Did Rising Workers' Comp Costs Kill Dominick's Finer Foods?

Monday, October 21, 2013 | 0

Our readers were saddened to hear Safeway, the parent corporation of Dominick’s grocery stores, pulled the plug on 72 grocery stores and approximately 8,000 workers who all had generally excellent union jobs in our state with pensions and other benefits. One concern voiced by a reader is whether their climbing workers' compensation claims and costs took them out of business.
 
Dominick DiMatteo was born in Sicily and founded the grocery chain in 1918. In 1950, the DiMatteos opened their first supermarket, a 14,000-square-foot store. By 1968, the chain had reached 19 stores. The DiMatteos continued to operate the chain under the financial backing of Fisher Foods. The DiMatteos continued to expand and acquired both Kohl's Chicago area locations and Eagle stores. In 1993, Dominick DiMatteo, Jr. died from lung cancer. News sources indicate his daughters and son did not have the same passion for the supermarket business. Safeway bought Dominick's in 1998 and kept it open until now.
 
Supermarket chains live in a business with fierce competition and razor-thin margins. Dominick’s would have had numerous employees who are truck drivers and transportation workers of various sorts. They also have managers and other workers that provide support for more than one location and visit several stores, when needed. Following current Illinois WC law, all such workers are now “traveling employees” and would be covered as a matter of law for nonwork-related risks, like falling in your own driveway or getting into a motor vehicle accident miles away from your job. You don’t have to be “traveling” to be covered; you just have to establish “traveling employee” status and have any injury or illness. Such workers are now covered in a global and no-fault fashion while workers who don’t “travel” or only work at one store are limited to only work-related risks. With respect to the members of our judiciary who created this unsustainable concept, we are certain it is going to result in skyrocketing WC costs, particularly for cash-strapped municipalities and government bodies, as most of their workers are now “travelers.”
 
As we have advised, no other state in the U.S. provides such coverage, but Illinois employers are currently being forced to do so while we await a ruling from our state Supreme Court in the Venture-Newberg-Perini, Webster and Stone v. IWCC decision. Their ruling is expected next month. It is the hope of all business observers that our highest court will reject the judicially created concept and return our state to traditional principles of WC law.
 
On the Illinois workers' comp front, Dominick’s Finer Foods has lots and lots of pending claims. Most of the claims are for actual work injuries. Their workers' comp claims and defense team has been appropriately fighting the Illinois workers’ comp claims that didn’t “arise out of and in the course of” employment. Now, that limit-switch no longer applies and such claims have to be automatically accepted and paid for their “travelers.”
 
In our view, the managers at Safeway, their parent corporation, are watching our state continue to get more and more business unfriendly. We are seeing our Illinois Legislature fighting and kicking to keep unfunded government worker “pensions” in place that is certain to cost billions for our kids, grandkids and great-great-grandkids. Our favorite government “pension” tidbit is the recent news confirming the highest “pension” in our state is held by Dr. Leslie Heffez who was a professor at the University of Illinois Hospital in Chicago. Reports indicate he is now being paid $516,413 per year from our state government “pension” program. Dr. Heffez doesn’t appear to need the taxpayer cash, as he is still working at not one but two different medical offices in Chicago and Highland Park. His “pension” will continue to receive compounded cost-of-living increases at more than $15,000 per year. In 23 years, his annual “pension” payout will exceed $1 million per year.
 
One reason we put “pension” in quotes is 60% of the money or more than $300,000 per year Dr. Heffez is currently receiving isn’t from personal contributions, matching state funds or interest on his “pension” investments—the money is “unfunded” which means he is being paid by you and me with our current tax dollars! During the next 23 years, Dr. Heffez is certain to receive at least $15 to 25 million dollars from Illinois taxpayers in exchange for what had to be a fraction of that amount in pension contributions. Please don’t focus solely on this great physician; thousands of other former state workers are getting billions from us in the same fashion. And we don’t and can’t blame Dr. Heffez for taking the tens of millions of taxpayer dollars to which he is clearly entitled—our criticism is focused on those who created, didn’t properly fund and are fighting to keep this unsustainable mess intact.
 
On another front, our judiciary remains the highest paid in the United States and they are guaranteed 3% annual raises in the Illinois Constitution. Cook County Board Chair Toni Preckwinkle noted the 432+ judges and justices in this county were paying less than $1 per month for family health care contributions that cost the county as much as $1,700 per month! One has to wonder if the effectively free benefits shouldn’t be subject to income taxes. Someone noticed the bailiffs and clerks who worked for the judges/justices were paying more than 100 times more for their health care share than their judicial bosses! We applaud Ms. Preckwinkle for working to change that anomaly and get “fair share” contributions from our judges. On a similar front, after only eight years of service, all Illinois judges and justices could retire and get “free” or taxpayer-paid lifetime family health care coverage. Gov. Quinn passed a law requiring them to make reasonable contributions and four class actions were filed by our judiciary to try to block any contributions. That matter is now moving directly to our Illinois Supreme Court for their ruling.
 
Business leaders see these sorts of shenanigans in our state and shake their heads and wonder how it could get much worse. If you don’t feel the “traveling employee” expansion was the sort of thing that caused Safeway to drop their interest in doing business in our state, you don’t know much about business. We hope the secret powers-that-be that run the Illinois Workers’ Compensation Commission start to understand the “traveling employee” idea, like government worker “pensions” and the freebies accorded to our well-paid judiciary, should be brought into line with other states.

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