Last year, Governor Rauner requested for reform to the Illinois Workers’ Compensation Act, resulting in the appearance of HB 2525 and HB 2622 on his desk. He promptly vetoed each bill, presumably after realizing that neither bill provided any type of reform to the Act.
The General Assembly has once again presented legislation in an attempt to satisfy Governor Rauner’s request for workers compensation reform, and their attempts at “reform” almost mirror their lackluster effort from last year. The Senate recently approved Senate Bill 2863, which is essentially the same bill as the previously vetoed HB 2525.
In essence, SB 2863 would achieve the following: Codification of Venture Newburg by establishing factors for determining traveling employee status and expands liability by also defining a traveling employee using a reasonable & foreseeable standard; Codifies current case law of “in the course of employment” & “arising out of the employment” and reinforcing the current “any” cause standard; and Allows AMA guideline submission for impairment rating for PPD benefit. These are all current laws in Illinois and codifying each does nothing in the way of reform.
In addition, SB 2863 contains a unique addition to the Act that would provide employers a right of contribution from a prior employer for repetitive and cumulative trauma injuries. On its face, this seems like a win for the employer, but the unintended consequences of additional litigation between the employers could eat up any savings realized by the employer seeking contribution and substantially increase the legal costs of prior employers. Not to mention that employers would be required to insure for future claims by long-departed employees.
Currently, employers who have a history of providing safe work environment are rewarded through reductions in their insurance premiums (safer workplace = higher reduction). Many employers utilize safety and return to work programs to promote a safe workplace, but SB 2863 would cause a strain on implementing such programs. SB 2863 would require employers to submit any plans for a safety and return to work programs to the State for approval, a process fraught with red-tape delays. This most likely entails additional costs and fees associated with submission of plans and would lengthen the frame before the employer receives any savings from the reduction in premiums.
SB 2863 also provides for additional methods of penalizing employers. For example, if an employer fails to pay or object to an electronically submitted bill within 30 days, then that medical bill shall be subject to penalties pursuant to Section 8.2 (d)(3) of the Act (1% interest penalty per month). SB 2863 also provides that the Commission shall impose an administrative fine if an employer or insurer fails to comply with the electronic claims acceptance and response process. The individual fines shall not be greater than $1,000.00 and there is a yearly cap of $10,000.00 for identical violations throughout the year. Adding these additional penalties, will only create an even greater burden on the employer in evaluating and addressing the numerous types of medical documents they receive on a daily basis.
There is a provision within SB 2863 that would allow the Commission to assess penalties for delay in authorization of treatment. This addition likely drafted in response the Appellate Court’s holding in Hollywood Casino (Which states that the Commission has no authority to assess penalties for delay in authorization of medical treatment). In addition to fining employers for “unreasonable or vexatious delay” of payment of medical, SB 2863 seeks to penalize employers who do not authorize treatment under the same standard.
SB 2863 does provide some benefits from the perspective of the employer. The bill reverses the ruling in Will County Forest Preserve District and returns us to over 100 years of precedent that the shoulder is not part of the whole person, but a part of the arm. (It also states that the hip is part of the leg, not the whole person, just to make sure that does not become an issue with the courts in the future.) The bill also allows employers to receive credits on prior, specific spinal injuries. SB 2683 also requires IWCC to establish an evidence-based closed drug formulary for physician-provided medications, and would reportedly provide an estimated savings of $14 to $25 million. Finally, it would require the IWCC to establish a medical fee schedule for ambulatory surgery services, which we believe would have minimal impact to existing reimbursement levels for these services. (On May 16, 2018, the House Labor Committee advanced SB 2863 on a partisan 16 Democrat to 12 Republican vote.)
The House has also proposed HB 4595, a bill identical to HB 2622 that was also vetoed by Governor Rauner last year. HB 4595 would create a state funded workers’ insurance company (Illinois Employers Mutual Insurance Company) that would insure Illinois employers against liability for workers’ compensation and occupational disease claims. The new insurance company would receive its initial $10,000,000.00 funding from the IWCC and would operate as a non-profit corporation. The reported intent of the legislation is to provide the state some control over the cost of insurance premiums in Illinois by offering lower rates than hundreds of workers compensation insurers already competing for business within this state. The reality is that creation of a state funded insurance carrier would only create additional volatility in market with already shrinking profit margins.
The Generally Assembly is pushing SB 2863 and HB 4595 behind the mask of “reform.” We recommend contacting your state representatives and senators to voice your opposition to these Bills.
Thanks to I&F Legislative Watch Group member Jack Arnold for the review of this issue. Jack is based in the firm’s Chicago, Illinois office and has been an Associate Attorney with the firm since 2016. He practices in Employers Liability Defense, General Insurance Defense and Workers’ Compensation Defense.