Monetary Relief for Illinois Employers

Monday, March 29, 2010 | 0

By Shawn R. Biery
Keefe, Campbell & Associates

Taking you back down memory lane, we recall the first Chairman appointed by our current Governor-out-on-bond, supported a change to the funding of the later renamed Illinois Workers’ Compensation Commission. It was the new Chairman’s goal to follow the model of the State of Missouri and a number of other states to move the Commission out of being funded by the General Revenue Fund for our state and into a new anti-business insurance and payroll surcharge which didn’t require him to go to the legislature and the Governor to make the changes he wanted to make at the Commission. We assure you some of the changes he wanted were to double or triple the number of Arbitrators, bring in or “appoint” any number of Plaintiff/Petitioner attorneys to serve in his image and likeness and more than double the budget of the Commission.
 
What he got was the Illinois Industrial Commission Operations Fund Surcharge. This was supported the Democrat House, Senate and Governor because they were then free to spend the monies they used to have to spend for the Commission on other fun stuff. In our view, the problems were two-fold:
 
    A.    Illinois business now had to fully fund the Plaintiff/Petitioner-oriented Commission to provide new laws and rules to be administered by folks beholden to Illinois labor;
    B.    The monies were used to basically increase workers’ compensation costs in this state to the stratospheric levels they have currently reached;
    C.    The surcharge added a new anti-business fee which would more than exponentially increase the budget of the Commission.
 
On April 22, 2004, the Illinois State Chamber of Commerce filed suit against the State of Illinois boldly challenging the newly imposed fees created by then-Governor Blagojevich’s new Industrial Commission Operations Fund Surcharge. The complaint alleged the statute imposed a surcharge on employers’ and workers’ compensation carriers intended to generate $31-million to fund the operations of the Industrial Commission, even though the actual budget for the Industrial Commission was dramatically lower. The complaint alleged the fees were unconstitutional and improper. The fee imposed the total cost of workers’ compensation administration and adjudication solely on Illinois employers. Most important, the bill over-funded the Industrial Commission for no particular reason.
 
In November 2004, Circuit Court Judge Patrick McGann declared unconstitutional the Industrial Commission Operation Fund Surcharge. That ruling called into question hundreds of business fees the state enacted or increased at the time.

McGann ruled the surcharge created an arbitrary class of taxpayer and violated a provision of the state constitution that requires all new fees to operate like existing fees, which raise only enough money to cover specific activities. In the case of the workers compensation insurance surcharge, the fee ostensibly was to pay the cost of operating then-named Illinois Industrial Commission.
 
McGann ruled the surcharge had no "reasonable relation" to the cost. He noted in his ruling the workers compensation surcharge brought in $31 million and $22 million of it was not going to the Commission but to the state's general fund.

"The surplus resulting from this fee increase was clearly anticipated," McGann wrote in his ruling. He added, "This is clearly beyond the role of fees in the financing of governmental operations."
 
The Illinois Supreme Court later ruled McGann correctly refused the state's request to dismiss the case, but added he had acted prematurely in ruling for the State Chamber and sought more factual findings. State Chamber President Doug Whitley was furious to see our highest court not simply note the State agreed with all the allegations and affirm the ruling. The litigation then ran on for five-six more years.
 
At present, the parties have reached a class-action settlement. Your organization may be able to get monies back. Preliminary approval for settlement of the lawsuit has been provided by the Circuit Court of Cook County. The sum of $3.3 million, which now resides in a Protest Fund, will be placed in a claim fund to be distributed to class members who can support their claim for repayment. The support for claim can be made with documentation of cancelled checks, invoices showing the surcharge or other proofs of payment as long as they make a claim for repayment during the claims period in the appropriate manner. The method to make a claim is currently proposed to be with either mailing a claim form to the Administrator Robert Langendorf or emailing the Administrator at robert.langendorf@gmail.com. 
 
The amount of refund will be limited to 45% of the Surcharge paid between July 1, 2003 to June 30, 2004 and 10% of the Surcharge paid July 1, 2004 to June 30, 2009. The current proposed settlement agreement can be seen on the web at IWCC-Chamber preliminary settlement agreement and the preliminary approval order can be found on the web at IWCC-Chamber settlement preliminary approval order.
 
We urge our readers to continue to support State Chamber President Doug Whitley and the Illinois State Chamber of Commerce that is clearly out on point in trying to reform workers’ compensation in this state.
 
Shawn R. Biery is an attorney for Keefe, Campbell & Associates, a Chicago-based workers' compensation defense law firm. This column was reprinted with permission from the firm's client newsletter.