lawyer will receive, the agreement is confirmed in writing and the total fee is reasonable, the Court said an agreement could be enforced.

The Court later read the rule as establishing two scenarios where attorneys could split fees, one of which required the attorneys expressly state they assume joint financial responsibility. See Donald W. Fohrman and Associates, Ltd. v. Marc D. Alberts,P.C. 2014 IL App. (1st) 123351 The Court held a fee-splitting agreement unenforceable as there was no substantial compliance with Rule 1.5(e) of the Rules of Professional Conduct.  However, the Court in this case stated FTZ established prima facie case of reversible error, and the matter was reversed and remanded for further adjudication by the trial court. 

In short, we want our readers to take away the significance of the Rules of Professional Conduct for fee-splitting agreements. Failure to adhere to the Rules will likely result in the loss of referral fees should the agreement be disputed. Therefore, PI and WC referring attorneys entering into such agreements should strictly adhere to the Rules in order for fee-splitting agreements to be held enforceable.

This article was researched and written by Lilia Picazo, J.D. She can be reached for questions at lpicazo@keefe-law.com. We appreciate your thoughts and comments. Please 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!!! 

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.comand 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!

8-8-2016; Can This Be The Biggest Mistake in IL WC History?; NCCI Proposes Another Decrease for IL WC Advisory Rates; OSHA Contradiction and More

Synopsis: Can This Be the Biggest Mistake in the History of Illinois Work Comp?

Editor's comment: With all the respect we can offer to the members of the Appellate Court, WC Division, we have to say we consider their new and unprecedented legal theory to be a major WC mistake. What they are now doing is to develop is the philosophy that post-traumatic stress disorder or PTSD of any sort is now an “accidental injury” in this state. What just hit is their ruling in Moran v. IWCC where they ruled a firefighter lieutenant can receive potentially lifelong benefits for PTSD due to the passing of another firefighter under his command during a live fire. Claimant Moran was not inside the house when the fire overtook his subordinate, and Moran did not participate in the rescue or resuscitation efforts.

Why is that a major league problem for our state? Well, please tell us how to accurately and unquestionably confirm the presence of actual (and not faked) PTSD. You cannot give someone claiming PTSD a lie detector test. There is no effective medical care for PTSD with a start, middle and end. In our view, anyone claiming PTSD can live a normal life, eat, drink, sleep and whine, whine, whine about their situation. Once you stamp someone with the PTSD label, the feigned condition almost never gets better and if it does, it is entirely up to them. If you allow one person in this state to go on temporary total disability for PTSD for a day, you are laying the path for hundreds/thousands of other workers to follow that model to become totally and permanently “disabled” without the need for an actual injury to their person. We promise you every Claimant lawyer from Waukegan to Carbondale is going to teach their claimants and potential claimants how to add PTSD to their IL WC claims to maximize lost time and supposed permanency. We think this is a massive issue for Illinois jobs and government.

Do We Truly Want to Encourage and Reward Cowardice?

We have never seen a PTSD claim where there isn’t a factor of the person suffering from it being afraid of something. In every claim we have dealt with, the man or woman had something happen to them or around them and they are now afraid it will happen again. If the event that occurred was truly unexpected and shocking but only involves mental stress, you can empathize for a time but after a reasonable period of time, it is time to put on the big-boy and big-girl pants and get back into the mix.

You always have to remember, the problem with giving someone lifetime benefits when they are afraid of something that occurred at work is now they don’t ever want to work ever again. If you give lifetime benefits to one person for a non-injurious event, lots of other folks are going to want to sign up as cowards and whiners to get the same money. Please also remember when someone in Illinois making $100 a week in a part-time job is adjudicated totally and permanently disabled in this state, the minimum T&P weekly rate is $535.79 so they will jump to annual tax-free take-home pay of $27,861.08! They will also be entitled to RAF COLA bumps that will eventually double or triple that money. We vote we only give that out to people with actual injuries.

And we aren’t saying workers with PTSD don’t need any medical/psych care at all—let them get the care they need but don’t encourage cowardice, malingering and possibly scamming by paying them to remain off work indefinitely or for the rest of their lives.

Do We Truly Want to Also Encourage Freeloadin’? Will PTSD become the IL WC Equivalent of Another Fake IL Gov’t Pension?

Illinois and the City of Chicago are the epicenter of freeloading gov't workers. We know of no other place in the United States where there are more former government workers who enjoy the greatest government benefit of all--they don't have to work but they still get full salaries, giant annual raises and lifetime Cadillac-coverage group healthcare paid for by you and me. We feel our State and the second largest city in the country have more former gov't workers living on the dole than anywhere in the world.

How do they do it? What in tarnation happened? Well, our leaders in Springfield and reviewing courts figured out if you give create lots of paths to phony retirement plans, the former government workers become your best pals and will vote for you and work for you in elections. Because Illinois and Chicago don't have term limits, several politicians and jurists have stayed in office for decades to reap the benefits of using our tax dollars to line their pockets and the pockets of their government supporters. No one is talking about freeloadin’, all they can say is taxes have to go up and up more to pay for it.

The Biggest Freeloaders of All--Illinois Legislators

Don't believe us? Want a solid example? Well, the phoniest of phony retirement scams in this State is the Illinois General Assembly fake retirement plan. To take advantage of this kooky deal, you need to get elected to the IL House or Senate. You will get paid at least $68K a year for part-time work--they only work 50 days a calendar year. You don't actually have to show up. The scam starts when a married legislator contributes about 10% of that salary or $6,800 a year into the scam, oops, we mean phony retirement plan. They have to serve just two terms or four years to be "vested" in the scam. If you do the quick math, you will "contribute" $27,200 into the pot for your fake retirement plan in that four year period. Let's say the State matches that money during your two terms, putting a combined $54,400 away for your phony retirement needs. You can retire at 55 and collect 85% of your highest salary when you start taking the "retirement." Any school child will note if you remain at $68,000 a year as a legislator, your starting retirement is $57,800 in the first year of collecting this fake pension benefit--yes, in the very first year of retirement, you will collect more than double what you put into the plan and simultaneously use up the entire "matching" amount contributed by the State.

After about 11 months of collecting this fake pension benefit, you win!! After 200 days or the equivalent of one year of actual work, you are now a lifetime freeloader and taxpayers will owe you the $57,800 plus 3% annual not-actually-COLA benefit increases. If you don't know the math on 3% compounded annual raises, the indisputable math means a former legislator will enjoy increases that will double their retirement benefit in about 21 years and will eventually quadruple the starting amount well into middle six figures. All of that money and your taxpayer-paid Cadillac healthcare coverage comes from current tax dollars--remember, you blew through the fake pension contributions in the first year of participation!

What Does This Mean to IL Workers' Comp?

Well, our Appellate Court, WC Division just expanded the availability of similar lifetime fake benefits for Illinois police and firefighters (and probably lots of other workers). In Moran v. IWCC, a lieutenant on the Village of Homewood Fire Department was managing a live house/building fire. He was outside the property and making the best possible radio calls on where and what his team was doing in battling the blaze. Sadly, while doing so, two of his team members were hit by what is called a 'flashover' and they were seriously injured. Both of them were taken by other firefighters to emergency medical care and one survived while the other passed. Our best thoughts and wishes go out to the brave survivor and the family and friends of these heroes who gave their all to the community.

So what happened? Well, the fire lieutenant quarterbacking the fire claimed he suffers from post-traumatic stress disorder or PTSD. In our view, he is now scared to do the job. From our review of the record, we don't see what would be the basis for a work comp stress claim other than the fact he was on the site of the event and did everything he possibly could do to protect his team from afar. Claimant did not go into the live fire or see/experience what happened to the injured men or otherwise deal with anything other than what we all feel firefighters and their managers sometimes have to do—bravely fight fires at moderate to high risk to life and property.

So this became a workers' comp claim? Yep--remember, we are in the People's Republic of Illinois! Despite the lack of any immediate threat to his life or what we felt was a sudden, shocking or unexpected occurrence, Claimant maintained he was and remains disabled from all work. In fact, it appears he has already been off work for half-a-decade or more. The Arbitrator carefully considered these facts and denied the claim. The IL Work Comp Commission panel also denied the claim. The Circuit Court judge assigned confirmed their decision based on the fact above.

Last week, in a ruling that we can only describe as unprecedented, a unanimous Appellate Court, WC Division reversed the denial to award this firefighting manager potentially lifetime benefits with Rate Adjustment Fund increases. If you read their ruling, we truly feel the entire Homewood Fire Department and all the members of the other local fire departments that pitched in to help could sign up for the same benefits when they learned any other firefighter passed in the line of duty. Similarly, if one police officer at a stakeout or bank robbery were to be killed, we feel all the members of that city's police department and the neighboring departments could follow the path to lifetime retirement benefits as laid out by this ruling and the entire police department could start claiming PTSD due to the passing of their comrade-in-arms.

Please understand we do not mean to be insensitive to the dangers these public servants face each day. We salute our police and firefighters because we see them as brave tough men and women who put their lives on the line for us at a moment's notice. We are absolutely sure the Village of Homewood rightfully paid for the widow of the fallen firefighter as is appropriate when a catastrophic accident occurs. The taxpayers in Homewood have and should also pay for the medical bills and whatever the other injured firefighter needed. If you write to say we are insensitive to Claimant Moran, we will write you back to confirm you are insensitive to the taxpayers of Homewood and the entire State of Illinois!

As to this claim for PTSD for someone who admittedly wasn't touched, burned or injured in any way, we don't feel it is insensitive for the Commission to have denied this claim and for the firefighter to go back to his job or a different, less-challenging job. There is no shame to former Officer Moran to learn he can’t handle this demanding job—if he wasn’t cut out to do it, he should find other less-demanding work. But to pay him for his mistake in thinking he could handle that challenging firefighting work, there is no way you or I or anyone can tell if he is telling the truth or making it all up to get very expensive WC benefits from unsuspecting local taxpayers. The Commission weighed the evidence and ruled accordingly. In our view, the Appellate Court simply re-tried the case and weighed evidence themselves rather than abide by our view of the manifest weight standard.

We have no true idea how any Illinois municipality will ever defend such impossible-to-document PTSD claims. In our view, there is no true way to confirm or deny the presence of PTSD. You don't have to take a lie detector test to establish or document the condition. All this former firefighter has to do is keep occasionally going to a psychiatrist and claim he has issues and he can stay on the freeloadin' dole for the rest of his life.

Is this going to be expensive? The only thing all Illinois taxpayers can be sure of is skyrocketing taxes in the years to come due to similar fake government pensions created by the legislature and our radical reviewing courts. The City of Chicago has already hiked taxes $833M over the next four years with almost all of that money earmarked to their freeloadin' and completely unfunded pension programs. In the Village your editor lives in, the benefits for firefighters already surpass the annual payroll set aside for them. Try to imagine how expensive it will be to have all the firefighters or police officers in your local fire/police department walk off the job to start freeloadin' if and when one of their fellow officers in the department pass away for any reason on the job. Could firefighter/police benefit costs double/triple? It boggles the mind. It is also mind-boggling to think any time someone dies in a factory from a heart attack or in an office from a fall-down, everyone in and around the building might be able to claim PTSD.

Can This Ruling Be Appealed? Can Our IL State Chamber Change the Law to Stop PTSD Claims?

This ruling is another example of this very liberal Appellate panel randomly and sporadically changing IL WC law by flipping denials on the “manifest weight of the evidence” standard. When they reverse the IWCC on the facts, there is supposed to be literally no basis for the Commission’s ruling. This comes from the last two IL Supreme Court rulings on the topic in Sisbro and Twice Over Clean. We find it impossible to contemplate there was no basis for this current IWCC ruling and we feel numerous facts demand/support summary affirmance.

In our view, there was also strong support in the record for the decision of the Arbitrator, the three-member Commission panel and the Circuit Court judge to deny this claim. In our view, their combined denials should have been quickly and quietly affirmed by the Appellate panel with the message to former Officer Moran to get whatever psych care he needed on his own dime but get back to the job. If he truly couldn’t go back to the job, he should be advised to seek other government work without being rewarded with hefty WC benefits from taxpayers for his personal and non-work-related issues.

Legislatively “controlling” or reigning in what we feel will be a flood of new PTSD work comp claims is going to have to be considered by the gurus at the IL State Chamber, like the eminent Jay Dee Shattuck. He is among our readership and we strongly hope both he and State Chamber President Todd Maisch work to stem the PTSD tide that we are sure is coming.

If you need help defending these new PTSD claims that are certain to come at you and your claims, contact John Campbell at jcampbell@keefe-law.com or Shawn Biery at sbiery@keefe-law.com or any KCB&A defense lawyer for our top psych experts and defense strategies. Trust us, you will need all of it!

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Synopsis: NCCI Proposes Decrease for Workers Compensation Advisory Loss Costs and Rates in Illinois for 2017—Yawn!! It is Advisory???

Editor’s comment: On July 26, 2016, the National Council on Compensation Insurance delivered a workers compensation advisory rate and loss cost filing, and an assigned risk rate filing to the Illinois Department of Insurance. Based upon its review of the most recent available policy year data (2013 and 2014), NCCI has proposed an overall average workers compensation advisory voluntary loss cost level change of -13.4%, advisory voluntary rate level change of -12.9% and an assigned risk rate level change of -6.7% to become effective January 1, 2017.

Here are some of their key observations:

·         The financial data experience period evaluated as of December 31, 2015 shows significant improvement when compared with the data evaluated as of December 31, 2014, that showed no change was warranted.

·         Lost-time claim frequency decreased 6.5% in policy year 2014.

·         The average indemnity and medical cost per case for lost time claims decreased in policy year 2014.

Since the enactment of the 2011 Amendments to the IL WC Act in HB 1698, effective September 1, 2011, the cumulative voluntary loss cost level change is -30.1% and the cumulative voluntary rate level change is -28.7%. These cumulative changes include the proposed loss cost and rate level changes described above.

In our view, this is generally good news for the IL WC industry. However, it doesn’t mean a great deal. From our review of their data over the last decade or two, the NCCI has recommended enough “advisory rate reductions” to make WC premiums free in IL. We ask the rhetorical question--can advisory rates go negative where the insurance carriers owe money to their insureds???

We have always felt the NCCI IL WC advisory rate filing is mildly misleading. In our experience the advisory rates have almost always dropped, dropped and dropped some more. The problem with NCCI advisory WC rates is just that—they are ‘advisory’ and you can’t purchase IL WC insurance at those rates.

We assure our readers the NCCI statistical analysis is more significant. The metrics clearly point in the right direction for IL business and local governments. Overall, the latest WC experience in Illinois is a mixed bag with different components applying offsetting pressure on system costs. An increase in indemnity severity, higher benefit payments because of inflation and a slow-down in claim closures at early reports are putting upward pressure on costs.

At the same time, indemnity claim frequency declined slightly in 2012 and 2013 and medical severity increased at the same rate as inflation, helping to mitigate any cost increases. The two big questions for Illinois involve the lagging economy and pending legislation A standoff between Gov. Bruce Rauner, a Republican, and Democrats in the House and Senate prevented the Illinois General Assembly from passing anything other than a “stopgap” half-year state budget. The Governor and Democratic lawmakers are deadlocked over “turnaround” workers' compensation reforms.

In our view, the much preferred metric is the every-other-year analysis from the State of Oregon that will rank actual WC premiums in a state-by-state fashion. In their 2014 survey, IL WC rated 7th.

http://www.cbs.state.or.us/external/dir/wc_cost/files/report_summary.pdf Their next survey should be out in October 2016. We will report the minute we see it.

In the interim, we are hoping the brave and hard-working IL WC Arbitrators and Commissioners will continue to carefully limit costs and deny questionable IL WC claims to bring us into line with the surrounding states and thereby encourage jobs and development of new business in this state.

To contact the NCCI person on their report, call or email Terri Robinson via phone: 501-753-5180; fax: 561-893-5655 or email Terri_Robinson@ncci.com

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

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Synopsis: OSHA Postpones Enforcement of Anti-Retaliation Measures While They Try to Figure Out What The Heck They Are Doing.

Editor’s comment: The federal Occupational Safety and Health Administration is delaying enforcement of anti-retaliation measures contained in a new injury-reporting rule, following the filing of a recent lawsuit challenging their new provisions. Enforcement of the new provisions is now scheduled to begin Nov. 1 rather than Aug. 10 as previously scheduled, OSHA announced.

A day earlier, a group of Plaintiffs filed an emergency motion for a preliminary injunction seeking to delay implementation of the new provisions. The provisions would prohibit safety-incentive programs that could potentially discourage a worker from reporting an injury — for example, programs that give workers a bonus for remaining accident free for a particular period. Post-accident drug testing in some cases also would be prohibited by the new rule, while in contradiction to that rule, post-accident drug testing performed to comply with state or federal laws would not.

On July 8, 2016, a workers’ compensation insurer, several trade organizations and three employers filed a lawsuit against OSHA, saying the anti-retaliation measures would eliminate programs that have improved workplace safety. The lawsuit, filed in U.S. District Court for the Northern District of Texas, alleges that OSHA exceeded its statutory authority in enacting the rule and didn’t follow legally required procedures.

In a news release, OSHA said the enforcement delay is to “conduct additional outreach, and provide educational materials and guidance for employers.”

From the perspective of the defense team at KC&BA, if a U.S. employer is aware of a fatality or amputation or other serious injuries in their workplace, they have 24 hours to report the accident to OSHA’s hot line or the employer could be charged by OSHA with a crime and prosecuted. In short, OSHA demands/commands “same day” accident reporting from U.S. businesses.

At the same time, OSHA was fighting (sort of) to not have injured workers have to report claims to their employer on a same day basis, as OSHA assert that policy will somehow inhibit accident reporting.

Are we the only ones who see those two positions as inherently contradictory?

We can foresee a situation in which two workers are on the same job and both are injured. Worker A is killed and the Worker B injured but Worker B hides the death of the other worker and his/her own injury from the employer to avoid drug testing. When the employer finds out about late reporting, they fire Worker B for it.

Couldn’t OSHA bring criminal charges against the employer for not rapidly reporting the fatality and then also sue the employer for firing Worker B in retaliation for late reporting?

On a related issue, we recently reported where a federal court ruled in response to an OSHA lawsuit against a South Beloit, IL employer for “restitution” and the federal judge awarded the widow $350K on top of the state WC death benefit. OSHA’s litigation and this judge basically doubled the death benefit payable to the widow, asserting there were safety violations. In our view, that is what state WC death benefits are for. We are concerned OSHA appears intent upon creating a “super-WC” benefit structure in the federal courts at their whim on the claims they select.

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