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Reform proponent suggests trimming Work Comp Commission budget by $10 million

By Amanda Robert | Oct 11, 2016

Workers’ compensation continues to be a contentious issue in Illinois, with many business leaders and legal advocates pushing for more reform.

Eugene F. Keefe, a founding partner of Keefe, Campbell, Biery & Associates, LLC, a workers’ compensation defense firm in Chicago, is one of these attorneys. He says changes first need to be made within the Illinois Workers’ Compensation Commission, the state agency tasked with resolving disputes between employees and employers related to injuries that occur in the workplace.

He contends that the IWCC could significantly reduce its nearly $30 million budget by cutting or even eliminating some of its “excessive” staff. According to its website, the commission currently employs 32 arbitrators, who first hear cases, and 10 commissioners, who hear administrative appeals. Each commissioner also has an administrative assistant and two staff attorneys.

“I think they can cut $10 million off the budget if they did it in a more efficient way,” Keefe said. “Since every nickel comes out of the pocket of Illinois business, it’s amazing to me that no one steps up and says this is too much money.”

Keefe adds that a reduction in IWCC staff makes sense since new workers’ compensation claims have decreased in Illinois. According to IWCC annual reports, there were 42, 758 new claims in fiscal year 2015, down from 50,854 in fiscal year 2010, and 58,715 in fiscal year 2005.

“No one has adjusted the number of hearing officers in response to the much lower number of claims,” he said.

Many Illinois business and legal advocates also argue that changes to the Illinois Workers’ Compensation Act in 2005 that were intended to make workers’ compensation more efficient instead worsened problems in the system.

Jay Shattuck, the executive director of the Employment Law Council at the Illinois Chamber of Commerce, points out that the reforms – including raises in wage-replacement rates, settlement awards and the valuation of certain types of injuries – dramatically increased costs for the state’s employers.

According to the Oregon Workers’ Compensation Premium Rate Ranking Summary, Illinois had the 20th highest premiums in the country in 2006. The state moved to the third highest by 2010 and then to the fourth highest in 2012.

Illinois introduced additional reforms, including a 30 percent cut in the fees that medical providers can charge through workers’ compensation, to again attempt to address the high costs of its system in 2011.

The state had the seventh highest workers’ compensation premiums in the country the last time the Oregon summary was published in 2014.

“I would say seventh highest in the country is a long ways from being in the middle of the pack, where we were 10 years prior,” Shattuck said. “The people I represent in the business community would argue that there needs to be true reform and additional improvements to the workers’ comp system that will not only help reduce costs, but we would like to see improvements in medical care and changes at the commission to make the system work better for injured workers as well as for employers.”

Shattuck contends that his clients, the Illinois Chamber of Commerce, Technology & Manufacturing Association and Associated Builders and Contractors, want to see a stricter causation standard. Currently, an employee in Illinois only needs to prove that the workplace was a contributing cause of his or her injury or illness.

Meanwhile, he says, other states have decided that the workplace needs to be the primary cause or a major contributing cause of the employee’s injury.

G. Steven Murdock, a partner at Inman & Fitzgibbons in Chicago, who focuses on workers’ compensation defense, agrees that the causation standard is one of the most significant problems in Illinois’ law.

He explains that his clients have paid the entire cost of spinal fusion surgeries for employees who may have had years of back problems or even congenital conditions that led to those problems.

“It’s very expensive, but you go over to Missouri, where I practice also, and there the workplace has to be the prevailing factor,” Murdock said. “We’re looking for a simpler standard here, where it has to be the majority cause, or more than 50 percent of the cause for us to be responsible.”

Shattuck says his clients also want to change Illinois’ current charge-based medical fee schedule to a Medicare-based fee schedule. In recent years, many states have adopted Medicare’s resource-based relative value scale system, or RBRVS, in which payments for services are determined by the resource costs needed to provide them.

“The federal government works with the medical community and develops reimbursement levels for Medicare,” Shattuck said. “Those are applied across the country.

“The medical providers as well as the payers understand the Medicare system because it’s used primarily for group health, obviously Medicaid and Medicare, and most states now use it for workers’ compensation.”

Murdock adds that even though Illinois’ medical fee schedule was cut by 30 percent in 2011, it hasn’t significantly reduced costs for employers.

“It obviously created a cost savings, because you cut 30 percent of it,” he said. “But the fee schedule was higher than most in the country before that, and the annual cost of living increases are still there.

“So since 2011, it’s gone up every year. There are no controls in place.”

Murdock argues that another previous reform — using the American Medical Association guidelines to evaluate permanent partial disability – also failed to achieve its intended purpose. He says the guidelines are one of five factors arbitrators consider when establishing an employee’s impairment, but they rarely give them the weight they deserve.

He says there should be a stricter use of the AMA guidelines since they are based on science and not as subjective as the other factors – the employee’s occupation, age, future earning capacity and evidence of disability and corroborating medical records.

An alternative point of view comes from the plaintiffs’ bar which believes that workers’ compensation reforms in 2005 and 2011 would have cut costs and made the system more efficient if it weren’t for the insurance industry.

Christopher T. Hurley, the president of the Illinois Trial Lawyers Association, contends that even though workers’ compensation claims and costs to workers’ compensation insurance carriers have decreased in recent years, insurance companies have not passed any savings down to employers.

Hurley, who is also the founding partner of Hurley McKenna & Mertz, a personal injury firm in Chicago, says that before Illinois legislators discuss any further workers’ compensation reforms, they should discuss why insurance companies are not lowering premiums.

“I have not heard a case for reform other than that insurance companies want to make more money,” Hurley said. “Who wants to live in a state where workers’ lives and limbs are sacrificed for the profit of insurance companies that are not passing on the reduced costs to the employers?

“If there is reform that is needed, it is insurance reform.”

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Organizations in this Story

Illinois Chamber of Commerce Illinois Trial Lawyers Association Illinois Workers' Compensation Commission

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