Illinois Workers' Compensation Reform

Wednesday, December 22, 2010 | 0

By Michael Rusin
Rusin Maciorowski Friedman

The Republican gubernatorial candidate in Illinois, Bill Brady, had promised workers’ compensation reform. He was a business owner who had investigated our workers’ compensation system and determined that it was unfavorable to business. He had promised changes in the workers’ compensation system, recognizing that many employers had moved out of the State of Illinois or
had chosen not to move into the State of Illinois because of high workers’ compensation costs.

Gov. Quinn, on the other hand, was strongly supported by unions and plaintiff lawyers who want no changes in the system. Therefore, with Quinn’s election, we didn’t expect any push for workers’ compensation reform for the next two years at least or even the next four years until Quinn was up for re-election. However, Quinn wants an income tax increase. The state’s
finances are terrible. Quinn knew that he had to get an income tax increase or else he was going to be forced to make major cuts in state spending, especially education. Quinn recognized that in order to get his income tax increase, he would need to compromise on something. Quinn needs Republican votes in order to get his income tax increase.

In return for supporting an income tax increase, Republicans have demanded workers’ compensation reform. It is somewhat surprising that Republicans would demand workers’ compensation reform as their primary bargaining chip for supporting the Governor’s income tax increase. It is further surprising that Democrats would be so willing to take up the issue of workers’ compensation reform.

We had rather startling changes in the Workers’ Compensation Act in 2006. At that time, Gov. Blagojevich with a strong Democrat majority pushed through significant changes in benefits, significantly increasing employer indemnity costs and adding a medical fee schedule which was to help employers. The medical fee schedule has done nothing to reduce employers’ costs for medical expenses. The medical fee schedule essentially keeps employer costs high and has escalators which are designed to further increase employers’ costs.

However, that may all change during the current legislative veto session. Both the House and Senate have hastily scheduled meetings to discuss workers’ compensation reform. The Senate special committee met Nov. 29 and Dec. 8, 2010. The House committee had its first meeting on Dec. 3, 2010 with further meetings scheduled Dec. 15 and 16, 2010. The goal of these committees is to come up with legislation that can be voted on by January 2011.

Not surprisingly, the testimony so far from the unions and the medical providers is that there should be no changes. Alternatively, if any changes are to take place, they should be the result of the “agreed bill” process.

Employers, on the other hand, have argued that the Illinois workers’ compensation system is dramatically unfair to employers. They have pointed to several different studies. Importantly, they pointed to the 2010 Oregon workers’ compensation premium rate report showing Illinois as the third most expensive state in the U. S. According to the Oregon study, in 2008, Illinois was
ranked as the 10th most expensive, but in 2010, we moved up to number three, a dubious improvement in our ranking. Correspondingly, compared to our neighboring states, Wisconsin is ranked 19, Missouri 33, Iowa 36, and Indiana 50th.

Several top Democrats, including State Senate President John Cullerton, have indicated a willingness to drastically reform Illinois workers’ compensation. Workers’ compensation costs are a significant determining factor in companies deciding where to place their businesses. The costs are a significant drain on employers who are forced to be in Illinois such as municipalities and municipal organizations that are all struggling with their individual budgets.

The time is certainly ripe for change. It is certainly possible by January 2011 we will have a workers' compensation reform bill. If we do, we will also have a personal income tax increase from the current 3% on individual income up to 4%. Corporate income tax rates would move from 4.8% to 5.8%

Michael Rusin is a founding partner of Rusin Maciorowski Friedman, a Chicago workers' compensation defense firm. This column was reprinted with his permission from the firm's client newsletter.