Illinois WC Reforms Signed by Governor

2011 is the one hundredth anniversary of the first U.S. Workers Comp statutes being enacted (first in Wisconsin, then elsewhere in fairly quick succession over the following years.)  So it seems timely that, this year, significant Workers Comp reforms were enacted into law here in Illinois.  While these changes were not all that some business groups wanted, they should have some noticeable impact on rates and premiums.
The biggest impact will likely be from the 30% reduction in the medical fee schedule.

The new law also introduces AMA guidelines for the first time in Illinois, for use in determining the degree of impairment of injured workers. It also allows for the use of PPOs in Workers Comp, although workers can still opt out of such networks and obtain care from a doctor of their own choosing.

The new law also tightens up limitations on benefits when alcohol or drugs are involved--shifting the burden of proof to the worker, applying a blood alcohol limit of .08 and a zero tolerance for illicit drugs.  But the language of the law is that such intoxication must be the "sole cause" of the injury in order for WC benefits to be ruled out.

The reforms also reduce the amount of time paid for carpal tunnel injuries, and strengthens the use of Utilization Reviews.

One thing the new law does not do, to the frustration of some in the business community, is require that workers prove that an injury or illness was caused by work.  In my own view, that might well have been a bit too much, as it would have likely caused some legitimately injured workers to be denied benefits if they could not conclusively prove the injury occurred at work.

All in all, these reforms represent a significant improvement for Illinois employers, while not throwing the baby out with the bathwater.  Now if only someone would consider some of the Workers Comp insurance reforms that I advocated for--but everyone in Springfield was focused on fighting over benefit levels, so the insurance industry got to avoid having some of their practices reined in.

California Woes for A WC Insurer and A Staffing Agency

There have been a couple of developments in the California Workers Comp marketplace that are leaving some employers scrambling. First, regulators have placed Majestic Insurance into conservatorship. Majestic wrote most of its business in California, but also wrote policies in New York, Arizona, New Jersey, Nevada, and some other states.

At the same time, it is reported that a large California temporary staffing agency is prepared to shut down in the wake of disputed multimillion dollar fine by California regulators. Mainstay was created and operated by an Indian tribe in California. Mainstay has been embroiled for years with California regulators over Workers Comp and Unemployment Compensation issues.

A WTF Moment in Illinois Workers Comp

Illinois state representative John Bradley has introduced a bill in the Illinois House to repeal the Illinois Workers Compensation Act. Bradley, a Democrat from Marion, Illinois, reportedly has characterized this as a response to the efforts by the business community to change the causation standard in Illinois Workers Compensation so that the workplace must be the primary cause of a covered injury or illness.

That's right--a Democrat in Illinois has introduced a bill to abolish the Workers Compensation Act. Now, it seems pretty clear that such a proposal will go nowhere, that is intended merely as some kind of protest, but even so...WTF, as they say on the internets.

Illinois Governor Proposes His Version of WC Reform

Illinois Governor Pat Quinn (who is, if nothing else, the rara avis of politics, an honest man) has proposed his own version of Workers Compensation reform for Illinois. There are also several reform proposals still floating around the state legislature (including one bill backed by the Illinois Chamber of Commerce, of which I am a member.)

All of these proposals focus on the claims side of the equation, though. Quinn's version, like some others, would prevent injured workers from collecting Workers Comp if drugs or alcohol played a part. Quinn also proposes putting some limits on medical expenses, and upgrading the caliber of Workers Comp arbitrators by requiring them to be attorneys.

Business groups are less than satisfied, though, as they really want some greater changes, such as requiring that a worker be able to prove that the workplace was the primary cause of the injury, and making the medical fee schedule that was approved a few years ago actually adopt meaningful standards.

But all of these proposals ignore what I think is something important: insurance reform. For most employers, insurance is the only viable way to satisfy their Workers Compensation liabilities, and the insurance regulations in Illinois could be significantly improved to hold down the cost of Workers Compensation insurance.

Many small employers in Illinois are in the Assigned Risk Plan, for instance, only because they are small or new businesses. And the cost of the Assigned Risk Plan is often double what the cost of the same coverage would be in the so-called "voluntary" insurance market.


I've written to Governor Quinn, and Illinois legislators, about what could be done to reform Workers Compensation insurance costs in Illinois. So far, no one has bothered to even respond to me. And I don't think that's likely to happen, either, more's the pity.

Pennsylvania Planning A Change In WC Rules

Pennsylvania is currently considering making a change in the Commonwealth's Workers Compensation rules to allow for partners and members of an LLC to voluntarily elect coverage for themselves. Most other states allow this, but Pennsylvania is unique in some important aspects of their Workers Compensation system.

For more information about how Pennsylvania operates its unique Workers Compensation system, take a look here.

Workers Comp Blitzes Indoor Football Team

The Lafayette Wildcatters, a minor league indoor football team in Louisiana, have announced that they are scrapping their 2011 season because Workers Compensation insurance isn't available at an affordable cost.

I don't know any more about the situation than what is being reported in the press, but it does make me wonder if there was some behind-the-scenes tussling between the Wildcatters and the insurer that serves as Louisiana's insurer of last resort, the Louisiana Workers Compensation Corporation, or LWCC.

I've had a little experience reviewing premium audits done by LWCC, and based on those cases I think LWCC can be a bit aggressive in how they calculate premiums. In one case from a year or so ago, they had ratcheted up premiums by about a million dollars for a client, premium increases that were based on a fundamental mis-reading of manual rules and how they applied to this client. So, without being unfair to LWCC, it strikes me that it might well be that something similar has happened to the Wildcatters.

Of course, it isn't just LWCC that sometimes hammers sports teams over Workers Comp. A couple of years ago, I was able to help the San Francisco 49ers in a very large Workers Comp premium dispute. Although I was able to produce a very beneficial result for them, the details of the matter are covered by a confidentiality agreement that prevent me from providing any details. But the insurance company wasn't LWCC, it was a large national insurer.

It's surprising to some folks that professional athletic teams would have to tussle with Workers Comp costs just like any other business, but state laws are pretty clear in most jurisdictions--just about any business enterprise is responsible for Workers Compensation for its workers. And football players who play for money are not just athletes, they're also employees.

$15,000 Refund For a Waste Hauler

Here's a quick case study from our recent files. We successfully recovered an overcharge of $15,000 for a waste hauler in Lexington, South Carolina. The overcharge had been caused by the failure of their insurer to properly report to NCCI some significant reimbursements the insurer had received from the Second Injury Fund. Under the rules, the insurer should have filed corrected reports with NCCI, so that the experience modifier for the waste hauler could be revised down. But as we often see, the insurer failed to file proper corrected reports. Until we got involved, that is.

We had to bug the insurer to file the corrected reports, then follow up with NCCI to make sure the experience modifiers were recalculated, and then finally we had to work with subsequent insurers of the waste haulers to get audits revised to use the now-lower experience mods.

Sad to say, this is far from an isolated case.