Illinois and Indiana revise workers compensation schemes

Illinois' revisions are expected to save employers more than half a billion dollars per year.

Since January 2008, Illinois taxpayers have paid nearly $10 million in workers compensation awards and settlements to staffers at Menard Correctional Center in downstate Illinois. An investigation by the Belleville News-Democrat revealed that more than 230 employees at the prison have filed workers compensation claims for repetitive trauma injuries since January 2008—most of which are alleged to have arisen from locking and unlocking cell doors. Strangely, all of these claims came after a 2007 report commissioned by the state that showed that guards’ duties would not cause repetitive motion injuries. 

While a federal grand jury considers potential fraud charges, Illinois lawmakers decided to take action. On June 28, Gov. Pat Quinn signed into law a major overhaul of the state’s workers compensation law. Among other things, the revision slashes the maximum compensation for carpal tunnel sufferers, reduces the compensation for medical providers and gets rid of workers comp arbitrators whose allegedly too-cozy relationships with claimants’ lawyers led to some of the abuses. Quinn claims that the measure will save employers more than half a billion dollars per year. 

“This is a major step forward and a big win for employers,” says Mark Denzler, vice president for government affairs at the Illinois Manufacturers Association, which advocated the legislation.

But others say the overhaul was an unnecessary measure that will penalize legitimate claimants for the abuses of a few. “Just because the costs [of Illinois’ workers compensation system] are high doesn’t mean the system is broken,” says Jason Rubens, a partner at Rubens & Kress. “There are states with lower costs, but injured people often don’t get proper care or fair compensation.”

Cost Savings

The reaction to Illinois’ new statute among reform advocates has been mixed. While most agree that businesses will save money, many Republican lawmakers are unhappy that the savings will come at the expense of doctors rather than by placing limitations on claims. 

Illinois previously required carriers to pay doctors who treated injured workers for 100 percent of the workers’ medical bills. The amended statute cuts back doctor-reimbursement rates 30 percent. While lower rates for doctors will benefit businesses and likely lower insurance rates, some criticize the amendment.

“The result will be that some of the best doctors will stop taking workers compensation patients,” Rubens says. 

In addition to slashing rates, the new statute reduces benefits. Benefits for carpal tunnel sufferers are reduced from 40 weeks to a maximum of 28 weeks, and wage-differential payments for someone with a permanent injury or impairment are cut off after five years or when the worker reaches age 67, whichever is later. 

The amendment also makes mandatory a “utilization review” process. Before approving a certain course of medical treatment for an injured worker, the proposed treatment will be subject to peer review by a panel of experts to determine whether it is medically necessary. If the treating doctor decides to go forward with treatment not approved by the peer panel, the treatment will not be compensable.

“This is a substantial cost-control measure,” Denzler says. “It is already used in the insurance industry.”

The statute also establishes a PPO-like network of providers for workers’ compensation claims, a provision that advocates say will cut back on doctor shopping among lawyers looking for providers that will approve more expensive treatments.

Finally, the statute results in the termination of all arbitrators in the state. Going forward, all workers compensation arbitrators must be attorneys, must participate in ongoing training and will be barred from accepting gifts from attorneys. These measures are aimed at preventing situations like the Menard prison scandal, where claimants’ lawyers allegedly exploited their relationships with arbitrators to settle meritless claims.  

Causation Battle

While all of these changes are significant, the Illinois legislature failed to achieve what many consider the Holy Grail of workers comp reform—a “primary cause” rule. In Illinois, an employee who claims a work-related injury need only prove that his injury arose “out of and in the course of his employment.” In many other states, including Missouri, Kansas and Alabama, a worker must prove that work was the primary, prevailing or sole cause of the injury. “

Primary cause was our No. 1 goal, and we didn’t get that,” Denzler says.  

Many believe that changing the causation standard is the key to reining in out-of-control workers comp rates. Missouri’s 2005 change to a “prevailing factor” standard led the state’s leading workers comp insurer to announce an automatic 5 percent reduction in rates across the board. 

An earlier version of the Illinois statute that contained a primary cause clause (S.B. 3931) failed to get majority support in the Illinois legislature. For now, the statute simply codifies the courts’ interpretation of existing law as announced in 1976 in Sershon v. Industrial Commission: The employee must prove that work was a “causative factor.”

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