Labor Department Has New Test For Independent Contractors

The U.S. Department of Labor has issued a new test for determining whether a worker is an employee or an independent contractor. The six part test focuses on these criteria:

Is the Work an Integral Part of the Employer’s Business?
Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?
How Does the Worker’s Relative Investment Compare to the Employer’s Investment
Does the Work Performed Require Special Skill and Initiative?
Is the Relationship between the Worker and the Employer Permanent or Indefinite?
What is the Nature and Degree of the Employer’s Control?

The entire Department of Labor memo can be found here.

A more detailed examination of this test can also be found at the Insurance Journal.

This issue can have great importance to employers and their Workers Compensation insurance premiums, as often employers think that paying a worker via a 1099 rather than a W-2 basis means they don't have to pay Workers Compensation insurance premiums for that worker. In most states, this is wrong, and can lead to very unpleasant surprises when the audit is done at the conclusion of a policy. In fact, this is one of the common causes of what we call "Shock Audits", where the audit bill is unexpectedly much greater than the employer anticipated.

Of course, not all employers are acting out of ignorance when they try to change workers to independent contractors. A story in the Wall Street Journal on June 30 described how some companies try to reduce costs by trying to turn employees into independent contractors.

For those who can't get through the WSJ paywall, here's an excerpt from the article by Laura Weber:

"Employers have long shifted work from employees to independent contractors, often relabeling the workers and slightly altering the conditions of their work, court documents and settlements indicate. Now, businesses are turning to other kinds of employment relationships, such as setting up workers as franchisees or owners of limited liability companies, which helps to shield businesses from tax and labor statutes.

In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who shoulder an increasing share of responsibility for everything from health-insurance premiums to retirement income to job security. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits against Uber Technologies Inc. and FedEx Corp., among others. Both have recently lost or settled big cases. Uber is appealing one decision, and FedEx settled in California for $228 million but is continuing to challenge classification lawsuits in other states."

Competitive Pricing for Workers Compensation Insurance Needs Effective Regulatory Oversight

Recently, a former director of the Illinois Department of Insurance has written that proposed modest regulation of Workers Compensation insurance rates would produce undesirable results for the business community. With all due respect, I think the director is wrong. Here's why.

The theory of price competition is that the marketplace will enable consumers (in this case, employers who have to buy Workers Comp insurance) to see which insurer has the best price, and therefore make a ration decision and in the process exert control over insurance pricing (the more expensive insurers will lose business and be incentivized to reduce rates).

Couple of problems with that. One, the rules that govern computation of Workers Comp insurance premiums are dauntingly complex, and are largely written by the insurance industry itself. So there are ample opportunities for insurance underwriters and agents to "low ball" insurance proposals, making it seem that one insurer's cost is lower when it ultimately will not be.

The other problem is that the ultimate cost of Workers Comp insurance isn't known at the time the buying decision is made. When it starts, the premium is just an estimate. The real cost of the policy won't be known until after the policy ends, usually a year later. That's when the insurer does an audit, and determines what the insurance actually costs. And sometimes those audits can be much, much higher than the original estimate.

That's why effective insurance rate and premium regulation is so important for the business community. Left completely to their own devices, insurance company underwriters and auditors have a natural bias for higher premium charges. Sometimes they're right about that. But sometimes those higher premiums are based on, shall we say, somewhat self-serving interpretations of the rules.

In Illinois, our Department of Insurance has seen an exodus of personnel who were experienced and knowledgeable about Workers Compensation insurance pricing. And there has been a huge reduction in staff at the department over the course of the last decade as well, so the remaining staff are generally overworked and stressed. And the people who knew about Workers Comp premium issues are pretty much all gone, anyway. That's not to say that those who remain cannot help employers with disputes over Workers Comp premiums, but it does mean that the agency is having a harder time providing knowledgeable and effective oversight in this area.

Illinois is far from alone in this regard. In many states, the ability of insurance regulators to provide genuine an effective assistance in disputes over Workers Comp insurance premiums is limited, at best.

Competitive pricing of Workers Comp insurance does likely provide benefits to employers. But without genuinely effective regulatory oversight, those benefits can often be illusory.

New Mexico Farmers Singing Workers Comp Blues

New Mexico recently remove the exemption for ranchers and farmers in the state's Workers Compensation Act. And the cost of Workers Compensation insurance is now proving to be significantly more than some of those agricultural employers had anticipated.

Those in the agricultural business are, perhaps predictably, suggesting that these increase costs spell the end of the agricultural business in New Mexico. Somehow, that seems as if it might be a little exaggerated. Still, as so many other businesses have learned, the cost of insuring against your Workers Compensation liability is non-trivial. But most other kinds of business enterprise have figured out how to handle this cost of doing business, even though it can be painful (or worse).

Those farmers who are only now being introduced to the enervating drain on revenue that Workers Comp coverage can represent should learn from the experiences of other industries who have had to wrestle with this issue for many years: "Trust, but verify". That is, double check those insurance premiums an audits, as errors by the insurers and rating bureaus can be common and costly.

California Tinkering With Experience Mod Formula

California operates under its own set of rules for Workers Compensation insurance, rules that, while having a lot in common with the rules used elsewhere, can also differ significantly in some important details.

California's Workers Comp rating bureau, the WCIRB, has just filed to make some changes in the formula used to compute the experience modification factor used to compute California Workers Compensation insurance premiums. This follows changes made over the past few years by NCCI in their experience mod formula used in most other states.

The WCIRB changes will change the eligibility threshold for experience rating, effective in 2016, so that it is computed using the expected loss rates for insureds rather than pure premium rates. This change is technical enough that it is a little difficult to predict just what real world impact it will have. We're reviewing it at the AIM offices at the moment, and will share the results of that analysis when it is done.

The other change WCIRB is proposing, to be effective in 2017, is to adjust the "split point" used in the mod formula. The split point is the cut off value for determining how much of a claim gets fully counted in the mod calculation an how much, if any, gets discounted as being "excess". WCIRB says they will make the split point "flexibible" base on the size of the employer. Again, it's going to take a little analysis to figure out how much difference this will make in mods, and which employers might find the changes helpful, an which employers might find the changes producing higher mos.

The recent NCCI changes in split point have seen modifiers increasing for a fair number of employers with moderate loss records, while rewarding employers with very low loss records. It seems likely the WCIRB changes will operate in similar fashion, but we are still working on our detailed analysis, as the WCIRB changes are different from those implemented by NCCI.

Illinois Workers Comp "Reform"--Some Useful Context

Illinois Governor Bruce Rauner is currently advocating for changes to the Illinois Workers Compensation system that he describes as reforms that are needed to keep Illinois business competitive and healthy. His first efforts at this have just been rejected by the Illinois legislature, but he indicates he does not intend to abandon his efforts in this regard.  So I've written leaders in the Illinois legislature the following, in an effort, quixotic though it clearly is, to provide some context on this debate, and some ideas I've long advocated for. Be advised, this is a rather lengthy post.

The specific changes recently sought included:

• Restricting the eligibility of workers for benefits under the Workers Compensation Act when they are traveling for work, imposing a requirement that the employer be paying or reimbursing for the travel costs or paying travel expenses and would exclude injuries due to “common risks of travel”. The bill would also exclude injuries occurring on a paid or unpaid break at work when the worker is not performing any specific task for the employer;

• Excluding eligibility for injuries due to “hazard or risk to which the general public is also exposed”;

• Adding the phrase “credible” to the phrase “employee bears the burden of showing, by a preponderance of the credible evidence, that he or she has sustained accidental injuries arising out of and in the course of the employment;

• Adding that the Act does not apply if the “accident resulted from a hazard or risk to which the general public is also exposed”;

• Adding a requirement that the “course of employment has to be a "major contributing cause" of a medical condition or injury, defined as being greater than 50% of all combined other factors;

• Applying that same “greater than 50%” standard to cumulative or repetitive injury like carpal tunnel claims, with the burden of proof on the worker.

The bottom line is that these changes would significantly increase the burden placed upon injured workers to establish that an injury is covered under the Act, and would eliminate eligibility for workers in certain circumstances.

Given that significant Workers Compensation claims are often the subject of fierce legal dispute and that injured workers already sometimes find that some insurers  employ strategies to delay and avoid paying some legitimate claims, these changes hold the potential to increase the friction and delay experienced by injured workers when seeking medical and indemnity compensation under the Act.

Worse, it does not appear likely that enacting these changes would actually produce significant savings for most Illinois employers. These changes might be helpful to the very largest employers, who self-insure Workers Compensation exposures, and insurance companies, but produce limited benefit to the vast majority of Illinois businesses.

Consider the proposed “reform” to reduce or eliminate eligibility of traveling workers. The current ability of traveling workers to obtain Workers Compensation benefits is not a significant factor in the current cost of Workers Compensation insurance in Illinois. Illinois workers are already ineligible for Workers Compensation benefits for injuries sustained while traveling to or from work.

The proposed change would restrict eligibility for workers when traveling out of town on behalf of employers. Yet an analysis of insurance rates for those most exposed to this risk indicates a significant decline in claims in recent years for this class of workers.

As evidence of this, consider the manual rates applied to traveling salespeople in Illinois, as calculated by the National Council on Compensation Insurance (“NCCI”), an insurance industry rating organization that serves Workers Compensation insurers.

In 2015, NCCI has calculated the manual rate  for Code 8742, which is for outside salespeople, to be $0.44 per hundred dollars of payroll. In 1996, NCCI had calculated this rate at $0.71 per hundred dollars of payroll. So over the past nineteen years, the rate for outside salespeople in Illinois, the workers most exposed to the risks and hazards of business travel, have declined by 38%, according to the insurance industry’s own rating organization. These rates are computed by NCCI based on actual claims reported by Illinois Workers Compensation insurers statewide. The decline in rates for outside salespeople indicates a significant drop in claims and claims costs for these workers. This would not support the contention that a restriction of eligibility for traveling workers is required to reduce costs for employers. Those costs have been dropping considerably even while allowing those injured while traveling to be compensated under the Act.

Indeed, over the past nineteen years, manual rates overall  for Workers Compensation insurance in Illinois have declined significantly. My own review of a representative “market basket” of Illinois manual rates for ten kinds of workplace exposures, including clerical work, outside salespeople, manufacturing, contracting, and retail industries, found a 14.3% decline in manual rates from 1996 to 2015.

Although these manual rates had increased for the period from 1996 through 2010, there has been a marked decrease in rates since 2010, reflecting changes that have already been made in the Illinois Workers Compensation system.  Indeed, using this same “market basket” of rates and comparing 2010 to 2015, there has been a rate reduction of 19%. So the changes already made in Illinois have been producing significant rate reductions for employers.

Still, Workers Compensation insurance rates in Illinois are higher than those in neighboring states. Partly, this is a reflection of higher average wages, as many Workers Compensation indemnity settlements are based on earnings of the injured worker.

However, there are other aspects of this rate differential that do not appear to be the result of higher average wages. Illinois remains significantly more costly than nationwide averages, and more expensive than neighboring states, in regards to Permanent Partial Indemnity claims.

While this also can be explained, in part, by higher average wages in Illinois, this appears to be only a partial explanation.  And according to analysis by NCCI released in mid-2014 (the latest year available) Illinois is significantly more costly in this regard.

The problem is that the proposed changes to the Illinois Workers Compensation Act are not well focused on this aspect of Illinois Workers Compensation claims costs. Imposing arbitrary obstacles on the ability of some legitimately injured workers to obtain Workers Compensation benefits seems unlikely to reduce the systemic incidence and severity of serious claims. It would seem likely to incentivize cost shifting to other insurance and government benefit programs, and also likely to reduce the incentives for employers to operate safely.

To look at it from a different viewpoint, if the biggest difference between Illinois and neighboring states is in the cost of those claims that produce permanent injury to workers, is it truly good public policy to attempt to reduce costs for employers by denying medical care and indemnity to workers who have suffered permanent injury?

I would argue that a better approach would be to develop programs to incentivize workplace safety and training to reduce these costs. Just this week, NCCI announced the results of a study that indicated that delays in reporting claims increased claims costs up to 51%. A statewide program to educate employers about prompt reporting of injuries could do far more to reduce Permanent Partial Indemnity costs than the proposed restrictions on eligibility.

The other important context for these proposed changes is the fact that, for most Illinois employers, what matters most is the cost of Workers Compensation insurance, as all but the largest employers handle their Workers Compensation obligations by purchasing insurance to cover those obligations.

As evidenced by the manual rates computed by NCCI, Illinois has already achieved significant reductions in claims costs. But many employers have not seen Workers Compensation insurance premiums decline commensurately, because the insurance industry in Illinois has been effectively deregulated.

So even as the manual rates for insurance have declined significantly in recent years, many employers have seen Workers Compensation insurance costs rise, due to actions by the insurance industry.

The insurance industry, over the course of the past four years, has implemented a major change in the formula used to adjust current Workers Compensation insurance premiums based on past reported losses. These changes in what is known as the Experience Modification Factor have significantly increased Workers Compensation insurance costs for many Illinois employers, more than offsetting the manual rate reductions that have occurred.

Additionally, in Illinois, many smaller employers are insured through the Assigned Risk Plan, which imposes much higher insurance costs. For the period 2010 through 2013, as reported by NCCI (which administers the Illinois Assigned Risk Plan on behalf of member insurance companies) the number of policies written in the Assigned Risk Plan increased by 22.3%, even as overall premium volume of the Illinois Assigned Risk Plan more than doubled, from $56,500,000 in 2010 to $118,500,000 in 2013.

For smaller employers in Illinois, increases in the cost of Workers Compensation insurance have been the financial burden, not excessive claims or benefits paid to workers.

It isn’t just manual rates that are higher in the Assigned Risk Plan—although they are. The “market basket” of manual rates I used in my earlier analysis show that the 2015 Assigned Risk Plan rates calculated by NCCI to be 50% higher than the average rate for the same classifications in the Voluntary Market.

And the Assigned Risk price differentials don’t stop with manual rates. Assigned Risk policies get no Premium Discount, which is a size discount automatically applied to Non-Assigned Risk policies. And Assigned Risk policies are subject to an additional surcharge called ARAP—a surcharge for assigned risk policyholders if their Experience Modification Factor goes above 1.00 (which, thanks to the changes in the experience rating formula, is more likely for many employers). Finally, Assigned Risk policies are not eligible for significant discretionary credits that employers in the Voluntary Market often obtain.

It is routine for the insurance costs of employers in the Illinois Assigned Risk Plan to be double those that would be available in the Voluntary Market.

It should be noted that the Assigned Risk Plan historically has operated at a deficit—that is, claims costs have exceeded even the increased premiums charged. But there are many smaller employers in Illinois with minimal or no claims, but who nonetheless have to pay the greatly increased insurance costs associated with the Assigned Risk Plan.  Currently, the Illinois Assigned Risk Plan has no mechanism to provide premium reductions to smaller employers with good loss records, as the experience rating plan does not apply to employers below a certain premium size.

Adjusting the Illinois Assigned Risk Plan to provide relief to smaller employers with low claims could provide dramatic benefits to many Illinois businesses, without reducing benefits to injured workers.

Changes in the Illinois Workers Compensation system in recent years have reduced benefits paid to workers, and limited payments to medical providers, with the resulting manual rate reductions cited earlier. But no similar limitations have been placed on insurers.

Indeed, Workers Compensation insurance regulation has been effectively removed by large reductions in staff at the Illinois Department of Insurance, and by the adoption of a laissez-faire rate regulation process that allows the insurance industry to file and use rates and rating plans without any significant oversight or limitation.

While it may well not be advisable or advantageous to return to the strict rate regulation that once was the norm in the Workers Compensation insurance field, allowing the insurance industry to operate without
effective independent oversight or limitation, in the realm of Workers Compensation insurance, does seem inconsistent with the limitations that have been imposed on workers and on medical providers, which have been done in the interests of containing Workers Compensation costs for businesses in Illinois.

If it is good public policy to impose arbitrary limitations on the ability of injured workers to obtain benefits under the Workers Compensation Act, and to impose arbitrary cost controls on the medical providers who actually treat injured workers, it is difficult to understand why reasonable and independent oversight of Workers Compensation insurance rates and premiums is not also good public policy. Reinstating such oversight could well reduce or obviate the need for imposing further limitations on workers and medical providers.

Historically, the insurance industry has been among those advocating that workers and medical providers make sacrifices for the good of the economic climate in Illinois. It would seem equitable that the insurance industry also make some changes that would improve our business environment.

In summary, the recently proposed changes to the Illinois Workers Compensation Act do not appear to actually address the fundamental issues that burden many Illinois employers in regards the cost of meeting their Workers Compensation obligations. Recent changes in benefits and medical fees have
already produced significant cost reductions, reductions that have not been consistently passed along to all Illinois employers by the insurance industry. Before further reductions in benefits and medical fees are seriously considered, adjustments to the Workers Compensation insurance system in Illinois would seem to offer opportunities to provide relief to employers that would not harm injured workers or those who care for them.

I’ve worked with Workers Compensation in Illinois since 1978. I’ve been an insurance broker, consultant, author, and expert witness on Workers Compensation insurance and have served on a task force organized by the Illinois Department of Insurance to help implement Workers Compensation insurance regulations. I’ve helped countless Illinois employers reduce their Workers Compensation insurance premium charges by finding and correcting errors made by insurance companies in computing premiums.

I’ve also consulted with major insurance companies regarding Workers Compensation insurance, including such companies as Zurich American, Great American, Zenith Insurance, FCCI Insurance, Liberty Mutual, Lloyds of London, and others. I’ve also consulted with insurance agents and brokers on Workers Compensation insurance for their policyholders, and I’ve served as an expert witness on these matters in civil and criminal courts across the U.S.

All of that experience and training leads me to believe that these proposed changes to the Illinois Workers Compensation Act would likely produce very limited benefit to employers, while causing significant harm to some workers just when they most need assistance.  There are other, more equitable and focused approaches, in my opinion, that would better serve the workers and employers of our state.

Lumberman's Underwriting Alliance: WTF?

There are a lot of news stories recently about a small Workers Compensation insurer, Lumberman's Underwriting Alliance, being put into "rehabilitation" by a Missouri judge, putting the Missouri Department of Insurance in charge of figuring out if the company needs to be liquidated or if it can be saved. The news stories explain that Lumberman's was a specialty insurer of companies in the forestry industries, with only about 3,000 policyholders.

These news reports then go on to explain that Lumberman's was brought down when a large PEO insured, TS Employment, failed to properly fund collateral obligations, went into bankruptcy, and left Lumberman's holding the bag for a lot of Workers Comp claims.

The news stories also note that TS Employment served another "defunct staffing company" named Corporate Resource Services. A lot of people outside the insurance industry might be forgiven if the phrase "WTF?" formed in their minds when reading these news stories, but in truth this illustrates some disturbing developments in the field of Workers Compensation that regulators do not seem to have addressed very well.

How exactly did it come to pass that the Missouri Department of Insurance will now take control over a small insurance company with a home office in Boca Raton, Florida that was imploded by insuring a PEO based out of New York?  A PEO, by the way, that covered yet another staffing company. And the news reports indicate that most of the 6,000 open claims for Lumberman's Underwriting Alliance are from California. This would seem to give new meaning to the saying about a tangled web.

And this insurer, that historically specialized in underwriting those in the forestry industry, instead underwrote a large deductible policy for an employee leasing company in New York that apparently covered a lot of California businesses. This may be because the PEO, TS Employment, covered another staffing company, this Corporate Resource Services. No wonder things blew up, this arrangement was more complicated than anything Rube Goldberg ever designed.

And yet, all of this is, sad to say, not all that unique in our modern insurance industry. Large Deductible Workers Comp policies, where the policyholder is supposed to reimburse the insurer for all claims under the deductible limit, can produce these kinds of megawatt clusterfucks when wishful thinking and avarice outweigh sound underwriting.

Mind you, I have no idea what actually happened behind the scenes at this particular megawatt clusterfuck--but one can tell, just from the scant details in the press, the general outlines of how this mess may have happened.

The combination of an employee leasing company, which provides Workers Compensation coverage for hundreds of different client companies, with a Large Deductible policy that leaves the insurer responsible for paying claims even if the policyholder defaults on the required reimbursements, can leave an insurance company holding a very large and expensive bag at the end of the day.

Why exactly would an insurance company that specialized in the forestry industry even want to underwrite a large employee leasing company--an employee leasing company that contracted to extend WC coverage to a different staffing company, for heaven's sake--is beyond me.

But I am sure an explanation will eventually be uncovered, as regulators belatedly sift through the rubble.

Here's a question someone might want to ask: why the hell was this ever allowed in the first place?

The answers, at least as this writer sees them, would be:
the insurance industry has succeeded in largely getting itself pretty much effectively unregulated by getting state insurers to first buy into the idea that a largely unregulated marketplace would foster price competition for policyholders, and then by getting state insurance regulators starved for staff and budgets. So there is no one really looking over their shoulders as they chase cash flow and throw old fashioned underwriting caution to the wind.

Then you get the combination of PEOs, which are largely unregulated, and Large Deductible Workers Comp, which seduces some insurers with thoughts of making these large accounts essentially "cost-plus" contracts, where claims costs are just a pass through to the policyholder, along with claims adjusting fees and other charges. No more worries about underwriting losses, because the claims are the responsibility of the policyholder.

Except when they're not, as in this case.

Employee leasing can provide valuable services to employers, with cost savings from economies of scale, when done right. But nobody really oversees these PEO operations, so you can get a fair number of companies that seem like financial miracles for a while, but which are actually ticking weapons of mass financial destruction. And it's difficult to tell the difference between a well-run PEO and one that is running on borrowed time.

This is hardly the first insurance company to run aground by insuring the staffing industry--and it is far from the largest--but it should serve as a warning sign to just how crazy things can get in an industry that is supposed to be cautiously conservative, an industry that the public relies upon to maintain a reliable Workers Compensation insurance system.

If things could go this wrong at Lumberman's, what might be going on at other, larger insurers, where the impact of these kinds of bad decisions might be disguised for much longer?

Here We Go Again

So, our new Illinois governor wants to make further "reforms" in Workers Compensation in the Land of Lincoln. Alas, his approach appears to be pretty much confined to making injured workers get less when they are hurt. It's an approach that has been tried before, as in, the last time (four years ago) when Illinois enacted Workers Compensation "reform".

This time, Governor Rauner wants to change things so that workers are not eligible for Workers Comp if injured while traveling to and from work.  Ummm, governor, I don't actually think that is a major cause of current Illinois Workers Comp costs. Because right now, workers are not eligible for Workers Comp in Illinois if injured driving to or from work. Workers now are only covered by the act when driving to or from a client, as part of their work duties.

So what are the more serious proposals our governor is advocating? You know, the ones that aren't actually already in place?

Rauner wants to put the burden of proof onto workers that their injury stems from work, and that workplace exposure was the main cause of the injury. Now, mind you, a lot of injured workers already say that insurance companies screw them over, taking their sweet time paying medical bills and for lost wages. So just imagine how really hellish life will be for injured workers once the insurance companies can really dick them around (sorry, didn't mean to use a technical insurance term, but sometimes it must be done) and tell them that the worker has to prove that the back injury that's crippling them was caused mainly from work and not from, say, mowing the lawn or picking up their grandkids or that fall down the steps fifteen years ago. No potential for abuse there, governor.

Rauner also wants to cut back some more on what doctors and hospitals are paid. Which was already done four years ago, and didn't produce the rate-reduction nirvana proponents predicted.

That brings up an interesting point, one that Rauner doesn't talk about. For most employers, the cost of Workers Comp isn't really driven directly by the cost of claims---it's driven by the cost of insurance.

That's because most employers, save all but the largest, have to buy insurance for their Workers Comp liabilities. And we've rather completely de-regulated the cost of Workers Compensation insurance over the last twenty five years, and completely wrecked the ability of the Department of Insurance to enforce what rate protections are still in place.

I have pointed out to the Illinois legislature how some simple steps could serve to reduce Workers Compensation insurance costs for many Illinois employers. Once those ideas were presented, all that could be heard was the sound of crickets, and then the legislators returned to their script.

That noise you hear in the background? It's the sound made while grinding political axes. You have to listen hard, though, because it's hard to hear over the sound of groaning business people who have to pay their latest Workers Comp insurance bill, and the moans of injured workers who are trying to get those insurance companies to pay claims on a timely basis--if their injuries are even reported.

I know someone, a construction worker, who failed to report a serious hernia injury from his work out of fear his small employer would not take it well. He ended up using his regular health coverage instead, with deductibles and co-pays. It shouldn't be that way, but for people who have to work for a living, that is reality sometimes.

People who work for a living, and small businesses who have to scramble to pay sometimes outrageous Workers Comp insurance bills--those don't seem to be the kinds of folks Governor Rauner is very worried about. When you've made your fortune as a cutthroat financier, the worst you have to worry about is paper cuts. And the Workers Comp rates for financial services and office work are still very, very low. So I don't think he and his advisers have much in the way of a real appreciation for the realities that a lot of folks in Illinois face on a regular basis.

Realities like my client who saw his Workers Comp insurer write him a policy with an initial premium of $2,500.00, only to have the insurer later bill him for $3,000,000.00 (and file suit against him to try and get it.)

Or my client, the folks who operated a petting zoo, whose insurance company sought to re-classify them as a rodeo (with a resulting huge increase in premiums). Or all the construction companies facing being locked out of bidding on new projects because the insurance industry changed the formula for calculating experience modifiers, and suddenly their mods have jumped over 1.00 without there being any real change in their loss history.

Those weren't problems caused by workers with exaggerated claims, or doctors gouging the system--they were problems caused by an unregulated insurance industry.