Daddy, Can we Reform Workers' Comp in Illinois?

Friday, May 11, 2012 | 0

Attorney General Lisa Madigan’s office lays out a seminal report with crucial recommendations for her father, Illinois House Speaker Michael Madigan for needed workers' compensation reform. Some of these recommendations will affect current handling of claims for Illinois state workers and some of them will affect the entire Illinois workers' compensation system. Let’s hope her Dad is listening.
 
We consider the AG’s report required reading for anyone interested in making Illinois workers’ compensation more functional for Illinois businesses and government agencies. If you want the link, send a reply. If you aren’t sure, Illinois state government is almost certainly the largest full-time union employer in our state.
 
What is weird about the People’s Republic of Illinois” is our wildly liberal state government is “defended” by the office of the oldest daughter of the same political family that makes it so liberal—Attorney General Lisa Madigan is one of four children of House Speaker Mike Madigan. Our readers may remember your editor referring to the “secret-powers-that-be” that run the Illinois Workers’ Compensation Commission—Speaker Madigan is The Boss, El Jefe, the Exalted Grand Poobah of the “secret-powers-that-be who run our state’s workers’ comp system. By that we mean nothing of value at the IWCC happens without Speaker Madigan’s seal of approval. One way for a plaintiff/petitioner attorney to be “made” in the workers' comp system in this state is to have a picture on your wall or a snazzy wallet-sized snapshot of you shaking hands with Speaker Madigan.
 
The Political Tug of War in Illinois Workers' Comp

What this sets up is the odd scenario in which the Attorney-General-Daughter who is charged with reining in a workers' comp system that is basically “defined” and staffed in every way by her illustrious father. Like many of the political families in this nutty state, the family is torn between the immense donations of one of the biggest political lobbying forces in the state, the Illinois Trial Lawyers Ass’n that wants WC benefits as high as possible versus the divergent interests of taxpayers and/or voters who are justifiably upset to see skyrocketing taxes and tolls due, in part to impossible-to-contemplate government inefficiency and bungling in managing a WC claims program for Illinois State workers that is clearly out of control. If you carefully review the report, you can tell the Office of the Attorney General isn’t very happy with lots of decisions by arbitrators and commissioners either.

Please also understand none of what we are writing about is “corrupt” and neither father nor daughter have done anything remotely unethical or against the law—in fact, they are honest, educated and decent folks who are doing what they feel the forces of Illinois government let them do within the confines of the law. That said, the Illinois workers’ comp system for state government workers remains hilariously inept. We applaud Attorney General Lisa Madigan for having the guts and drive to say so in careful detail.
 
Here are some of the important highlights of her report.
 
The Role of the Office of the Attorney General in Workers’ Compensation Litigation

The vast majority of workers’ compensation claims by state employees do not result in case filings with the IWCC. There are currently approximately 20,000 to 22,000 open state employee workers’ compensation files at the Department of Central Management Services (CMS). As of Dec. 31, 2011, the OAG was handling approximately 5,300 state employee workers’ compensation cases which were filed with the IWCC. The OAG plays no role in approximately 75% of state employee workers’ compensation claims.

As we have advised, your editor is certain CMS does dole out some of its work to private defense firms. It is apparent from this report the OAG has no idea how that might take place. We would strongly recommend the duty to manage outside defense firms be moved from the wildly overloaded CMS to the OAG.

The OAG expends considerable resources defending the increasing number of workers’ compensation cases. To handle the growing number of cases, they have significantly increased the number of attorneys and staff in the office’s two workers’ compensation bureaus. In 2003, the OAG had 17 attorneys and support staff members in the workers’ compensation bureaus. The OAG currently has 36 attorneys and support staff members handling workers’ compensation cases (25 attorneys and 11 support staff), with three new attorneys and another support staff member starting in April and May to bring the total to 40.

The CMS Claims Adjusting Process—Trying to Put Out a Raging Forest Fire with a Toy Squirt Gun

CMS currently administers workers’ compensation claims for all state agencies. The OAG report confirms CMS’s workers’ compensation budget is chronically and severely underfunded. A significant portion of each fiscal year’s funding is used to pay medical bills from the previous fiscal year, leaving CMS with insufficient funding for all other aspects of this program, such as retaining independent medical experts when needed to defend a case. As of March 2012, CMS is currently over 23 months behind in paying medical bills—we assume this means they are routinely paying 12% interest on an annual basis on all medical bills, as the Illinois Workers' Compensation Act provides. We are also certain the state gets hit with penalties and fees on most medical bills as a normal course of business at the IWCC. The only reason no one knows how much is their comically outdated computer won’t let them search for and find the totals!

The OAG report also outlines CMS has too few adjusters to handle the claims by state employees. The report indicates there are approximately 20,000 to 22,000 open state employee workers’ compensation claims. At present, there are only 8 CMS claims adjuster IIs to handle those claims (a claims adjuster I was added in recent months to assist them). In the private sector, 200 files is a very hefty caseload—if you do the math above, CMS adjusters are supposed to be “managing” over 2,000 claims each. Quite simply, the agency does not have sufficient funds or staffing to appropriately handle workers’ compensation claims. When you dont have enough folks to handle the work, they have to be paying millions of dollars they don’t owe and taxpayers shouldn’t have to fund.

Prior to the Blagojevich administration, some of the largest state agencies – Department of Transportation, Department of Corrections, Department of Health Services and Illinois State Police – each administered its own workers’ compensation claims, using its own funds. As a result, those agencies had a direct financial interest in improving the workplace to avoid or minimize workers’ compensation claims, defending against workers’ compensation claims and insuring injured workers could return to work as soon as possible to reduce the cost of temporary total disability payments. Under the consolidated system for workers’ compensation claims, employing agencies do not experience any impact to their budgets when their employees file claims or remain off of work and on TTD for an extended period of time, providing those agencies with no financial incentive to determine the cause of the increase in claims and take steps to eliminate it. The agencies also have little incentive to accommodate employees whenever possible (including with light duty work) to allow them to return to work quickly.

The OAG specifically recommended increasing CMS’s use of vocational rehabilitation counselors. In some cases, a state employee may suffer injuries which result in his/her physician providing permanent physical restrictions, precluding the employee from performing the duties of the previous state job. In such cases, the state has an obligation to assist the employee in finding alternate employment through vocational rehabilitation services such as resume-building and interviewing skills, job search assistance, job skills training, education and other similar services which are provided by a vocational counselor. During this process, the employee is paid a benefit similar to TTD and referred to as "maintenance" benefits, which, like TTD, amounts to two-thirds of the state employee's salary. If the vocational rehabilitation process is not initiated promptly and closely monitored, this significantly increases the length of time that the employee continues to receive maintenance payments. Additionally, a more comprehensive vocational rehabilitation process would lessen the likelihood the IWCC will find the employee to be permanently and totally disabled if the case proceeds to trial. This is the case because the IWCC often uses the failure of the employer to provide meaningful vocational rehabilitation services to the employee as justification for finding that the employee is entitled to lifetime permanent and total disability benefits. As we have advised, more than 700 state workers could be taken off of total and permanent disability benefits if voc rehab were offered right now.

The OAG report indicates CMS has recently begun to forward cases in which petitioners need vocational rehabilitation services and/or job search assistance to the Illinois Department of Human Services. DHS has vocational rehabilitation specialists throughout the State. We are hopeful this new effort will assist in controlling TTD and maintenance benefit costs paid by CMS and also help to diminish the number of petitioners who are adjudicated to be permanently and totally disabled. We wish every employer in this state could simply forward their troublesome claimants to DHS in the same fashion.

Another State Workers' Comp Embarrassment—Intentionally Incomplete Accident Reporting

The Workers’ Compensation Act requires notice of an accident to the employer no later than 45 days after the accident. The act further provides, however, that this notice may be made to a supervisor either orally or in writing. Under the act and relevant case law, an employee’s failure to provide notice within 45 days is not a bar to the workers’ compensation claim unless the employer can prove undue prejudice as a result of the defective notice. Although CMS requires all injured state employees to fill out forms regarding the accident, the act does not require completion of these forms. As a result, injured state employees often do not complete the CMS forms on advice of their counsel.

As taxpayers, we consider this concept, if true, to be something that should be investigated and stopped, either by the Illinois Workers’ Compensation Commission or the Attorney Registration and Disciplinary Commission. We do not consider it ethical for attorneys to be providing advice to potential claimants so as to not fully cooperate with accident investigation protocols.

The OAG report also indicates the state faces significant difficulty in defending cases on a notice defense particularly in repetitive trauma claims where, as discussed in more detail below, the employee may file the claim long after leaving employment. The IWCC often determines notice was defective, but concludes state government did not suffer “prejudice” as a result.

The OAG report indicates to establish that notice has been provided to the employer, the IWCC merely requires testimony the employee said something to a supervisor at the time of the accident regarding an injury and the fact that it was work-related. In some cases, even the employees passing mention of an injury or condition of ill-being, however, without specifically informing the supervisor the injury or condition is work-related, has been deemed sufficient notice by some arbitrators and commissioners.

In our view, the OAG report erroneously indicates a petitioner is not required to present evidence to corroborate that oral notice was given to a supervisor or to identify, prior to trial, which supervisor received notice. We are certain the Rules Governing Practice require a “stip sheet” or request for hearing form be completed and sent to the other side prior to hearing—the form requires the identity of the supervisor to whom notice was given to be disclosed.

The OAG report also indicates the employer is not entitled to pre-trial discovery to determine which supervisor in the chain of command the petitioner alleges received the notice, leaving the employer with difficulty in preparing to present appropriate rebuttal witnesses. If the employer presents a supervisor to rebut the employee’s contention that notice was provided, the employee often testifies that a different supervisor was informed about the injury. We would routinely object to any other person being identified during a hearing as having been provided notice of onset if they weren’t listed on the Request for Hearing form.

The OAG report recommends:
To ensure that State employees must provide clear notice at the time of an injury, the Workers’ Compensation Act should be amended to require that, whenever physically possible, State employees must fully complete the CMS workers’ compensation paperwork and to provide that until the paperwork is completed, benefits shall be withheld.
The Workers’ Compensation Act should be amended to require written, signed and verified notice of an accident.

We wholeheartedly agree with both recommendations.

Eugene Keefe is a founding partner of the Keefe Campbell & Associates workers' compensation defense law firm in Chicago. This column was reprinted with his permission from the firm's client newsletter.