24th Annual Claims Handling Seminars Winning StrAtegieS for

Heyl, Royster, Voelker & Allen

24th Annual Claims Handling Seminars

Winning StrAtegieS for DiffiCult timeSWorkers’ CompensationThursday, May 21, 2009Bloomington, Illinois

PeoriASuite 600Chase Building124 S.W. Adams StreetPeoria, IL 61602Telephone: 309.676.0400Fax: 309.676.3374

SPringfielDSuite 575, National City Center1 North Old State Capitol PlazaPO Box 1687Springfield, IL 62705Telephone: 217.522.8822Fax: 217.523.3902

urbAnASuite 300102 E. Main StreetPO Box 129Urbana, IL 61803Telephone: 217.344.0060Fax: 217.344.9295

roCkforD2nd Floor120 West State St.PO Box 1288Rockford, IL 61105Telephone: 815.963.4454Fax: 815.963.0399

eDWArDSvilleMark Twain Plaza III, Suite 100105 West Vandalia StreetPO Box 467Edwardsville, IL 62025Telephone: 618.656.4646Fax: 618.656.7940

WWW.hEyLROySTER.COM

© 2009 Heyl, Royster, Voelker & Allen

May 21, 2009 IN RE: 24th Annual Claims Handling Seminars Dear Seminar Attendee: On behalf of the firm, I want to welcome you to our 24th Annual Claims Handling Seminars. Our attorneys have endeavored to prepare materials and presentations which will benefit you in your daily work, whether you are a claims professional, risk manager, corporate counsel or employer. Please be sure to fill out the database update and evaluation form which is with your materials. Your feedback regarding this seminar and your suggestions for future topics are very important to us. We also ask that you be sure to provide your e-mail address since we are now distributing publications such as our Quarterly Review of Recent Decisions and Below the Red Line, our workers’ compensation newsletter, via e-mail. In order to receive Continuing Education verification, be sure to sign the attendance sheet at the registration table both before the session begins and immediately following the conclusion of our sessions this afternoon. Attendance verification certificates will be e-mailed only to those who sign the attendance sheet. Once again, we appreciate your taking the time to join us today, and thank you for your confidence in selecting us as your attorneys. HEYL, ROYSTER, VOELKER & ALLEN By: Robert V. Dewey, Jr. Managing Partner 309-676-0400, ext 294 [email protected]

Workers’ Compensation agenda

Winning StrategieS for Difficult timeS Thursday, May 21, 20091:00 - 4:30 p.M.Bloomington, illinoiS

1:00 p.m. Welcome and introductions – Kevin luther, rockford

1:05 p.m. dan’s stimulus plan: Case Law Update – dan simmons, springfield

1:25 p.m. Wage Differential Exposure in a Recession: temporary or permanent incapacity? – Bruce Bonds, urbana

1:45 p.m. non-economic depression: How to manage post-traumatic stress and mental Claims – Kevin luther, rockford

2:05 p.m. medical necessity in an economic slowdown: Controlling medical treatment Costs – Jim Voelker, peoria

2:15 p.m. do medical restrictions increase in economic slowdown? restriction reduction strategy – Toney Tomaso, urbana

2:25 p.m. Break

2:45 p.m. Fighting permanent total disability in soup Line times – Jim Manning, peoria

3:05 p.m. money Well spent: Your defense attorney and Your Vocational specialist – Gary Borah, springfield

3:15 p.m. the Bottom Line: early Claim investigation and development – Craig young, peoria

3:35 p.m. Federal Bailout? msa strategies and developments – Brad peterson, urbana

3:50 p.m. employment Law: Balancing Workers’ Compensation Concerns with downsizing Liability – Brad Ingram, peoria

4:05 p.m. TTD Liability and Mass Layoffs – Brad antonacci, rockford

4:15 p.m. Where’s the relief? iWCC news and Legislation – Bruce Bonds, urbana

4:25 p.m. Questions and answers

4:30 p.m. Cocktails & Hors d’oeuvres

RockfordChicago

Peoria

Urbana

Springfield

EdwardsvilleSt. Louis

ILLINOIS

Workers’ Compensation ContaCt attorneys

Heyl, royster, Voelker & allen

peoria(309) 676-0400 Bradford B. [email protected]

springfield(217) 522-8822gary l. [email protected]

edWardsVille(618) 656-4646Bruce l. Bonds (Lawrenceville and Mt. Vernon Calls)

[email protected]

Craig s. young (Collinsville Call)

[email protected]

toney J. tomaso(Belleville Call)

[email protected]

roCkford(815) 963-4454kevin J. [email protected]

UrBana(217) 344-0060 Bruce l. [email protected]

peoriaBloomingtonGalesburgPeoriaRock Island

SpringfieldCarlinvilleClintonDecaturQuincySpringfieldTaylorvilleWinchester

UrbanaDanvilleJolietKankakeeMattoonUrbanaWhittington/Herrin

arBitration Hearing sitesrockfordChicagoDe KalbGenevaOttawaRock FallsRockfordWaukeganWheatonWoodstock

EdwardsvilleBellevilleCollinsvilleLawrencevilleMt. Vernon

www.heylroyster.com

The cases and materials presented here are in summary and outline form. To be certain of their applicability and use for specific claims, we recommend the entire opinions and statutes be read and counsel consulted.

WORKERS’ COMPENSATION WINNING STRATEGIES FOR DIFFICULT TIMES Welcome and Introductions .................................................................................................................................. A-1

Dan’s Stimulus Plan: Case Law Update ............................................................................................................... B-1

Wage Differential Exposure in a Recession: Temporary or Permanent Incapacity? ................................................................................................................ C-1

Non-Economic Depression: How to Manage Post-Traumatic Stress and Mental Claims ...................................................................... D-1

Medical Necessity in an Economic Slowdown: Controlling Medical Treatment Costs .................................................................................................................. E-1

Do Medical Restrictions Increase in Economic Slowdown? Restriction Reduction Strategy .............................................................................................................................. F-1

Fighting Permanent Total Disability in Soup Line Times ............................................................................. G-1

Money Well Spent: Your Defense Attorney and Your Vocational Specialist ....................................... H-1

The Bottom Line: Early Claim Investigation and Development .................................................................. I-1

Federal Bailout? MSA Strategies and Developments ..................................................................................... J-1

Employment Law: Balancing Workers’ Compensation Concerns with Downsizing Liability ............................................... K-1

TTD Liability and Mass Layoffs ............................................................................................................................... L-1

Where’s the Relief? IWCC News and Legislation .......................................................................................... M-1


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WELCOME AND INTRODUCTIONS

Presented and Prepared by: Kevin J. Luther

[email protected] Rockford, Illinois • 815.963.4454

Heyl, Royster, Voelker & Allen PEORIA • SPRINGFIELD • URBANA • ROCKFORD • EDWARDSVILLE



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Kevin J. Luther - Partner

Kevin has spent his entire legal career at Heyl Royster, beginning in 1984 in the Peoria office. He has been in the Rockford office since it opened in 1985. Kevin is currently in charge of the firm’s workers’ compensation practice group. Kevin concentrates his practice in the areas of workers' compensation, employment law, and employer liability. He supervises the workers' compensation, employment law, and employer liability practice groups in the Rockford office. He has represented numerous employers before the Illinois Human Rights Commission and has arbitrated hundreds of workers' compensation claims. He has also tried numerous liability cases to jury verdict. Kevin is a member of the Winnebago County Bar Association in its workers' compensation and trial sections. He is a member of the State Bar of Wisconsin, Illinois State Bar Association, and the American Bar Association, and has actively participated in sections relevant to his practice areas. He is a member of the Illinois Association of Defense Trial Counsel (Board of Directors). Kevin is the contributing editor of the Workers' Compensation Report for the Illinois Defense Counsel Quarterly. Significant Cases • Arlene Bernardoni v. Huntsman Chemical Corp.,

Applied Frye principle to Illinois workers' compensation in the defense of an occupational disease/exposure claim.

• Richard Urbanski v. Deichmueller Construction Co., Defined jurisdictional issue in workers' compensation review.

Selected Publications • "Economic Disability and Earning Capacity: A

Historical Analysis for Wage Differential Claims," Illinois Defense Counsel Quarterly (2006)

• "The Normal Daily Activity Exception to Workers' Compensation Claims," Illinois Defense Counsel Quarterly (2004)

• "The Age Discrimination in Employment Act: A Seventh Circuit Perspective," Illinois Defense Counsel Quarterly (1998)

• "The Impact of Federal Legislation on the Employer/Employee Relationship in Illinois," Illinois Defense Counsel Quarterly (1996)

• “An Overview of Repetitive Trauma Claims,” Illinois Bar Journal (1992)

Public Speaking • Kevin has spoken to numerous industry and

attorney groups throughout the years. Professional Recognition • Martindale-Hubbell AV rated • Selected as a Leading Lawyer in Illinois. Only

five percent of lawyers in the state are named as Leading Lawyers.

• Named to the 2009 Illinois Super Lawyers list. The Super Lawyers selection process is based on peer recognition and professional achievement. Only five percent of the lawyers in each state earn this designation.

Professional Associations • Winnebago County Bar Association • Illinois State Bar Association • State Bar of Wisconsin • Illinois Association of Defense Trial Counsel

(Board of Directors) Court Admissions • State Courts of Illinois and Wisconsin • United States District Court, Northern and

Central Districts of Illinois • United States Court of Appeals, Seventh Circuit

Education • Juris Doctorate, Washington University School

of Law, 1984 • Bachelor of Arts-Economics and Mathematics

(Summa Cum Laude), Blackburn University, 1981

Learn more about our speakers at www.heylroyster.com

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DAN’S STIMULUS PLAN: CASE LAW UPDATE

Presented and Prepared by: Daniel R. Simmons

[email protected] Springfield, Illinois • 217.522.8822




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DAN’S STIMULUS PLAN: CASE LAW UPDATE

I. EXCLUSIVE REMEDY .................................................................................................................................... B-3 II. SUBROGATION.............................................................................................................................................. B-4 III. LOANING AND BORROWING EMPLOYERS ........................................................................................ B-5 IV. TEMPORARY TOTAL DISABILITY ............................................................................................................. B-5 V. PROCEDURAL MATTERS ............................................................................................................................ B-6

A. Section 19(g) Petitions ................................................................................................................ B-6 B. Arbitration Decision Recall ........................................................................................................ B-6 C. IME Report Admissibility ............................................................................................................ B-7 D. Law of the Case .............................................................................................................................. B-7 E. Failure to File Statement of Exceptions ................................................................................ B-7 F. Release .............................................................................................................................................. B-8

VI. MISCELLANEOUS CASES ........................................................................................................................... B-8

A. MBA – PTD ....................................................................................................................................... B-8 B. Accident ............................................................................................................................................ B-9 C. Undocumented Aliens ................................................................................................................. B-9 D. Uninsured Motorists Coverage ................................................................................................ B-9 E. Choice of Doctors ......................................................................................................................... B-9

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DAN’S STIMULUS PLAN: CASE LAW UPDATE I. EXCLUSIVE REMEDY

Ioerger v. Halverson Const. Co. Inc., 232 Ill. 2d 196, 902 N.E.2d 645, 327 Ill. Dec. 524 (2008) − Iron workers brought a personal injury action against a construction company that was a member of a joint venture and the joint venture for injuries they received when a scaffolding collapsed at a bridge repair site. The circuit court granted the defendants’ motion for summary judgment. The Appellate Court reversed and remanded on grounds that the construction company and joint venture were not immune under the Workers’ Compensation Act. The Supreme Court granted the defendants’ petition for leave to appeal. The Supreme Court reversed and affirmed the circuit court’s original ruling that the co-venturer was immune from suit pursuant to the exclusive remedy provision of the Workers’ Compensation Act. Under Illinois law, joint ventures are governed by partnership principles. A joint venture is essentially a partnership carried on for a single enterprise. The joint venture was required to reimburse the employer for labor costs, including workers’ compensation insurance premiums. The Court held that the co-venturer of the injured workers’ employer was an agent of the employer and therefore was immune from personal injury suit under the exclusive remedy provision of the Workers’ Compensation Act. Kolacki v. Verink, 384 Ill. App. 3d 674, 893 N.E.2d 717, 323 Ill. Dec. 445 (3d Dist. 2008) − An employee of a veterinary clinic was kicked in the head by a horse. She brought suit against the land owners who leased their property to the clinic, alleging violations of the Illinois Animal Control Act and negligence. The circuit court found that the employee’s action was barred by the exclusive remedy provision of the Workers’ Compensation Act. The Appellate Court affirmed. The Court held that the employee failed in her burden to show that workers’ compensation laws dual capacity doctrine applied so as to allow the negligence suit to go forward against the landowner who also owned the clinic. Under the dual capacity doctrine, a defendant who is protected by the exclusive remedy provision of the Workers’ Compensation Act may become liable in tort if he acted in a second capacity that creates obligations independent of those imposed on the defendant as an employer. The only business being conducted on the premises was the business of the veterinary clinic. The veterinary clinic provided medical treatment and boarding services for horses, therefore the landowner was not acting in a dual capacity as an owner of a separate business. The duties of the landowner as property owner were so intertwined with their duties as owner and employee of the clinic that the two capacities could not be separated. Uphold v. Illinois Workers’ Compensation Comm’n, 385 Ill. App. 3d 567, 896 N.E.2d 828, 324 Ill. Dec. 752 (5th Dist. 2008) − The Workers’ Compensation Commission affirmed an arbitrator’s decision that the petitioner could pursue workers’ compensation benefits under either the state’s workers’ compensation law or under the federal Long Shore Harbor Workers’ Compensation Act. The circuit court set aside the Commission decision. The Appellate Court affirmed. If an employee is injured on navigable waters while engaged in traditional maritime activity, jurisdiction under the Long Shore and Harbor Workers’ Compensation Act is exclusive.

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Ship repair is a traditional maritime activity. The petitioner injured his back while vacuuming a barge. Accordingly, jurisdiction was exclusively under the Long Shore and Harbor Workers’ Compensation Act. It should be noted that the petitioner argued for dual jurisdiction, while the employer argued that Illinois Workers’ Compensation law was not applicable. II. SUBROGATION

Pederson v. Mi-Jack Products, Inc., Nos. 1-07-2327, 1-07-3228, 2009 WL 650628 (1st Dist. March 10, 2009) − The plaintiff brought suit two days before the expiration of the two-year statute of limitations. The defendants eventually brought a third-party complaint for contribution against the plaintiff’s employer. After a variety of missteps in the underlying case, the plaintiff was faced with the possibility of having summary judgment entered against him. He also dismissed his former attorneys and filed a malpractice suit against them. He then negotiated a compromise settlement with the defendants; however, the employer’s workers’ compensation insurance carrier objected to the settlement because it was for substantially less than the workers’ compensation lien. The employer sought to be substituted in to pursue reimbursement of its workers’ compensation lien. The plaintiff asked the trial court to enforce the settlement and adjudicate the workers’ compensation lien. The trial court refused. The Appellate Court reversed. Section 5(b) of the Illinois Workers’ Compensation Act provides that the employer may file suit to seek subrogation recovery of its workers’ compensation lien against a third party at any time within three months of the expiration of the statute of limitations. In this case, the employer did not file suit within three months of the expiration of the statute of limitations. Accordingly, pursuant to the express provisions of the Act, the employer did not have the right to intervene as a plaintiff in the employee’s law suit absent the employee’s consent. Hollywood Trucking, Inc. v. Watters, 385 Ill. App. 3d 237, 895 N.E.2d 3, 324 Ill. Dec. 3 (5th Dist. 2008) − An interstate motor carrier brought an action against a physician and medical provider who performed a Department of Transportation examination of the truck driver that it later employed. The suit alleged negligence, fraud and fraudulent misrepresentation relating to the examination. The circuit court dismissed the fraud and fraudulent misrepresentation claims. The Appellate Court affirmed. Among other things, the interstate motor carrier wanted to recover workers’ compensation benefits paid to its employee on the theory that the driver fraudulently misrepresented his physical condition at the time of his hiring. The Appellate Court ruled that there was no jurisdiction to consider that claim. In order for the Court to be able to consider the claim for recovery, the Court would have to determine factual issues concerning accident, nature and extent and the carrier’s possible defenses. Given that all of those determinations fell within the Workers’ Compensation Commission’s exclusive jurisdiction, the trial court had no jurisdiction to consider the motor carrier’s claim. In cases involving a determination of an employee’s entitlement to workers’ compensation benefits and the employer’s defenses to the claim, the circuit court’s role is appellate only.

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III. LOANING AND BORROWING EMPLOYERS

Surestaff, Inc. v. Open Kitchens, Inc., 384 Ill. App. 3d 172, 892 N.E.2d 1137, 323 Ill. Dec. 145 (1st Dist. 2008) − A loaning employer brought an action against a borrowing employer to recover workers’ compensation benefits paid as a result of the death of a borrowed employee. The circuit court entered judgment on a jury verdict in favor of the loaning employer. The Appellate Court affirmed. A borrowing employer that seeks to avoid reimbursing a loaning employer for workers’ compensation benefits paid as a result of the death of a borrowed employee has the burden to establish the existence of an agreement by the loaning employer waiving its statutory right to reimbursement. There was no such agreement, therefore the reimbursement was allowed. Hester v. Gilster-Mary Lee Corp., 386 Ill. App. 3d 1104, 899 N.E.2d 589, 326 Ill. Dec. 372 (5th Dist. 2008) − A worker who was assigned to a company by an employment agency brought a retaliatory discharge action against the company, alleging that she was refused further work in retaliation for testifying in a workers’ compensation proceeding. The circuit court granted the company’s motion to dismiss. The Appellate Court reversed. The Court held that, as a matter of first impression, a borrowed employee could maintain a retaliatory discharge claim against a borrowing employer. To the extent that an employee could maintain an action against an employer for retaliatory discharge as a result of activities engaged in by the employee which are protected by the Workers’ Compensation Act, an action is also available to a borrowed employee against a borrowing employer because borrowing employers are entitled to claim the protections of the Illinois Workers’ Compensation Act. IV. TEMPORARY TOTAL DISABILITY

Weyer v. Illinois Workers’ Compensation Comm’n, 387 Ill. App. 3d 297, 900 N.E.2d 360, 326 Ill. Dec. 724 (1st Dist. 2008) − The Workers’ Compensation Commission found that the petitioner was not entitled to temporary total disability benefits for a shoulder lesion. The circuit court affirmed. The Appellate Court affirmed. This was the second proceeding for the petitioner. He successfully won temporary total disability in the first proceeding. The Appellate Court noted that each proceeding on a workers’ compensation claimants claim for temporary total disability benefits as a separate proceeding, limited to a determination of temporary total disability up to the date of the hearing. Each TTD decision is a separate and appealable order. Accordingly, a prior decision finding that the shoulder injury was caused by the work-related accident was not law of the case in the subsequent TTD proceeding on the issue of whether the claimant’s shoulder condition as it existed at the time of the subsequent proceeding was causally related to the accident. The arbitrator could correctly find that, while the accident caused an aggravation of a pre-existing shoulder condition, the aggravation had resolved itself by the date of the hearing in the subsequent proceeding. Interstate Scaffolding, Inc. v. Illinois Workers’ Compensation Comm’n, 385 Ill. App. 3d 1040, 896 N.E.2d 1132, 324 Ill. Dec. 913 (3d Dist. 2008) − An injured employee who had been returned to

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light duty work filed an application for adjustment of claim after he was terminated for writing religious graffiti on storage room walls. The arbitrator declined to award TTD benefits subsequent to the dismissal. The Commission found that the employee was entitled to TTD. The circuit court affirmed. The Appellate Court reversed. There was no question that the employee had not reached maximum medical improvement by the time that he was discharged by his employer. That the injured employee engaged in conduct that led to his termination meant that he removed himself from the work force as a result of his conduct that was unrelated to his injury, therefore he was not entitled to TTD benefits. V. PROCEDURAL MATTERS

A. Section 19(g) Petitions

Hagene v. Derek Polling Const., No. 5-07-0225, 2009 WL 503454 (5th Dist. Feb. 24, 2009) − The petitioner filed a section 19(g) Petition to reduce a lump sum settlement agreement to judgment. The trial court dismissed the petition. The Appellate Court reversed. The settlement indicated that the respondent had paid all of the petitioner’s medical bills; however, three past medical bills remained unpaid. The first page of the settlement contract contains a section called Medical Expenses. The “yes” box was checked to show that all medical expenses had been paid. There was also a space to list unpaid medical expenses. The settlement contract was blank in that space. The terms of settlement indicated that all medical expenses were resolved as part of the settlement agreement. The Court noted that the contract language did not contain any separate payment for medical expenses. The Court stated that ”[w]hen we consider the entire contract in the context of all the surrounding circumstances, we conclude that the parties did not intend to discharge the respondent’s statutory obligation to pay the petitioner’s past related medical bills.” The surrounding circumstances indicated that the respondent had paid all of the petitioner’s medical bills. As a result, the respondent was obligated to pay the unpaid medical bills.

B. Arbitration Decision Recall

Smalley Steel Ring Co. v. Illinois Workers’ Compensation Comm’n, 386 Ill. App. 3d 993, 900 N.E.2d 1161, 326 Ill. Dec. 914 (2d Dist. 2008) − A claimant filed an application for workers’ compensation benefits that were awarded by the arbitrator. After the arbitrator issued the decision, the employer filed an emergency motion to recall the arbitrator’s decision and reopen proofs. The employer discovered new evidence to show that the plaintiff lied about his identity and that he had actually suffered the same injury while working for a different employer and obtained benefits under the Act. The arbitrator recalled the decision and found that the claimant was not entitled to benefits. The Commission reversed and the circuit court affirmed the Commission. The Appellate Court also affirmed. Section 19(f) of the Act provides that the only legitimate basis for recalling an arbitrator’s decision is for correction of a clerical or computational error. Accordingly, the arbitrator lacked jurisdiction to recall the decision on the employer’s motion alleging fraud. The Court noted that a party may maintain an action in circuit

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court to obtain relief from a judgment based on fraud, therefore the employer was not without a remedy.

C. IME Report Admissibility

City of Chicago v. Illinois Workers’ Compensation Comm’n, 387 Ill. App. 3d 276, 899 N.E.2d 1247, 326 Ill. Dec. 596 (1st Dist. 2008) − A petitioner was awarded permanent total disability benefits. At the Appellate Court level, the Court held that the Commission committed reversible error when it excluded the independent medical evaluation report from the employer’s physician and remanded the case for further proceedings. The IME report was not allowed in evidence because it was not tendered to the treating physician before the physician’s deposition. The IME was not conducted until after the physician’s deposition, and the report was tendered to the claimant a few days after the examination and well before the arbitration hearing. The purpose of the statute requiring the exchange of IME reports no later than 48 hours before a case was set for hearing was to prevent surprise medical testimony at the arbitration hearing. The Court found that the arbitration hearing did not start at the time that the treating physician was deposed.

D. Law of the Case

Ming Auto Body/Ming of Decatur, Inc. v. Industrial Comm’n, 387 Ill. App. 3d 244, 899 N.E.2d 365, 326 Ill. Dec. 148 (1st Dist. 2008) − The Appellate Court held that after the arbitrator and Workers’ Compensation Commission found that the claimant had sustained an employment related accident and that the injury was causally related, the law of the case doctrine precluded the arbitrator and the Commission from revisiting those questions in the subsequent permanency hearing even if the claimant had engaged in fraud. The Court noted that the employer could bring an action before the circuit court to seek relief from a judgment of the Commission based on fraud pursuant to section 19(f) of the Act.

E. Failure to File Statement of Exceptions

Kline Const. v. Illinois Workers’ Compensation Comm’n, 384 Ill. App. 3d 233, 892 N.E.2d 112, 322 Ill. Dec. 865 (1st Dist. 2008) − A claimant failed to file a statement of exceptions in his petition for review. The Appellate Court held that the failure to file a statement of exceptions did not result in waiver of all of the issues raised in the appeal. The administrative rule requiring a statement of exceptions states that the Commission would consider only issues raised in both the petition for review and the statement of exceptions. On the other hand, the Workers’ Compensation Act mandates review of all questions appearing from the transcript once a petition for review is filed. Specifically, section 19(e) of the Act states that ”if a petition for review and agreed statement of facts or transcript of evidence is filed, . . . . the Commission shall promptly review the decision of the arbitrator and all questions of law or fact which appear from the statement of facts or transcript of evidence.” Administrative rules that are in conflict with a statute are invalid. Accordingly, once a timely petition to review an arbitrator’s decision has been filed along with an agreed statement of facts or a transcript of the evidence, the Commission is

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obligated to review all questions of law or fact which appear from the transcript of evidence even if no statement of exceptions is filed.

F. Release

Maxit, Inc. v. Van Cleve, 231 Ill. 2d 229, 897 N.E.2d 745, 325 Ill. Dec. 206 (2008) − An employer filed a complaint against its employee alleging that the employee breached a settlement release by continuing to pursue his workers’ compensation claim after signing a release. The employee filed a counterclaim alleging that the employer had fraudulently induced him to sign the release. The circuit court granted the employer’s motion for summary judgment. The Appellate Court reversed. The Illinois Supreme Court granted leave to appeal and affirmed the Appellate Court. There was a dispute concerning whether the release that the employee signed covered only underinsured motorists claims or both underinsured motorists and workers’ compensation claims. The Supreme Court held that even if one assumed that the release was intended to apply to both underinsured motorists claims as well as workers’ compensation claims, the workers’ compensation claims could not be released in the absence of approval from the Workers’ Compensation Commission. Section 23 of the Workers’ Compensation Act specifically provides that no employee shall have the power to waive any of the provisions of the Act with regard to the amount of compensation payable except after approval by the Commission. Accordingly, even if the release was valid and covered the workers’ compensation claim, the employee did not have legal authority to waive section 23 of the Act which requires Commission approval of the settlement. VI. MISCELLANEOUS CASES

A. MBA – PTD

Ameritech Services, Inc. v. Illinois Workers’ Compensation Comm’n, No. 1-08-1412WC, 2009 WL 723476 (1st Dist. March 17, 2009) − The petitioner worked for Ameritech as a universal account executive. The petitioner was 30 years old and had an MBA. The treating physician concluded that the petitioner could no longer do his previous job. The employer’s medical expert also agreed that the petitioner should be restricted to lifting no more than 15 pounds. The claimant’s vocational rehabilitation expert testified that the petitioner was permanently and totally disabled. She found that the petitioner had transferrable skills in the areas of accounting, finance, marketing and customer service. She did a labor market survey, but believed that the petitioner would not be a candidate for any of the jobs identified. She offered an opinion that it was unlikely that an employer would hire the petitioner over an able bodied candidate and, even if he was hired, the petitioner would not be able to continue working. She did not explore the availability of any non-skilled jobs for the claimant. The burden was then on the respondent to show that work was available. The respondent did not introduce testimony of a vocational rehabilitation expert to contradict the petitioner’s expert. They did have a psychological expert. However, she did not perform a labor market survey and did not comment on the effect of his physical limitations and restrictions on his ability to obtain and hold work in the labor market.

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B. Accident

City of Springfield v. Illinois Workers’ Compensation Comm’n, No. 4-08-0170WC, 2009 WL 475292 (4th Dist. Feb. 11, 2009) − The Appellate Court upheld consistent rulings from below that the petitioner sustained a compensable, repetitive use work injury. The Court found that the evidence was sufficient to establish a repetitive trauma injury where the petitioner had to operate hand held tools for at least five hours per eight hour work day.

C. Undocumented Aliens

Economy Packing Co. v. Illinois Workers’ Compensation Comm’n, 387 Ill. App. 3d 283, 901 N.E.2d 915, 327 Ill. Dec. 182 (1st Dist. 2008) − The Commission awarded the claimant, an undocumented alien, workers’ compensation benefits. The Appellate Court affirmed. The Court held that all aliens in the service of another pursuant to a contract for hire, regardless of their immigration status, are considered employees within the meaning of the Workers’ Compensation Act. Accordingly, the mere fact that the claimant is an undocumented alien does not preclude him from recovering workers’ compensation benefits.

D. Uninsured Motorists Coverage

Taylor v. Pekin Ins. Co., 231 Ill. 2d 390, 899 N.E.2d 251, 326 Ill. Dec. 34 (2008) − An employee who was injured in an automobile accident with an uninsured motorist during the course of his employment brought a declaratory judgment action against his employer’s insurer that provided both workers’ compensation and automobile insurance coverage. He claimed that the insurer was not allowed to deduct from his uninsured motorist award the full amount of his workers’ compensation award without a deduction of 25 percent for attorney’s fees. The circuit court dismissed the action. The Appellate Court reversed. The Supreme Court granted leave to appeal and reversed the Appellate Court and affirmed the circuit court. The Supreme Court held that the insurer had a contractual right of set off rather than a right of reimbursement, therefore the insurer was not required to pay a portion of the fees for the attorney for the employee. The Court found that the 25 percent attorney fee rule did not apply where the claimant obtained recovery for his injuries through his employer’s uninsured motorist coverage rather than from the third-party motorist. Accordingly, the insurer, which provided both UM coverage and workers’ compensation coverage and which had a contractual right in the automobile insurance policy to a set off against UM benefits for recovery under workers’ compensation law, was not required to deduct from its contractual set off 25 percent for attorney’s fees.

E. Choice of Doctors

Comfort Masters v. Workers’ Compensation Comm’n, 382 Ill. App. 3d 1043, 889 N.E.2d 684, 321 Ill. Dec. 419 (1st Dist. 2008) − The Appellate Court held that the claimant’s two visits to an acupuncturist for massages did not exhaust the claimant’s second choice of physician. The statute applies to treatment from a physician, surgeon or hospital. The Court held that the

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acupuncturist was not a physician, surgeon or hospital, therefore going to the acupuncturist did not count as a choice of physician for purposes of the rule.

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Daniel R. Simmons - Partner

Dan concentrates his practice in the areas of workers' compensation and general insurance defense, including auto liability, premises liability and third party defense of employers. Since graduation from law school in 1984, he has spent his entire legal career at Heyl Royster in the Springfield office. He became a partner in 1996. Dan has extensive litigation experience. He has taken numerous cases to jury verdict both in state and federal courts. Additionally, he has arbitrated hundreds of workers' compensation claims before the Illinois Workers' Compensation Commission. Dan appreciates that his clients' goal is to conclude claims in the most efficient, economical means possible and strives to achieve that goal through motion practice, settlement or trial. Dan is a frequent author and lecturer on civil liability and workers' compensation issues. His speaking is both to clients and to Illinois attorneys for continuing legal education. Dan continues to provide writing and speaking services to the Property Loss Research Bureau/Liability Insurance Research Bureau's annual conference that is routinely attended by over 2,500 senior claims professionals from around the United States. Dan is a past president and program director of the Lincoln-Douglas American Inn of Court. The Inn is designed to promote legal education, civility and collegiality among members of the bar.

Professional Recognition • Martindale-Hubbell AV Rated

Professional Associations • Lincoln-Douglas American Inn of Court (past

president and program director) • American Bar Association • Illinois State Bar Association • Sangamon County Bar Association • Central Illinois Claims Adjusters' Association

Court Admissions

• State Courts of Illinois • United States District Court, Central District

of Illinois • United States Court of Appeals, Seventh

Circuit Education • Juris Doctor, University of Iowa, 1984 • Bachelor of Arts (Magna Cum Laude) - Political

Science, Speech and Humanities, Augustana College, 1981


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WAGE DIFFERENTIAL EXPOSURE IN A RECESSION: TEMPORARY OR PERMANENT INCAPACITY?

Presented and Prepared by: Bruce L. Bonds

[email protected] Urbana, Illinois • 217.344.0060




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I. BACKGROUND ........................................................................................................................................... C-3 II. DEVELOPMENT OF WAGE DIFFERENTIAL THEORY IN ILLINOIS ............................................. C-3 III. CALCULATIONS.......................................................................................................................................... C-6 IV. WHEN WILL THE PETITIONER SEEK A WAGE DIFFERENTIAL AWARD

UNDER SECTION 8(d)(1)? ....................................................................................................................... C-6 V. WHEN SHOULD THE EMPLOYER SEEK TO PROVE A WAGE DIFFERENTIAL? ..................... C-7 VI. WAGE DIFFERENTIAL CONCERNS IN THE CURRENT ECONOMIC CLIMATE ...................... C-7 VII. TIPS FOR MINIMIZING WAGE DIFFERENTIAL EXPOSURE .......................................................... C-8

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I. BACKGROUND

Workers’ compensation laws were initially based on a “wage-loss principle.” This principle provides that an injured worker should receive compensation as representative of the loss of future wages that result from the workers’ compensation injury. This is consistent with the social policy which underlies workers’ compensation statutes, which is to prevent the actual destitution of injured workers. Over time there has been a gradual erosion of the wage-loss principle in favor of what is known as a “schedule principle.” Rather than compensating an individual for wage loss, the schedule principle takes a different form. The schedule principle prescribes a fixed number of weeks of compensation for particular body parts lost or loss of use. Illinois initially did not have a schedule. Recently there has been a trend back to the original “wage-loss principle” as a more appropriate means of compensating workers’ compensation injuries. II. DEVELOPMENT OF WAGE DIFFERENTIAL THEORY IN ILLINOIS

When an injured employee returns to his former employment at pre-injury pay, compensation is awarded for permanent partial disability, or PPD, represented by the loss of use of the injured body part. PPD awards may fall under Section 8(d)(2) person as a whole provisions or Section 8(e) specific loss provisions. However, where the employee cannot return to his former employment and he further suffers a diminished earning capacity, benefits may be awarded under Section 8(d)(1), the so-called wage differential provision. The Act in part provides:

If, after the accidental injury has been sustained, the employee as a result thereof becomes partially incapacitated from pursuing his usual and customary line of employment, he shall, except in cases compensated under the specific schedule set forth in paragraph (e) of this Section, receive compensation for the duration of his disability, subject to the limitations as to maximum amounts fixed in paragraph (b) of this Section, equal to 66 2/3% of the difference between the average amount which he would be able to earn in the full performance of his duties in the occupation in which he was engaged at the time of the accident and the average amount which he is earning or is able to earn in some suitable employment or business after the accident. [emphasis added]

820 ILCS 305/8(d)(1).

Thus, in order to qualify for a Section 8(d)(1) differential, the petitioner must prove: (1) a partial incapacity which prevents the pursuit of his/her “usual and customary line of employment,” and (2) an impairment of earnings.

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The petitioner cannot recover for both Section 8(d)(1) wage differential and a specific loss of use for a man as a whole under Section 8(e) or Section 8(d)(2). Pruiett v. Industrial Comm’n, 65 Ill. 2d 240, 357 N.E.2d 544, 2 Ill. Dec. 377 (1976); Freeman United Coal Min. Co. v. Industrial Comm’n, 283 Ill. App. 3d 785, 670 N.E.2d 1122, 219 Ill. Dec. 234 (5th Dist. 1996). If there is evidence of a permanent reduced earnings capacity and a wage differential is sought, the Commission is required to award a wage differential award. Gallianetti v. Industrial Comm’n, 315 Ill. App. 3d 721, 734 N.E.2d 482, 248 Ill. Dec. 554 (3d Dist. 2000). Note that the petitioner is in essence entitled to “elect” whether they wish to proceed under the schedule or under a wage differential. Naturally the petitioner’s counsel will calculate which avenue will provide the greatest recovery. The differential is to be paid for the duration of disability which has been interpreted as to mean “for life” – not “work life,” even if after an award is rendered, the employee changes jobs resulting in a larger loss of wages. Rutledge v. Industrial Comm’n, 242 Ill. App. 3d 329, 611 N.E.2d 526, 183 Ill. Dec. 263 (1st Dist. 1993). In computing the wage differential, use the amount of the money the petitioner would be earning at the time of the settlement (including raises) if that figure is greater than the average weekly wage as it was computed at the time of the accident. General Elec. Co. v. Industrial Comm’n, 144 Ill. App. 3d 1003, 495 N.E.2d 68, 99 Ill. Dec. 3 (4th Dist. 1986), appeal denied, 113 Ill. 2d 573, 505 N.E.2d 352, 106 Ill. Dec. 46 (1987). Post-accident earnings in the pre-accident job may be shown through testimony by similarly situated employees. Morton’s of Chicago v. Industrial Comm’n, 366 Ill. App. 3d 1056, 853 N.E.2d 40, 304 Ill. Dec. 508 (1st Dist. 2006). Fringe benefits are not included in calculating pre-accident earnings. However, vacation pay is included. Pluto v. Industrial Comm’n, 272 Ill. App. 3d 722, 650 N.E.2d 631, 208 Ill. Dec. 937 (1st Dist. 1995). In calculating the wage differential, an employee who works less than full time (that is to say a 40 hour week on average) is entitled to have the wage differential benefit calculated based on an assumption that he was in “full performance of work,” even if he did not work full-time during the preceding 52 weeks. Forest City Erectors v. Industrial Comm’n, 264 Ill. App. 3d 436, 636 N.E.2d 969, 201 Ill. Dec. 537 (1st Dist. 1994); Greaney v. Industrial Comm’n, 358 Ill. App. 3d 1002, 832 N.E.2d 331, 295 Ill. Dec. 180 (1st Dist. 2005). Pursuant to the 2005 Amendments to the Illinois Workers’ Compensation Act, a wage differential award cannot exceed 100 percent of the State average weekly wage, currently $923.56 (Note: prior to the 2005 Amendments, the wage differential was capped at the PPD rate in effect at the time of the accident.) This will apply primarily to high wage earners who as a result of injuries are unable to return to pre-accident earning levels. In computing wage differential awards, do not speculate on what increases or promotions the petitioner might have had if he had continued to work. Deichmiller v. Industrial Comm’n, 147 Ill. App. 3d 66, 497 N.E.2d 452, 100 Ill. Dec. 474 (1st Dist. 1986). Wage differentials are calculated on

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the presumption that, but for the injury, the employee would be in the full performance of his original duties; the petitioner’s wage differential is therefore calculated on the petitioner’s job classification at the time of the original injury. Old Ben Coal Co. v. Industrial Comm’n, 198 Ill. App. 3d 485, 555 N.E.2d 1201, 144 Ill. Dec. 682 (5th Dist. 1990); First Assist, Inc. v. Industrial Comm’n, 371 Ill. App. 3d 488, 867 N.E.2d 1063, 311 Ill. Dec. 77 (4th Dist. 2007) (operating room nurse was entitled to have benefits based on the wage of an operating room nurse at the time of the arbitration rather than a R.N. in general nursing). If the pre-accident wage is difficult to determine or unknown at the trial, it is permissible to use the average weekly wage in effect at the time of the accident rather than to speculate as to changes since the accident date. Fernandes v. Industrial Comm’n, 246 Ill. App. 3d 261, 615 N.E.2d 1191, 186 Ill. Dec. 134 (4th Dist. 1993). To recover a wage differential award, the employee must present medical evidence that the employee cannot return to the original employment and has a loss of earnings. Old Ben Coal Co. v. Industrial Comm’n, 198 Ill. App. 3d 485, 555 N.E.2d 1201, 144 Ill. Dec. 682 (5th Dist. 1990). If the petitioner is released to return for a “trial” at his original job, but refuses to do so and elects to take a lower paying job which he “enjoys,” he cannot obtain a wage differential recovery. Durfee v. Industrial Comm’n, 195 Ill. App. 3d 886, 553 N.E.2d 8, 142 Ill. Dec. 658 (5th Dist. 1990). However, in a fairly recent Appellate Court Decision, Yellow Freight Systems v. Industrial Comm’n, 351 Ill. App. 3d 789, 814 N.E.2d 910, 286 Ill. Dec. 684 (1st Dist. 2004), the Court reversed an award of 40 percent of a person where there was a pre-existing shoulder injury (the arbitrator had awarded a 45 percent loss of an arm) and awarded a wage differential despite the fact that the petitioner had accepted a lower paying job as a security guard, refused to apply for higher paying positions with the employer and was found by the Commission not to have shown any evidence of an appropriate job search. This Decision was based on a finding that the employer had approved of the job which the petitioner took and advised their vocational rehabilitation specialist to close their file. Pursuant to the 2005 Amendments to the Workers’ Compensation Act, a wage differential award can be set aside within five years after an award or settlement. Moreover, the 2005 Appellate Court Decision in Cassens Transport Co. v. Industrial Comm’n, 354 Ill. App. 3d 807, 821 N.E.2d 1274, 290 Ill. Dec. 700 (4th Dist. 2005) holds that there has to be a change in physical “disability” and not just economic status to support a review that will modify the wage differential award. The employee’s “usual and customary” work for purposes of calculating a wage differential may include wages from a concurrent employment from which employee is temporarily laid off at the time of injury. Flynn v. Industrial Comm’n, 211 Ill. 2d 546, 813 N.E.2d 119, 286 Ill. Dec. 62 (2004).

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III. CALCULATIONS

Wage differential example 1: Average weekly wage $1,200.00 Post-accident wage $ 300.00 Calculation: $1,200.00 - $300.00 = $900.00 x two-thirds = $600.00

Wage differential award is $600.00

Wage differential example 2: Date of accident 7/1/08 Average weekly wage $2,000.00 Post-accident wage $ 300.00 Calculation: $2,000.00 - $300.00 = $1,700.00 x two-thirds = $1,133.90

*Wage differentials are limited to 100 percent of the State average weekly wage in effect on the date of the injury. In this case it would be $883.86.

Wage differential example 3: Date of accident 7/1/08 Average weekly wage $2,000.00 Pre-accident wage at time of trial $2,500.00 Post-accident wage $1,000.00 Calculation: $2,500.00 - $1,000.00 = $1,500.00 x two-thirds = $1,000.00 Wage differential award is $883.86 IV. WHEN WILL THE PETITIONER SEEK A WAGE DIFFERENTIAL AWARD UNDER

SECTION 8(d)(1)?

• Where there are permanent restrictions which prevent the employee from returning to work at their former job and there is an impairment of earnings capacity, and;

• Where the wage differential will yield a higher award than would the expected schedule

award for the same injury.

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V. WHEN SHOULD THE EMPLOYER SEEK TO PROVE A WAGE DIFFERENTIAL? • Anytime the petitioner is seeking to prove a claim of odd lot permanent total disability, the

employer should aggressively attempt to prove a wage differential themselves via labor market survey, vocational testing, etc.

VI. WAGE DIFFERENTIAL CONCERNS IN THE CURRENT ECONOMIC CLIMATE • Availability of jobs. • Availability of high paying jobs. • Employees who settle based on a wage differential then attempt to return to work at full

duty. • Employees who work less than 40 hours per week but seek wage differential awards based

on a 40 hour work week. As outlined above, in the case of seasonal workers, this appears to be the law pursuant to the Forest City Erectors case. However, it is an open question as to an individual who voluntarily agreed to work only 20 hours per week (that is to say their job was a 20 hour per week job) should be entitled to have a wage differential calculated as though they had worked 40 hours. This can significantly impact the value of the case.

Example 1: Pre-accident: work 20 hours per week at $20.00 per hour = average weekly wage of $400.00. Post accident: can work 20 hours per week at $10.00 per hour = wage differential calculation according to Forest City Erectors; 40 hours per week (notwithstanding the fact that the employee worked only 20) x 20 = $800.00 - $200.00 = $600.00 x two-thirds = wage differential of $400.00 per week As opposed to: Example 2: $400.00 - $200.00 x two-thirds = $133.00 per week • Legitimacy of permanent restrictions. • Employee cooperation or lack thereof. • Potential evidentiary concerns as to testimony by a vocational rehabilitation specialist of lack

of cooperation based on follow-up phone calls to employers with whom the petitioner has applied or interviewed. These communications may be considered “hearsay.” First Assist, Inc. v. Industrial Comm’n, 371 Ill. App. 3d 488, 867 N.E.2d 1063, 311 Ill. Dec. 77 (4th Dist. 2007).

• Although an employer has 60 days in which to review a wage differential settlement or award, they must show a change in the physical condition not the economic earnings (this makes no sense, but it is the law according to the Supreme Court).

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VII. TIPS FOR MINIMIZING WAGE DIFFERENTIAL EXPOSURE

• Broaden the area of a job search. Often times employees who live in remote areas but work in more urban areas attempt to have their job search limited to the remote rural areas in which they live. If in fact the employee was injured in an urban area, at a minimum a job search should be expanded to include that area.

• Employer should consider paying wage differential benefits weekly rather than in a lump sum unless they receive a significant discount on the present value of that stream of payments.

Question: If I want to pay in a lump sum, what is the value of the wage differential case? Answer: The cost of the purchase of an annuity to fund that stream of payments which will often be less than a straight forward present value calculation using a five percent or six percent rate of return on the petitioner’s anticipated life expectancy. Question: Are there any ways to prove or reduce the costs of this annuity? Answer: Yes, obtain a “rated life” on the employee in the case of any individuals who have significant injuries and/or other health conditions. Their “chronological age” might be significantly less than their “rated age.” That is to say a 50-year-old individual with significant health conditions might be rated as age 58. A rated life annuity can then be purchased based on the rate age on the present value which would significantly reduce the costs of the purchase of the annuity that would fund the stream of payments. Thus, the actual value of the case on a lump sum basis is the cost purchased of a rated life annuity. In these instances, the insurance company that settles the annuity is running the risk that the individual will live longer than their rated life. • Include contract language in wage differential settlements indicating that the parties agree

and stipulate that the employee will never be able to return to work in the capacity in which they were working at the time of the accident and that settlement payments are in part consideration for this stipulation. Consideration of coupling such a provision with a resignation should also be made. This would be done in an attempt to prohibit the petitioner from claiming permanent restrictions on which a wage differential settlement is made and then attempting to return to work a short time later, claiming they are “better now.”

• In calculating the wage differential, focus on evidence of earnings capacity not just earnings. The fact that the petitioner claims that is the most they can earn is not dispositive. Yvonne Johnson v. University of Illinois, 08 IWCC 0257, 2008 WL 1787577 (IWCC March 6, 2008).

• Consider whether the current economy has reduced the future loss of earnings capacity. For example, if an injured employee is a member of the United Auto Workers, future collective bargaining agreements may call for lower wages than are currently being paid. This might

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also apply in other industries. If that were the case, this would lower the current earnings in the customary line of work component of the wage differential calculation, thereby reducing the wage differential. Discuss the potential for future wage reductions with a vocational counselor.

• Work closely with a vocational specialist. Advise them up front not to document that a lower paying job is “appropriate” for the individual where higher paying jobs might be available. Such a statement may be used by the Commission as evidence against the employer.

• Verify legitimacy of permanent restrictions via IME, FCE and surveillance.

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Bruce L. Bonds - Partner

Bruce is the immediate past Chair of our state-wide workers' compensation practice group and has spent his entire legal career with Heyl Royster beginning in 1982 in the Peoria office. He concentrates his expertise in the area of workers' compensation, third-party defense of employers, and employment law. He represented the combined employers group in the negotiations which culminated in the 2005 revisions to the Illinois Workers' Compensation Act. With extensive experience before the Illinois Workers' Compensation Commission, Bruce has defended employers in thousands of cases during the course of his career. As a result of his experience and success, his services are sought by both self-insureds, insurance carriers, and TPAs. Bruce is an adjunct professor of law at the University of Illinois College of Law where he has taught workers' compensation law to upper-level students since 1998. Bruce is a frequent speaker on workers' compensation issues at bar association and industry-sponsored seminars. Bruce has served as Vice-Chair of the ABA Committee on Employment, Chair of the Illinois State Bar Association Section Council on Workers' Compensation, and currently serves on the Employment Law Committee of the Chicagoland Chamber of Commerce and the Illinois Chamber of Commerce Workers' Compensation Committee. He has been designated as one of the "Leading Lawyers" in Illinois as a result of a survey of Illinois attorneys conducted by the Chicago Daily Law Record; another survey published by Chicago Lawyer Magazine named Bruce one of the "Best Lawyers in Illinois" for 2008. Public Speaking • “The 2005 Amendments, 3 Years Later: The

Respondent's Perspective” Safeworks 16th Annual Work Injury Conference 2008

• “Update on the Illinois Workers’ Compensation Act and Medical Fee Schedule” Illinois-Iowa Safety Council Annual Convention 2008

• “Impact of the New Medical Fee Schedule” SafeWorks 14th Annual Work Injury Conference 2006

• “Penalties, Penalties and More Penalties, The Changes to Section 19 and Strategies for Minimizing Penalties Exposure” CCMSI 2008

• “Recent Changes to the Illinois Workers’ Compensation Statutes” Illinois Manufacturers Association 2005

• “Recent Changes to the Illinois Workers’ Compensation Act” Chicagoland Chamber of Commerce 2005

• “Substantive Changes to the Workers’ Compensation Act” Illinois Bar Association 2005

• “Update on the Newly Enacted Amendments of the Illinois Workers’ Compensation Act” ISBA Workers’ Compensation Law Section 2006

• “Update on the Newly Amended Workers’ Compensation Act” ISBA Workers’ Compensation Law Section 2005

Professional Recognition • Martindale-Hubbell AV Rated • Selected as a Leading Lawyer in Illinois. Only


Professional Associations • American Bar Association (Past Vice-Chair of

Employment Law Committee) • Illinois State Bar Association (Past Chair

Workers' Compensation Law Section Council) • Champaign County Bar Association • Peoria County Bar Association • Workers' Compensation Lawyers Association • Illinois Association of Defense Trial Counsel • Counsel of Defense Research Institute

Court Admissions • State Courts of Illinois • United States District Court, Central District of

Illinois • United States Court of Appeals, Seventh Circuit

Education • Juris Doctor, Washington University School of

Law, 1982 • Bachelor of Arts-Finance, University of Illinois,

1979


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NON‐ECONOMIC DEPRESSION: HOW TO MANAGE POST‐TRAUMATIC STRESS AND MENTAL CLAIMS

Presented and Prepared by: Kevin J. Luther





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NON-ECONOMIC DEPRESSION: HOW TO MANAGE POST-TRAUMATIC STRESS AND MENTAL CLAIMS

I. INTRODUCTION − WC PSYCHOLOGICAL/MENTAL/EMOTIONAL CLAIMS AND INVESTIGATION ................................................................................................................................ D-4 A. Common Psychological/Mental/Emotional Claims ......................................................... D-4 B. Red Flags for Early Detection of Psychological/Mental/ Emotional Claims .......................................................................................................................... D-4 C. Impact of Medication ................................................................................................................. D-5 II. STRATEGIES TO MANAGE PSYCHOLOGICAL/MENTAL/EMOTIONAL CLAIMS .................... D-5 A. General Analysis ........................................................................................................................... D-5 B. Checklist for Investigation of Petitioner’s Background .................................................. D-6 III. THE FOUR MOST COMMON CLAIMS AND HANDLING SUGGESTIONS ................................ D-6 A. Post-Traumatic Stress Disorder .............................................................................................. D-6 B. Acute Stress Disorder ................................................................................................................. D-7 C. Chronic Pain Syndrome Claims ............................................................................................... D-7

1. Red Flags Suggesting Psychological Factors in Chronic Pain Claims ................................................................................................. D-8 2. Strategy Checklist for Chronic Pain Claims ......................................................... D-8 D. Depression ...................................................................................................................................... D-8

1. Symptoms of Major Depression .............................................................................. D-9 2. Symptoms of Dysthymic Disorder .......................................................................... D-9 3. Causes of Depression .................................................................................................. D-9

a) The Following Is a List of Causes of Depression ..............................D-10 b) In Addition to Illnesses, Several Medications Can Cause Depression .........................................................................................D-10 c) Strategy and Documents Needed .........................................................D-10 E. Organic Brain Syndrome/Traumatic Brain Injury ...........................................................D-11

1. Symptoms ......................................................................................................................D-11 2. Strategy and Documents Needed to Assess the Claim ................................D-11

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IV. WC LEGAL DECISIONS REGARDING PSYCHOLOGICAL/MENTAL/STRESS CLAIMS .........D-11 A. Types of Legal Claims ...............................................................................................................D-11

1. Mental-Physical Injury ...............................................................................................D-12 2. Physical-Mental Injury ...............................................................................................D-12 3. Mental-Mental Injury .................................................................................................D-12 B. Examples of WC Legal Decisions ..........................................................................................D-13

1. Non-Consensual Sexual Assault Is a “Physical-Mental” Trauma ...............D-13 2. Psychological Claim of Major Depression Denied ..........................................D-14 3. Flight Attendant Post-Traumatic Stress Claim Held Compensable ..........D-14 4. Intentional Infliction of Emotional Distress May State Cause of Action Against Insurance Company and Vocational

Rehabilitation Specialist ............................................................................................D-16 5. Mental Stress Claims Denied ..................................................................................D-17 6. The Threat of Discharge Not Compensable in Mental Stress Claim ...............................................................................................D-18

V. IS WORK THE SOURCE OF DEPRESSIVE AND ANXIETY DISORDERS? ...................................D-19 A. Abstract ..........................................................................................................................................D-19 VI. ADDITIONAL RESEARCH AND CONCLUSIONS IN THE MEDICAL LITERATURE –

REGARDING CAUSAL CONNECTION .................................................................................................D-19

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NON-ECONOMIC DEPRESSION: HOW TO MANAGE POST-TRAUMATIC STRESS AND MENTAL CLAIMS

I. INTRODUCTION − WC PSYCHOLOGICAL/MENTAL/EMOTIONAL CLAIMS AND

INVESTIGATION

Psychological/emotional/mental injury can cover a variety of mental health claims. A claim can result from actual physical damage to the brain or emotional upset with no medical evidence of any brain damage.

One type of claim is known as a traumatic brain injury (TBI) or organic brain syndrome (OBS) claim. Here, the petitioner alleges that a work-related event was a cause or produces a change in the structure or metabolism of his/her brain. This can result from any physical head injury or toxic exposure.

Another type of mental/emotional claim is one where a work-related event was a cause which produced depression, anxiety, or some other type of mental illness. Here, physical injury to the body is frequently involved, but it is not necessary. For example, a petitioner may claim post-traumatic stress disorder (PTSD) from an intentional infliction of emotional harm such as workplace harassment or witnessing some type of traumatic event in which there was no physical injury, but emotional harm is alleged.

A. Common Psychological/Mental/Emotional Claims

• Brain syndrome/traumatic brain injury associated with an allegation of a concussion; • Post-traumatic stress disorder (PTSD); • Depression claims; • Anxiety disorders; • Chronic pain claims with related depression.

B. Red Flags for Early Detection of Psychological/Mental/Emotional Claims

• Claim of prolonged disability after mild concussion; • Chronic pain with little response to therapy; • Referral to psychiatric or other healthcare professional for treatment; • Referral for psychological or neuropsychological testing; • Medication − prescription of antidepressant, anti-anxiety or other psychotropic medications; • Notation of chronic fatigue syndrome, depression, nervousness, or other fears that present

at work or during other normal activities; • Behavior change; • Self-damaging behavior; • No objective neurological evidence to support loss of physical function; • Seizure or blackout activity claims;

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• Claims involving paralysis or serious disfigurement; • EEGs supporting seizure activity.

C. Impact of Medication

In many claims, petitioners continue to report symptoms and reject medications as not being helpful. This may cause the healthcare professionals to widen the use and types of medication. This may cause the petitioner to develop symptoms from the drug effects and interactions with each other. Additionally, it is possible that medications can change the physical and psychological functions that are actually being tested in neurological and neuropsychological reviews.

Petitioner medication checklist: • Medications before the date of accident; • Medications on the date of accident; • All medications prescribed after the date of accident; • Number of physicians prescribing medications and whether they are the same or similar

medications; • Petitioner compliance with medications (rate and dosage); • Evidence of addiction or drug-seeking behavior; • Any blood or urine tests to determine if petitioner is actually taking the medications at the

appropriate rate and dosage; • Are symptoms the result of the injury or from the effects of medication; • Obtain the petitioner’s pharmacy records and computer printouts from before and after an

accident. II. STRATEGIES TO MANAGE PSYCHOLOGICAL/MENTAL/EMOTIONAL CLAIMS

A. General Analysis

1. Obtain a thorough and comprehensive statement from petitioner as well as other witnesses as soon after the accident or incident as possible;

2. Record these statements;

3. It is recommended that detailed questions that require memory and concentration be asked of the petitioner;

4. Gather all information and documentation regarding the accident and treatment that took place within the first week after the accident;

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5. Identify both medical and emotional/mental health providers, both before and after the accident;

6. Examine statements in medical records for other causes and/or preexisting causes of the petitioner’s alleged mental illness as well as effects of medication;

7. Retain experienced, independent psychological and psychiatric examiners to review records and possibly examine the petitioner.

B. Checklist for Investigation of Petitioner’s Background

• Past educational information/school records; • Examine childhood, adolescent, and developmental/social/behavioral problems history; • Employment history, including performance evaluations; • Military service information (health record and disciplinary information); • Past medical history; • Health status before accident; • Past hospitalizations; • Current treatment records, including physical and mental/emotional/psychological

treatment; • Alcohol and substance abuse history; • Driving and accident history, including examination of DUI history; • Criminal history; • Identification of all post-accident symptoms; • Identification of all post-accident treatment records; • Examination of any inherited or family medical or mental disorders; • Examination of current family structure and/or recent family changes; • Identification of any family deaths; • Marital history; • Petitioner’s spouse and children information; • Identification of any social and recreational changes both before and after accident; • Identification of medications pre-accident and post-accident, including medications taken

within one day prior to and after the accident; • Recent stressors or changes in petitioner's life (legal, family, social or employment); • Workers’ compensation and insurance claim history (index check); • Analysis of earnings history of petitioner before and after accident. III. THE FOUR MOST COMMON CLAIMS AND HANDLING SUGGESTIONS

A. Post-Traumatic Stress Disorder

DSM-III-R describes post-traumatic stress disorder as an anxiety condition which is brought on by a distressing event outside the range of usual human experience. It occurs in both males and females and can occur at any age.

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Common symptoms of post-traumatic stress disorder are flashbacks and nightmares. These flashbacks and nightmares must be of the current traumatic event that caused the injury.

Four key areas are used to diagnose PTSD: (1) The nature of the experience/accident; (2) the occurrence of dreams and recollections of the specific event, (3) avoidance behaviors and numbing reactions, and (4) increased arousal. Depression is commonly associated with PTSD, and in many cases a separate depressive disorder or diagnosis may be made. Anxiety conditions are usually associated with PTSD. Many times, they will remit within weeks or months.

Symptoms of Post-Traumatic Stress Disorder

• There must be a severe traumatic event that involves the threat of serious harm to the petitioner or others. This event involves intense horror, helplessness, and fear.

• The event is re-experienced through recurrent recollections of event. This can be in recurrent dreams of the event, but the feeling is as if the event/accident is recurring. These can be dreams and/or flashbacks, but must be of the actual event/accident which is claimed to be the cause of the condition. If the flashback/dreams are of another past trauma, then the claimed event may not qualify as a PTSD claim.

• Persistent avoidance of the stimuli associated with the accident/incident or numbing of general responsiveness that was not present before the accident. This can include attempts to avoid thoughts or feelings, activities, places, or people that remind the petitioner of the accident/incident. It can include markedly diminished interest in significant activities, a feeling of detaching or estrangement from others, a sense of a shortened future, as well as restriction in ranges of emotion. It can include an inability to remember or recall an important aspect of the accident/incident.

• Persistent symptoms of increased arousal such as difficulty sleeping, irritability, anger, difficulty concentrating, and an exaggerated startle response. Sometimes these symptoms can be caused by medication side effects, cocaine use, daytime napping, or irregular sleep patterns and/or depression.

• The symptoms last one month or more. • The symptoms cause significant impairment and stress in occupational, social, or other areas

of functioning.

B. Acute Stress Disorder

The 1984 DSM-IV included a new disorder. It was identified as acute stress disorder, and it differs from PTSD because it lasts for only two days to one month. It anticipates that the diagnosis and condition is short-term with the possibility of no permanent impairment.

C. Chronic Pain Syndrome Claims

Chronic pain syndrome involves physical and psychological disorders. It requires assessment of the claimed pain from both a physical and mental perspective. Four possible causes for the chronic pain complaints have been identified:

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• Actual physical pain. Many times the actual pain is magnified by depression. • Malingering. Where there is no real pain, but the petitioner consciously exaggerates his/her

symptoms to receive compensation or avoid responsibility. • Factitious disorder. To receive care, petitioner has no claim of real pain but is consciously

exaggerating his/her symptoms to receive care, treatment, and attention from others. • Somatoform pain disorder. This is involuntary. The petitioner is producing pain behavior

because of unconscious psychological conflicts or needs.

1. Red Flags Suggesting Psychological Factors in Chronic Pain Claims

• Vague history of illness with questionable chronology and irrelevant information; • Open expression of resentment to employer, insurance company, or medical profession; • Dramatic descriptions of pain symptoms; • Difficulty in describing pain and localizing pain; • Failure of typical and traditional treatment to give significant pain relief; • Depression and anxiety symptoms along with pain complaints.

2. Strategy Checklist for Chronic Pain Claims

• Thorough medical review of physical injury diagnoses and factors; • Personality and psychiatric disorders identified; • Socioenvironmental factors such as prior occupations, family functioning, etc.; • Thorough patient history; • Interview of family members, if possible; • Psychological testing (Minnesota Multiphasic Personality Inventory (MMPI-II)); • Obtain all medical records; • Obtain all pharmacy records; • Surveillance, if appropriate and available; • Reasonable relationship between the injury and pain pattern; • Medications before and after accident and pattern of medications; • Consistency of pain; • Dysfunctional family or social life; • Pain overly dramatic; • History of depression; • Increased income or income flow because of compensation payments; • Doctor, physical therapy, and other healthcare professional documentation of pain

compared to petitioner’s description of pain.

D. Depression

Depression is a broad term that can include many different types, including major depression, bipolar disorder, cyclothymia, and dysthymic disorder. Risk factors that can be associated with the diagnosis of major depression are gender, social class, heredity, as well as life events. Major depression is found to be twice as common in females as in males. The lower socioeconomic

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groups have twice the risk of major depression as opposed to higher socioeconomic groups. Major depression is 1.5 to 3 times more common among first-degree relatives of people than in the general population. Depression can be seen as a normal human emotion, and many times the chronology of symptoms show that the depression started prior to the accident.

Dysthymic disorder is a mood disorder that is chronic and extends approximately two years with other psychological or physical complaints. This usually begins in childhood or early adult life and is common. In adults the disorder is more common in females. It is also associated more with those who have a family history of dysthymic disorder.

1. Symptoms of Major Depression

• Depressed mood; • Markedly diminished interest or pleasure in most activities; • Significant weight gain or loss when not dieting; • Insomnia or hypersomnia almost every day; • Psychomotor agitation or retardation; • Fatigue/loss of interest daily; • Feeling of worthlessness or guilt; • Reduced concentration or ability to think daily; • Recurrent thoughts of death or suicidal ideations.

2. Symptoms of Dysthymic Disorder

This involves a depressed mood for most of the day for at least two years. It requires two of the following symptoms:

• Poor appetite/overeating; • Insomnia or hypersomnia; • Low energy or fatigue; • Low self-esteem; • Poor concentration; • Difficulty making decisions; • Feelings of hopelessness; • Loss of pleasure; • Social withdrawal; • Feelings of guilt; • Irritability or anger; • Decreased activity and productivity.

3. Causes of Depression

It has been said that 50 percent of persons that have had a major depression in the past will have a second episode. Many of these people will develop recurrent depression as they age.

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a) The Following Is a List of Causes of Depression

• Addison’s/Cushing’s disease; • Cardiovascular conditions; • Gastrointestinal illness; • Hyperparathyroidism; • Hyperthyroidism; • Hypothyroidism; • Infectious diseases; • Malnutrition; • Neurological conditions; • Personality disorders; • Rheumatoid arthritis; • Tumors.

b) In Addition to Illnesses, Several Medications Can Cause Depression

• Barbiturates; • Benzodiazepines; • Corticosteroids; • Digitalis; • Antihypertensive drugs; • Alcohol; • Street drugs; • Antineoplastics; • Anti-Parkinson drugs; • Adrenocortical steroids; • Cortisone Acetate; • Antibacterials; • Cycloserine; • Cardiovascular drugs; • Progestational agents; • Estrogen agents/drugs.

c) Strategy and Documents Needed

• Surgical test results; • Depression inventories, including MMPI-II test results; • All past medical and psychological history records; • Pharmacy records; • Job performance and work history records;

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• All reports and handwritten clinical notes of the treating psychologist/psychiatrist/mental health professional;

• Blood chemistry records and lab tests.

E. Organic Brain Syndrome/Traumatic Brain Injury

The most common claimed symptom is dementia. This concerns the alleged loss of cognitive ability, loss of memory, and inability to concentrate.

1. Symptoms

• Aversion to loud noises; • Aversion to bright lights; • Dizziness; • Fatigue; • Headaches; • Impaired vision; • Insomnia; • Loss of memory; • Nausea.

2. Strategy and Documents Needed to Assess the Claim

• Neuropsychological and psychological test results, including the raw data; • All medical records, past and current; • All psychological records and history, past and current; • Pediatric records; • Pharmacy records; • Performance and employment history records; • Actual handwritten clinical notes of healthcare professionals; • Blood chemistry records, lab tests; • School records – all grades; • Military records; • Driving and accident history; • Time and exposures to toxic substances; • Actual CT/MRI films that were produced.

IV. WC LEGAL DECISIONS REGARDING PSYCHOLOGICAL/MENTAL/STRESS CLAIMS

A. Types of Legal Claims

Claims involving emotional stress can be classified into any of three types: the mental-physical injury, the physical-mental injury, or the mental-mental injury. The evaluation and

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compensability of an injury relating to emotional stress will differ depending on which of the types above the injury is classified.

1. Mental-Physical Injury

The mental-physical injury is one in which job-related stress causes the employee to suffer a physical injury. An example of this would be job-related stress causing the employee to have a heart attack. In order for this type injury to be compensable, the employee must show that he or she was engaged in employment at the time and place of the precipitating cause of the injury and that the injury occurred because of a work-related risk or because the employment placed him or her at a risk of exposure exceeding that of the general public. However, it is irrelevant whether the employee might have suffered the same injury even if not working. Further, the employee is not required to show he or she experienced stress any greater than that of his or her co-workers or that there were increased or unusual levels of stress at the time of the injury. If it can be shown that the employee’s health was so deteriorated that any normal daily activity could result in the injury or that the activity the employee was engaged in presented risks no greater than those to which the general public is exposed, compensability is not warranted.

2. Physical-Mental Injury

The physical-mental injury is one in which a psychological injury is related to and caused by a physical trauma or injury. An example of this would be where an employee has fallen and injured his or her wrist and, though the wrist has healed, cannot return to work because of post-traumatic stress. If the mental injury can be traced to a physical trauma and that physical trauma is a causative factor in the mental injury, compensability is warranted.

3. Mental-Mental Injury

The mental-mental injury is one which is a psychological injury caused by sudden, severe emotional shock traceable to a definite time, place, and cause even though no physical trauma or injury was sustained. An example of this would be an employee that suffers from residual anxiety after having seen a co-worker’s hand severed by a machine the co-worker had been operating. In order for a mental-mental injury to be compensable, the employee must establish that: (1) The disorder arose out of a greater stress than the day-to-day emotional strain and tension which all employees experience, (2) that from an objective point of view, the conditions actually exist, and (3) that employment conditions, as opposed to non-employment conditions, were the major contributing causes of the mental disorder.

With all three of these types of injuries, the employer must accept the employee as it finds the employee. Showing that the individual employee is more susceptible to stress than the typical employee is not sufficient to defeat compensability.

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B. Examples of WC Legal Decisions

1. Non-Consensual Sexual Assault Is a “Physical-Mental” Trauma

In City of Springfield v. Industrial Comm’n, 291 Ill. App. 3d 734, 685 N.E.2d 12, 226 Ill. Dec. 198 (4th Dist. 1997), the Appellate Court considered a case of first impression regarding whether or not non-consensual sexual assault was properly characterized as “physical-mental” trauma, as opposed to “mental-mental” trauma when considering the compensability of a psychic injury. The claimant stated that she suffered a psychological injury (debilitating depression) after five acts of non-consensual sexual intercourse over a five-month period of time with her supervisor while at work. The respondent maintained that the five acts of sexual intercourse were consensual, although the supervisor alleged to have assaulted the claimant did not testify at the arbitration hearing to refute the claimant’s allegations of non-consensual conduct.

The Appellate Court outlined the theory of compensation for mental incapacity allegedly resulting from a work-related injury pursuant to the standard set forth in the Illinois Supreme Court decision of Pathfinder Co. v. Industrial Comm’n, 62 Ill. 2d 556, 343 N.E.2d 913 (1976). In Pathfinder, our Supreme Court held that psychological injuries could be compensable in either of two ways: (1) Where the psychological injuries were related to and caused by a physical trauma or injury, i.e., “physical-mental” trauma, or (2) where the psychological injuries were caused by a “sudden, severe emotional shock traceable to a definite time, place and cause which causes psychological injury or harm . . . though no physical trauma or injury was sustained,” i.e., “mental-mental” trauma. Pathfinder, 62 Ill. 2d at 563. In “mental-mental” claims, recoveries generally are more difficult to establish because the claimant is required to establish that the work event is the “major” cause of the psychological injury or condition. See Chicago Bd. of Educ. v. Industrial Comm’n, 169 Ill. App. 3d 459, 466, 523 N.E.2d 912, 917, 120 Ill. Dec. 1 (1st Dist. 1988). Under the “physical-mental” theory, the alleged work-related physical injury need not be the sole causative factor but need only be a causative factor of the alleged mental condition. See May v. Industrial Comm’n, 195 Ill. App. 3d 468, 487, 522 N.E.2d 258, 270, 141 Ill. Dec. 890 (3d Dist. 1990).

For purposes of determining which standard to apply, the Appellate Court reviewed what is required in the “physical-mental” theory recovery. It noted that only minor physical contact or contact that left no objective manifestation, i.e., bruises, contusions, broken bones, etc., was sufficient to cause psychological injuries to be compensable. Pathfinder, 62 Ill. 2d at 564. After reviewing the case law, the Appellate Court was convinced that the physical contact explicit in non-consensual sexual intercourse is sufficient to meet the requirement of physical contact necessary for the “physical-mental” trauma theory of recovery.

The court also noted that rape, sexual assault, and battery are all physical bodily injury crimes in Illinois. See 720 ILCS 5/12-13, 12-3 (West 1992). Accordingly, the Appellate Court affirmed the Industrial Commission finding that non-consensual sexual assault was likely to involve physical trauma, and it was therefore appropriate to characterize the claimant’s injury as a “physical-mental” trauma, as opposed to a “mental-mental” trauma.

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2. Psychological Claim of Major Depression Denied

In Anderson v. Industrial Comm’n, 321 Ill. App. 3d 463, 748 N.E.2d 339, 254 Ill. Dec. 893 (5th Dist. 2001), the claimant was a police officer who was promoted to inspector. Over the next two years, he had numerous “run-ins” with his supervisor. The petitioner claimed that his supervisor had threatened him. Eventually, he was demoted to a sergeant in the patrol division, and his salary was reduced.

His treating physician concluded that the claimant was suffering from job stress. A psychiatrist testified that the petitioner was suffering from major depression and that his work environment was a major factor in this illness. Medical records from both physicians failed to show any reference to the petitioner’s confrontations with his supervisor. Additionally, the records showed the treating physicians had prescribed Valium intermittently since 1976 for an anxiety disorder.

The arbitrator found that a compensable occurrence did take place and awarded TTD benefits and medical bills. The arbitrator found that the supervisor’s alleged threats to the claimant’s well-being were “beyond the common and necessary stresses of employment.” Id. at 466.

The Industrial Commission reversed and denied benefits. The Commission found that the claimant’s testimony that he had been threatened by his supervisor was not credible. It noted that the claimant’s version of events was uncorroborated, and no support for this claim was found in the medical records.

The Industrial Commission also found that the conditions under which the claimant worked were “not so outside the norm in terms of everyday employment stresses occasioned by employees in general so as to warrant compensability.” Id. at 467.

On review, the Circuit Court of St. Clair County affirmed the Industrial Commission decision. On appeal, the Fifth District Appellate Court affirmed the denial of benefits.

This decision further illustrates that psychological claims can be successfully defended before the Illinois Industrial Commission.

3. Flight Attendant Post-Traumatic Stress Claim Held Compensable

In Matlock v. Industrial Comm’n, 321 Ill. App. 3d 167, 746 N.E.2d 751, 253 Ill. Dec. 930 (1st Dist. 2001), the Appellate Court considered a psychological claim brought on behalf of a flight attendant. The flight attendant had worked for her employer for some 27 years. On November 22, 1997, she was assigned to a flight bound from Chicago to London. The claimant identified a previously troublesome passenger during boarding, but the security coordinator decided that this passenger, even though a little eccentric, was suitable to fly.

After the plane took off from Chicago, the passenger made trouble in the cabin. Moreover, after being confined to her seat on several occasions, she sprayed a chemical in the cabin whose fumes filled the galley where the flight attendant was working. The spray caused the flight attendant to feel nauseated and dizzy and to have heart palpitations. Eventually, the pilot diverted the flight in order to turn the passenger over to authorities.

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After debriefing by the FBI and her employer, the claimant was referred to a counselor whom she saw on three occasions. The counselor felt the claimant should continue counseling, but the employer refused to pay for any more sessions.

The plaintiff then sought treatment from a psychologist whom she had seen in 1992 for depression and in 1995 following the death of her mother and an injury to her brother. The psychologist observed a deterioration in the claimant’s physical appearance, forgetfulness, and decreased activity in her life and diagnosed the claimant with post-traumatic stress disorder from the 1997 flight incident.

The employer also had the claimant examined by a clinical psychologist. That psychologist disagreed with the diagnosis of post-traumatic stress disorder and concluded that the claimant’s problems were caused more by her anger at her employer. However, he did not release her to return to work and found her to have further need for psychotherapy. He diagnosed her as suffering from adjustment disorder with anxiety.

The arbitrator found the claim to be compensable and concluded that the claimant was entitled to penalties and attorneys’ fees because the employer’s conduct was unreasonable and vexatious. The Industrial Commission and the circuit court agreed that the claimant was entitled to benefits but did not find that the employer’s conduct was so unreasonable as to justify penalties and attorneys’ fees.

The Appellate Court noted that in Illinois, psychological injuries are compensable under one of two theories, either (a) mental-physical, where the injuries are related to and caused by a physical trauma or injury, or (b) mental, when the injuries are caused by sudden severe emotional shock traceable to a definite time and place and cause even though no physical trauma or injury was sustained. Recovery for non-traumatically induced mental disability is limited to those employees who can establish that: (1) The mental disorder arose in a situation of greater dimensions than the day-to-day emotional strain and tension which all employees must experience, (2) the conditions exist in reality from an objective standpoint, and (3) the employment conditions, when compared to the non-employment conditions, were the major contributing cause of the mental disorder. See Northwest Suburban Special Educ. Organization v. Industrial Comm’n, 312 Ill. App. 3d 783, 787, 728 N.E.2d 498, 501, 245 Ill. Dec. 416 (1st Dist. 2000).

Mental disorders which develop over time in the normal course of the employment relationship do not constitute compensable injuries. On the other hand, even minor physical contact or injury may be sufficient to trigger compensability in the physical-mental category. See Chicago Park District v. Industrial Comm’n, 263 Ill. App. 3d 835, 842, 635 N.E.2d 770, 776, 200 Ill. Dec. 431 (1st Dist. 1994).

Using these standards, the Appellate Court concluded that the claimant could have recovered under either theory. The claimant was directly exposed to the chemical sprayed in the cabin and experienced physical trauma in the course of her employment. The psychological disability arose from a situation of greater dimensions than the day-to-day emotional strain and tension to which flight attendants are subjected in their employment. The court also noted that even the

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employer’s expert could not state with certainty that the events which took place on the flight were not the triggering events for the claimant’s inability to return to work.

With respect to the issue of penalties, the court noted that an employer’s reasonable good faith challenge to liability ordinarily will not subject it to penalties under the Act. Given the totality of the circumstances, however, the Appellate Court decided that the employer’s conduct was unreasonable. It noted that even the employer’s expert felt that the claimant was in need of further psychological treatment, and the employer still refused to pay compensation. According to the Appellate Court, the mere fact that psychological injury cases are difficult to adjudicate does not mean that the award of penalties and attorneys’ fees was unacceptable or inappropriate.

4. Intentional Infliction of Emotional Distress May State Cause of Action Against Insurance Company and Vocational Rehabilitation Specialist

In Senesac v. Employer’s Vocational Resources, Inc., CCM, Inc., 324 Ill. App. 3d 380, 754 N.E.2d 363, 257 Ill. Dec. 705 (1st Dist. 2001), the Appellate Court considered a civil lawsuit directed by an injured worker against his employer’s workers’ compensation carrier and the vocational rehabilitation and job placement service that the workers’ compensation carrier hired in the claim. The complaint contained counts alleging negligence, malpractice, loss of consortium, and intentional infliction of emotional distress.

The plaintiff was a worker who was injured on the job on June 20, 1996. He worked for that employer for approximately six years and alleged that his work-related injury precluded him from returning to work. State Farm Fire & Casualty Company, the workers’ compensation carrier, hired a vocational rehabilitation and placement service to assist the claimant in finding other employment. The complaint alleges that the job placement service required the injured worker to make 25 “in-person employer contacts” per week, in addition to contacts provided by the job placement specialist. The complaint alleged that he applied to over 1,400 positions and was rejected or failed to obtain employment with any of them. He alleged that he was required to apply for businesses located over 60 miles from his residence and that he was required to apply for jobs beyond his training, experience, or jobs that were inappropriate for him from a physical standpoint. He alleged that he was required to apply for positions that were “demeaning” and jobs that did not provide enough income necessary to support his family. The defendants did not recommend retraining, and the plaintiff alleged that he was not dealt with fairly and in good faith.

The workers’ compensation carrier filed a Motion for Summary Judgment arguing that the plaintiff’s claims arose out of the Workers’ Compensation Act and were barred by the exclusive remedy provision in section 5 of the Illinois Workers’ Compensation Act. 820 ILCS 305/5. The vocational rehabilitation service also filed a Motion to Dismiss arguing that it was protected by the exclusive remedy provision of the Act.

The trial court granted the defendant’s Motion for Summary Judgment on all counts. The Appellate Court reversed, in part, and remanded. The Appellate Court ruled that the count alleging intentional infliction of emotional distress may state a cause of action. The Appellate

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Court examined a California decision, Unruh v. Truck Insurance Exchange, 7 Cal. 3d 616, 498 P.2d 1063 (1972), that ruled that a cause of action does exist for intentional infliction of emotional distress even though an employer would be immune from suit by an injured employee for the employer’s intentional acts. In essence, the California court reasoned that under the Dual Capacity Doctrine, the insurance carrier was not performing its proper role in the workers’ compensation scheme and had participated in an alleged deceitful course of conduct against the plaintiff. The Illinois Appellate Court also quoted Professor Larson, who focused on two factors: (1) that the plaintiff had two distinct injuries, i.e. the work-related injury and the second emotional injury, which resulted from the alleged intentional acts of the defendant separated by “long distance and time” from the first injury; and (2) that the major claim in the tort action was an intangible emotional damage and not a personal injury. 6 Larson, section 104.05 (2) at 104-25, 26.

Accordingly, the Appellate Court determined that the trial court erred in dismissing the claims based upon intentional conduct. The matter was remanded to the trial court for reinstatement of the plaintiff’s counts alleging intentional infliction of emotional distress and for the trial court to consider whether allegations of the complaints sufficiently pled such a theory.

In many workers’ compensation claims where job placement is instituted, it is frequently met with resistance and sometimes non-cooperation on the part of the claimant and his or her counsel. Unfortunately, this Appellate Court decision now provides those petitioner’s attorneys and claimants who resist job placement services with additional ammunition. It is recommended that when job placement services are instituted, they be closely reviewed to make sure that the placement services are conducted in the highest level of good faith with objective evidence showing that job placement is the goal, as opposed to any other motive.

5. Mental Stress Claims Denied

As workers’ compensation practitioners are aware, mental stress claims can be effectively defended here in Illinois. Two additional Appellate Court decisions have been identified which can assist the defense attorney in defending these claims.

In Skidis v. Industrial Comm’n, 309 Ill. App. 3d 720, 722 N.E.2d 1163, 243 Ill. Dec. 94 (5th Dist. 1999), reh’g denied (January 10, 2000), the petitioner alleged psychiatric illness which she claimed was due to increased workload and verbal abuse by a supervisor. The petitioner was a police dispatcher who alleged a mental disability from work-related stress. She claimed that over the last five years, her workload increased and that her supervisor was verbally abusive. She did not establish a sudden severe emotional shock.

The court concluded that her mental condition was a product of normal stress associated with employment along with problems arising from her relationships and events in her personal life. The Appellate Court held that the petitioner’s claim did not establish a compensable claim under the mental-mental standards in Illinois.

In Northwest Suburban Special Educ. Organization v. Industrial Comm’n, 312 Ill. App. 3d 783, 728 N.E.2d 498, 245 Ill. Dec. 416 (1st Dist. 2000), reh’g denied (April 14, 2000), the petitioner also

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alleged a stress claim. It was alleged that there was an altercation between the petitioner and a co-worker wherein the petitioner was not touched but apparently pushed another away from him. This was found not to constitute physical contact. It was nothing more than the usual employment tension and was not sufficient to establish a claim for mental disability under either a mental-mental theory or a physical-mental theory.

6. The Threat of Discharge Not Compensable in Mental Stress Claim

In Anderson v. Industrial Comm’n, 321 Ill. App. 3d 463, 748 N.E.2d 339, 254 Ill. Dec. 893 (5th Dist. 2001), the Appellate Court considered a mental stress claim filed by the petitioner. The petitioner was employed as an inspector for the respondent police department. He had a number of “run-ins” with the chief of police, and in 1991 he received an order that reassigned him from his position as an inspector to the position of sergeant in the department’s patrol division. This move resulted in a $6,000 reduction in annual salary.

According to the claimant, the chief of police allegedly told him he was going to “destroy” the claimant and told the claimant that he “better take out some more insurance.” The claimant testified that he interpreted those statements to be a threat on his life. Thereafter, the claimant saw his personal physician, who indicated that the claimant suffered from “job stress” and was to remain off of work. He was then seen by a psychiatrist, who restricted the claimant from work. This psychiatrist testified that the petitioner’s work environment was not totally responsible for his condition, but it was a “major factor in the intensity, severity, and duration of his illness.” The chief of police denied that he said these things to the claimant. He specifically denied threatening the claimant or telling the claimant that he needed to obtain insurance.

The arbitrator awarded the petitioner benefits and held that the threat was “beyond common and necessary stresses of employment.” The Industrial Commission reversed. Unlike the arbitrator, the Industrial Commission found that the claimant’s testimony that he had been threatened by the chief of police was not credible. The Industrial Commission noted that the claimant’s version of the events on the day of the threat was wholly uncorroborated, and there was no support in the records of his treating physician for that contention.

The circuit court affirmed the denial of benefits, as did the Appellate Court. In analyzing this “mental stress” claim, the Appellate Court noted what elements were required as set forth in Runion v. Industrial Comm’n, 245 Ill. App. 3d 470, 473, 615 N.E.2d 8, 185 Ill. Dec. 713 (5th Dist. 1993):

Recovery for non-traumatically induced mental disease is limited to those who can establish that: (1) the mental disorder arose in a situation of greater dimensions than the day-to-day emotional stress and tension which all employees must experience; (2) the conditions exist in reality, from an objective standpoint; and (3) the employment conditions, when compared to the non-employment conditions, were the “major contributory cause” of the mental disorder.

Runion, 245 Ill. App. 3d at 473.

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This case reaffirms prior case law which makes it difficult for claimants to establish compensable “mental-mental” stress claims here in Illinois. This is an area where defenses do exist, and it is imperative for employer attorneys to fully explore the claimant’s pre-accident/exposure mental history to identify other “major causes” to account for the alleged mental condition. V. IS WORK THE SOURCE OF DEPRESSIVE AND ANXIETY DISORDERS?

What is the contribution of working conditions and social support to the onset of depressive and anxiety disorders among male and female employees?

A. Abstract

Poor working conditions may be an important source of stress and may therefore contribute to the development of depressive and anxiety disorders. Social support may act as a buffer and protect against the development of depression or anxiety in the face of poor working conditions. With longitudinal data from the Netherlands Mental Health Survey and Incidence Study (NEMESIS), the effect of working conditions and social support on the incidence of depressive and anxiety disorders was examined among 2,646 working men and women, aged 18 through 65 years. Three dimensions of self-reported working conditions were assessed: psychological demands, decision latitude, and job security. Social support was assessed through validated scales for daily emotional support. About 10.5 percent of working women and 4.6 percent among working men developed an incident depressive and/or anxiety disorder over two years. Psychological demands predicted the incidence of depressive and anxiety disorders in both men and women. (RR per score increase = 2.29, 95% CI: 1.44-3.63), whereas decision latitude and job security did not. Social support protected against the incidence of depressive and anxiety disorders. This effect was stronger for men compared to women. Social support did not buffer the unfavorable mental effect of working conditions. Women were more likely to report low levels of decision latitude, whereas men reported higher psychological demands. Working conditions did not explain sex differences in the incidence of depressive and anxiety disorders.

© 2006 Elsevier Ltd. All rights reserved.

Inger Plaisier, Jeanne G.M. de Bruijin, Ron de Graaf, et al., Social Science & Medicine, Jan. 2007, at 401-410. VI. ADDITIONAL RESEARCH AND CONCLUSIONS IN THE MEDICAL LITERATURE –

REGARDING CAUSAL CONNECTION

• Working can be disadvantageous as well as beneficial for mental health depending, among other things, on the quality of working conditions. Harnois G., & Gabriel, P. Mental health and work: Impact, issues and good practices, Geneva, 2000.

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• One important aspect of working conditions is the security of the worker’s position: uncertainty about the employment position causes stress. Siegrist, J., Adverse health effects of high-effort/low-reward conditions, Journal of Occupational Health Psychology, 1996, 27-41.

• A good, stable social network that provides social support can positively influence mental health. Brown, D. R., & Gary, L. E., Stressful life events, social support networks, and the physical and mental health of urban black adults. Journal of Human Stress, 1987, 165-174.

• Incidence of depressive and anxiety disorders in women is approximately twice as high as among men. Alonso, J., Angermeyer, M. C., Bernert, S., Bruffaerts, R., Brugha, T. S., Bryson, H., et al. Prevalence of mental disorders in Europe: Results from the European Study of the Epidemiology of Mental Disorders (ESEMeD) project. Acta Psychiatrica Scandinavica Supplement, 2004, 21-27.

• Men report better working conditions than women. Blidt, C., & Michelsen, H. Gender differences in the effects from working conditions on mental health: A 4-year follow up. International Archive Occupational Environmental Health, 2002, 252-258.

• It has been suggested that because women not only receive, but also give more social support than men do, they may be more negatively affected by emotional strain of network members. Furher, R., Stansfeld, S. A., Chemali, J., & Shipley, M. J. Gender, social relations, and mental health: prospective findings from an occupational cohort (Whitehall II study). Social Science & Medicine, 1999, 77-87; Stansfeld, S. A., Fuhrer, R., & Shipley, M. J., Types of social support as predictors of psychiatric morbidity in a cohort of British Civil Servants (Whitehall II Study). Psychological Medicine, 1998, 881-892; Walen, H. R., & Lachman, M. E. Social support and strain from partner, family, and friends: Costs and benefits for men and women in adulthood. Journal of Social and Personal Relationships, 2000, 5-30.

• Surprisingly, job insecurity was an indicator for the incidence of anxiety among women, and not among men. Although men work more hours than women do, imminent work loss has more impact on women’s mental health. Evans, O., & Steptoe, A., The contribution of gender-role orientation, work factors, and home stressors to psychological well-being and sickness absence in male- and female-dominated occupational groups. Social Science & Medicine, 2002, 481-492; Pugliesi, K., Gender and work stress: Differential exposure and vulnerability. Journal of Gender, Culture, and Health, 1999, 97-117; Roxburgh, S. Gender differences in work and well-being: effects of exposure and vulnerability. Journal of Health and Social Behavior, 1996, 265-277.

• In several studies the hypothesis that social support by co-workers can buffer the effect of poor working conditions was not supported. Doef, M. vander. & Maes, S., The job demand-control (-support) model and psychological well-being: A review of 20 years of empirical research. Work and Stress, 1999, 87-114; Sanne B., Mykletun, A., Dahl, A. A., Moen, B. E., & Tell, G. S., Testing the job demand-control support model with anxiety and depression as outcomes: The Hordaland health study. Occupational Medicine, 2005, 463-473.

• A 29-year Yale study concluded that an optimistic attitude is more important to health than blood pressure, cholesterol level, smoking, or obesity. With an optimistic attitude, one can live an average of seven and a half years longer.

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Kevin J. Luther - Partner

Kevin has spent his entire legal career at Heyl Royster, beginning in 1984 in the Peoria office. He has been in the Rockford office since it opened in 1985. Kevin is currently in charge of the firm’s workers’ compensation practice group. Kevin concentrates his practice in the areas of workers' compensation, employment law, and employer liability. He supervises the workers' compensation, employment law, and employer liability practice groups in the Rockford office. He has represented numerous employers before the Illinois Human Rights Commission and has arbitrated hundreds of workers' compensation claims. He has also tried numerous liability cases to jury verdict. Kevin is a member of the Winnebago County Bar Association in its workers' compensation and trial sections. He is a member of the State Bar of Wisconsin, Illinois State Bar Association, and the American Bar Association, and has actively participated in sections relevant to his practice areas. He is a member of the Illinois Association of Defense Trial Counsel (Board of Directors). Kevin is the contributing editor of the Workers' Compensation Report for the Illinois Defense Counsel Quarterly. Significant Cases • Arlene Bernardoni v. Huntsman Chemical Corp.,

Applied Frye principle to Illinois workers' compensation in the defense of an occupational disease/exposure claim.

• Richard Urbanski v. Deichmueller Construction Co., Defined jurisdictional issue in workers' compensation review.

Selected Publications • "Economic Disability and Earning Capacity: A

Historical Analysis for Wage Differential Claims," Illinois Defense Counsel Quarterly (2006)

• "The Normal Daily Activity Exception to Workers' Compensation Claims," Illinois Defense Counsel Quarterly (2004)

• "The Age Discrimination in Employment Act: A Seventh Circuit Perspective," Illinois Defense Counsel Quarterly (1998)

• "The Impact of Federal Legislation on the Employer/Employee Relationship in Illinois," Illinois Defense Counsel Quarterly (1996)

• “An Overview of Repetitive Trauma Claims,” Illinois Bar Journal (1992)

Public Speaking • Kevin has spoken to numerous industry and

attorney groups throughout the years. Professional Recognition • Martindale-Hubbell AV rated • Selected as a Leading Lawyer in Illinois. Only


• Named to the 2009 Illinois Super Lawyers list. The Super Lawyers selection process is based on peer recognition and professional achievement. Only five percent of the lawyers in each state earn this designation.

Professional Associations • Winnebago County Bar Association • Illinois State Bar Association • State Bar of Wisconsin • Illinois Association of Defense Trial Counsel

(Board of Directors) Court Admissions • State Courts of Illinois and Wisconsin • United States District Court, Northern and

Central Districts of Illinois • United States Court of Appeals, Seventh Circuit

Education • Juris Doctorate, Washington University School

of Law, 1984 • Bachelor of Arts-Economics and Mathematics

(Summa Cum Laude), Blackburn University, 1981


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MEDICAL NECESSITY IN AN ECONOMIC SLOWDOWN: CONTROLLING MEDICAL TREATMENT COSTS

Presented and Prepared by: James M. Voelker

[email protected] Peoria, Illinois • 309.676.0400




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I. INTRODUCTION ............................................................................................................................................ E-4

A. Section 8(a) B 820 ILCS 305/8(a), 8(j), 8.2, 8.7, 12 ............................................................. E-4

1. Section 8(a) − Medical Benefits ................................................................................ E-4 2. Section 8(j) − Group Benefits .................................................................................... E-6 3. Section 8.2 − Fee Schedule ........................................................................................ E-7 4. Section 8.7 − Utilization Review ............................................................................ E-10 5. Section 12 – IME .......................................................................................................... E-12

B. Key Elements of Statute ........................................................................................................... E-13

1. Lifetime Benefits .......................................................................................................... E-13 2. Two Doctor Rule .......................................................................................................... E-13 3. Reasonable and Necessary Charges .................................................................... E-14 4. Release of Records ..................................................................................................... E-14 5. Payment Is Not an Admission of Liability .......................................................... E-14 6. Credit for Group Benefits ......................................................................................... E-14 7. Fee Schedule ................................................................................................................. E-15 8. Utilization Review ........................................................................................................ E-16

a) Definition ......................................................................................................... E-16 b) Utilization Review Provider Requirements ......................................... E-16 c) Types of Utilization Review ...................................................................... E-17

(1) Prospective − Before the Treatment ...................................... E-17 (2) Concurrent Utilization Review .................................................. E-18 (3) Retrospective Utilization Review ............................................. E-18

d) Utilization Review as Evidence ................................................................ E-18 e) Penalties........................................................................................................... E-18

9. Section 12 IME.............................................................................................................. E-19 10. Panel Physicians ........................................................................................................... E-19

II. AREAS OF DISPUTE AND DEFENSE STRATEGIES ........................................................................... E-20

A. Areas of Dispute ......................................................................................................................... E-20

1. Unreasonably High Charges ................................................................................... E-20 2. Excessive Treatment ................................................................................................... E-20 3. Unnecessary Surgery ................................................................................................. E-21 4. Excessive Referrals B Two Doctor Rule ................................................................ E-22

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B. Strategies to Limit Excessive Treatment and Move the File ....................................... E-22

1. Communicate With the Provider ........................................................................... E-22 2. Treating Physician Opinions .................................................................................... E-22 3. Section 12 IME Opinions .......................................................................................... E-23 4. Utilization Review ........................................................................................................ E-23 5. Nurse Case Managers ................................................................................................ E-24 6. Group Medical .............................................................................................................. E-25 7. Public Aid ....................................................................................................................... E-25 8. Depositions .................................................................................................................... E-25 9. Provider Compromises .............................................................................................. E-26 10. Pre-Trial ........................................................................................................................... E-26 11. Trial ................................................................................................................................... E-26

III. CASE LAW .................................................................................................................................................... E-27

A. Home Modification ................................................................................................................... E-27 B. Two Doctor Rule ......................................................................................................................... E-27 C. Travel Expenses ........................................................................................................................... E-28 D. Finance and Collection Charges ........................................................................................... E-29 E. Reasonable and Necessary Charges ................................................................................... E-29 F. Direct Action by Medical Providers ..................................................................................... E-30 G. Admissions of Liability .............................................................................................................. E-30 H. Reimbursement ........................................................................................................................... E-30 I. Services Provided by Spouse or Significant Other ........................................................ E-30 J. Copying Expenses ...................................................................................................................... E-31 K. Prospective Expenses ................................................................................................................ E-31 L. Penalties......................................................................................................................................... E-32 M. Utilization Review ....................................................................................................................... E-32

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I. INTRODUCTION

Liability for medical expenses under the Illinois Workers' Compensation Act is often one of the largest exposures for employers and insurance companies in a workers’ compensation claim. This article outlines the employers’ liability for medical expenses under the Act and discusses strategies, defenses and case law aimed at mitigating the liability for medical expenses under the Act. The sections of the Illinois Workers' Compensation Act related to the respondent’s liability for medical expenses are listed below.

A. Section 8(a) B 820 ILCS 305/8(a), 8(j), 8.2, 8.7, 12

1. Section 8(a) − Medical Benefits

(820 ILCS 305/8) (from Ch. 48, par. 138.8) Sec. 8. The amount of compensation which shall be paid to the employee for an

accidental injury not resulting in death is: (a) The employer shall provide and pay the negotiated rate, if applicable, or the lesser of

the health care provider's actual charges or according to a fee schedule, subject to Section 8.2, in effect at the time the service was rendered for all the necessary first aid, medical and surgical services, and all necessary medical, surgical and hospital services thereafter incurred, limited, however, to that which is reasonably required to cure or relieve from the effects of the accidental injury. If the employer does not dispute payment of first aid, medical, surgical, and hospital services, the employer shall make such payment to the provider on behalf of the employee. The employer shall also pay for treatment, instruction and training necessary for the physical, mental and vocational rehabilitation of the employee, including all maintenance costs and expenses incidental thereto. If as a result of the injury the employee is unable to be self sufficient the employer shall further pay for such maintenance or institutional care as shall be required.

The employee may at any time elect to secure his own physician, surgeon and hospital services at the employer's expense, or,

Upon agreement between the employer and the employees, or the employees' exclusive representative, and subject to the approval of the Illinois Workers' Compensation Commission, the employer shall maintain a list of physicians, to be known as a Panel of Physicians, who are accessible to the employees. The employer shall post this list in a place or places easily accessible to his employees. The employee shall have the right to make an alternative choice of physician from such Panel if he is not satisfied with the physician first selected. If, due to the nature of the injury or its occurrence away from the employer's place of business, the employee is unable to make a selection from the Panel, the selection process from the Panel shall not

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apply. The physician selected from the Panel may arrange for any consultation, referral or other specialized medical services outside the Panel at the employer's expense. Provided that, in the event the Commission shall find that a doctor selected by the employee is rendering improper or inadequate care, the Commission may order the employee to select another doctor certified or qualified in the medical field for which treatment is required. If the employee refuses to make such change the Commission may relieve the employer of his obligation to pay the doctor's charges from the date of refusal to the date of compliance.

Any vocational rehabilitation counselors who provide service under this Act shall have appropriate certifications which designate the counselor as qualified to render opinions relating to vocational rehabilitation. Vocational rehabilitation may include, but is not limited to, counseling for job searches, supervising a job search program, and vocational retraining including education at an accredited learning institution. The employee or employer may petition to the Commission to decide disputes relating to vocational rehabilitation and the Commission shall resolve any such dispute, including payment of the vocational rehabilitation program by the employer.

The maintenance benefit shall not be less than the temporary total disability rate determined for the employee. In addition, maintenance shall include costs and expenses incidental to the vocational rehabilitation program.

When the employee is working light duty on a part time basis or full time basis and earns less than he or she would be earning if employed in the full capacity of the job or jobs, then the employee shall be entitled to temporary partial disability benefits. Temporary partial disability benefits shall be equal to two thirds of the difference between the average amount that the employee would be able to earn in the full performance of his or her duties in the occupation in which he or she was engaged at the time of accident and the net amount which he or she is earning in the modified job provided to the employee by the employer or in any other job that the employee is working.

Every hospital, physician, surgeon or other person rendering treatment or services in accordance with the provisions of this Section shall upon written request furnish full and complete reports thereof to, and permit their records to be copied by, the employer, the employee or his dependents, as the case may be, or any other party to any proceeding for compensation before the Commission, or their attorneys.

Notwithstanding the foregoing, the employer's liability to pay for such medical services selected by the employee shall be limited to:

(1) all first aid and emergency treatment; plus (2) all medical, surgical and hospital services provided by the physician, surgeon

or hospital initially chosen by the employee or by any other physician, consultant, expert, institution or other provider of services recommended by said initial service provider or any subsequent provider of medical services in the chain of referrals from said initial service provider; plus

(3) all medical, surgical and hospital services provided by any second physician, surgeon or hospital subsequently chosen by the employee or by any other physician, consultant, expert, institution or other provider of services recommended by said second service provider or any subsequent provider of medical services in the chain of referrals from said second service provider. Thereafter the employer shall select and pay for all

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necessary medical, surgical and hospital treatment and the employee may not select a provider of medical services at the employer's expense unless the employer agrees to such selection. At any time the employee may obtain any medical treatment he desires at his own expense. This paragraph shall not affect the duty to pay for rehabilitation referred to above.

When an employer and employee so agree in writing, nothing in this Act prevents an

employee whose injury or disability has been established under this Act, from relying in good faith, on treatment by prayer or spiritual means alone, in accordance with the tenets and practice of a recognized church or religious denomination, by a duly accredited practitioner thereof, and having nursing services appropriate therewith, without suffering loss or diminution of the compensation benefits under this Act. However, the employee shall submit to all physical examinations required by this Act. The cost of such treatment and nursing care shall be paid by the employee unless the employer agrees to make such payment.

Where the accidental injury results in the amputation of an arm, hand, leg or foot, or the enucleation of an eye, or the loss of any of the natural teeth, the employer shall furnish an artificial of any such members lost or damaged in accidental injury arising out of and in the course of employment, and shall also furnish the necessary braces in all proper and necessary cases. In cases of the loss of a member or members by amputation, the employer shall, whenever necessary, maintain in good repair, refit or replace the artificial limbs during the lifetime of the employee. Where the accidental injury accompanied by physical injury results in damage to a denture, eye glasses or contact eye lenses, or where the accidental injury results in damage to an artificial member, the employer shall replace or repair such denture, glasses, lenses, or artificial member.

The furnishing by the employer of any such services or appliances is not an admission of liability on the part of the employer to pay compensation.

The furnishing of any such services or appliances or the servicing thereof by the employer is not the payment of compensation.

2. Section 8(j) − Group Benefits

8(j) 1. In the event the injured employee receives benefits, including medical, surgical or hospital benefits under any group plan covering non occupational disabilities contributed to wholly or partially by the employer, which benefits should not have been payable if any rights of recovery existed under this Act, then such amounts so paid to the employee from any such group plan as shall be consistent with, and limited to, the provisions of paragraph 2 hereof, shall be credited to or against any compensation payment for temporary total incapacity for work or any medical, surgical or hospital benefits made or to be made under this Act. In such event, the period of time for giving notice of accidental injury and filing application for adjustment of claim does not commence to run until the termination of such payments. This paragraph does not apply to payments made under any group plan which would have been payable irrespective of an accidental injury under this Act. Any employer receiving such credit shall keep such employee safe and harmless from any and all claims or liabilities that may be made against him by reason of having received such payments only to the extent of such credit.

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Any excess benefits paid to or on behalf of a State employee by the State Employees' Retirement System under Article 14 of the Illinois Pension Code on a death claim or disputed disability claim shall be credited against any payments made or to be made by the State of Illinois to or on behalf of such employee under this Act, except for payments for medical expenses which have already been incurred at the time of the award. The State of Illinois shall directly reimburse the State Employees' Retirement System to the extent of such credit.

2. Nothing contained in this Act shall be construed to give the employer or the insurance carrier the right to credit for any benefits or payments received by the employee other than compensation payments provided by this Act, and where the employee receives payments other than compensation payments, whether as full or partial salary, group insurance benefits, bonuses, annuities or any other payments, the employer or insurance carrier shall receive credit for each such payment only to the extent of the compensation that would have been payable during the period covered by such payment.

3. The extension of time for the filing of an Application for Adjustment of Claim as provided in paragraph 1 above shall not apply to those cases where the time for such filing had expired prior to the date on which payments or benefits enumerated herein have been initiated or resumed. Provided however that this paragraph 3 shall apply only to cases wherein the payments or benefits hereinabove enumerated shall be received after July 1, 1969. (Source: P.A. 93 721, eff. 1 1 05; 94 277, eff. 7 20 05; 94 695, eff. 11 16 05.)

3. Section 8.2 − Fee Schedule

820 ILCS 305/8.2) Sec. 8.2. Fee schedule. (a) Except as provided for in subsection (c), for procedures, treatments, or services

covered under this Act and rendered or to be rendered on and after February 1, 2006, the maximum allowable payment shall be 90% of the 80th percentile of charges and fees as determined by the Commission utilizing information provided by employers' and insurers' national databases, with a minimum of 12,000,000 Illinois line item charges and fees comprised of health care provider and hospital charges and fees as of August 1, 2004 but not earlier than August 1, 2002. These charges and fees are provider billed amounts and shall not include discounted charges. The 80th percentile is the point on an ordered data set from low to high such that 80% of the cases are below or equal to that point and at most 20% are above or equal to that point. The Commission shall adjust these historical charges and fees as of August 1, 2004 by the Consumer Price Index U for the period August 1, 2004 through September 30, 2005. The Commission shall establish fee schedules for procedures, treatments, or services for hospital inpatient, hospital outpatient, emergency room and trauma, ambulatory surgical treatment centers, and professional services. These charges and fees shall be designated by geozip or any smaller geographic unit. The data shall in no way identify or tend to identify any patient, employer, or health care provider. As used in this Section, "geozip" means a three digit zip code based on data similarities, geographical similarities, and frequencies. A geozip does not cross state boundaries. As used in this Section, "three digit zip code" means a geographic area in which all zip codes have the same first 3 digits. If a geozip does not have the necessary number of charges and fees to calculate a valid percentile for a specific procedure, treatment, or service,

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the Commission may combine data from the geozip with up to 4 other geozips that are demographically and economically similar and exhibit similarities in data and frequencies until the Commission reaches 9 charges or fees for that specific procedure, treatment, or service. In cases where the compiled data contains less than 9 charges or fees for a procedure, treatment, or service, reimbursement shall occur at 76% of charges and fees as determined by the Commission in a manner consistent with the provisions of this paragraph. The Commission has the authority to set the maximum allowable payment to providers of out of state procedures, treatments, or services covered under this Act in a manner consistent with this Section. Not later than September 30 in 2006 and each year thereafter, the Commission shall automatically increase or decrease the maximum allowable payment for a procedure, treatment, or service established and in effect on January 1 of that year by the percentage change in the Consumer Price Index U for the 12 month period ending August 31 of that year. The increase or decrease shall become effective on January 1 of the following year. As used in this Section, "Consumer Price Index U" means the index published by the Bureau of Labor Statistics of the U.S. Department of Labor, that measures the average change in prices of all goods and services purchased by all urban consumers, U.S. city average, all items, 1982 84=100.

(b) Notwithstanding the provisions of subsection (a), if the Commission finds that there is a significant limitation on access to quality health care in either a specific field of health care services or a specific geographic limitation on access to health care, it may change the Consumer Price Index U increase or decrease for that specific field or specific geographic limitation on access to health care to address that limitation.

(c) The Commission shall establish by rule a process to review those medical cases or outliers that involve extra ordinary treatment to determine whether to make an additional adjustment to the maximum payment within a fee schedule for a procedure, treatment, or service.

(d) When a patient notifies a provider that the treatment, procedure, or service being sought is for a work related illness or injury and furnishes the provider the name and address of the responsible employer, the provider shall bill the employer directly. The employer shall make payment and providers shall submit bills and records in accordance with the provisions of this Section. All payments to providers for treatment provided pursuant to this Act shall be made within 60 days of receipt of the bills as long as the claim contains substantially all the required data elements necessary to adjudicate the bills. In the case of nonpayment to a provider within 60 days of receipt of the bill which contained substantially all of the required data elements necessary to adjudicate the bill or nonpayment to a provider of a portion of such a bill up to the lesser of the actual charge or the payment level set by the Commission in the fee schedule established in this Section, the bill, or portion of the bill, shall incur interest at a rate of 1% per month payable to the provider.

(e) Except as provided in subsections (e 5), (e 10), and (e 15), a provider shall not hold an employee liable for costs related to a non disputed procedure, treatment, or service rendered in connection with a compensable injury. The provisions of subsections (e 5), (e 10), (e 15), and (e 20) shall not apply if an employee provides information to the provider regarding participation in a group health plan. If the employee participates in a group health plan, the provider may submit a claim for services to the group health plan. If the claim for service is covered by the group health plan, the employee's responsibility shall be limited to applicable deductibles, co

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payments, or co insurance. Except as provided under subsections (e 5), (e 10), (e 15), and (e 20), a provider shall not bill or otherwise attempt to recover from the employee the difference between the provider's charge and the amount paid by the employer or the insurer on a compensable injury.

(e 5) If an employer notifies a provider that the employer does not consider the illness or injury to be compensable under this Act, the provider may seek payment of the provider's actual charges from the employee for any procedure, treatment, or service rendered. Once an employee informs the provider that there is an application filed with the Commission to resolve a dispute over payment of such charges, the provider shall cease any and all efforts to collect payment for the services that are the subject of the dispute. Any statute of limitations or statute of repose applicable to the provider's efforts to collect payment from the employee shall be tolled from the date that the employee files the application with the Commission until the date that the provider is permitted to resume collection efforts under the provisions of this Section.

(e 10) If an employer notifies a provider that the employer will pay only a portion of a bill for any procedure, treatment, or service rendered in connection with a compensable illness or disease, the provider may seek payment from the employee for the remainder of the amount of the bill up to the lesser of the actual charge, negotiated rate, if applicable, or the payment level set by the Commission in the fee schedule established in this Section. Once an employee informs the provider that there is an application filed with the Commission to resolve a dispute over payment of such charges, the provider shall cease any and all efforts to collect payment for the services that are the subject of the dispute. Any statute of limitations or statute of repose applicable to the provider's efforts to collect payment from the employee shall be tolled from the date that the employee files the application with the Commission until the date that the provider is permitted to resume collection efforts under the provisions of this Section.

(e 15) When there is a dispute over the compensability of or amount of payment for a procedure, treatment, or service, and a case is pending or proceeding before an Arbitrator or the Commission, the provider may mail the employee reminders that the employee will be responsible for payment of any procedure, treatment or service rendered by the provider. The reminders must state that they are not bills, to the extent practicable include itemized information, and state that the employee need not pay until such time as the provider is permitted to resume collection efforts under this Section. The reminders shall not be provided to any credit rating agency. The reminders may request that the employee furnish the provider with information about the proceeding under this Act, such as the file number, names of parties, and status of the case. If an employee fails to respond to such request for information or fails to furnish the information requested within 90 days of the date of the reminder, the provider is entitled to resume any and all efforts to collect payment from the employee for the services rendered to the employee and the employee shall be responsible for payment of any outstanding bills for a procedure, treatment, or service rendered by a provider.

(e 20) Upon a final award or judgment by an Arbitrator or the Commission, or a settlement agreed to by the employer and the employee, a provider may resume any and all efforts to collect payment from the employee for the services rendered to the employee and the employee shall be responsible for payment of any outstanding bills for a procedure, treatment, or service rendered by a provider as well as the interest awarded under subsection (d) of this Section. In the case of a procedure, treatment, or service deemed compensable, the provider

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shall not require a payment rate, excluding the interest provisions under subsection (d), greater than the lesser of the actual charge or the payment level set by the Commission in the fee schedule established in this Section. Payment for services deemed not covered or not compensable under this Act is the responsibility of the employee unless a provider and employee have agreed otherwise in writing. Services not covered or not compensable under this Act are not subject to the fee schedule in this Section.

(f) Nothing in this Act shall prohibit an employer or insurer from contracting with a health care provider or group of health care providers for reimbursement levels for benefits under this Act different from those provided in this Section.

(g) On or before January 1, 2010 the Commission shall provide to the Governor and General Assembly a report regarding the implementation of the medical fee schedule and the index used for annual adjustment to that schedule as described in this Section. (Source: P.A. 94 277, eff. 7 20 05; 94 695, eff. 11 16 05.)

4. Section 8.7 − Utilization Review

(820 ILCS 305/8.7) Sec. 8.7. Utilization review programs. (a) As used in this Section: "Utilization review" means the evaluation of proposed or provided health care services to

determine the appropriateness of both the level of health care services medically necessary and the quality of health care services provided to a patient, including evaluation of their efficiency, efficacy, and appropriateness of treatment, hospitalization, or office visits based on medically accepted standards. The evaluation must be accomplished by means of a system that identifies the utilization of health care services based on standards of care or nationally recognized peer review guidelines as well as nationally recognized evidence based upon standards as provided in this Act. Utilization techniques may include prospective review, second opinions, concurrent review, discharge planning, peer review, independent medical examinations, and retrospective review (for purposes of this sentence, retrospective review shall be applicable to services rendered on or after July 20, 2005). Nothing in this Section applies to prospective review of necessary first aid or emergency treatment.

(b) No person may conduct a utilization review program for workers' compensation services in this State unless once every 2 years the person registers the utilization review program with the Department of Financial and Professional Regulation and certifies compliance with the Workers' Compensation Utilization Management standards or Health Utilization Management Standards of URAC sufficient to achieve URAC accreditation or submits evidence of accreditation by URAC for its Workers' Compensation Utilization Management Standards or Health Utilization Management Standards. Nothing in this Act shall be construed to require an employer or insurer or its subcontractors to become URAC accredited.

(c) In addition, the Secretary of Financial and Professional Regulation may certify alternative utilization review standards of national accreditation organizations or entities in order for plans to comply with this Section. Any alternative utilization review standards shall meet or exceed those standards required under subsection (b).

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(d) This registration shall include submission of all of the following information regarding utilization review program activities:

(1) The name, address, and telephone number of the utilization review programs. (2) The organization and governing structure of the utilization review programs. (3) The number of lives for which utilization review is conducted by each

utilization review program. (4) Hours of operation of each utilization review program. (5) Description of the grievance process for each utilization review program. (6) Number of covered lives for which utilization review was conducted for the

previous calendar year for each utilization review program. (7) Written policies and procedures for protecting confidential information

according to applicable State and federal laws for each utilization review program. (e) A utilization review program shall have written procedures to ensure that patient

specific information obtained during the process of utilization review will be: (1) kept confidential in accordance with applicable State and federal laws; and (2) shared only with the employee, the employee's designee, and the employee's health

care provider, and those who are authorized by law to receive the information. Summary data shall not be considered confidential if it does not provide information to allow identification of individual patients or health care providers.

Only a health care professional may make determinations regarding the medical necessity of health care services during the course of utilization review.

When making retrospective reviews, utilization review programs shall base reviews solely on the medical information available to the attending physician or ordering provider at the time the health care services were provided.

(f) If the Department of Financial and Professional Regulation finds that a utilization review program is not in compliance with this Section,

the Department shall issue a corrective action plan and allow a reasonable amount of time for compliance with the plan. If the utilization review program does not come into compliance, the Department may issue a cease and desist order. Before issuing a cease and desist order under this Section, the Department shall provide the utilization review program with a written notice of the reasons for the order and allow a reasonable amount of time to supply additional information demonstrating compliance with the requirements of this Section and to request a hearing. The hearing notice shall be sent by certified mail, return receipt requested, and the hearing shall be conducted in accordance with the Illinois Administrative Procedure Act. (g) A utilization review program subject to a corrective action may continue to conduct business until a final decision has been issued by the Department.

(h) The Secretary of Financial and Professional Regulation may by rule establish a registration fee for each person conducting a

utilization review program. (i) A utilization review will be considered by the Commission, along with all other

evidence and in the same manner as all other evidence, in the determination of the reasonableness and necessity of the medical bills or treatment. Nothing in this Section shall be construed to diminish the rights of employees to reasonable and necessary medical treatment

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or employee choice of health care provider under Section 8(a) or the rights of employers to medical examinations under Section 12.

(j) When an employer denies payment of or refuses to authorize payment of first aid, medical, surgical, or hospital services under Section 8(a) of this Act, if that denial or refusal to authorize complies with a utilization review program registered under this Section and complies with all other requirements of this Section, then there shall be a rebuttable presumption that the employer shall not be responsible for payment of additional compensation pursuant to Section 19(k) of this Act and if that denial or refusal to authorize does not comply with a utilization review program registered under this Section and does not comply with all other requirements of this Section, then that will be considered by the Commission, along with all other evidence and in the same manner as all other evidence, in the determination of whether the employer may be responsible for the payment of additional compensation pursuant to Section 19(k) of this Act. (Source: P.A. 94 277, eff. 7 20 05; 94 695, eff. 11 16 05.)

5. Section 12 − IME

(820 ILCS 305/12) (from Ch. 48, par. 138.12) Sec. 12. An employee entitled to receive disability payments shall be required, if

requested by the employer, to submit himself, at the expense of the employer, for examination to a duly qualified medical practitioner or surgeon selected by the employer, at any time and place reasonably convenient for the employee, either within or without the State of Illinois, for the purpose of determining the nature, extent and probable duration of the injury received by the employee, and for the purpose of ascertaining the amount of compensation which may be due the employee from time to time for disability according to the provisions of this Act. An employee may also be required to submit himself for examination by medical experts under subsection (c) of Section 19. An employer requesting such an examination, of an employee residing within the State of Illinois, shall deliver to the employee with the notice of the time and place of examination sufficient money to defray the necessary expense of travel by the most convenient means to and from the place of examination, and the cost of meals necessary during the trip, and if the examination or travel to and from the place of examination causes any loss of working time on the part of the employee, the employer shall reimburse him for such loss of wages upon the basis of his average daily wage. Such examination shall be made in the presence of a duly qualified medical practitioner or surgeon provided and paid for by the employee, if such employee so desires.

In all cases where the examination is made by a surgeon engaged by the employer, and the injured employee has no surgeon present at such examination, it shall be the duty of the surgeon making the examination at the instance of the employer to deliver to the injured employee, or his representative, a statement in writing of the condition and extent of the injury to the same extent that said surgeon reports to the employer and the same shall be an exact copy of that furnished to the employer, said copy to be furnished the employee, or his representative as soon as practicable but not later than 48 hours before the time the case is set for hearing. Such delivery shall be made in person either to the employee or his representative,

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or by registered mail to either, and the receipt of either shall be proof of such delivery. If such surgeon refuses to furnish the employee with such statement to the same extent as that furnished the employer said surgeon shall not be permitted to testify at the hearing next following said examination.

If the employee refuses so to submit himself to examination or unnecessarily obstructs the same, his right to compensation payments shall be temporarily suspended until such examination shall have taken place, and no compensation shall be payable under this Act for such period.

It shall be the duty of surgeons treating an injured employee who is likely to die, and treating him at the instance of the employer, to have called in another surgeon to be designated and paid for by either the injured employee or by the person or persons who would become his beneficiary or beneficiaries, to make an examination before the death of such injured employee.

In all cases where the examination is made by a surgeon engaged by the injured employee, and the employer has no surgeon present at such examination, it shall be the duty of the surgeon making the examination at the instance of the employee, to deliver to the employer, or his representative, a statement in writing of the condition and extent of the injury to the same extent that said surgeon reports to the employee and the same shall be an exact copy of that furnished to the employee, said copy to be furnished the employer, or his representative, as soon as practicable but not later than 48 hours before the time the case is set for hearing. Such delivery shall be made in person either to the employer, or his representative, or by registered mail to either, and the receipt of either shall be proof of such delivery. If such surgeon refuses to furnish the employer with such statement to the same extent as that furnished the employee, said surgeon shall not be permitted to testify at the hearing next following said examination. (Source: P.A. 94 277, eff. 7 20 05.)

B. Key Elements of Statute

1. Lifetime Benefits

Once a claim has been ruled compensable, the respondent is liable for reasonable medical expenses relating to the occupational injury for the life of the petitioner. These rights may be waived by the petitioner by contract when a case is settled. Lifetime benefits only apply to treatment required to cure or relieve the work-related injury. Medical benefits include first aid, emergency, medical, surgical and hospital services provided by the physician selected by the petitioner. Benefits also include artificial members, braces, glasses, dentures, lenses and the cost of repair of such devices in the future. Necessary home modification expenses are also compensable when the injury requires such accommodations.

2. Two Doctor Rule

The petitioner has the right to select two physicians of his/her choice. A referral from the first physician and any physician in the same chain counts as one choice by the petitioner. As a result, the petitioner can see an unlimited number of physicians of his/her choice if he/she

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obtains a referral from one of the physicians in the chain of referral. (Emergency room treatment or first aid is not a choice.)

3. Reasonable and Necessary Charges

The Act specifically limits the liability of the employer to reasonable and necessary treatments and charges.

4. Release of Records

Section 8(a) requires all medical providers to furnish complete medical records relating to a workers’ compensation claim to the employer upon request.

5. Payment Is Not an Admission of Liability

The Act specifically states that payment of medical expenses under the Act is not an admission of liability on the part of an employer to pay compensation. Despite that fact, there are times when an arbitrator will perceive payment of medical as an indication of the seriousness of the respondent=s defense. This depends on the facts of each case. If benefits are paid for a period of time and a defense is discovered negating accident, causation or some other issue, the best course of action is to immediately deny the claim. An effective trial presentation will explain to the arbitrator why benefits were suspended and negate any false perception on the part of the arbitrator.

6. Credit for Group Benefits

Section 8(j)(1) provides that when an employee receives non-occupational medical or disability payments which would not have been payable if rights to recovery existed under the Act, then the employer is entitled to a credit for such payments against any award for temporary total disability or medical benefits. Pursuant to the statutory language, the employer must contribute in part to the premium for the medical or group disability coverage in order to obtain the credit. Where a credit is taken by the employer, the statute provides that the employer shall automatically hold the employee harmless for any claims or liabilities (by the group insurer) for payments received by the employee. The employer cannot take a credit where the group medical or disability payments would have been payable to the employee irrespective of an accidental injury under this Act. A little known aspect of section 8(j) is that payments of group health by a qualifying carrier act to toll the statue of limitations for the filing of an application for adjustment of claim and the 45 day notice provision of the Act. These limitation periods are tolled during the time group health benefits are being paid. Such tolling will not occur, however, where the employee does not acquire group medical or disability benefits until after the statute has run.

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7. Fee Schedule

The 2005 amendments to the Illinois Workers’ Compensation Act created a Medical Fee Schedule, which outlines the amounts that medical providers may charge for procedures, treatments, or services covered under this Act. The fee schedule applies to medical expenses covered under the Act rendered on or after February 1, 2006. Section 8.2(a) of the Act provides that the maximum allowable payment for procedures, treatments, or services covered under the Act shall be 90 percent of the 80th percentile of charges and fees, as determined by the Commission, from charges for those services between August 1, 2002, and August 1, 2004. The Commission will adjust these historical charges and fees as of August 1, 2004, by the Consumer Price Index for all goods and services (the CPI-U) and will do this on an annual basis for the period of August 4 to the following September 30 of each year, to become effective on January 1 of the following year. Charges are designated by Geozip, which are the first three numbers of a zip code. For procedures where insufficient data is available for a procedure, treatment, or service, reimbursement shall occur at 76 percent of the charges and fees. The Commission has the authority to set maximum allowable payment to providers with out-of-state procedures, treatment, and services. According to the current Fee Schedule, out of state procedures are to be paid at the lesser of 76 percent of the charges or the Medical Fee Schedule amount from the state where the services took place, should that state have a Medical Fee Schedule. Should the Commission find that there is a significant limitation on access to quality healthcare, it may change the CPI-U increase or decrease for the specific field or geographic area in question. The Commission can make additional adjustments to the maximum payment for cases that involve extraordinary treatment. Once the employee notifies the provider that the treatment is claimed to be work-related, the provider shall bill the employer directly. Payments on non-disputed claims must be made within 60 days of receipt of the bill as long as the claim contains substantially all of the required data elements necessary to adjudicate the bills. Providers may charge one percent interest per month on bills after 60 days where this requirement has been met. Providers cannot balance bill an employee for services rendered in connection with a compensable injury, nor can they attempt to recover from the employee the difference between

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their charge and the amount paid pursuant to the Medical Fee Schedule on a compensable injury. Where the employee notifies the provider that the claim is in dispute, the provider may seek payment from the employee at that time. Once an employee informs the provider there is an Application for Adjustment of Claim on file with the Commission, the medical provider must cease collection efforts until the conclusion of the case, but the statute of limitations is tolled from the date the employee files the Application to permit the provider to resume collection efforts at a later date if necessary. When there is a dispute over compensability and a case is pending before the Commission, the provider may mail the employee reminders that the employee will be responsible for payment of the procedure. These reminders must indicate they are not bills, must include itemized information to the extent practicable, and may not be provided to any credit rating agency. Upon a final award or a settlement agreed to by the employer and the employee, a provider may resume any and all efforts to collect payment from the employee of any outstanding bills. Payment for services deemed not covered or not compensable under the Act is the responsibility of the employee and are not subject to the Medical Fee Schedule. The recent amendments do not prohibit an employer or insurer from contracting with a healthcare provider for reimbursement levels different from those provided in the Medical Fee Schedule. The Illinois Medical Fee Schedule is published on the Commissions’ website at http://www.state.il.us/agency/iic/ The Medical Fee Schedule does not apply to charges for medical evaluations under section 12.

8. Utilization Review

a) Definition

Utilization review is the evaluation of proposed or provided health care services to determine the appropriateness of both the level of health care services that are medically necessary and the quality of health care services provided to a petitioner. The evaluation includes the efficiency, efficacy, and appropriateness of treatment, hospitalization, or office visits based on medically accepted standards.

b) Utilization Review Provider Requirements

Section 8.7 of the Act requires that a utilization review evaluation must be accomplished by means of a system that identifies the utilization of health care services based on standards of

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care or nationally recognized peer review guidelines as well as nationally recognized evidence based upon standards as provided in the Act. Section 8.7(b) of the Act provides that utilization review provider must register every two years with the Department of Financial and Professional Regulation. No person may conduct a utilization review program for workers' compensation services unless once every two years the person registers the utilization review program with the Department of Financial and Professional Regulation and certifies compliance with the Workers' Compensation Utilization Management standards or Health Utilization Management Standards of URAC sufficient to achieve URAC accreditation or submits evidence of accreditation by URAC for its Workers' Compensation Utilization Management Standards or Health Utilization Management Standards. The Act does not require an employer, insurer or its subcontractors to become URAC accredited. Section 8.7(e) of the Act provides that only a health care professional may make determinations regarding the medical necessity of health care services during the course of utilization review. When making retrospective reviews, utilization review programs shall base reviews solely on the medical information available to the attending physician or ordering provider at the time the health care services were provided. Section 8.7(e) of the Act also provides that a utilization review program shall have written procedures to ensure that patient-specific information obtained during the process of utilization review will be: 1. Kept confidential in accordance with applicable state and federal laws; and 2. Shared only with the employee, the employee’s designee, and the employee’s health care provider, and those who are authorized by law to receive the information . . .

c) Types of Utilization Review

Utilization techniques may include prospective review, second opinions, concurrent review, discharge planning, peer review, independent medical examinations and retrospective review. Utilization review does not apply to prospective review of necessary first aid or emergency treatment.

(1) Prospective − Before the Treatment Prospective utilization review typically applies to physical therapy, chiropractor, and pain center-type treatment and as pre-certification for recommended procedures, such as surgery. It does

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not apply to emergency room treatment. It is used to determine whether the recommended treatment is appropriate Examples of prospective treatment would be:

• Determine if a hospital admission is appropriate; • Determine that the place of care is appropriate; • Determine if the duration of care is appropriate.

Utilization review is best for all parties when it is prospective.

(2) Concurrent Utilization Review This is an assessment of ongoing treatment and might include second opinions, discharge planning, and assessments of the duration and frequency of care, particularly in chiropractic and physical therapy care.

(3) Retrospective Utilization Review The Illinois statute and URAC guidelines are similar in that retrospective utilization review is available, but the medical information reviewed during the utilization review process must be the same information the treating doctor had available at the time the decision was made. This is perhaps the least desirable type of utilization review, as one would assume the Illinois Workers’ Compensation Commission does not want to deny or reduce bills after they have been incurred.

d) Utilization Review as Evidence

A utilization review report will be considered by the Commission, along with all other evidence and in the same manner as all other evidence in the determination of the reasonableness and necessity of the medical bills. Nothing in the statute is to be construed to diminish the rights of employees to reasonable and necessary medical treatment, or employee choice of health care providers under section 8(a), or the rights of employers to medical examinations under section 12.

e) Penalties

If an employer’s denial of medical services under section 8(a) complies with a URAC utilization review program, then there shall be a rebuttable presumption that the employer shall not be subject to penalties pursuant to section 19(k) of this Act, and if that denial or refusal to authorize does not comply with a URAC utilization review program and does not comply with all other requirements of this section, then that will be considered by the Commission along with all other evidence, and in the same manner as all other evidence in the determination of whether the employer may be subject to penalties.

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9. Section 12 IME

An employee claiming benefits under the Act is required to submit to an exam if requested by the employer. The exam is at the expense of the employer, and may be performed by a duly qualified medical practitioner or surgeon selected by the employer. The time and place of the exam shall be reasonably convenient for the employee, either inside or outside the State of Illinois. An employer requesting a section 12 examination is required to deliver to the employee with the notice of the time and place of examination sufficient money to defray the necessary expense of travel by the most convenient means to and from the place of examination, and the cost of meals necessary during the trip. If as a result of the examination the employee loses any wages, the employer is required to reimburse the employee for the loss on the basis of his average daily wage. The Act states that it shall be the duty of the surgeon making the examination at the instance of the employer to deliver to the injured employee, or his representative, a statement in writing of the condition and extent of the injury to the same extent that said surgeon reports to the employer and the same shall be an exact copy of that furnished to the employer, said copy to be furnished the employee, or his representative as soon as practicable but not later than 48 hours before the time the case is set for hearing. Such delivery shall be made in person either to the employee or his representative, or by registered mail to either, and the receipt of either shall be proof of such delivery. If such surgeon refuses to furnish the employee with such statement to the same extent as that furnished the employer said surgeon shall not be permitted to testify at the hearing following said examination. If the employee refuses so to submit himself to examination or unnecessarily obstructs the same, his right to compensation payments shall be temporarily suspended until such examination shall have taken place, and no compensation shall be payable under this Act for such period.

10. Panel Physicians

Section 8a of the Act provides that upon agreement between the employer and the employees, or the employees’ exclusive representative, and subject to the approval of the Illinois Workers’ Compensation Commission, the employer shall maintain a list of physicians, to be known as a Panel of Physicians, who are accessible to the employees. The employer shall post this list in a place or places easily accessible to his employees. The employee shall have the right to make an alternative choice of physician from such Panel if he is not satisfied with the physician first selected. If, due to the nature of the injury or its occurrence away from the employer’s place of business, the employee is unable to make a selection from the Panel, the selection process from

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the Panel shall not apply. The physician selected from the Panel may arrange for any consultation, referral or other specialized medical services outside the Panel at the employer’s expense. Provided that, in the event the Commission shall find that a doctor selected by the employee is rendering improper or inadequate care, the Commission may order the employee to select another doctor certified or qualified in the medical field for which treatment is required. If the employee refuses to make such change the Commission may relieve the employer of his obligation to pay the doctor’s charges from the date of refusal to the date of compliance. II. AREAS OF DISPUTE AND DEFENSE STRATEGIES

A. Areas of Dispute

1. Unreasonably High Charges

Prior to the 2005 amendments to the Illinois Workers' Compensation Act, the most common areas of dispute related to the amount of the charge by medical providers. The adoption of a fee schedule in Illinois has sharply reduced the disputes related to the amount charged by medical providers. This issue arises when the fee schedule does not provide for charges related to a particular type of treatment. In that situation, the Commission is left to rely on the opinions of treating physician, examining physicians and utilization review.

2. Excessive Treatment

Chiropractic treatment is one of the most frequent areas of dispute based on over-treatment. It is not unusual to find chiropractors providing adjustments to patients three to five times per week for years at a time. As with any disputed charge, it is important to know the reputation of the chiropractor with the arbitrator hearing the case. The Industrial Commission and its arbitrators are growing more intolerant of chiropractic billing excesses. You are more likely to successfully defend exorbitant chiropractic charges than any other type of medical charge. When considering how to move a disputed chiropractic case, it should be recognized that chiropractors regularly discount their bills to close a case. If the chiropractor is not willing to discount the bill and the proof is in place to successfully defend the bill, then trying the case with a good arbitrator can often be the best way to move the file. Most arbitrators will allow a reasonable period of chiropractic treatment, usually six to eight weeks. In each case, one should attempt to determine which arbitrator will ultimately hear the case and what that arbitrator=s attitude is about chiropractic care. Decisions concerning termination of authorization can be made accordingly.

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One of the best defenses to excessive chiropractic bills is the petitioner=s failure to improve. If there is no improvement in the petitioner=s condition, bills for treatment beyond four to six weeks are typically denied by the Industrial Commission. (See Arroyo v. Henri Studio, 95 WC 5329, 98 IIC 0344 (Mar. 31, 1998); Santoro v. Kraft General Foods, 95 WC 69217, 98 IIC 0621 (June 17, 1998); Endicott v. Colonial Care Center, 91 WC 43970, 98 IIC 0763 (July 28, 1998). Lengthy physical therapy can also result in disputed and excessive charges. However, the Industrial Commission is much more tolerant of physical therapists than of chiropractors. Therapy programs are monitored by referring physicians who are usually less likely to approve therapy without some evidence of improvement. Therapists themselves often recommend discontinuation of therapy if the patient does not show adequate progress. Nevertheless, a close watch needs to be made of the petitioner=s progress. Many physicians prescribe expensive diagnostic procedures such as the MRI=s, CT=s and bone scans with little consideration given to the cost of such procedures. At trial, multiple diagnostic procedures will likely be awarded unless there is very specific and credible evidence that the procedures were unnecessary. Pain Clinic referrals have become increasingly popular, especially for chronic pain patients with minimal objective findings. Pain Clinics tend to treat injured workers for long periods of time, often with minimal success. It is important to create some evidence early in the course of such treatment that additional treatment is unreasonable and unnecessary. Such evidence can be created by an examining physician, medical manager, or possibly by a cooperative treating physician.

3. Unnecessary Surgery

One of the most frustrating and potentially damaging medical disputes occurs when a surgeon performs unnecessary or unwise surgery. The exposure of a case can change dramatically when surgery takes place, even if it is successful. Once a petitioner has had surgery, successfully denying the reasonableness and/or necessity is very difficult. The Industrial Commission rarely denies such bills and disability for such surgery once it has taken place unless there is a basis to deny the entire claim. Thus, the primary effort to limit this exposure must occur before the surgery. When questionable surgery is suggested, obtain a credible opinion refuting the need for the surgery from an independent surgeon immediately. The report should be furnished to the petitioner=s attorney and the petitioner=s surgeon with a letter explaining that the surgery will not be paid. Hopefully, the treating surgeon will give such a report serious consideration before performing surgery.

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4. Excessive Referrals B Two Doctor Rule

Doctors do not hesitate to refer patients to other physicians. Many times, their notes do not clearly specify a referral. Arbitrators usually allow petitioners to testify about the referrals made. Unfortunately, this allows the petitioner to fabricate referrals. To combat such fabrications one should find out directly from the allegedly referring doctor whether a referral was made. It is important to obtain the complete files of both physicians to uncover documents which will show if a referral was made.

B. Strategies to Limit Excessive Treatment and Move the File

The strategies used to limit or avoid the cost of excessive treatment of any kind varies with each case. The first goal is to avoid the occurrence of excessive treatment. If excessive treatment occurs, then try to avoid paying for it, or at least get the bill compromised. The latter goal can be accomplished either by trial or settlement.

1. Communicate With the Provider

One of the best ways to avoid excessive medical charges is to stop the treatment as soon as possible after it starts. For example, chiropractic treatment longer than four to six weeks should be challenged immediately. Let the chiropractor know in writing that the workers= compensation carrier will not pay for continuing chiropractic care. Many chiropractors will discontinue treatment based simply on the written notice that the payor deems the treatment excessive. Any direct communication with a medical provider must be limited to the issue of challenge to the charges. In Hydraulics v. Industrial Comm'n, 329 Ill. App. 3d 166, 768 N.E.2d 760, 263 Ill. Dec. 679 (2d Dist. 2002), the Appellate Court held that ex-parte contact with a medical provider for the purpose of obtaining medical information can form a basis for penalizing the employer. The Hydraulics case held that Petrillo v. Syntex Laboratories, Inc., 148 Ill. App. 3d 581, 499 N.E.2d 952, 102 Ill. Dec. 172 (1st Dist. 1986) applies to workers’ compensation cases.

2. Treating Physician Opinions

One of the most persuasive ways to challenge medical treatment by a treating physician is with the testimony of another treating physician. This opportunity usually develops when the petitioner switches treating physicians because he or she is not happy with the first physician. When the first physician is made aware that the petitioner sought treatment with a second physician without a referral, the first physician will frequently hold it against the petitioner in a deposition. One of the most common examples occurs when the first physician recommends against surgery and the petitioner seeks a second physician who performs the surgery. The first treating physician will generally be given great weight by the arbitrator and Commission. The first

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physician is presumed to be credible causing an extra degree of scrutiny on the operating physician. This evidence is usually marshaled by a careful review of all the treating medical records.

3. Section 12 IME Opinions

Ongoing or prospective medical treatment is frequently challenged with the opinion of an examining physician. The selection of a section 12 examining physician is critically important to whether the exam is a success. The biggest mistake to be made in selecting an IME physician is to delegate the task to a nurse case manager or third-party service. A nurse case manager or third-party service will focus on the qualifications of the examining physician and their own assessment of whether the physician is competent. It is important to understand that the success of the exam will be determined by the credibility that will be given to the physician by the arbitrator and Commission. There a many excellent physicians that do not have good reputations with the Illinois Workers' Compensation Commission. To select the best physician for the job you need to know what the arbitrator who will hear the case believes about an IME physician. Therefore, the selection needs to be made by someone with experience with the arbitrator who will handle the case. This will usually be a lawyer who has tried numerous cases with the arbitrator and knows the arbitrator’s particular likes and dislikes.

4. Utilization Review

Utilization review has now been with us for several years. The last section of this article summarizes fifteen cases from the Illinois Workers' Compensation Commission that ruled on utilization review reports. A thoughtful analysis of these cases reveals several trends regarding the Illinois Workers' Compensation Commission’s treatment of utilization review reports. All of the decisions involving utilization review comment on the qualifications of the utilization review provider. It is important for the utilization review report to detail the provider’s qualifications and certifications. If the doctor is URAC certified, that fact should be highlighted in the report. Of those cases where the respondents’ reports were rejected, many were criticized for not containing details to support the utilization review conclusions. Therefore, it is important that any utilization review report submitted be detailed in its findings and the basis for its conclusions. The greater the factual basis for the findings, the more likely it will be upheld. The details should include a medical and scientific basis for the opinions rendered.

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Several of the decisions that rejected utilization review reports were critical of the reports because no detail was provided in the report regarding the medical records reviewed and relied upon by the utilization review provider. Any utilization review report must include a summary of the medical records reviewed and relied upon by the utilization review provider. Utilization review reports must be timely. The longer the delay between the challenged treatment and the date of the utilization review report the less persuasive it is to the Commission. Once the utilization review report is obtained, a trial setting should be obtained quickly. The Commission is more likely to adopt a utilization review report the closer it is to the trial date. Many of the cases where the respondent’s utilization review report was adopted by the Commission were submitted in conjunction with a section 12 IME report that supported the utilization review conclusions. Therefore, it is important to understand that a successful IME can supplement a successful utilization review report. Utilization review reports are adopted more often when the utilization review finds support in records of one of the treating physicians. Many of the rejected utilization review reports were found to be totally unreasonable by the Commission. A utilization review report is much more likely to be found credible by the Commission if it finds some treatment reasonable but challenges other treatment. A blanket rejection of all the treatment provided by the treating physicians is likely to receive a summary rejection by the Commission. Several utilization review reports were rejected by the Commission because the utilization review reports addressed causation in addition to the reasonableness and necessity of the treatment in question. It is best to leave causation issues to section 12 IME physicians. To do otherwise may cause the Commission to give less weight to the utilization review report. It is important that the language of the utilization review report maintain a neutral tone and not appear partisan or biased. In retrospective reviews, it is important for the utilization review report to reference only medical information available to the treating physician at the time services were provided. The report should expressly state that fact.

5. Nurse Case Managers

Nurse case managers can be very effective in limiting unnecessary treatment, redirecting injured workers to more meaningful treatment providers, and controlling medical costs. Medical managers should be considered on all cases involving serious injuries or prolonged courses of treatment. The ability to attend appointments with a petitioner provides a way for the nurse to communicate with the treating physician and encourage the end of treatment.

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6. Group Medical

Payment of medical bills by a group health carrier often provides a good way to compromise medical expenses. Group health carriers will usually receive a better discount than the workers’ compensation carrier so the total medical exposure is reduced simply by payment by the group health carrier. Many times cases are settled with “hold harmless” language. A “hold harmless” is generally understood to mean that the respondent will hold the petitioner harmless from any claims for reimbursement made by the group health carrier. It is important to understand that a “hold harmless” agreement does not mean that the respondent will simply reimburse the group health carrier after the case is settled. The contract language should place the burden on the group health carrier to prove that the medical bills arose out of and in the course of the petitioner’s employment. The language should also require the petitioner to notify the respondent in writing if a claim for reimbursement is filed. Example hold harmless language: Respondent agrees to hold the petitioner harmless from any claims for reimbursement for medical bills paid by Blue Cross Blue Shield up to $5,200.00 to the extent that such bills are proven to have arisen out of and in the course of petitioner's employment for the injuries alleged and are proven reasonable and necessary. This agreement is contingent upon petitioner providing respondent with prompt written notice of any such claims and/or law suits for reimbursement.

7. Public Aid

The Illinois Department of Public Aid is frequently another source of payment for disputed medical bills. If the respondent has notice of payments by the Illinois Department of Public Aid, its name must be placed on the settlement draft. IDPA has a statutory lien and can recover from any entity who has notice of the lien but does not honor it. Medical bills paid by Public Aid are usually paid at a much lower rate than could be achieved by the workers’ compensation carrier. Moreover, Public Aid will usually agree to a substantial discount to compromise the lien. The net result is that medical bills can be compromised for a fraction of what the bills would cost if paid directly by the workers’ compensation carrier.

8. Depositions

Forcing the petitioner to proceed with the deposition of the offending physician can be helpful in the appropriate case. Chiropractors regularly continue treatment of their patients even though their own tests reveal minimal, if any, residuals. In the appropriate situation, a deposition

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of the offending provider can provide ammunition to defeat the reasonableness of the treatment.

9. Provider Compromises

In disputed cases, medical providers will frequently agree to compromise medical bills to insure some payment.

10. Pre-Trial

Depending on the arbitrator, a pre-trial can be a very persuasive way to convince the opposition to end treatment or compromise medical bills. The determination of whether a pre-trial would be effective depends on the particular arbitrator and the facts of the case.

11. Trial

The arbitrator’s decision to award or deny excessive treatment will be based on the following:

• The arbitrator’s own personal bias for or against the type of treatment involved.

• The medical provider’s reputation with the arbitrator for excessive treatment.

• The length of treatment in that particular case, and the petitioner’s improvement as a result of the treatment.

• The credibility of the treating or examining physician used to dispute the continuing

treatment.

• The credibility of the petitioner. The arbitrator’s personal bias against the particular chiropractor involved and the credibility of the opposing medical doctor are of utmost importance in evaluating the likelihood of success in denying excessive medical treatment. For example, arbitrators vary significantly in their views of chiropractors. Some have no hesitation to deny chiropractic treatment beyond six to twelve weeks. The arbitrator’s opinion about the examining doctor is just as important as the arbitrator’s opinion of the allegedly offending provider.

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III. CASE LAW

A. Home Modification

Zephyr, Inc. v. Industrial Comm=n, 215 Ill. App. 3d 669, 576 N.E.2d 1, 159 Ill. Dec. 332 (1st Dist. 1991), modified, reh=g denied, remanded, 1991 WL 137387 (1st Dist. July 26, 1991) held that despite the lack of explicit statutory language in section 8(a) referring to home modification, a fair reading of the statute does not preclude such compensation. The Court held that such provision is consistent with the statute=s general purpose of fully compensating employees for work-related injuries. The Court affirmed the Commission=s order of home modifications within the meaning of section 8(a). The petitioner received an award ordering the respondents to pay $275,491 to remodel claimant=s home. The Court modified its decision upon denial of the rehearing petition on July 26, 1991 remanding the matter to the Commission to establish a procedure for payment of the monies to the claimant to remodel his home.

B. Two Doctor Rule

Rerak v. Syntronic Instruments, 93 WC 19794, 98 IIC 0650 (June 30, 1998) B Where one of petitioner=s first two choices of physicians retired, and petitioner then sought treatment from a substitute physician, that substitute physician was still within petitioner=s two choices of treating doctors and referrals. See Courier v. Industrial Comm=n, 282 Ill. App. 3d 1, 668 N.E.2d 28, 217 Ill. Dec. 843 (5th Dist. 1996). Oscar v. School District #203, 97 WC 8862, 99 IIC 0792 (Aug. 13, 1999) B The emergency room and any physicians to whom the emergency room referred the petitioner do not constitute a Achoice of physician@ by the petitioner. Davis v. Baskin Clothing Co., 92 WC 52171, 95 IIC 0796 (July 7, 1995) B The Industrial Commission held that a specialist who treated the claimant was within the chain of referral of the petitioner=s first physician even though the referring physician did not specify the second physician by name. The first physician advised the petitioner to see a particular specialist but did not name the specialist. Despite that fact, the Industrial Commission held that the second physician was within the chain of referral. Berschinski v. Industrial Comm=n, Ill. Cir. Ct. Cook County, 94 L 50076 (May 17, 1995) B The circuit court held that the petitioner=s treating doctor was his second choice of physician where the petitioner chose a doctor from a list provided by the insurance carrier and was not uncomfortable about the doctor=s treatment. Adams v. Industrial Comm=n, 245 Ill. App. 3d 459, 614 N.E.2d 533, 185 Ill. Dec. 399 (5th Dist. 1993) B Petitioner was entitled to TTD through the date of release despite seeking treatment

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from a third choice physician at his own expense. The Court required the claimant to pay for medical expenses after exceeding his employer-paid treatment choices under section 8(a).

C. Travel Expenses

Governor=s Travel Control Board B The Governor=s Travel Control Board, created pursuant to 30 ILCS 105/12-1 establishes the mileage reimbursement rate utilized by the Industrial Commission. That rate is presently 322 cents per mile. Effective July 1, 2001, the rate goes to 342 cents per mile. General Tire & Rubber Co. v. Industrial Comm=n, 221 Ill. App. 3d 641, 582 N.E.2d 744, 164 Ill. Dec. 181 (5th Dist. 1991) ruled on travel expenses related to petitioner=s care by a treating physician. The petitioner travelled approximately 100 miles to treat with his physician. The Commission found it was reasonable and necessary for the petitioner to travel and included $1,588 in medical expenses for travel. In affirming the Commission=s ruling, the Court noted that the doctor had been petitioner=s treating physician since 1984 and was familiar with petitioner=s condition and medical history. The Court found that it was reasonable for the petitioner to seek the medical care from someone he knew and trusted. Furthermore, there was no evidence presented showing that there was any other surgeon in the area that would treat the petitioner with surgery. The only orthopedic surgeon in the area gave testimony that the surgery was not necessary. The Court found that it was reasonable for the petitioner to seek treatment from someone who was willing to perform surgery to relieve his pain. The Courts are willing to award travel expense for a petitioner seeking treatment from a physician who has cared for the plaintiff for some time. Plunk v. Arkansas Best Freight, 96 WC 17034, 98 IIC 1163 (Dec. 7, 1998) B A reasonableness standard applies to the determination of whether a claimant is entitled to expenses for traveling to see a doctor. In the Plunk case, the petitioner drove 60 miles one way to obtain treatment for a low back injury. Travel expenses were awarded. Fraser v. Northern Illinois Univ. Police Dept., 94 WC 8704, 98 IIC 0444 (May 7, 1998) B The Industrial Commission awarded travel expenses to a petitioner who undertook, at respondent=s request, a course of treatment by physicians chosen by respondent. Petitioner was compensated for mileage incurred in attending the treatment with these various physicians chosen by respondent. Kosinski v. Mobil Chemical Co., 92 WC 38112, 92 WC 38114, 99 IIC 0794 (Aug. 13, 1999) B Local mileage is not normally deemed to be a reasonable and necessary medical expense under section 8(a). Where the treatment is available in the petitioner=s hometown, the mileage is not reimbursable. Shehorn v. State of Illinois B Illinois State Police, 86 WC 1354, 95 IIC 0425 (Apr. 3, 1995) B The Commission denied petitioner=s travel expenses to his treating physician even though the petitioner traveled a total of 8,000 miles where each one way trip was 12 miles.

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Primozic v. Firestone Tire & Service Centers, 92 WC 50646, 95 IIC 0200 (Feb. 15, 1995) B The Industrial Commission held that travel expenses which arose from the claimant=s referral to a work hardening facility were reimbursable.

D. Finance and Collection Charges

Shannon v. Baldwin Associates, 80 WC 45317, 95 IIC 0008 (Jan. 4, 1995) B The Industrial Commission denied the petition seeking payment of finance charges on medical expenses. Gibson v. Sirloin Stockade, 96 WC 6659, 99 IIC 0745 (July 30, 1999) B Finance and collection charges are not covered under section 8(a) of the Act and therefore cannot be awarded by the Industrial Commission.

E. Reasonable and Necessary Charges

General Tire & Rubber Co. v. Industrial Comm=n, 221 Ill. App. 3d 641, 582 N.E.2d 744, 164 Ill. Dec. 181 (5th Dist. 1991) held that challenges to medical expenses as being reasonable and necessary require the application of a reasonableness standard. Section 8(a) is limited to expenses which are reasonably required to cure or relieve from the effects of the accidental injury. The Court held that a respondent is required to pay for medical expenses which are usual and customary for similar services in the community where the services are rendered. The respondent, in the instant case, provided no clear evidence that the doctor=s charges were unreasonable. Challenges to the reasonableness of physician or hospital charges will require evidence that the charges were not usual and customary for similar services in a community where the services were rendered. McLain v. Martin Cement Co., 94 WC 3550, 95 IIC 0626 (May 30, 1995) B The Industrial Commission held that the Commission=s award of the expense of a TENS unit was justified even though the treating physician admitted that the TENS unit would only be successful as a placebo. There was no physiological reason for it to work and would only help if the petitioner thought it was going to work. Despite that fact, the Industrial Commission held that the bill was reasonable and necessary. Lakotich v. Fluor Construction, 93 WC 13756, 98 IIC 0712 (July 9, 1998) B There is a rebuttable presumption that paid bills are inherently reasonable. To defeat the award of paid bills, the respondent must offer evidence to rebut this presumption. Harbecke v. Borden, Inc., 93 WC 66724, 98 IIC 1001 (Oct. 15, 1998) B The Industrial Commission regularly denies reimbursement for medical expenses incurred by the petitioner where the petitioner had no prescription for such services. The petitioner=s claim for reimbursement for a mattress and box spring was denied. (See also 98 IIC 0619, glove and salve expenses denied, 99 IIC 0584, physical therapy expenses denied.)

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F. Direct Action by Medical Providers

Piller v. Weippert, 260 Ill. App. 3d 677, 633 N.E.2d 174, 198 Ill. Dec. 712 (2d Dist. 1994) B The Appellate Court held that the physician who treated the injured employee was not foreclosed from pursuing an action in circuit court against the employee for amounts unpaid by the employer. The petitioner argued that the Industrial Commission=s award was limited to reasonable and necessary expenses by the Industrial Commission and, thus, precluded the chiropractor from pursuing the bills. The petitioner also argued that the Physician=s Lien Act specifically exempted liens for services rendered on the Illinois Workers= Compensation Act. The Illinois Appellate Court rejected the petitioner=s argument and stated that the physician could pursue the bills under a separate civil action against the petitioner. The Court further stated that even if the Industrial Commission had made a ruling as to the reasonableness and necessity of the bills, the chiropractor was not bound by that decision as he was not a party to the proceeding.

G. Admissions of Liability

Jewel Tea Co. v. Industrial Comm=n, 39 Ill. 2d 180, 233 N.E.2d 557 (1968) B The Illinois Supreme Court held that payment of medical benefits cannot be interpreted to mean an admission of liability for the claimant=s disability.

H. Reimbursement

Fencl-Tufo Chevrolet, Inc. v. Industrial Comm=n, 169 Ill. App. 3d 510, 523 N.E.2d 926, 120 Ill. Dec. 15 (1st Dist. 1988) B The petitioner=s medical bills were paid by the State of Michigan because the respondent refused to pay them. The Court held that the ultimate responsibility for the bills was that of the respondent and that it was required to reimburse the State of Michigan for those medical expenses. Odie v. Industrial Comm=n, 88 Ill. 2d 514, 431 N.E.2d 374, 59 Ill. Dec. 89 (1982) B The Illinois Supreme Court held that the Industrial Commission=s refusal to order payment of medical expenses for the claimant=s surgery was not inconsistent with its finding that at the time of the surgery, the petitioner was temporarily totally incapacitated. It reasoned that it was entirely possible that a person could still be recovering from an injury and yet not need further treatment.

I. Services Provided by Spouse or Significant Other

Rousey v. Industrial Comm=n, 224 Ill. App. 3d 1096, 587 N.E.2d 26, 167 Ill. Dec. 144 (4th Dist. 1992) denied a wife=s request for maintenance expenses despite support from Dr. Eilers. The claimant required supervision akin to what one would provide a child. The petitioner suffered a serious brain injury but recovered and was self-sufficient to the extent he could attend to his basic needs, get about the community on his own, and feed and clothe himself without assistance. He could drive, hunt and perform limited routine household chores and interact with his children to a limited extent. The Court found that claimant=s spouse provided no medical

E-31

assistance. In denying the wife=s claim for maintenance expenses, the Court held that in the absence of medical care or active attendance to claimant=s basic needs, the Commission=s determination that the claimant=s spouse was performing household duties which are not compensable within the meaning of the Act is not against the manifest weight of the evidence. Burd v. Industrial Comm=n, 207 Ill. App. 3d 371, 566 N.E.2d 35, 152 Ill. Dec. 507 (3d Dist. 1991) involved an appeal by the claimant from an Industrial Commission decision which was affirmed by the trial court denying claimant fees for services rendered by his fiancée pursuant to section 8(a) of the Act. Claimant was injured in 1986 and rendered a paraplegic. Unrebutted medical testimony established that the claimant could not exist in his house without assistance provided by either a home care service or a Asignificant other.@ This was due to the need for assistance in case of an emergency, and assisting with bath and showers. The claimant sought compensation for his fiancée=s services. At arbitration, an award was made for expenses for home care service, but the arbitrator found that the fiancée was not entitled to payment for hours spent caring for the claimant, since she had occupied the residence with the claimant prior to the injury and continued to work full-time after his injury. The Appellate Court relied on Dr. Szymke=s testimony and held that many of the tasks performed by the fiancée were necessitated by claimant=s injury, and they were not considered ordinary household duties. They noted that the fiancée was not the claimant=s spouse, and therefore, compensation for performance of housekeeping services was not automatically barred. The evidence that the claimant required 24 hour per day care was unrebutted in the record. Based on these facts, the Court held that this petitioner was entitled to payment for home care services rendered by his fiancée.

J. Copying Expenses

Clayton v. Ingalls Memorial Hosp., 311 Ill. App. 3d 135, 724 N.E.2d 222, 243 Ill. Dec. 913 (1st Dist. 2000) B The petitioner issued an Illinois Industrial Commission subpoena duces tecum pursuant to section 16 of the Workers= Compensation Act to a treating hospital for the hospital to produce copies of all its original medical records and itemized bills before a Commission arbitrator. The petitioner tendered a $25.00 check for statutory witness and mileage fees. The defendant hospital refused to comply with the subpoena, demanding copying charges of $1.00 per page, $17.00 retrieval fee, and $20.75 for postage. The Appellate Court held that only a $20.00 per day witness fee and 20 cents per mile travel fee were required by section 16 of the Act. The subpoenaing party is not required to pay any per page copy fees.

K. Prospective Expenses

Plantation Manufacturing Co. v. Industrial Comm=n, 294 Ill. App. 3d 705, 691 N.E.2d 13, 229 Ill. Dec. 77 (2d Dist. 1997), appeal denied, 178 Ill. 2d 595, 699 N.E.2d 1037, 232 Ill. Dec. 852 (1998) B The Industrial Commission can award prospective medical benefits for reasonable and necessary medical services. Only the necessity of the medical treatment or procedure must have been incurred prior to arbitration, not the specific medical procedure or treatment itself.

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E-32

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E-33

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E-34

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E-35

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E-36

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E-37

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E-38

James M. Voelker - Partner

Jim has spent his entire legal career with Heyl Royster. He started in the mailroom in 1976 and eventually worked as a law clerk for the firm during law school. In 1986, he joined the firm as an attorney in his hometown of Peoria and became a partner with the firm in 1996. Jim concentrates his practice in the areas of workers' compensation and personal injury litigation, representing employers, insurers and self-insureds. He has tried over 200 workers' compensation cases and numerous civil cases throughout the State of Illinois. He handles all aspects of workers' compensation litigation including trials and appeals. Jim is the author of various articles and speeches prepared and presented for business groups and employers in the State of Illinois. Jim is also the author of CompCalc, Illinois Workers' Compensation software, that is used throughout the state of Illinois by insurance companies, employers, attorneys, and several arbitrators of the Illinois Workers' Compensation Commission to calculate workers' compensation benefits. Jim is also the founder of IllinoisComp.com, a website devoted to workers' compensation issues in Illinois, and MedicareApproval.com, a web-site devoted to issues related to the Medicare Secondary Payer Statute. Jim was also a co-founder of the Heartland Free-Net. Significant Cases • S & H Floor Covering, Inc. v. Workers'

Compensation Comm'n, 373 Ill. App. 3d 259 (4th Dist. 2007) Court opened the door for giving "an extra degree of scrutiny" to the Commission's decision where the Commission makes credibility determinations regardless of the arbitrator's findings.

• Farris v. Industrial Comm'n, 357 Ill. App. 3d 525 (4th Dist. 2005) Held that in cases where the employee loses five or more days of work during the 52 weeks prior to the injury, the lost time (to the extent not due to the fault of the employee) should be deducted from the wage calculation.

Selected Publications • Chapter 7 - "Medicare Secondary Payer

Statute," Illinois Institute of Continuing Legal Education, Illinois Workers' Compensation Practice Handbook

• Chapter 12 - "Social Security Disability Offsets," Illinois Institute for Continuing Legal Education, Illinois Workers' Compensation Practice Handbook

• Website Editor: http://www.IllinoisComp.com • Website Editor:

http://www.MedicareApproval.com • Author: CompCalc Illinois Workers'

Compensation Software, http://www.compcalc.com

Professional Recognition • Martindale-Hubbell AV Rated

Professional Associations • Peoria County Bar Association (Co-Chair of

Publications Committee) • Illinois State Bar Association • American Bar Association • Abraham Lincoln American Inn of Court


Illinois Education • Juris Doctor (With Distinction) University of

Iowa, 1986 • Bachelor of Science-Business Administration

(Cum Laude), University of Illinois, 1983


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DO MEDICAL RESTRICTIONS INCREASE IN ECONOMIC SLOWDOWN? RESTRICTION REDUCTION STRATEGY

Presented and Prepared by: Toney J. Tomaso





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I. DO MEDICAL RESTRICTIONS INCREASE IN AN ECONOMIC SLOWDOWN? ..................... F-3 II. STRATEGIES TO REDUCE RESTRICTIONS ........................................................................................ F-3

A. Communication with the Employer and Supervisors .................................................. F-3 B. Volunteer Work .......................................................................................................................... F-4 C. Job Description .......................................................................................................................... F-4 D. DVD of Job Duties ..................................................................................................................... F-5 E. Involvement of a Case Manager .......................................................................................... F-5 F. Utilization Review ...................................................................................................................... F-5 G. Job Site Analysis ........................................................................................................................ F-5 H. Functional Capacity Evaluation ............................................................................................ F-5 I. Independent Medical Examination ..................................................................................... F-6 J. Foundation Objection to Restriction Slip ......................................................................... F-6

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I. DO MEDICAL RESTRICTIONS INCREASE IN AN ECONOMIC SLOWDOWN?

We have found ourselves in uncharted financial and economic waters the likes of which most of us have never seen. This has created a new batch of problems in the workers’ compensation realm. One of these pesky problems is dealing with an employee who has heard through the proverbial grapevine layoffs or workforce reductions are on their way. In order to protect himself, and cheat the system, this employee may run out to his family physician or treating physician in order to obtain medical restrictions which are sufficiently limiting such that the employer cannot accommodate. The employee should rightfully take his place at his co-workers sides at the unemployment line, but rather, he is sitting home watching Judge Judy and demanding a TTD check. The focus of this outline is how to deal with those restrictions put into place by the employee’s physician in order to combat this less than honest strategy used by the employee. First, and foremost, one cannot simply accept as true the findings and opinion rendered by the physician in regard to the work restrictions. Many doctors, as studies have shown, are overly protective of their patients and simply will write them a note if they believe it is in the patient’s best interest. This is especially true of family physicians who hold a special relationship with their patient. These restrictions are typically based upon the employee’s history of complaints and work duties, without the benefit of independent, confirming sources in regard to what the patient can actually do at work. We want to avoid this practice and identify strategies to employ to place a check on these physicians and their willingness to give restriction slips to their patients which are not reasonable under the circumstances. This includes restrictions of “no work” as well as light duty restrictions. The following is a list, which is by no means exhaustive, but rather instructional and useful so that when the situation arises, you can use it as a check list to ensure you are doing everything within your power to ensure the employee is not receiving lost time benefits simply because he has a doctor who is willing to write him a note. The order of this list is based on the approximate cost involved based upon the strategy used. It begins with no cost and ends with the more costly options. II. STRATEGIES TO REDUCE RESTRICTIONS

A. Communication with the Employer and Supervisors

Communicate thoroughly with the employer and the supervisor to determine if accommodations can be met. This could be the easiest and quickest solution to the problem. If

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the claims handler and the employer realize the employee is simply working the system in order to profit while remaining off work, and the employer is willing to create or place the employee into a position which complies with the physicians restrictions, then that should be your first option. It is also advisable to concurrently conduct an investigation in order to determine if the employee is fabricating an injury and/or inability to work. You want to press the employee and his co-workers for details in order to determine the validity of the complaints and injury assertions. If, ultimately, a position is created and cannot be kept available permanently then you must concurrently establish a medical defense in regard to the unreasonable restrictions. The options noted below provide further details to combat this issue.

B. Volunteer Work

This is a relatively new concept being utilized by the defense. It serves two purposes. First, it assures the employee will not be allowed to simply sit at home watching TV while he collects a TTD check. Rather, it forces him to return to some service, within his restrictions, to ensure he does not become complacent with his current medical status. The second advantage to this strategy is a benefit to the employer from a charitable contribution standpoint for the community in which it is located. If the employer is providing volunteer service hours to community organizations, it benefits the community as well as the charitable-arm of that company. It may give rise to a non-compliance defense if this employee does not follow these instructions and report for duty to the local not-for-profit organization of the employer’s choosing. These duties, however, cannot go above and beyond the restrictions which have been set forth by the physician.

C. Job Description

In most cases the physician is obtaining a one-sided version of events from the employee. This includes what the employee says he does at work, how long he does it, and when those duties cause pain or discomfort. Most employers have job descriptions, or can make one available upon request in short order. Obtain a written job description and provide it to the physician. Use it as a guide for the physician so that they can comment as to what duties the employee can and cannot do. It will give you better specificity and serve as confirmation the physician is getting an accurate history as to employee’s actual work duties. Once you provide this job description, you can obtain the doctor’s opinion, or if a restriction has already been given, then ask for clarification as to what the employee can do. It is important to note here the job description you use must be accurate and up to date in order to provide the physician with a correct foundation for his opinions on which work restrictions can be based. You want to be able to defeat the argument being made by the employee that the job description is not accurate and that their duties are much more difficult and demanding than what is laid out in the written job description.

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D. DVD of Job Duties

You have the ability to use the old adage a picture is worth a thousand words. As long as the physician is willing to look at the DVD, and the DVD is up to date and accurate, then it is a good strategy to use. It will show exactly what the employee is required to do and avoids those situations where the physician cannot truly appreciate what the employee’s duties entail and how they are performed from simply reading a job description. Again, the less wiggle room you give a physician to interpret things on the subject of restrictions of work duties, the better off you will be.

E. Involvement of a Case Manager

It might become necessary to employ the services of a case manager in order to deal with the physician if he is unwilling to accurately address the work restriction issue, as well as the follow up you are requesting as it relates to the job description. Because the case manager can attend the appointments, and discuss the subject of return to work status, it serves as a good mechanism to control this issue. A nurse case manager may be of benefit to focus the physician’s attention on this specific subject matter – work restrictions.

F. Utilization Review

Utilization review is a relatively new mechanism which an employer can utilize to combat treatment as prescribed by another physician [820 ILCS 305/8.7]. If the restrictions are considered treatment recommendations for the employee, then a peer review can be conducted on the subject. A physician of equal qualifications will have the opportunity to review and analyze all pertinent medical records. You can also provide this peer reviewing physician with additional material in order to lay a proper foundation as to the employee’s job duties. This defense expert will then issue an opinion in regard to reasonable and necessary treatment including whether or not specific restrictions are reasonable under the circumstances.

G. Job Site Analysis

This is a consultant report made by an exercise physiologist, or an equally qualified expert in the field. The JSA is created after your consultant performs a work site evaluation and analysis taking into account the employee’s work duties. Comments on the physical demand of the employee’s job are made and opinions based upon these observations are provided. This allows you to go well beyond the boundaries of a simple job description and judge specifically what is required of an employee while they are at work. The consultant can comment on the issue of restrictions and make further suggestions for job modifications or further testing (such as undergoing an FCE).

H. Functional Capacity Evaluation

This option may go hand in hand with your IME. Some defense experts may simply tell you they will not issue restrictions or comment on some other physician’s unless they have an objective

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measuring stick to use. Many physicians will agree an FCE is an objective device to test an employee’s working capacity. One of the benefits of such testing is that it also identifies symptom magnification and overt pain behaviors by the employee. To assist the FCE tester, you should send the employee’s job description or work duty DVD. The more information they have as to the employee’s work duties, the more accurate they can be in their ultimate findings as to whether a return to work (in any capacity) is possible. The FCE can then be used by your experts to opine whether the current restrictions placed upon the employee are reasonable under the circumstances. And, lastly, the FCE can be utilized by your IME physician to further assist you in your defense of the case on this issue of restrictions.

I. Independent Medical Examination

Pursuant to section 12 of the Act [820 ILCS 305/12] the employer has the right to send an employee for an examination with a physician of its choosing. If you want your focus of the IME to be on whether the employee can return to work, or a review of a treating physician’s recommendation regarding work restrictions, you most certainly can do that with your expert. You then have the right to provide your expert with any and all information which you deem necessary to have the question addressed. If you obtain a favorable opinion report, then you have the formal basis to tell the employee to return to work, and deny any further off work benefits. In order to ensure your expert is not going to hurt your cause or argument against these new restrictions set up by the treating physician, you can begin the expert process with a records review, and then move on to an IME if you deem it reasonable and necessary under the circumstances. Once again, make sure you have a qualified expert in the field, who has all the required information to weigh in on the issue of restrictions, and the records he is relying upon are accurate and up to date.

J. Foundation Objection to Restriction Slip

If the physician is placing a restriction on the employee which just doesn’t seem to make any sense, employer’s counsel should object to the foundation of the restriction slip and force the physician’s evidence deposition. This will allow employer’s counsel the opportunity to cross-examine the physician. Please keep in mind you may run into an argument by the employee (and his attorney) that the light duty restriction slip or off work note is a medical record based upon treatment records, and therefore pursuant to section 16 of the Act [820 ILCS 305/16] is not subject to a foundation objection and therefore allowed into evidence once certified by the medical provider/facility. We argue that this does not go toward treatment, but rather it deals with work restriction issues that have legal ramifications. Your attorney should arm himself with facts from the employer as to why the employee can conduct full duty activities, or should be allowed to return to modified work.

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Toney J. Tomaso - Associate

Toney is an associate in the Urbana office who concentrates his practice in the areas of workers' compensation, third-party defense of employers, asbestos class action litigation, insurance coverage issues and automobile liability claims. Toney has successfully defended hundreds of workers' compensation claims before various arbitrators throughout the State of Illinois, as well as before all three panels of the Illinois Workers' Compensation Commission. Toney was a member of a three attorney trial team which handled a class action lawsuit arising out of a medical malpractice class action which lasted approximately eight weeks in East Central Illinois. During the course of this litigation, he was required to depose approximately one-half of the class, prepare defense experts, and participate in all phases of the eight-week trial. Significant Cases • Land v. Montgomery, Eight week medical

malpractice class action lawsuit. Public Speaking • “Workers Compensation Law Update”

Lorman Seminar 2008 • “Arising Out Of When Should Your Case Be

Arbitrated” Heyl Royster 2008

• “Recent Developments In Workers’ Compensation” Risk and Insurance Management Society 2007

Professional Associations • Champaign County Bar Association (Bench and

Bar and Computer/Technology Committees) • Illinois State Bar Association • American Bar Association • Will County Bar Association • Illinois Trial Lawyers Association • Illinois Defense Counsel


Illinois Education • Juris Doctor, Louisiana State University, 1995 • Bachelor of Arts (Golden Key Honor Society),

University of Illinois, 1992


G-1

FIGHTING PERMANENT TOTAL DISABILITY IN SOUP LINE TIMES

Presented and Prepared by: James J. Manning


Prepared with the Assistance of: Brad A. Elward





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I. INTRODUCTION ....................................................................................................................................... G-3 II. PERMANENT TOTAL DISABILITY – THE FRAMEWORK ............................................................. G-3 III. ESSENTIALS OF THE “ODD LOT” CLAIM ......................................................................................... G-4 IV. DEFENDING THE “ODD LOT” PERMANENT TOTAL DISABILITY CLAIM .............................. G-6

A. Send the Claimant for a Section 12 Examination to Confirm the Restrictions ......................................................................................................................... G-6 B. Obtain a Vocational Assessment ........................................................................................ G-6 C. Offer the Claimant a Job ....................................................................................................... G-7 D. Attack the Claimant’s Medical Evidence, Job Search, and Vocational Assessment ................................................................................................. G-7 E. Aggressive Settlement Options .......................................................................................... G-7 F. Attacking the PTD Award Post-Award – Sections 8(f) and 19(h) ........................... G-8 G. Recent PTD Cases of Interest ............................................................................................... G-8

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I. INTRODUCTION

The past year has seen significant changes in the national economy, resulting in business layoffs, business closings, and a significant pull-back in consumer demand, harboring concerns of even more future hardships. As of March 2009, national unemployment stood at 8.5 percent and unemployment in Illinois reached 9.1 percent, up from 5.9 percent in March 2008. On a national level, the economy lost over 663,000 jobs in March 2009. Tough economic times impact no area of workers’ compensation harder than permanent total disability (PTD). Permanent total disability claims have historically been the most hotly contested of all workers’ compensation claims, in large part because the award subjects the employer to payments of weekly benefits for the duration of the disability, which, in many cases, is for the life of the claimant. According to the most recent annual report of the Illinois Workers’ Compensation Commission (Fiscal Year 2007), there were five determinations of permanent total disability for every 100,000 employees in the State of Illinois. As of January 2009, there were 6,554,168 people employed in Illinois. Applying the 2007 percentage to the January 2009 workforce means that there could be as many as 328 PTD determinations across the state in 2009. Using the FY 2007 average weekly wage rate of $739.39 (yielding a PTD rate of $493.17 per week), a PTD finding would result in benefits of $25,644.84 per year. For a claimant with a remaining life-expectancy of 25 years, this would yield a total payout by the employer of $641,121.00. The recent recession will undoubtedly result in a higher number of claimants seeking PTD awards using the so-called “odd lot” category. As discussed in more detail below, the “odd lot” classification depends on the claimant establishing the unavailability of work for a person in his or her condition. With fewer jobs in the current labor market and more people (the unemployed) competing for those jobs which remain, it will be a more difficult landscape for workers with limited skills and limited physical capabilities to find work. II. PERMANENT TOTAL DISABILITY – THE FRAMEWORK

Illinois recognizes two types of permanent total disability awards: (1) “specific loss” total disabilities, also referred to as statutory permanent total disability, under section 8(e)(18) of the Act, and (2) “non-specific” total disability awards, which refer to individuals who are either “obviously unemployable” or who are adjudicated medically permanently totally disabled or as falling within the “odd lot” classification under section 8(f) of the Act. 820 ILCS 305/8(e)(18), 8(f).

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In short, section 8(e)(18) applies where the claimant suffers the complete loss of two extremities or both eyes. These awards are known as the statutory permanent total and apply even where the claimant can return to gainful employment. Scandroli Construction Co. v. Industrial Comm’n, 54 Ill. 2d 395, 400, 297 N.E.2d 150 (1973). Concerning “non-specific permanent total disability” awards, the claimant can, under certain circumstances, establish an entitlement to total permanent disability benefits using section 8(f) of the Act. This section applies to any part of the body, although we most commonly see such benefits sought for injuries to the back or multiple body parts. In Valley Mould & Iron Co. v. Industrial Comm’n, 84 Ill. 2d 538, 419 N.E.2d 1159, 50 Ill. Dec. 710 (1981), the Illinois Supreme Court held that a claimant can establish a non-specific permanent total disability by three means: (1) a showing that he is obviously unemployable; (2) presenting medical evidence supporting the claim of total disability; or (3) by showing that there is no work available to a person in his circumstances. The last category is what is referred to as the “odd lot.” Although all three types are of concern to employers, the area of “odd lot” permanent total disability will likely be impacted most severely by the economic recession we are experiencing today. Nevertheless, on any PTD claim, the claimant has the burden of proving the nature and extent of his injury by a preponderance of the evidence. Esposito v. Industrial Comm’n, 186 Ill. App. 3d 728, 737, 542 N.E.2d 843, 134 Ill. Dec. 497 (1st Dist. 1989). PTD benefits are available for both physical and mental disabilities. South Import Motors, Inc. v. Industrial Comm’n, 52 Ill. 2d 485, 489, 288 N.E.2d 373 (1972). Regardless of the method used to prove a permanent total disability, the award is calculated in the same manner. Computation of a PTD award is based on sections 7 and 8 of the Act; a claimant receiving PTD benefits receives two-thirds of their average weekly wage for life, subject to the statutory minimum and maximums levels in effect at the time of the injury. Thus, for an injury occurring between January 15, 2009 and July 14, 2009, the maximum PTD rate is $1,231.41 and the minimum PTD rate is $461.78. For example, if a 30-year-old female employee was injured on March 22, 2009, and had an average weekly wage of $988.50, her PTD payment would be $659.32 per week, or $34,284.64 per year. Using a life expectancy of 47.7 years, should the disability not cease, the total payout could reach $1,635.377.32. III. ESSENTIALS OF THE “ODD LOT” CLAIM

“Odd lot” claims are the most heavily litigated of all PTD claims, since there is often a strong disagreement between the parties as to the claimant’s entitlement to such benefits. A claimant falls within the odd lot classification if he shows that, because of his condition (physical restrictions) and circumstances (training, age, and job skills), there is not employment available. According to Alano v. Industrial Comm’n, 282 Ill. App. 3d 531, 537-538, 668 N.E.2d 21, 217 Ill. Dec. 836 (1st Dist. 1996), the “odd lot” designation applies where the claimant’s disability is not

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obvious in nature and there is no medical evidence stating that he is permanently and totally disabled. According to the case law, a claimant is totally and permanently disabled when she is unable to make some contribution to the work force sufficient to justify the payment of wages. Ceco Corp. v. Industrial Comm’n, 95 Ill. 2d 278, 286, 447 N.E.2d 842, 69 Ill. Dec. 407 (1983). A claimant, however, need not be reduced to total physical incapacity before a permanent total disability award may be granted. Instead, the claimant must show that she is unable to perform services except those that are so limited in quantity, dependability, or quality that there is no reasonable stable market for them. A.M.T.C. of Illinois, Inc. v. Industrial Comm’n, 77 Ill. 2d 482, 487, 397 N.E.2d 804, 34 Ill. Dec. 132 (1979). Where a claimant’s disability is of a limited nature such that she is not obviously unemployable, or where there is no medical evidence to support a claim of total disability, the claimant has the burden of establishing that she falls into the “odd-lot” category – one who, though not altogether incapacitated from work, is so handicapped that she will not be employed regularly in any well-known branch of the labor market. Ceco Corp. v. Industrial Comm’n, 95 Ill. 2d 278, 287, 447 N.E.2d 842, 69 Ill. Dec. 407 (1983). A claimant satisfies her burden that she falls within the “odd lot” category in one of two ways, if, by a preponderance of the evidence, she can show:

• A diligent but unsuccessful job search; or • That because of her age, skills, training, and work history, she is not employable in any

well-known branch of the labor market. Interlake, Inc. v. Industrial Comm’n, 86 Ill. 2d 168, 178, 427 N.E.2d 103, 56 Ill. Dec. 23 (1981); Alano v. Industrial Comm’n, 282 Ill. App. 3d 531, 534-535, 668 N.E.2d 21, 217 Ill. Dec. 836 (1st Dist. 1996). Once the employee makes this showing, the burden of proof then shifts to the employer to show that some kind of suitable work is regularly and continuously available to the claimant. Valley Mould & Iron Co. v. Industrial Comm’n, 84 Ill. 2d 538, 547, 419 N.E.2d 1159, 50 Ill. Dec. 710 (1981). The claimant must present more than a prima facie case; he must prove by a preponderance of the evidence that he falls within the “odd lot” category before the burden shifts to the employer. Lanter Courier v. Industrial Comm’n, 282 Ill. App. 3d 1, 6-7, 668 N.E.2d 28, 217 Ill. Dec. 843 (5th Dist. 1996). Employers can meet this burden by (1) making a job offer within the claimant’s restrictions, (2) presenting a vocational assessment showing a reasonably stable market for jobs within the claimant’s physical restrictions and age, education, training, and work experience, or (3) obtaining the testimony of an independent medical examiner (IME) disputing the claimant’s restrictions and/or inability to work.

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IV. DEFENDING THE “ODD LOT” PERMANENT TOTAL DISABILITY CLAIM

Recent economic hard times now mandate more than ever that employers must aggressively defend potential PTD claims. A PTD benefit claim should be anticipated any time the claimant’s physician states that he cannot return to his former employment. In evaluating the “odd lot” claim, the following information is critical:

• Is there medical evidence that the claimant cannot work or return to his former job? • What is the claimant’s age, education, training, and work experience? • Has the claimant looked for work? • Can the claimant be returned to gainful employment by rehabilitation? • Has the employer offered new employment to the claimant within his restrictions?

CAVEAT: The fact that a claimant can work for occasional wages on a part-time or intermittent basis will not defeat a claim for TPD based on an “odd lot” theory. Smallwood v. Industrial Comm’n, 53 Ill. 2d 151, 290 N.E.2d 234 (1972) (injured maintenance man received some income from preaching). Evidence that the claimant has been able to earn occasional wages or can perform some useful services is likewise not dispositive. J.M. Jones Co. v. Industrial Comm’n, 71 Ill. 2d 368, 373, 375 N.E.2d 1306, 17 Ill. Dec. 22 (1978). Towards the goal of reducing the likelihood of a PTD award, the employer should evaluate several courses of action.

A. Send the Claimant for a Section 12 Examination to Confirm the Restrictions

Use the section 12 Independent Medical Exam (IME) to confirm the nature and extent of the disability, i.e., the claimant’s physical restrictions. 820 ILCS 305/12. The IME physician should not only review all medical records in the case but also meet with and examine the claimant so as to remove any potential grounds for damaging cross-examination. Care should also be taken to obtain a physician in the appropriate specialty for your case. In certain cases, it might also be wise to utilize two IMEs to defeat what might appear to be an otherwise strong petitioner’s IME or treating physician opinion. One word of caution – the IME physician selected should be significantly qualified and not someone who can be easily dismissed by the arbitrator or the Commission as a professional testifying expert.

B. Obtain a Vocational Assessment

A vocational assessment should be utilized whenever there is potential for a PTD award. The vocational expert must have all information on the claimant and should meet with the claimant, and further, should assist in the job search effort. Moreover, the vocational expert should concentrate her efforts on locating employment in the geographic regions where the claimant lives and should be sure to inquire whether the potential employer could accommodate any

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unusual restrictions. To illustrate the latter, in a recent case, an employer’s vocational expert identified several jobs that the claimant could possibly perform within her restrictions, but she failed to inform the potential employers that the claimant had to lay down for ten minutes every hour and that she had to keep her legs elevated for a portion of the day. Likewise, the identified jobs were not located where the claimant lived, but some three hours away.

C. Offer the Claimant a Job

Offering the claimant a job within his or her restrictions is one of the most effective means of eliminating a potential PTD claim. If the claimant accepts the job, the claim then reverts to a PPD award, which will have substantially less value. Also, Illinois law provides that a claimant’s refusal to accept a legitimate job offer within his or her restrictions can result in the denial of PTD benefits. Presson v. Industrial Comm’n, 200 Ill. App. 3d 876, 558 N.E.2d 127, 146 Ill. Dec. 164 (5th Dist. 1990).

D. Attack the Claimant’s Medical Evidence, Job Search, and Vocational Assessment

Attacking the claimant’s case can be done, as noted above, through the use of an IME and the employer’s own vocational specialist, but also through focused cross-examination of the claimant. If the claimant has performed a job search, inquiries should be made concerning the number of employers contacted, over what period of time, what types of jobs were sought, and whether a general inquiry was made versus a specific job application. On potentially large exposures, the lack of any discovery mechanisms provided by the Act might justify the hiring a private investigator to research the claimant’s past work history and educational status. If a vocational expert is offered by the claimant, did the expert assist in the job search? Did the expert adequately consider the claimant’s prior job skills? Were the expert’s assessments supported by any objective testing? Concerning the claimant’s physician, was the doctor offering the opinions a generalist or a specialist? Were the opinions concerning employability and/or restrictions based on a functional capacity assessment? Another related approach is to authorize surveillance on the claimant in the hopes of catching the claimant performing acts inconsistent with his restrictions.

E. Aggressive Settlement Options

Anticipating a PTD award, the employer may wish to consider several approaches to settling the case early, perhaps by making a larger PPD offer coupled with open or limited open-ended medical benefits. Employers can also investigate using a structured settlement or combining a lump-sum payment with an annuity. Another option (perhaps for older claimants) is to offer to include in the settlement language Social Security offset language, which will allow the claimant to more of her Social Security disability income.

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One problem with settling PTD awards after they have been entered is that the current interest rates are extremely low. Thus, it will take a larger payment up front to represent the value of the claim. Using our prior PTD example, if an employer is facing a total exposure over the employee’s 47.7 year life span of $1,635,377.37, the present value of the PTD award at 6 percent interest is $101,514.53. At the much lower 3 percent interest rate, the present value is $399,284.41.

F. Attacking the PTD Award Post-Award – Sections 8(f) and 19(h)

An award of PTD benefits is payable for the duration of the disability. In many cases, this means for life. However, two provisions in the Act allow an employer to reopen the disability assessment and to modify the permanency finding, perhaps eliminating the PTD award and resulting in a section 8(e) permanent partial award or a section 8(d)(1) wage differential. Section 8(f) provides for the termination of a PTD award where the employee either returns to work or is able to do so and earns or is able to earn as much as before the accident. Section 8(f) focuses on the petitioner’s earning aspects. There is no time limit on when a section 8(f) petition may be filed. Section 19(h) also provides an employer with a means to end the PTD award. However, this section focuses not on the claimant’s ability to earn money, but on the disability. To succeed on a section 19(h) petition, the employer must show by a preponderance of the evidence that the disability has decreased or diminished and must do so by showing a material change in the claimant’s condition. Moreover, a section 19(h) petition must be brought within 60 months of the original award, or else the right is lost.

G. Recent PTD Cases of Interest

Economy Packing Co. v. Workers’ Compensation Comm’n, 387 Ill. App. 3d 283, 901 N.E.2d 915, 327 Ill. Dec. 182 (1st Dist. 2008) − The Appellate Court, Workers’ Compensation Commission Division, in a 3-2 decision, upheld the award of PTD benefits to an illegal alien, despite the fact that an illegal alien cannot legally be employed in the United States in any capacity. The Court looked to whether a resident in the claimant’s condition could have found work, regardless of the fact that the claimant was an illegal alien. Despite five justices certifying the case for Supreme Court review, the Court denied the employer’s petition for leave to appeal. Westin Hotel v. Industrial Comm’n, 372 Ill. App. 3d 527, 865 N.E.2d 342, 310 Ill. Dec. 18 (1st Dist. 2007) − The Appellate Court (in a 4-1 decision), reversed the Commission’s award of “odd lot” PTD benefits because the claimant failed to present any evidence of unsuccessful job search. The court noted that the only witness to testify regarding the claimant’s unemployability was his physician, Dr. Coe, who was a specialist in occupational medicine. The Court observed that Dr. Coe had not ordered or reviewed any vocational or rehabilitative tests, had not conducted a labor market survey, and had made no attempt to find claimant employment within his restrictions. Moreover, Dr. Coe did not prescribe a functional capacity evaluation. The employer’s

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IME physician testified that the claimant was capable of returning to medium-level work. Finally, the Court stated that most cases have required evidence from a rehabilitation services provider or vocational counselor, of which claimant had none. City of Chicago v. Illinois Workers’ Compensation Comm’n, 373 Ill. App. 3d 1080, 871 N.E.2d 765, 313 Ill. Dec. 38 (1st Dist. 2007) − The Court affirmed the Commission’s award of PTD benefits based on an “odd lot” status, finding that although the claimant failed to conduct a job search, “he did attend various interviews scheduled by respondent.” The claimant attended meetings with potential employers and was placed on at least two eligibility lists. The Court further pointed out that the employer did not offer the claimant a position and failed to refute the claimant’s vocational testimony that the claimant would be unable to find work in any field. Ameritech Services, Inc. v. Illinois Workers’ Compensation Comm’n, No. 1-08-1412WC, 2009 WL 723476 (4th Dist. March 17, 2009) − The Court affirmed the Commission’s award of PTD benefits where the employer failed to carry its burden of showing that some kind of suitable work is regularly and consistently available to the claimant. The employer failed to present any testimony of a vocational rehabilitation specialist and failed to offer the claimant a job within his restrictions. Although one of the employer’s managers testified that a job was offered, there was no documentation, and the Commission rejected the testimony. Barabba v. Fellows, Inc., No. 04 WC 15912, No. 08 IWCC 0733, 2008 WL 2805418 (IWCC, June 19, 2008) − PTD benefits were awarded to a 60-year-old claimant despite her having accepted a severance package due to her fear of an economic lay-off and job loss. The Commission held that the employer was not relieved of demonstrating that there existed a reasonably stable job market for a person in the claimant’s condition and with her experiences.

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James J. Manning - Partner

Jim currently chairs the firm's real estate practice group where he concentrates much of his current legal practice representing buyers, sellers, builders and providing closing services on residential real estate transactions. Jim has practiced in all areas of civil litigation, including premises and auto liability, commercial litigation, workers' compensation, real estate litigation, and construction litigation. Jim has presented numerous seminars on residential real estate contracts, title insurance and related matters to Realtor® clients and the Peoria Area Association of Realtors® in addition to presentations on various workers' compensation issues both for the Illinois Institute of Continuing Legal Education and Lorman Education Services.

Professional Recognition • Selected as a Leading Lawyer in Illinois. Only


Professional Associations • Peoria County Bar Association (Member and

former Chair of the PCBA Real Property Committee)

• Illinois Real Estate Lawyers' Association • Illinois Land Title Association • Illinois State Bar Association • American Bar Association


Illinois Education • Juris Doctor, Saint Louis University School of

Law, 1992 • Bachelor of Business Administration, University

of Notre Dame, 1989


H-1

MONEY WELL SPENT: YOUR DEFENSE ATTORNEY AND YOUR VOCATIONAL SPECIALIST

Presented and Prepared by: Gary L. Borah

[email protected] Springfield, Illinois • 217.522.8822




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I. WHEN SHOULD VOCATIONAL REHABILITATION FIRST BE EXPLORED? ........................... H-3 II. GUIDELINES FOR IMPLEMENTATION OF REHABILITATION .................................................. H-3

A. Established Factors Regarding Rehabilitation ............................................................... H-3 B. Additional Factor for Rehabilitation .................................................................................. H-4

III. PETITIONER’S RIGHTS UNDER VOCATIONAL REHABILITATION ........................................... H-4 IV. RESPONDENT’S RIGHTS DURING VOCATIONAL REHABILITATION ..................................... H-5 V. RECENT STATUTORY CHANGES ........................................................................................................ H-6 VI. VOCATIONAL REHABILITATION IN A DIFFICULT ECONOMY ................................................. H-6

A. Selection of a Rehabilitation Counselor .......................................................................... H-6 B. Vocational Rehabilitation Needs Should Be Determined Early .............................. H-7

ADDENDUM A Section 7110.10 Vocational Rehabilitation ................................................................................................... H-8

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Section 8(a) of the Illinois Workers’ Compensation Act provides that in addition to medical treatment the employer “shall also pay for treatment, instruction and training necessary for the physical, mental and vocational rehabilitation of the employee, including all maintenance costs and expenses incidental thereto.” Pursuant to that section, the Industrial Commission has promulgated Ill. Admin. Code, Title 50, ch. II, § 7110.10 (1983) outlining the requirements of vocational rehabilitation. They are attached as “Addendum A” to this section. The requirement of developing a written claim within 120 days of the injury is seldom followed in practice. However, the Illinois Workers’ Compensation Commission recently held Rule 7110.10 is a mandate, not a suggestion. Belice v. Mayfield Transfer, 07 I.W.C.C. 0169. I. WHEN SHOULD VOCATIONAL REHABILITATION FIRST BE EXPLORED?

Section 6(d) requires that the employee be advised by his employer of his right to rehabilitation services and advise him of the locations of available public rehabilitation centers and any other such services of which he has knowledge. Industrial Commission Rule § 7110.10 (Ill. Admin. Code, Title 50, ch. II, § 7110.10 (1983)) requires that a vocational rehab plan be written if petitioner’s total incapacity for work exceeds 120 days, or when it can reasonably be determined that the injured worker will be unable to resume the regular duties in which he was injured, whichever first occurs. II. GUIDELINES FOR IMPLEMENTATION OF REHABILITATION

The seminal case on vocational rehabilitation in the State of Illinois is National Tea Co. v. Industrial Comm’n, 97 Ill. 2d 424, 454 N.E.2d 672, 73 Ill. Dec. 575 (1983). National Tea sets out the following criteria for consideration in formulating a rehabilitation plan:

A. Established Factors Regarding Rehabilitation

• Relative costs and benefits to be derived from the program. • Employee’s work life expectancy. • Ability and motivation of employee to undertake program. • Employee’s injury has reduced his earning capacity. (This is the most typical reason for

institution of a vocational rehabilitation plan.) • Evidence that rehabilitation will increase employee’s earning power. • Likelihood of obtaining employment upon completion of the program. • Unsuccessful previous rehabilitation programs undertaken by the employee.

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• Employee’s existing skills which might enable him to obtain employment without more

training or education. • Designed to restore employee to pre-injury earnings. • Is not to be applied inflexibly.

B. Additional Factor for Rehabilitation

“Is the employee likely to lose job security due to his injury?” Connell v. Industrial Comm’n, 170 Ill. App. 3d 49, 523 N.E.2d 1265, 120 Ill. Dec. 354 (1st Dist. 1988). III. PETITIONER’S RIGHTS UNDER VOCATIONAL REHABILITATION

• Petitioner has the right to vocational rehabilitation as interpreted by National Tea at the employer’s expense. Section 8(a).

• Petitioner has the right to choose his own counselor, although they seldom do. Avenarius v. Consolidated Freightways, 86 IIC 1498; 820 ILCS 305/8(a).

• Petitioner is arguably not restricted to the limitations on the chain of referrals in the selection of a vocational rehabilitation specialist. Section 8(a)(3) states in part:

This paragraph shall not affect the duty to pay for rehabilitation referred to above.

• Most respondents would take the position, however, that the limitations do apply.

• Petitioner has a right to temporary total disability compensation during the rehabilitation

program. National Tea Co. v. Industrial Comm’n, 97 Ill. 2d 424, 454 N.E.2d 672, 73 Ill. Dec. 575 (1983); Connell v. Industrial Comm’n, 170 Ill. App. 3d 49, 523 N.E.2d 1265, 120 Ill. Dec. 354 (1st Dist. 1988); Avenarius v. Consolidated Freightways, 86 IIC 1498; 820 ILCS 305/8(a).

• Petitioner has a right to receive a copy of his rehabilitation reports prepared by the respondent’s rehabilitation counselor.

• Petitioner has a right to avail himself of the extraordinary procedures and remedies provisions of sections 19(b) and 19(b-1), and can seek penalties under section 19(k)(1) and attorneys’ fees under section 16 for failure to provide a vocational rehabilitation plan. Archer Daniels Midland Co. v. Industrial Comm’n, 174 Ill. App. 3d 918, 529 N.E.2d 237, 124 Ill. Dec. 417 (3d Dist. 1988), rev’d in part, 138 Ill. 2d 107, 561 N.E.2d 623, 149 Ill. Dec. 253 (1990); Howlett’s Tree Service v. Industrial Comm’n of Illinois, 160 Ill. App. 3d 190, 513 N.E.2d 82, 111 Ill. Dec. 836 (2d Dist. 1987).

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• The burden is not on the employee to request vocational rehabilitation. Roper v. Industrial Comm’n of Illinois, 349 Ill. App. 3d 500, 812 N.E.2d 65 (2004).

• The duty of the rehabilitation vendor is to the employee, not the respondent. Fricker v. Jewel Food Stores, 97 I.W.C.C. 2170.

IV. RESPONDENT’S RIGHTS DURING VOCATIONAL REHABILITATION

• Respondent has the right to nominate the initial vocational rehabilitation consultant pursuant to sections 8(a) and 6(d).

• Respondent has a right to suspend temporary total disability compensation/maintenance if the petitioner is non-cooperative on with rehabilitation efforts. Archer Daniels Midland Co. v. Industrial Comm’n, 174 Ill. App. 3d 918, 529 N.E.2d 237, 124 Ill. Dec. 417 (3d Dist. 1988), rev’d in part, 138 Ill. 2d 107, 561 N.E.2d 623, 149 Ill. Dec. 253 (1990). Issue is “what constitutes non-cooperation.”

Additionally, section 19(d) may provide an additional basis for a suspension of temporary total disability for non-cooperation. Section 19(d) states in part:

If any employee shall persist in insanitary or injurious practices which tend to either imperil or retard his recovery or shall refuse to submit to such medical, surgical, or hospital treatment as is reasonably essential to promote his recovery, the Commission may, in its discretion, reduce or suspend the compensation of any such injured employee.

Arguably, however, the respondent must institute a proceeding to suspend benefits rather than simply terminate them. In practice, they are most commonly simply terminated. Hayden v. Industrial Comm’n, 214 Ill. App. 3d 749, 574 N.E.2d 99, 158 Ill. Dec. 305 (1st Dist. 1991), has upheld the respondent’s unilateral termination of temporary total disability on the basis that the petitioner did not cooperate with efforts to place him in another job. In Hayden, the petitioner, an ironworker, sustained a back injury that prevented him for returning to his regular job. Temporary total disability was paid while the respondent attempted to place the petitioner in another job. A welding job became available, but the petitioner declined to accept the job because he thought it would be boring and it paid less than his job as an ironworker. Respondent declined temporary total disability for non-cooperation and the Appellate Court upheld this termination. • Respondent has the right to terminate maintenance payments upon petitioner’s completion

of the rehabilitation program. Archer Daniels Midland Co. v. Industrial Comm’n, 174 Ill. App. 3d 918, 529 N.E.2d 237, 124 Ill. Dec. 417 (3d Dist. 1988), rev’d in part, 138 Ill. 2d 107, 561 N.E.2d 623, 149 Ill. Dec. 253 (1990).

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V. RECENT STATUTORY CHANGES

The amendments to the Workers’ Compensation Act effective February 1, 2006 amended section 8(a) of the Act to provide that any vocational rehabilitation counselor who provides services under the Act shall have appropriate certifications that designate he or she is qualified to render opinions relating to vocational rehabilitation. VI. VOCATIONAL REHABILITATION IN A DIFFICULT ECONOMY

A. Selection of a Rehabilitation Counselor

With the recent economic downturn, vocational rehabilitation will probably become more important than in the past. Many employers will have fewer alternative positions to which an injured worker can return. Other employers will be hiring fewer people, and more selective in the people whom they do hire, resulting in fewer alternative positions in the job market for those workers displaced from their jobs. Thus, the selection of a vocational rehabilitation vendor will be more important than ever. While there is no formula for the selection of a proper vocational rehabilitation counselor, the following criteria should be considered: • It is important to choose a vendor with whom you have had past success. Success can mean

successful job placement, or successful claim resolution. It is important to choose a vendor who will make a diligent effort to place the petitioner in alternative employment. It is also important to choose a vendor who, if the petitioner does not make a good faith job search, will be candid in their assessment of that job search and willing to testify against petitioner if necessary.

• It is important to choose a vendor with credibility with the arbitrator before whom the claim will ultimately be presented. That determination is not always easy to make. Check with your defense attorney or other claims adjusters for persons known to have good credibility with the arbitrator. It is important that the vocational vendor be viewed by the arbitrator as a person whose objective was to place the petitioner in an alternative employment, and failed only because of petitioner’s non-cooperation.

• When possible, it is good to have a vocational vendor based in petitioner’s job search area. Such vendors are likely to know the job market better, are likely to have more immediate knowledge of job openings, and are available to keep the pressure on the petitioners to be diligent in their job search.

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• It is also important to choose a vocational vendor who will be available at the time of trial. Too often out-of-town or out-of-state vendors find it inconvenient to make trial appearances. Testimony at trial is a critical part of the service which can be offered by a vendor in any unsuccessful job search program.

• It is important to choose a vocational vendor with good credibility and job experience. As noted above, it is helpful if the vendor has had experience testifying at trial.

B. Vocational Rehabilitation Needs Should Be Determined Early

As noted above, in the poor economy, it is more and more likely that injured workers will not have jobs to which to return. Thus, there is an increased probability of vocational rehabilitation being needed. Those acting on behalf of employers should make the determination of the probable need for vocational rehabilitation as early as possible. Too often employers wait for maximum medical improvement before considering vocational rehabilitation. As noted above, Rule 7110.10 requires that a plan be developed as quickly as it can be reasonably determined that the injured worker will be unable to resume regular duties, or when the period of total incapacity of work exceeds 120 days, whichever first occurs. There are many cases in which such determination can be easily made early on. In those cases, it is to the employer’s benefit to initiate vocational rehab early. Typically, maintenance must be paid during a vocational rehabilitation program. With early determination of the need for vocational rehabilitation, maintenance costs can be reduced as the vocational rehabilitation can occur during the period of petitioner’s temporary total disability. In other words, while petitioner is drawing temporary total disability and recovering from his injury, he can be undergoing the rehabilitation process. Much of the testing and training necessary for any rehabilitation program can occur early in the process. If a person needs a GED, the GED requirements can be fulfilled while the petitioner is temporarily totally disabled. Further, early initiation of a vocational rehabilitation program can force the petitioner to do something while in the recovery mode rather than simply drawing a temporary total disability check for doing nothing.

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ADDENDUM A Section 7110.10 Vocational Rehabilitation a) The employer or his representative, in consultation with the injured employee and, if represented, with his representative, shall prepare a written assessment of the course of medical care, and, if appropriate, rehabilitation required to return the injured worker to employment when it can be reasonably determined that the injured worker will, as a result of the injury, be unable to resume the regular duties in which he was engaged at the time of injury, or when the period of total incapacity for work exceeds 120 continuous days, whichever first occurs. b) The assessment shall address the necessity for a plan or program which may include medical and vocational evaluation, modified or limited duty, and/or retraining, as necessary. c) At least every 4 months thereafter, provided the injured employee was and has remained totally incapacitated for work, or until the matter is terminated by order or award of the Industrial Commission or by written agreement of the parties approved by the Industrial Commission, the employer or his representative in consultation with the employee, and if represented, with his representative shall: 1) if the most recent previous assessment concluded that no plan or program was then necessary, prepare a written review of the continued appropriateness of that conclusion; or 2) if a plan or program had been developed, prepare a written review of the continued appropriateness of that plan or program, and make in writing any necessary modifications. d) A copy of each such written assessment, plan or program, review and modification shall be provided to the employee and/or his representative at the time of preparation, and an additional copy shall be retained in the file of the employer and, if insured, in the file of the insurance carrier, to be made available for review by the Industrial Commission on its request until the matter is terminated by order or award of the Industrial Commission or by written agreement of the parties approved by the Industrial Commission. e) The rehabilitation plan shall be prepared on a form furnished by the Industrial Commission. Ill. Admin. Code, Title 50, ch. II § 7110.10 (1983)

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Gary L. Borah - Partner

Gary has spent his entire legal career with Heyl Royster beginning in 1975 in the Springfield office. Born in Mt. Erie, Illinois, Gary became a partner with the firm in 1981. He has handled a wide range of cases, including workers' compensation, medical malpractice, products liability, automobile, construction accidents, and coverage issues. Gary concentrates his practice in the area of workers' compensation and employment law. He has made presentations for the Law Ed Seminars of the Illinois State Bar Association, and has frequently spoken to management and insurance audiences on workers' compensation and risk management. He regularly counsels self-insureds on their unique problems, offering experience and insight for implementing successful programs. He currently supervises the workers' compensation practice group in Heyl Royster's Springfield office. Gary has been designated one of the "Leading Lawyers" in Illinois as a result of a survey of Illinois attorneys conducted by the Chicago Daily Law Record, a designation awarded to only the top five percent of lawyers in the state. Public Speaking • “Repetitive Trauma - The Defenses are in the

Details” Heyl Royster 2008

• “Dollars and Cents: Top Ten Things Everyone Should Know Regarding Workers' Compensation” Safeworks Work Injury Conference 2006

• “Investigating and Resolving the Death Case” Heyl Royster 2007

• “Cumulative Trauma Disorders and Job Site Analysis: Minimizing Risk in the Workplace and the Courts” Midwest Rehabilitation 2008

• “Hot Topics in Illinois Workers' Compensation: New Problems, New Issues, New Solutions” Midwest Rehabilitation 2006

• “Penalties, Penalties, and More Penalties: The Changes to Section 19 and Strategies for Minimizing Penalty Exposure” Heyl Royster 2006

• “The Illinois Workers' Compensation Reform Act 2005” CorVel Corporation 2005

• “Top Ten Things Every Employer Should Know About Workers' Compensation” Illinois Land Improvement Contractors Association 2006

• “Trade-Offs in Claims Management” Hortica Insurance 2006

• “Top Ten Things Every Employer Should Know About Workers' Compensation” Gateway Rehabilitation Workers' Compensation Spring Conference 2007

Professional Recognition • Martindale-Hubbell AV Rated. • Selected as a Leading Lawyer in Illinois. Only


Professional Associations • Workers' Compensation Lawyers' Association • American Bar Association • Illinois State Bar Association (past member

Workers' Compensation Section Council) • Sangamon County Bar Association



Education • Juris Doctor, University of Toledo, 1975 • Bachelor of Science-Agricultural Science,

University of Illinois, 1971


I-1

THE BOTTOM LINE: EARLY CLAIM INVESTIGATION AND DEVELOPMENT

Presented and Prepared by: Craig S. Young





I-2


I. INTRODUCTION ............................................................................................................................................. I-3 II. ACCIDENT INVESTIGATION ....................................................................................................................... I-3

A. Why Should an Accident Be Investigated? ........................................................................... I-3 B. General Guidelines for Accident Investigation .................................................................... I-4

1. Get the Big Picture First ................................................................................................ I-4 2. Interview the Most Knowledgeable Person .......................................................... I-4 3. Record All Critical Information ................................................................................... I-4 4. Drawings and Photos May Be Helpful..................................................................... I-4

C. Specific Guidelines for Conducting an Investigation ........................................................ I-4

III. RED FLAGS – IMPORTANT SIGNS RAISING QUESTIONS

REGARDING LEGITIMACY OF CLAIM ..................................................................................................... I-5

A. Red Flags Indicating That Accident May Be Fraudulent .................................................. I-5

1. Unwitnessed Accidents ................................................................................................. I-5 2. Ambiguous Claims with Respect to Date, Time and Place .............................. I-5 3. Overly-Specific Claims ................................................................................................... I-5 4. Accident Witnessed Only by Friends or Co-Claimants ..................................... I-5 5. Inconsistencies Between the Initial Accident Description

by the Petitioner and Subsequently Obtained Information ............................ I-6 6. Patterns of Claims ........................................................................................................... I-6 7. Weekend Warrior Accidents ....................................................................................... I-6 8. General Layoffs, Strikes, or Scheduled Termination of Employee ................ I-6 9. Type of Injury Inconsistent with the Nature of Employment ......................... I-6 10. Claims Filed by Disgruntled Employees.................................................................. I-7 11. General Life Situations .................................................................................................. I-7 12. Concurrent Income ......................................................................................................... I-7 13. Family History ................................................................................................................... I-7

B. Red Flags Indicating That Claimed Period of TTD May Be Fraudulent ...................... I-7

IV. Follow Up to Investigation and Early Development of File Strategy ......................................... I-8

I-3


I. INTRODUCTION

One positive benefit of difficult economic times is it causes all of us to rethink our actions and go back to the basics. This applies not only in our business, but also in our personal lives. We are all looking more closely at our personal financial situations and identifying those areas where we can employ best practices to save money and reduce waste. The same concepts apply to the management of workers’ compensation cases. During these difficult economic times when claims may increase, and when it is more difficult for companies to bear the burden of workers’ compensation costs, we all must go back to the basics and focus on those best practices which help to manage and reduce workers’ compensation costs. In truth, some have become lax in proper claim handling techniques during these past several years of increased awards through the Industrial Commission. Those in charge of workers’ compensation decisions have legitimately developed the belief that even with proper claims handling techniques, the case will be lost, so why bother. In fact, proper claims handling has been even more important over the last several years, and will become of greater importance as we deal with the impact the difficult economy will have on the workers’ compensation equation. By far, the most important work carried out by the workers’ compensation claims handler occurs at the beginning of the case. Proper investigation, and early claim development is paramount to saving costs, not only in those cases which need to be defended, but also in the compensable case. When a claim is properly investigated and a proper defense strategy is established early, the path to ultimate resolution will always be easier, and more cost effective. The bottom line is truly impacted by early claim investigation and file development. II. ACCIDENT INVESTIGATION

A. Why Should an Accident Be Investigated?

There are numerous reasons for early accident investigation to take place on all claims. While it is certainly true that one goal of the accident investigation is to isolate those claims which are illegitimate and in need of defense, there are many other valuable results which develop from proper and early accident investigation. Those include: • Preventing or controlling a future reoccurrence or similar accident. • Properly and timely preparing all necessary forms, including Illinois Form 45, and any

pertinent company investigation reports.

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• Respond to the injured employee in a timely fashion.

• Insure the injured employee receives the appropriate medical attention promptly.

• Begin initial assessment of off work status and where appropriate, begin the encouragement of a prompt return to work.

• Direct the injured employee to assigned company medical facility, if appropriate.

• Record all pertinent facts which may bear on the compensability of the claim.

B. General Guidelines for Accident Investigation

1. Get the Big Picture First

Broad analysis of the accident scene and the accident facts. “See for yourself” what really happened and get the big picture.

2. Interview the Most Knowledgeable Person

This may be the claimant himself, a co-employee, or even a passer-by who has been involved in the occurrence or saw the incident.

3. Record All Critical Information

Even if you are not preparing an official report at the scene, record the information so that a report can be completed comprehensively and promptly.

4. Drawings and Photos May Be Helpful

Conditions can change quickly, so the more you can document with physical evidence as to the accident scene, the better.

C. Specific Guidelines for Conducting an Investigation

• What happened? • How did it happen? • Where did the accident occur? • When did it occur? • Who was injured?

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• What was injured? (be specific as to body parts) • Any witnesses? Who? Verify facts with witness? • What corrective action can be taken to prevent similar incident? • When possible, return to the scene of the accident to conduct the investigation, as this will

provide the most accurate and thorough information.

• Conduct investigation immediately. III. RED FLAGS – IMPORTANT SIGNS RAISING QUESTIONS REGARDING LEGITIMACY

OF CLAIM

A. Red Flags Indicating That Accident May Be Fraudulent

1. Unwitnessed Accidents

Unwitnessed accidents can be compensable in the State of Illinois. In unwitnessed accidents, one should always consider whether or not the accident could have occurred in the manner which is being claimed by the petitioner. For example, in one workers' compensation claim filed in the State of Illinois, a claimant claimed that a brick fell on his head while he was sitting in a hallway on break. Investigation revealed there were no bricks missing in the walls which enclosed the stairway.

2. Ambiguous Claims with Respect to Date, Time and Place

3. Overly-Specific Claims

Claimants sometimes go overboard and provide too many specific details with respect to an accident. For example, some would consider it unusual for a claimant to be able to specifically identify the hour and minute when an accident took place. In one workers' compensation claim filed in the State of Illinois, a certified nurse's aide claimed that he injured his low back while transferring an obese patient in a particular room at a particular time on a specific date. It was determined subsequently, however, that the obese resident had died prior to the alleged accident date.

4. Accident Witnessed Only by Friends or Co-Claimants

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5. Inconsistencies Between the Initial Accident Description by the Petitioner and Subsequently Obtained Information

Some arbitrators believe that information given by the petitioner at the initial medical treatment or evaluation is more reliable than statements made later on in medical treatment or during the litigation process. The more inconsistencies with respect to history between the initial accident description and the statements made subsequently, the more questionable the claim may be.

6. Patterns of Claims

Sometimes there are patterns of claims which suddenly come up in one section or department of a company. For example, one employer in Illinois operated for 15 years and never had any carpal tunnel claims. Following unionization and meetings which featured petitioner workers' compensation attorneys, the company suddenly experienced multiple workers' compensation claims alleging bilateral carpal tunnel syndrome. A cross-reference should be made with each claimant in these situations to determine if they are seeing the same doctors, using the same attorneys, etc. If the employee is temporary, index checks will help identify claimants with multiple insurance claims against previous employers for possibly the same type of injury. Additionally, small "mom and pop" businesses should be scrutinized carefully because oftentimes family members will present claims with the full support of the employer in circumstances such as lack of group medical coverage.

7. Weekend Warrior Accidents

Monday morning injuries and Friday injuries not reported until Monday raise a question as to whether or not the injury is work-related, or occurred over the weekend.

8. General Layoffs, Strikes, or Scheduled Termination of Employee

Any claim filed prior to a general layoff, strike, or termination of the petitioner is suspect. Sometimes this is difficult to avoid in light of such laws as the Federal Plant Closing Act which requires 60 days' notice before an employee can be terminated. Additionally, injuries which occur immediately after a person begins employment raise questions, especially in situations where the employee is newly hired or where the employer has no control over the hiring (labor pools, unions, and day labor). Also, seasonal employment such as those involving construction, agriculture, and tourism industries are ripe for alleged work-related accidents occurring just prior to the end of the season. Any claims which are reported following termination of the employee are suspect.

9. Type of Injury Inconsistent with the Nature of Employment

Does the diagnosis or pathology result from the alleged trauma or repetitive work duty? This type of analysis quite often requires assistance from a medical expert/evaluator. However, common sense and general medical knowledge possessed by experienced claims handlers can identify this situation of possible fraud.

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10. Claims Filed by Disgruntled Employees

Oftentimes alleged accidents occur following disciplinary actions and warnings. Claims can follow passovers for promotions or following arguments with superiors or co-workers.

11. General Life Situations

For example, sometimes a claimant lives in a large, extended family with small children. Sometimes child care can be a problem that may be a reason to stay off work and fake an accident. Pregnancy or, for example, situations where a spouse or the employee suddenly obtains custody of children as a result of a divorce proceeding can coincide with workers' compensation claims.

12. Concurrent Income

Although an employee can make more money while at work, as opposed to being off work from a temporary standpoint (benefits are only two-thirds of the average weekly wage), sometimes other financial concerns (such as other employment) make it cost-effective for a petitioner to be receiving TTD benefits.

13. Family History

Index checks of family members may be appropriate in certain circumstances. If a mother, father, brother, or sister has been successful in obtaining workers' compensation benefits, then this is easily picked up by family members.

B. Red Flags Indicating That Claimed Period of TTD May Be Fraudulent

The following are indicators of situations where the petitioner may be malingering for the sake of TTD benefits: • Variance between objective findings and subjective complaints; • Situations where a friend or family member has been enlisted to assist the petitioner (when

discussing the status of the matter with the employer, claims handler, picking up TTD benefits, etc.);

• Unexplained income or lifestyle (possibly due to concurrent employment, illegal drug sales,

etc.); • The petitioner is never at home when telephoned; • The petitioner coming to and from his house with great frequency at unscheduled times;

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• The petitioner is never available or rarely available to take a telephone call, even if allegedly at home;

• Activities that exceed medical restrictions. Neighborhood canvasses, activities checks, and

surveillance can be beneficial; • Refusal of non-invasive treatment (such as functional capacity evaluation, simple tests, etc.); • Refusal of medical management; • Refusal or reluctance to perform job searches; and • Noncooperation with Light Duty. IV. Follow Up to Investigation and Early Development of File Strategy

Clearly, proper file handling in the early stages does not end with the investigation. Following completion of an immediate investigation, the most important work of gathering all necessary documentation and formulating a defense strategy becomes paramount. In a best case scenario, the following steps should be completed after the investigation and before making final decisions on compensability and payment of benefits. • Follow up on any potential witnesses and take statements where appropriate • Determine prior claim history of the petitioner and identify patterns • Determine outside issues which could bear on the petitioner’s motivation to file claim,

including lay-off/termination status • Gather as many medical records as possible regarding treatment and determine whether or

not medical histories, diagnoses, and treatment are consistent with claimed injury • Speak with employer and review all medical records to determine status of pre-existing

conditions and treatment for same • Set a realistic plan for treatment in compensable cases and retain medical case

management, if necessary • Determine potential for return to work in restricted capacity, if necessary, and set early plan

for termination of TTD benefits • Confer with defense counsel if necessary on compensability issues

I-9

• Set clear defense and management plan with objective criteria for bringing claim to conclusion

Understandably, in the real world, conducting the perfect investigation and obtaining all information to set an early defense strategy will not always occur. We do have an obligation to accept or deny claims in prompt fashion, and it isn’t always possible to have every piece of information available before making final decisions, especially on the issue of compensability. The goal, however, must always be to gather all information before paying any benefit. It is no secret that the voluntary payment of benefits, even if only for a short amount of time, can dramatically diminish the effectiveness of a valid defense. It is therefore important, especially in those claims which carry red flags, to hold off on the payment of benefits, if possible, until the appropriate information is gathered and analyzed. Aggressive initial investigation and management of the claim will create a situation in which these types of informed decisions are possible, which in turn will dramatically reduce the cost of each claim.

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Craig S. Young - Partner

Craig practices in the firm's workers' compensation and employment law practice groups and he takes an active leadership role in the management of those practice groups. Craig began his career at Heyl Royster as a summer clerk while in law school and became an associate in the firm's Peoria office in 1985. He has spent his entire career with Heyl Royster and became a partner in 1993. He is recognized as a leading workers' compensation defense lawyer in the state of Illinois and has handled all aspects of Illinois workers' compensation litigation including arbitrations, reviews, and appeals. He has developed expertise in the application of workers' compensation to certain industries including hospitals, trucking companies, municipalities, large manufacturers, school districts, and universities. In addition to his expertise in litigated cases, Craig has developed a reputation for counseling employers regarding overall management of the workers' compensation risk. Through seminars and presentations to local and national industry groups, in-house meetings, regular claims review analysis, and day-to-day legal counsel, Craig assists his clients in looking beyond each individual case in an effort to reduce overall workers' compensation expense. His comprehensive approach to workers' compensation issues also includes third-party liability and lien recovery issues. Currently, Craig serves on the management team for the firm's workers' compensation practice group, and on the steering committee for the workers' compensation committee of the Defense Research Institute. He also chairs DRI's Program Committee and in that role has assisted in nationally acclaimed teleconferences on specific issues relating to workers' compensation defense. He has been designated as one of the "Leading Lawyers" in Illinois as a result of a survey of Illinois attorneys conducted by the Chicago Daily Law Record. Craig is actively involved in supporting many local charitable organization and civic causes. He was the 2008 recipient of the Peoria County Bar Association's Distinguished Community Service Award. Public Speaking

• “Medical Science, Industrial Commission Science - Understanding the Industrial

Commission's Approach to Medical Issues” Lorman Education Services 2008

• “The Employee Who Can't Return to Work: Wage Differentials, Vocational Rehabilitation & Job Placement” Lorman Education Services 2008

• “Medicare Set-Aside Agreements-The Rest of the Story” Defense Research Institute 2007

• “Resolving (or Alleviating) the Chronic Pain Case” Heyl, Royster, Voelker & Allen 2007

• “Definition, Statutory Employers, Self-Insureds, Insurance Non-Compliance and the Stop-Work Order: Sections 1,3 and 4” Heyl, Royster, Voelker & Allen 5/16/2006

• “Workers' Compensation and Illegal Aliens” Defense Research Institute 2006



• Peoria County Bar Association 2008 Distinguished Community Service Award

Professional Associations • American Bar Association • Illinois State Bar Association • Peoria County Bar Association - Board Member

and Chair of By-laws Committee • Defense Research Institute - Workers'

Compensation Steering Committee - Program Chair

• Prairie State Campaign for Legal Services - Committee Member

• Abraham Lincoln American Inn of Court Court Admissions • State Courts of Illinois • United States District Court, Central District of


Education • Juris Doctor, University of Illinois, 1985 • Bachelor of Arts-History (Summa Cum Laude),

Bradley University, 1982


J-1

FEDERAL BAILOUT? MSA STRATEGIES AND DEVELOPMENTS

Presented and Prepared by: Bradford J. Peterson





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I. MEDICARE SET-ASIDE OVERVIEW ...................................................................................................... J-3

A. Conditional Payments/Medicare Lien ................................................................................ J-4 II. RECENT DEVELOPMENTS ....................................................................................................................... J-4 III. MEDICARE SET-ASIDE STRATEGIES .................................................................................................... J-5

A. Physician’s Bailout ...................................................................................................................... J-5 B. Settlement/Dismissal Involving Multiple Claims ............................................................ J-6 C. Zero Allocation ............................................................................................................................ J-6 D. Concurrent Civil Claim .............................................................................................................. J-7

IV. SETTLEMENT BELOW THRESHOLDS .................................................................................................. J-7 V. MANDATORY MEDICARE REPORTING REQUIREMENTS ............................................................ J-7

A. SCHIP Extension Act .................................................................................................................. J-7 B. Responsible Reporting Entities ............................................................................................. J-8 C. Registration .................................................................................................................................. J-8 D. Triggers to Reporting ............................................................................................................... J-9 E. Reporting Thresholds ............................................................................................................... J-9

1. Medical Expenses ........................................................................................................ J-9 2. Total Settlement ....................................................................................................... J-10 3. Closed Cases .............................................................................................................. J-10

F. Medicare Resources ............................................................................................................... J-11

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I. MEDICARE SET-ASIDE OVERVIEW

The intent of the Medicare Secondary Payer Statute 42 USC § 1395y(b)(2) is relatively straight forward. It provides that Medicare is not required to pay for medical services to the extent that payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan. See 42 CFR § 411. The Medicare Secondary Payer Act is administered by the Center for Medicare and Medicaid Services which is a subdivision of the Federal Department of Health and Human Services. Where future medical care is reasonably anticipated for the work-related injury, a settlement with a Medicare eligible claimant will need to protect Medicare’s interests under the Medicare Secondary Payer Act. Where future medical care is reasonably anticipated, Medicare requires that funds for future Medicare covered expenses be Set-Aside to pay for future medical bills incurred as a result of the work related condition. These funds are referred to by the Center for Medicare and Medicaid Services as “Set-Aside arrangements.” The Set-Aside should be funded in an amount sufficient to pay for reasonably expected, causally related medical expenses for the life expectancy of the petitioner. See CMS Memo (April 22, 2003) Q & A5. If future medical treatment is not “reasonably anticipated” then a settlement may be reached without an allocation for future medical expenses or a Medicare Set-Aside account. If future medical treatment is not reasonably anticipated, then a written statement from the individual’s treating physician should be acquired and state that future medical treatment is not reasonably anticipated. See CMS Memos (April 22, 2003) Q & A20. Set-Aside arrangements may be funded through lump sum payments and/or structured future payments. Similarly, the Medicare Set-Aside account may be either independently administered or self administered. Where self administered, Medicare requires that the claimant comply with formal rules and requirements as to payments from the Set-Aside and accounting for those payments. See CMS Memo (April 22, 2003) Q & A8. Medicare approval for a proposed Medicare Set-Aside is required in two instances. If the claimant is Medicare eligible they are deemed a Class I beneficiary and Medicare approval for the Set-Aside is required where the total settlement is $25,000 or more. CMS states that the total settlement amount for purposes of the threshold includes but is not limited to wages (TTD), attorney’s fees, future medical expenses and repayment of any Medicare conditional payments. CMS Memos (July 11, 2005) and (April 25, 2006). If the claimant is not currently Medicare eligible but there is a reasonable expectation of Medicare enrollment within 30 months of the settlement date, then the CMS approval threshold is $250,000. These types of future beneficiaries are referred to as Class II beneficiaries.

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Where Class I and Class II beneficiaries do not meet the respective thresholds, then Medicare approval is not required for the Medicare Set-Aside. It is important to note, however, that CMS considers these thresholds as “work load review” thresholds and not safe harbor thresholds. In other words, although Medicare does not require approval for the Set-Aside amount, this does not waive any of Medicare’s rights, including enforcement, under the Medicare Secondary Payer Act.

A. Conditional Payments/Medicare Lien

If Medicare determines the workers’ compensation insurer will not pay promptly (within 120 days), providers and suppliers may submit claims to Medicare and Medicare will make a conditional payment. This conditional payment becomes a Medicare lien with regard to the pending workers’ compensation action. The Medicare Secondary Payer Act places a responsibility on insurers to reimburse the government when it has paid conditional Medicare benefits for an injured party. 42 USC § 1395y(b)(2)(B)(ii). The term “super lien” applies to Medicare liens as the insurer is not entitled to notice from Medicare of the conditional payment. Furthermore, it takes priority over other liens. Medicare is subrogated to any right of an individual or entity to recover payment from an insurer for medical bills. 42 USC § 1395y(b)(2)(B)(iv). Medicare also has the right to sue an insurer in order to recover benefits they paid out that the primary insurer should have covered. In addition to recovering reimbursement, they may also have a right to collect double damages against the insurer. 42 USC § 1395y(b)(2)(B)(iii). As Medicare is not required to give notice of conditional payments, it is incumbent upon insurers and their counsel to identify any claims involving Medicare beneficiaries and in such instances determine whether Medicare has paid any of the medical expenses related to the workers’ compensation injury. Upon written request, Medicare will perform a conditional payments search and confirm whether Medicare has paid any medical expenses and, if so, identify the amount of their lien. Where Medicare liens exist, the settlement contract should include language identifying the liens and confirming satisfaction of the lien through settlement. Although an indemnification clause would provide a remedy for an insurer, the indemnification clause will not be binding on Medicare. When satisfying a Medicare lien, payments should be made directly to Medicare and not the claimant. II. RECENT DEVELOPMENTS

In the last twelve months, CMS has issued additional Memoranda setting forth policy with regard to Medicare Set-Aside accounts. In its Memorandum of May 20, 2008, CMS asserted that the only life expectancy table they would recognize is the CDC Table 1 (All American Tables). This was in response to some vendors relying upon highly conservative life expectancy tables in an effort to reduce the amount necessary to fund the Medicare Set-Aside account. Medicare still

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recognizes, however, that parties may still calculate a Medicare Set-Aside amount based upon a claimant’s rated age. Prior to August 25, 2008, Medicare beneficiaries who had a change in condition such that future medical treatment was no longer anticipated could petition CMS for the release of the Medicare Set-Aside funds to the claimant. This policy changed with the CMS Memorandum of August 25, 2008. As of August 25, 2008, early termination of a Medicare Set-Aside account secondary to an improved condition is no longer permitted. The pricing for prescription drugs was addressed in CMS’s Memorandum of April 3, 2009. The Memorandum provides that beginning June 1, 2009, all Medicare Set-Aside submissions must calculate prescriptions utilizing the average wholesale price. After June 1, 2009, CMS will not recognize any other pricing, discounting or calculation methods when determining the adequacy of the prescription drug amounts in Medicare Set-Aside proposals. Prior to 2008, all of CMS’s regional offices participated in the approval process for Medicare Set-Aside proposals. The Center for Medicare Services has since reduced the number of regional offices evaluating Medicare Set-Asides to six. The Chicago Regional Office of CMS still participates in the review and approval of Illinois Set-Aside proposals. Additional regional offices handling the review of Medicare Set-Asides are Boston, Philadelphia, Dallas, San Francisco and Seattle. Regional offices in Denver, Atlanta, Kansas City and New York will no longer be handling Medicare Set-Asides. The Chicago regional office, division for Medicare Set-Asides, can be contacted at (312) 353-1801. III. MEDICARE SET-ASIDE STRATEGIES

Several strategies may be considered when handling a workers’ compensation claim with potential Medicare Set-Aside issues. Careful analysis must be undertaken as to whether the Medicare Secondary Payer Act, in fact, applies to your claim and whether a Medicare Set-Aside account must be established. One must always remain cognizant, however, that the Secondary Payer Act includes enforcement and penalty provisions where it is determined the parties improperly attempt to intentionally shift liability for medical expenses to Medicare. 42 CFR § 411.24(c)(2) (2006).

A. Physician’s Bailout

On many occasions claims handlers and attorneys overlook perhaps the most straight forward issue in the Medicare Set-Aside analysis. That issue is whether future medical treatment is reasonably anticipated. Oftentimes the analysis can be mired in addressing more complex nuances of the Secondary Payer Act without first assessing whether future medical treatment is, in fact, reasonably anticipated.

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In many cases involving the most serious injuries, the need for future medical treatment will be a given. In many instances, however, establishing a Medicare Set-Aside account may not be necessary as the possibility of future medical treatment does not meet the standard set by Medicare. The standard is, in fact, whether future medical treatment is “reasonably anticipated.” The standard is not whether the petitioner “might” need future medical treatment or whether the petitioner “could” need future medical treatment. The standard is whether such future treatment is “reasonably anticipated.” In my practice, I view the “reasonable anticipation” standard as ‘whether it is more likely than not that the claimant will need future medical treatment.’ In order to avoid establishment of a Medicare Set-Aside account, a statement from the petitioner’s treating physician must be secured and set forth an opinion that future medical treatment is not “reasonably anticipated” for the condition. When presenting the issue to the treating physician it is best to inquire as to whether future medical treatment is reasonably anticipated, i.e., is it more likely than not that the claimant will need future medical treatment.

B. Settlement/Dismissal Involving Multiple Claims

Oftentimes we face petitioners who have filed multiple claims for different accidents and resulting injuries. Many such instances may involve some claims that are clearly compensable while others are highly disputed. Furthermore, some of the claims may involve a likelihood of future medical treatment whereas others may not. When presented with such situations, consideration should be given to settling the claim(s) on that case where future medical treatment is not reasonably anticipated. The claimant may have another claim where future medical treatment is reasonably anticipated, but that claim could be dismissed with prejudice without payment of any benefits. Remember, the need for a Medicare Set-Aside is only triggered if there is a settlement closing out the petitioner’s future medical rights under the Act. With a dismissal of such claims, there is no settlement involving that claim. Rather, proceeds are paid on the separate claim where future medical treatment is not reasonably anticipated.

C. Zero Allocation

In claims where a substantial dispute exists as to compensability, one may consider a zero allocation with regard to the Medicare Set-Aside trust. This strategy may prove successful in those cases where substantial evidence exists in support of a defense of non-compensability. It is most likely to be successful where evidence contradicts a causal connection between the alleged injury and the workplace. In such instances, care should be taken to insure that the vendor preparing the Set-Aside allocation is acutely aware of the disputed nature of the claim and the need to acquire a “zero allocation proposal.” When thresholds are met the zero allocation will be submitted to Medicare for their approval. Again, it will be incumbent upon the vendor to highlight for CMS the disputed nature of the claim and the evidence in support of non-compensability or lack of causal connection.

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D. Concurrent Civil Claim

There are rare instances in which a workers’ compensation claim can be resolved without payment of future medical or permanent partial disability benefits. One such rare situation arises when the claimant has a concurrent civil action on file for the occurrence leading to the work-related injury. Thought should at least be given to a possible settlement of the workers’ compensation case with the only consideration being a waiver of the workers’ compensation lien. The settlement would not be placed on settlement contracts and approved by the Commission, but rather would be consummated with a written lien waiver and dismissal of the pending workers’ compensation claim. Compensation for the petitioner’s “disability” and future medical expenses would subsequently be funded through a civil verdict or settlement. A caveat must be noted, however, as the Medicare Secondary Payer Act also applies to liability cases. 42 USC § 1395(y). Ultimately the insurers for settling defendants in the civil action would be responsible for protecting Medicare’s interests. IV. SETTLEMENT BELOW THRESHOLDS

When the need for a Medicare Set-Aside account has been determined, it must then be evaluated as to whether the Medicare Set-Aside will need to be approved by CMS. Settlement thresholds are established at $25,000 for claims involving current beneficiaries and $250,000 for claimants who meet the standard for future beneficiaries. If the settlement value of the claim (including the Set-Aside amount) is near one of these thresholds an effort should be undertaken to get the petitioner to accept an amount below the applicable threshold. The benefit to the petitioner is that he will not have to await receipt of settlement funds pending CMS approval of the Set-Aside. Of course, the benefit for the respondent is a lower overall settlement amount. V. MANDATORY MEDICARE REPORTING REQUIREMENTS

A. SCHIP Extension Act

The Medicare/Medicaid and SCHIP Extension Act, P.L. 110-173, 121 Stat. 2492, became effective in December 2007. The new statute created mandatory reporting requirements for claims involving Medicare eligible individuals. The statue places specific obligations on group health plans, liability insurers (including self insurance), no fault insurers and workers’ compensation insurers. These reporting requirements constitute a further effort by Medicare to enforce the Medicare Secondary Payer Act. 42 USC § 1395y(b)(2). The reporting requirements will assist Medicare in the enforcement of their liens and further protect Medicare’s interests with respect to future medical expenses. Section 111 of the Medicare/Medicaid and SCHIP Extension Act of 2007, contains the new mandatory reporting requirements. Initially, on August 1, 2008, proposed guidelines were published in the Federal Register, Volume 73 at 45013. CMS then published through their website a “supporting statement for the Medicare Secondary Payer (MSP) Mandatory Insurer

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Reporting requirements . . .” http://www.cms.hhs.gov/MandatoryInsRep. It must be noted that the supporting statement is a proposed guideline and amendments to the proposals continue. Since August 2008, additional publications and alerts have been published by Medicare with regard to the implementation process for the SCHIP Extension Act. These include the March 16, 2009, “Medicare Secondary Payer Mandatory Reporting User Guide version 1.0. The entities responsible for complying with the reporting requirements for § 111 are referred to as responsible reporting entities (RREs). Responsible reporting entities include, but are not limited to, workers’ compensation, auto liability and liability insurers. The information provided through the notice will allow CMS to identify “primary payers” that Medicare’s payments would be secondary to. In addition to Medicare claims processing, the information is also acquired for possible MSP recovery actions and identifying claims where Medicare may, in fact, hold a lien for prior conditional payments. Notification to Medicare will be undertaken by the responsible reporting entity and provided to the CMS coordination of benefits contractor (COBC). Technical aspects of the data submission process will be managed by the COBC.

B. Responsible Reporting Entities

Responsible reporting entities are defined as follows:

In this paragraph, the term ‘applicable plan’ means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan or arrangement: i. Liability insurance (including self insurance). ii. No fault insurance. iii. Workers’ compensation laws or plans.

42 USC 1395y(b)(8)(F) Third-party administrators may be contractually assigned to meet the reporting requirements on behalf of insurers or self insureds. Any contractual assignment by the RRE to a third party administrator does not, however, limit the overall responsibility of the RRE for compliance with the Act.

C. Registration

RREs are required to register with CMS and begin testing prior to June 30, 2009. Testing will be undertaken through December 31, 2009, and compliance through the production of data will begin in January 2010.

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D. Triggers to Reporting

The responsible reporting entities are to report only with respect to Medicare beneficiaries. If a reported individual is not a Medicare beneficiary or CMS is unable to validate a particular SSN or HICN then the reporting will be rejected by CMS. Triggers to the reporting requirement also vary depending upon the type of primary plan (insurance). For liability cases, the trigger will be the settlement, judgment, award or other payment to a Medicare beneficiary. Claims will need to be reported regardless of whether or not there is an admission or determination of liability. Once again, the obligation to report does not exist if the claimant is not a Medicare beneficiary as of the assigned reporting date. Claims involving workers’ compensation claimants will have an obligation to report when there is an ongoing payment responsibility for medical expenses. Where the RRE has an ongoing responsibility for medical bills, they must report two events. They must report when that responsibility has been assumed and when that responsibility has been terminated. CMS has indicated the RRE may submit a termination date for ongoing responsibility for medical (ORM) if they acquire a signed statement from the injured individual’s treating physician that they will require no further medical items or services associated with the claimed injuries. MMSEA Section 111 “Medicare Secondary Payer Mandatory Reporting User Guide version 1.0, March 16, 2009.”

E. Reporting Thresholds

1. Medical Expenses

Medicare publications refer to the insurer’s ongoing responsibility for medicals (ORM). For liability insurance there is no diminumus dollar threshold for reporting the assumption/establishment of ORM. All such claims will need to be reported. For workers’ compensation claims the ongoing responsibility for medicals are excluded from reporting through December 31, 2010, when all of these criteria are met:

a. “Medicals only.” b. “Lost time” of no more than 7 calendar days. c. All payment(s) has/have been made directly to the medical provider. d. Total payment does not exceed $600.00.

Id. For Illinois workers’ compensation claims please note that TTD would be paid after the three-day waiting period. 820 ILCS § 305/8(b). If payment of TTD is commenced on the fourth day of the claim, then the claim would not qualify for the exception under subsection (b) above.

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2. Total Settlement

Medicare publications do not refer specifically to the “total amount of settlement” but rather to the “total payments” obligations to the claimant (TPOC). See MMSEA Section 111 “Medicare Secondary Payer Mandatory Reporting User Guide version 1.0, March 16, 2009.” Reporting thresholds for liability and workers’ compensation with regard to the total payment obligations to the claimant are as follows:

a. For TPOCs dates July 1, 2009 through December 31, 2010, TPOC amounts of $.0.00 - $5,000.00 are exempt from reporting except as specified in “d” below.

b. For TPOCs dates of January 1, 2011, through December 31, 2011, TPOC

amounts of $.0.00 - $2,000.00 are exempt from reporting except as specified in “d” below.

c. For TPOCs dates of January 1, 2012 through December 31, 2012, TPOC

amounts of $0.00 - $600.00 are exempt from reporting except as specified in “d” below.

d. Where there are multiple TPOCs reported by the same RRE on the same

record, the combined TPOC amounts must be considered in determining whether or not the reporting exception threshold is met. For TPOCs involving a deductible, where the RRE is responsible for reporting both any deductible and any amount above the deductible, the threshold applies to the total of these two figures.

CMS Alert for Liability Insurance (including self insurance), no fault, and workers’ compensation, March 20, 2009.

3. Closed Cases

If an insurer had an ongoing responsibility for medical (ORM) that was assumed prior to July 1, 2009, and continued as of that date then the RRE must report this individual. Medicare recognizes, however, that RREs may not have collected necessary data elements for individuals where responsibility was assumed prior to July 1, 2009. For these individuals an extension was allowed until October 2010, to report. This extension only applies where the RRE has accepted ongoing responsibility for medical after July 1, 2009, but the original claim resolution or partial resolution was prior to July 1, 2009. If the ORM was assumed prior to July 1, 2009, and the claim was actively closed or removed from current claims records prior to January 1, 2009, the RRE is not required to identify and report that ORM under the requirement for reporting ORM assumed prior to July 1, 2009. If,

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however, this claim is later reopened it then must be reported. CMS MMSEA Section 111 “Medicare Secondary Payer Mandatory Reporting User Guide version 1.0, March 16, 2009.”

F. Medicare Resources

Resources are available through the CMS website with regard to the SCHIP Extension Act and reporting requirements. These resources include links to the MMSEA § 111 User Guide as well as Memoranda regarding implementation of § 111.

http://www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPUserGuide031609.pdf

http://www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPInterim120508.pdf

http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage The website contains downloads of User Guide and Interim Record Layout of December 5, 2008. Additional information can be found at http://www.medicareapproval.com.

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Bradford J. Peterson - Partner

Brad has spent his entire career with Heyl Royster beginning in 1987, in the Urbana office. He became a partner with the firm in 1997. Brad concentrates his practice in the defense of workers' compensation, construction litigation, auto liability, premises liability and insurance coverage issues. In recent years, Brad has become a leader in the field on issues of Medicare Set-Aside trusts and workers' compensation claims. He has written and spoken frequently on the issue. He was one of the first attorneys in the State of Illinois to publish an article regarding the application of the Medicare Secondary Payer Act to workers' compensation claims: "Medicare, Workers' Compensation and Set-Aside Trusts," Southern Illinois Law Journal (2002). Brad is a member of the Champaign County, Illinois State, and American Bar Associations. He currently serves on the Illinois State Bar Association Assembly and has also served several previous terms. He has also been a member of the ISBA Bench and Bar Section Council and served as its chairman 2000-2001. Currently, he serves as a member of the ISBA Workers' Compensation Council and is past editor of the Workers' Compensation Section Newsletter. Significant Cases • West v. Kirkham, 207 Ill. App. 3d 954 (4th Dist.

1991) Recognized that trial court may find plaintiff contributorily negligent as a matter of law.

• Propst v. Weir, 937 F. 2d 338 (7th Cir. 1991) Application of qualified immunity for university officials in First Amendment Retaliatory Transfer claim.

Selected Publications • "Medicare, Workers' Compensation and Set

Aside Trusts," Southern Illinois Law Journal (2002)

• "Survey of Illinois Law-Workers' Compensation," Southern Illinois Law Journal (1991)

Public Speaking • “Medicare Set-Asides and the SCHIP Extension

Act” Illinois State Bar Association Advanced Workers' Compensation Seminar 2008

• “Medicare Set Aside Issues and Update” 22nd Annual HRVA Claims Handling Seminar 2007

• “Workers’ Compensation and Medicare Set Aside Proposals” Illinois State Bar Association Hot Topics and Workers’ Compensation 2005

• “Aggressive and Successful Workers’ Compensation Defense Strategies for Today’s Industrial Commission” 19th Annual HRVA Claims Handling Seminar 2004

Professional Associations • Champaign County Bar Association • Illinois State Bar Association • American Bar Association • Illinois Association of Defense Trial Counsel


Illinois • United States Court of Appeals, Seventh Circuit • United States Supreme Court

Education • Juris Doctor, Southern Illinois University, 1987 • Bachelor of Science (with honors), Illinois State

University, 1984


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EMPLOYMENT LAW: BALANCING WORKERS’ COMPENSATION CONCERNS WITH DOWNSIZING LIABILITY

Presented and Prepared by: Bradford B. Ingram





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I. SUCCESSFUL ASSESSMENT OF EMPLOYER RISKS FOR TERMINATIONS ................................ K-3

A. At Will Employment ..................................................................................................................... K-3 B. Limitations on Employer’s Ability to Discipline and Discharge ................................... K-3 C. When Do We End It? Termination Risk Assessment ........................................................ K-3

1. Nature of Relationship ................................................................................................. K-3 2. Who Is the Employer..................................................................................................... K-3 3. Contract Issues ................................................................................................................ K-3 4. Handbooks and Policies .............................................................................................. K-4

D. Laws: State, Federal and Local .................................................................................................. K-4

1. Public Sector Employers .............................................................................................. K-4 2. Protected Classifications .............................................................................................. K-4 3. Retaliation ......................................................................................................................... K-5

II. REDUCING TERMINATION RISKS ........................................................................................................... K-5

A. Security and Safety Concerns ................................................................................................... K-5 B. Use of Severance Agreements ................................................................................................. K-5

III. AVOIDING POST TERMINATION LIABILITY ........................................................................................ K-6 IV. RETALIATION CLAIMS ................................................................................................................................ K-6

A. Practical Strategies for Dealing with Employees Who Engage in Protected Activity ..................................................................................................... K-6

1. Legitimate Discipline Verses Retaliation ............................................................... K-6 2. Enforce Work Rules Consistently ............................................................................. K-6 3. Training on Retaliation ................................................................................................. K-7 4. Avoid Direct Communication .................................................................................... K-7 5. Objective Investigation ................................................................................................ K-7 6. Post Investigation Steps .............................................................................................. K-7 7. Avoid Job Transfers ....................................................................................................... K-7 8. Careful Analysis of Adverse Actions Post Complaint ........................................ K-7 9. Do Not Retaliate ............................................................................................................ K-8

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I. SUCCESSFUL ASSESSMENT OF EMPLOYER RISKS FOR TERMINATIONS

A. At Will Employment

Most employer-employee relationships are “at will” relationships. This doctrine allows the employer or the employee to end the employment relationship at either’s discretion. Employers can discharge employees for any reason or no reason so long as it is not an unlawful reason.

B. Limitations on Employer’s Ability to Discipline and Discharge

Employees today have many opportunities to challenge almost any discipline at work as an adverse employment action. Employees can file complaints and charges before local, federal, and state agencies as well as the courts to pursue remedies against employers for terminations. Employers and claims representatives need to have an understanding of the basics of employment law in order to reduce potential risks associated with termination and understand how those employment decisions affect the workers’ compensation case. This outline will highlight how employment termination decisions are made and considerations for employers and claims representatives regarding whether and when to end the employment relationship.

C. When Do We End It? Termination Risk Assessment

1. Nature of Relationship

The first step in assessing risks associated with discipline or termination would be to understand the nature of the relationship. A determination must be made as to whether it is a contractual relationship or an at will relationship. An assessment should also be made as to which state and federal laws apply to the particular employer.

2. Who Is the Employer

Questions also arise as to who is the employer in particular cases. A determination must be made as to whether there is a joint employment relationship and whether questions arise with regard to integrated enterprises and employment questions associated with temp agencies and staffing firms.

3. Contract Issues

Employers must also consider whether there exists any contractual obligations before terminating an employment relationship. The existence of a written employment agreement, a

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collective bargaining agreement or oral contracts or promises can be determinative with regard to limiting the employer’s ability to terminate an employee.

4. Handbooks and Policies

Another factor for consideration in any employment termination would be a review of the employer’s handbook and personnel policy. Courts in many jurisdictions have held that representations and policies found in employee handbooks and written personnel policies can, in certain circumstances, rise to the level of a contractual obligation.

D. Laws: State, Federal and Local

1. Public Sector Employers

Certain federal and state constitutional protections may also restrict the ability of government employers to terminate. Such actions cannot infringe upon fundamental constitutional rights. Constitutional protections normally arise in public sector employment disputes and are generally inapplicable to private sector employment disputes, unless some degree of state action can be established. Plaintiffs file claims based on a deprivation of a constitutionally protected right in public employment cases such as deprivation of Due Process Rights, Freedom of Speech, and Right to Privacy. The Fifth Amendment and Fourteenth Amendments of the United States Constitution prohibit the taking of life, liberty or property without due process. If an employee can establish a property interest in continued employment, due process requires that any deprivation of that interest be preceded by notice and opportunity to be heard. Constitutional protections of free speech extend to public sector employees commenting as citizens on matters of public concern, and the Fourth Amendment limits the ability of governments to engage in unreasonable searches and seizures. These constitutional considerations are not factors for private sector employers.

2. Protected Classifications

Of primary concern for employers are the federal and state statutes and local ordinances that protect certain classes of individuals from discrimination. These would include sex, pregnancy, sexual orientation (including transgender/transsexual), race, color, national origin, religion, age, marital status, family medical leave, disability, ancestry, political affiliation, military service, receipt of public assistance, union membership, concerted protected activity under the National Labor Relations Act, unlawful off-duty activities, and use of tobacco products. Federal, state and local ordinances prohibit terminations based on these protected categories.

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3. Retaliation

Another significant area of concern for any employer considering termination would be a claim of discharge based upon retaliation for exercising rights protected by public policy. Many states have causes of action for wrongful or retaliatory discharge in violation of public policy. Illinois provides a common law cause of action for retaliatory discharge. These claims are often filed where the employee claims retaliation was based upon rights to pursue workers’ compensation benefits. II. REDUCING TERMINATION RISKS

A. Security and Safety Concerns

Employers must take all appropriate steps to protect their employees from workplace violence. Employers must consider insuring that the company property and equipment and technology systems are secure and be sensitive to any concerns regarding violence or aggression associated with potential employee termination.

B. Use of Severance Agreements

Severance agreements can help resolve and diffuse the potential for anger and emotion associated with a termination. Employers can use a formal severance agreement which involves a review by counsel on both sides or an informal letter of agreement that provides for severance and effectively ends the relationship. Essential severance agreement provisions would include a non-admission clause, consideration, and waiver and release provisions. The severance agreement and release requires that it be executed voluntarily and knowingly by the employee without evidence of duress. Such agreements require compliance with the ADEA and OWBPA or they will be held invalid. Optional provisions for severance agreements and releases include a confidentiality provision as well as a non-disparagement provision. Many severance agreements and releases require those provisions to be mutual. Employers may also consider incorporating liquidated damage provisions to establish in advance the amount the employer may recover in the event the severance agreement is breached. Severance agreements and releases can include non-competition and trade secret provisions and set forth the federal tax treatment of employment settlements.

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III. AVOIDING POST TERMINATION LIABILITY

Once a termination has been completed, employers must continue to proceed carefully with regard to the terminated employee. Employers, their managers and claims representatives should refrain from comments or discussions regarding the circumstances of the former employee. Such discussions and comments can give rise to a claim of defamation. Employers should also avoid any retaliation associated with subsequent action by the employee to file a complaint or charge or participating in an investigation or proceeding under Title VII. Retaliation claims arise from most federal and state statutes which have anti-retaliation protections for current and former employees. Given the substantial federal, state, and local limitations on employers’ abilities to terminate employees, a thorough assessment of potential risks prior to making a decision to terminate is required. Prior to termination, employers must thoroughly review an employee’s personnel file and consider how it has treated other employees in similar situations. Employers need to follow a checklist of issues as set forth above and consider how to proceed with a termination and whether to use a severance agreement and release. Giving due consideration to these issues will help employers avoid potential litigation exposure and unnecessary discipline in the workplace. IV. RETALIATION CLAIMS

A. Practical Strategies for Dealing with Employees Who Engage in Protected Activity

1. Legitimate Discipline Verses Retaliation

When an employee engages in protected activity, that employee should not be retaliated against in any respect. Employers must train supervisors with regard to retaliation. A supervisor required to continue supervision of an employee who has accused the supervisor of discrimination or harassment may present one of the more difficult situations for an employer. If that supervisor treats the employee differently in any respect after he has engaged in a protected activity, such as filing a charge, the company is at risk for a retaliation claim.

2. Enforce Work Rules Consistently

Employers must act consistently and avoid inconsistent treatment of different employees under similar circumstances. This is typically how retaliation claims are made and the way causation is established in a discrimination case. For example, employers must avoid suddenly enforcing policies or work rules that were previously overlooked or treated lightly. Application of an attendance policy more strictly than it was enforced prior to the protected activity can favor an employee retaliation claim.

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3. Training on Retaliation

Employers today must educate their workforce on the prohibition against retaliation toward employees who engage in protected activity. Human nature dictates retaliation against an individual for allegations of wrongdoing, if those allegations are false. Training employees that retaliation is illegal and creates exposure for the employer is crucial. Employers must take such steps to stop an employee’s natural instinct to retaliate under such circumstances. Education and training are essential.

4. Avoid Direct Communication

Employers should not discuss with an employee his participation in any protected activity. An employer should not discuss allegations with the employee. The employer should never express disappointment or criticize the employee directly or indirectly for engaging in a protected activity.

5. Objective Investigation

Employers must objectively conduct an appropriate investigation of any complaints of discrimination, harassment or retaliation. If a senior member of management is involved, an employer must consider retaining an outside or independent investigator. Employees interviewed during an investigation, including the complaining employee, should be told that the investigation and interviews cannot be kept confidential, but will only be disclosed to those with a need to know.

6. Post Investigation Steps

A very important strategy for dealing with employees who engage in protected activity is to take appropriate action following the investigation. Those involved in the investigation should be counseled to not retaliate in any way against the accuser. The employer should follow-up with the plaintiff regarding the results of the investigation and describe the actions that are being taken in response to the charge.

7. Avoid Job Transfers

Employers should be very careful with regard to any job transfers. Many employees review job transfers negatively. Many of the retaliation cases today involve transfers. While a transfer may be a well-intentioned measure to separate wrongdoing supervisors from complaining employees, the transfer will likely be characterized as motivated by retaliatory animus.

8. Careful Analysis of Adverse Actions Post Complaint

While engaging in protected activity does not immunize the employee from legitimate adverse employment actions, including demotion or termination, as a practical matter, employers must be extremely careful before they enforce any adverse action against an employee who is

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engaged in protected activity. The employment file must be well-documented and a lesser discipline should be considered. Juries do not look favorably upon personnel files that are clean before the protected activity and suddenly are riddled with corrective actions following it. Appropriate actions can be taken if the situation truly warrants it. Examples of retaliation beyond demotion, transfer or termination include less obvious examples of retaliation such as negative performance evaluation, and denial of pay raises or promotions.

9. Do Not Retaliate

Employers are always best served by avoiding retaliation claims. The key to reducing the risk of a retaliation claim are accomplished only by doing the right thing from the start when an employee engages in protected activity.

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Bradford B. Ingram - Partner

Brad has spent his entire legal career with Heyl Royster, beginning in 1980 in the Peoria office. His defense practice has included a wide variety of civil litigation matters. Born in Pekin, Illinois, Brad became a partner in the firm in 1987. He is the partner in charge of the firm's Employment Law Practice Group. He also manages the defense of workers' compensation cases and civil rights and municipal claims in the Peoria office. Selected Publications • "Civil Rights Update: Rule 41(a) Voluntary

Dismissal in Federal Court Takes Effect Immediately Upon Filing, Not When Docketed," Illinois Defense Counsel Quarterly (2008)

• "Civil Rights Update: Seventh Circuit Holds 42 U.S.C. Section 1981 Applies to Claims of Retaliatory Discharge," Illinois Defense Counsel Quarterly (2007)

• "Civil Rights Update: Privity of Contract Required to State a Valid Claim Under Section 42 U.S.C. Section 1981," Illinois Defense Counsel Quarterly (2006)

• "Civil Rights Update: "Legitimate Nondiscriminatory Reason" remains Best Defense to Section 1981 and Title VII Discrimination Claims," Illinois Defense Counsel Quarterly (2005)

• "Winning Summary Judgment in Employment ADA Cases: What Have Plaintiffs Done for You Lately?" International Association of Defense Counsel Journal (2005)

Public Speaking • “Whistle Blower Protection in Illinois”

Peoria County Bar Association 2008 • “Harassment Awareness Training”

Illinois State Bar Association, Bloomington, Illinois 2007

• “Case Law, Discovery, Motions and Summary Judgment: Review of Recent Case Law” Illinois State Bar Association, Chicago, Illinois 2007

• “Family Medical Leave Act: A Primer, Legislative, and Case Law Update for Employers” Proctor Corporate Health Forum 2007

• “The Illinois Workers' Compensation Reform Act of 2005”

Association Occupational Health Professionals 2005

• “Sexual Harassment in the Workplace: Do You Know What It Is?” ISBA - Corporations, Securities, and Business Law Section Council 2005



Professional Associations • Defense Research Institute (Past Chair Workers'

Compensation Committee, Past National Program Chair Employment Law Section, Past Newsletter Editor Employment Law Committee, soon to be Vice Chair Employment Law Committee and/or Chair of the Employment Law Committee)

• American Bar Association (Past Chair Workers' Compensation Law Committee)

• International Association of Defense Counsel (Chair of DRI Membership Committee, Southern District of Illinois, Past Vice Chair of Journal Articles for the Employment Law Section, Past Newsletter Editor IADC Employment Law Section, Past Program Chair of the IADC Employment Law Section and soon to be Vice Chair/Chair Employment Law Section)

• National Association of College and University Attorneys

• College of Workers' Compensation Lawyers (Board of Governors)

• Illinois State Bar Association • Peoria County Bar Association

Court Admissions • State Courts of Illinois • United States District Court, Central and

Northern Districts of Illinois • United States Court of Appeals, Seventh Circuit • United States Supreme Court

Education • Juris Doctor, Drake University Law School, 1980 • Bachelor of Arts-Political Science, Drake

University, 1976


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TTD LIABILITY AND MASS LAYOFFS

Presented and Prepared by: Brad A. Antonacci





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TTD LIABILITY AND MASS LAYOFFS I. GENERAL ENTITLEMENT TO AND DURATION OF TTD

BENEFITS IN ILLINOIS ............................................................................................................................... L-4 II. ECONOMIC LAYOFFS AND TTD BENEFITS ....................................................................................... L-5

A. Case Law ......................................................................................................................................... L-5 B. Scenarios ........................................................................................................................................ L-7

1. Claimant Was Off Work and Had Not Yet Returned to Work Prior to the Economic Layoff .................................................................. L-7

2. Claimant Returned to Work With Restrictions (Perhaps Light Duty) and the Employer Accommodated the Restrictions at a Lower Wage Rate, and the Claimant Is Laid Off ............................................................ L-7

3. The Claimant Returns to Work With Restrictions to His/Her Former Job, Was Not at MMI, the Employer Accommodated the Restrictions With No Wage Loss, and the Claimant Is Laid Off .................................................................................... L-8

4. Claimant Returned to Work With Restrictions, Was Not at MMI, and Was Able to Perform His Former Job Because the Restrictions Do Not Interfere With Job Performance ................................................................................................ L-8

5. Claimant Is at MMI Without Restrictions, Returns to Former Employment, Then Laid Off ...................................................................... L-8

6. Claimant Is at MMI With Restrictions, Returns to Former Employment But No Accommodation Is Necessary, and Is Then Laid Off ............................................................................................................. L-8

7. Claimant Is at MMI With Restrictions, Restrictions Interfere With Regular Job Duties, Employer Accommodated the Restrictions, and Then Claimant Is Laid Off ....................................................... L-9

8. Claimant Is at MMI With Restrictions, Is Laid Off, Then Obtains Same Employment Elsewhere at a Lower Wage .................. L-9

9. Claimant Is Not at MMI, Obtains Employment Elsewhere After Being Laid Off, Subsequent Employer Accommodates Restrictions at a Lower Wage .................................................................................. L-9

10. Claimant Is Not at MMI Because She Delays in Arranging Future Surgery/Treatment, Is Working Light Duty at the Same or Reduced Rate, and Is Then Laid Off ............................ L-9

11. Claimant Not at MMI, Offered Light-Duty Work and Refuses, and Is Then Laid Off ................................................................................ L-10

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C. Limiting TTD Exposure During Layoffs .............................................................................. L-10 III. TTD AND ADDITIONAL ISSUES ........................................................................................................... L-10

A. TTD and Illegal Aliens .............................................................................................................. L-10 B. TTD and Failure to Attend IME ............................................................................................. L-11 C. TTD and Unemployment Compensation ......................................................................... L-12 D. TTD and Incarceration ............................................................................................................. L-12 E. TTD and Voluntary Termination .......................................................................................... L-13 F. TTD and Retirement ................................................................................................................. L-14 G. TTD and Social Security Benefits ......................................................................................... L-15

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TTD LIABILITY AND MASS LAYOFFS I. GENERAL ENTITLEMENT TO AND DURATION OF TTD BENEFITS IN ILLINOIS

Temporary total disability benefits are awarded for the period of time from when an employee is injured until he/she has recovered as far as the character of the injury will permit. Mechanical Devices v. Industrial Comm’n, 344 Ill. App. 3d 752, 760, 800 N.E.2d 819, 279 Ill. Dec. 531 (4th Dist. 2000). A person is considered totally disabled when he or she cannot perform any services except those that are so limited in quantity, dependability, or quality that there is no reasonably stable market for them. Dolce v. Industrial Comm’n, 286 Ill. App. 3d 117, 122, 675 N.E.2d 175, 221 Ill. Dec. 268 (1st Dist. 1996). The dispositive test for determining TTD duration is whether the claimant’s condition has stabilized; i.e., reached maximum medical improvement (MMI). Mechanical Devices v. Industrial Comm’n, 344 Ill. App. 3d 752, 759, 800 N.E.2d 819, 279 Ill. Dec. 531 (4th Dist. 2000). The factors to consider in deciding whether a claimant’s condition has stabilized include: (1) a release to return to work; (2) the medical testimony about the claimant’s injury; and (3) the extent of the injury. Land and Lakes Co. v. Industrial Comm’n, 359 Ill. App. 3d 582, 594, 834 N.E.2d 583, 296 Ill. Dec. 26 (2d Dist. 2005). This test sets the outer boundary for TTD benefits and a demarcation between entitlement to TTD benefits and permanency. A person may not have reached MMI but is nevertheless no longer receiving TTD benefits because he is back to work and performing his former job, even with restrictions. A claimant seeking TTD benefits must prove not only that he did not work but also that he was unable to work. Anders v. Industrial Comm’n, 332 Ill. App. 3d 501, 507, 773 N.E.2d 746, 266 Ill. Dec. 11 (4th Dist. 2002). However, “unable to work” does not mean that the claimant is obligated to look for other work. In Lukasik v. Industrial Comm’n, 124 Ill. App. 3d 609, 615, 465 N.E.2d 528, 80 Ill. Dec. 416 (1st Dist. 1984), the Court did note that the period of temporary total disability may terminate before the claimant has recovered to the full extent. In Lukasik, while the record reflected that the claimant may not have fully recovered as of the date TTD was terminated, the Appellate Court found that the Commission could properly have determined that he was no longer totally disabled and unable to work. The Court found no basis from the evidence to justify claimant’s failure to seek any employment following his release for light work, and the Court therefore denied TTD benefits at that point.

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II. ECONOMIC LAYOFFS AND TTD BENEFITS

A. Case Law

Three Illinois court decisions and one very recent Commission decision (McLaughlin v. Fischer Paper Products, Inc., 09 IWCC 0029 (January 13, 2009) address a claimant’s entitlement to TTD benefits where the claimant is on restrictions and is laid off due to economic reasons. In each case, the employee was released to return to work with restrictions but then was laid off for economic conditions. In affirming the Commission’s decision to award TTD benefits while the employee was off work due to economic layoff, the courts focused on whether the employee was off work due to the restrictions or purely economic reasons. Where the employee’s medical restrictions and inability to perform his usual employment impaired his ability to work, the fact that the employee had been laid off did not alter the TTD analysis. This conclusion is deemed consistent with the overriding purpose of the Illinois Workers’ Compensation Act to compensate an employee for all lost earnings resulting from a work-related disability. In Ford Motor Co. v. Industrial Comm’n, 126 Ill. App. 3d 739, 467 N.E.2d 1018, 81 Ill. Dec. 896 (1st Dist. 1984), the issue concerned the claimant’s entitlement to TTD following a release to return to work with restrictions and a subsequent layoff due to economic reasons. The Appellate Court affirmed the Commission’s finding that the claimant was entitled to continuing TTD benefits despite his economic layoff. In affirming the Commission’s decision, the Appellate Court observed:

The Industrial Commission could properly find from the evidence that, even if there had been no layoff, the claimant was able to do only light work during the layoff period. At the time he left the plant on layoff, he was under instruction by the company doctor to “stay off” his ankle. When the period ended, he was unable to perform his regular job because of pain in his ankle; and was, in fact, taken off that work and placed on light duty.

Ford Motor Co., 126 Ill. App. 3d at 743.

Thus, the employee’s restrictions and inability to perform his usual employment, and not his economic related layoff, caused him to miss work. The claimant was, therefore, entitled to TTD benefits during the economic layoff. The same result was reached in National Lock Co. v. Industrial Comm’n, 166 Ill. App. 3d 160, 519 N.E.2d 1172, 117 Ill. Dec. 5 (2d Dist. 1988), where the Appellate Court affirmed the Commission’s award of TTD benefits during an economic layoff. Using the same reasoning as in Ford Motor, the Commission noted that the employee could have continued working for the respondent had the restrictions arising from her work injury not prevented her from bumping into another job. The claimant’s lost time, therefore, was due to her injury-related restrictions and not the economic conditions that prevailed at that time.

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In Zenith Co. v. Industrial Comm’n, 91 Ill.2d 278, 437 N.E.2d 628, 62 Ill. Dec. 940 (1982), the Illinois Supreme Court upheld an award of TTD benefits to an employee who was placed on light duty and was subsequently laid off. The claimant had sustained back injuries at work and was released to return to work with restrictions of light duty only. The claimant requested light-duty work, but the employer advised him that light-duty work was unavailable. The employer then laid off the claimant. The Court rejected the employer’s argument that the claimant was laid off because no work was available, not because of any disability. The Court further dismissed the employer’s contention that claimant was working and that he was no longer treating. In each case, the Court held that it is the nature of the restrictions and the claimant’s ability or inability to return to the former line of work, and not the per se economic layoff that guides the Commission’s decision to award TTD benefits. Even with an economic layoff, the issue focuses on whether the employee’s injury and restrictions prevented a return to his or her “usual and customary line of employment.” The most recent Commission decision on the issue is McLaughlin v. Fischer Paper Products, Inc., 09 IWCC 0029 (Jan. 13, 2009). In McLaughlin, the parties stipulated that the claimant was temporarily totally disabled from October 12, 2004, through March 29, 2006, and that she was laid off on March 29, 2006, for economic reasons. The parties also stipulated that several other employees were laid off as well. The claimant stipulated that the layoff of the employees was due to economic reasons as well. The medical testimony was that during the period in question, the claimant was limited to light-duty work, that she would benefit from additional treatment, and that she was not yet at maximum medical improvement. According to the Commission, the claimant “remained temporarily totally disabled and was not accommodated by [her employer].” The Commission awarded TTD benefits for the period of March 30, 2006, the date of the layoff, through the date of hearing in February 2008. As the Commission noted:

Petitioner stipulated that her light-duty work with Respondent ended due to lack of work. Respondent contends that because the layoff was due to lack of work, they have no liability for temporary total disability during this period. Where an employer stops providing work to a claimant who remains under work restrictions and has not reached maximum medical improvement, the employer remains obligated to pay compensation for temporary total disability even though the employer stops providing work because of a lack of work.

The Commission rejected the employer’s argument that an economic layoff should preclude TTD benefits and focused on the fact that the claimant had restrictions relating to the employment injury and the fact that she had not yet reached MMI.

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In a 1994 Commission decision, Lorek v. Gross Common Carrier, Inc., 94 IIC 0375, 92 WC 2289 (IWCC March 15, 1994), the claimant initially worked for the respondent as a hand trucker. He then worked as a painter for the respondent when he was laid off. Following the layoff, the claimant was recalled as a replacement parts hanger. Following this, the claimant then went to a doctor and was placed on light duty. The claimant continued to work light duty. He eventually underwent a right carpal tunnel release surgery and again returned to light-duty work. However, the claimant was then laid off in line of seniority with a number of other workers. The claimant was to go back to his orthopedic physician to determine his work restrictions, but he failed to do so. The claimant also claimed that he looked for a job after being laid off but was unable to find employment. In denying TTD benefits, the Commission found it significant that the claimant provided no evidence that he was refused employment because of his work restrictions when he continued to look for work. The Commission also found it significant that there was no evidence that the claimant could not perform the jobs he sought. Presumably, if the claimant went to a business seeking employment, he at least felt he could perform the job. It is not clear from the decision that the claimant had reached MMI, but it appears that the Commission denied TTD benefits at least partially due to the fact that the claimant was to go back to his physician to determine his work restrictions but failed to do so.

B. Scenarios

1. Claimant Was Off Work and Had Not Yet Returned to Work Prior to the Economic Layoff

In this situation, the claimant will be owed TTD benefits regardless of the economic layoff because the claimant’s inability to work is due solely to the injury. From a defense standpoint, our strategy should be to get an opinion that the claimant is at MMI, either from the treating doctor or through a section 12 IME. We also want to show that the claimant had no restrictions or can return to his/her usual and customary line of employment. If we can show this, then no TTD benefits will be due and owing. However, we may be required to offer vocational rehabilitation and maintenance benefits during the claimant’s vocational rehabilitation. If we are required to offer vocational rehabilitation, the goal is to get the claimant back to work in his/her usual and customary line of employment or get him/her back to work earning at or near the prior earnings in their usual and customary line of employment.

2. Claimant Returned to Work With Restrictions (Perhaps Light Duty) and the Employer Accommodated the Restrictions at a Lower Wage Rate, and the Claimant Is Laid Off

A strong case can be made that the claimant is entitled to temporary partial disability benefits only. The claimant returned to work and was paid for that work, albeit at a lower wage. The section 8(a) TPD benefit paid represents the inability to work at the former level. If that individual is let go because of an economic layoff, the employer should only have to continue to

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pay the TPD benefit and not the full wage. The claimant, to the extent he/she was able to work, was in the same position as the other non-injured workers.

3. The Claimant Returns to Work With Restrictions to His Former Job, Was Not at MMI, the Employer Accommodated the Restrictions With No Wage Loss, and the Claimant Is Laid Off

A strong argument can be made for terminating all TTD benefits. Our defense should be to show that the claimant’s restrictions did not interfere with his job duties. This will require testimony from the employer that the employee did return to his usual and customary line of employment. We should argue that the claimant was able to perform his usual and customary line of employment. We should again attempt to obtain an opinion that the claimant is at MMI. We should also introduce evidence through the employer that all employees, even those performing the claimant’s old job, were laid off. We want to be able to show that the economy was the sole reason for the claimant’s layoff and not the claimant’s injury.

4. Claimant Returned to Work With Restrictions, Was Not at MMI, and Was Able to Perform His Former Job Because the Restrictions Do Not Interfere With Job Performance

The defense in this situation should be raised that the claimant is in no different position than the other non-injured employees who were also let go and is therefore not owed TTD. We again should obtain testimony from the employer that the claimant was able to perform his usual and customary line of employment despite having the restrictions. We should also attempt to obtain an opinion that the claimant is at MMI.

5. Claimant Is at MMI Without Restrictions, Returns to Former

Employment, Then Laid Off

In this situation, no TTD benefits are due and owing because it is clear that the sole reason for the claimant’s layoff was the economy. The claimant’s attorney will more than likely send the claimant back to the doctor to get a note indicating the claimant could not return to his former job or is not at MMI. If this does happen, we would need to dispute this with an opinion that the claimant is at MMI and can return to work without restrictions.

6. Claimant Is at MMI With Restrictions, Returns to Former Employment But No Accommodation Is Necessary, and Is Then Laid Off

No TTD benefits are due and owing in this situation because claimant is at MMI. We must again prove that the claimant is able to perform his usual and customary line of employment even with the restrictions. We should also argue that the claimant is not entitled to maintenance or vocational rehabilitation because he/she was able to return to his/her former employment with no accommodation.

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7. Claimant Is at MMI With Restrictions, Restrictions Interfere With Regular Job Duties, Employer Accommodated the Restrictions, and Then Claimant Is Laid Off

Since the claimant is at MMI, no TTD benefits are due and owing. However, since the restrictions interfere with the claimant’s regular job duties, it is possible that we would be responsible for vocational rehabilitation and maintenance benefits. If this is the case, the key will be to get the claimant back to work at or near their prior earnings in order to avoid a section 8(d)1 wage differential. The employer will also want to show that the claimant was able to perform his/her usual and customary line of employment.

8. Claimant Is at MMI With Restrictions, Is Laid Off, Then Obtains Same Employment Elsewhere at a Lower Wage

In this situation, the claimant will likely push for a section 8(d)1 wage differential. Our defense should be that the claimant has returned to work in his usual and customary line of employment even with his restrictions, so even if the claimant is earning less, he is unable to prove that he is entitled to a section 8(d)1 wage differential. We will want to develop as broad of a definition of the claimant’s usual and customary line of employment as possible to include his current employment.

9. Claimant Is Not at MMI, Obtains Employment Elsewhere After Being Laid Off, Subsequent Employer Accommodates Restrictions at a Lower Wage

Claimant will argue that she is entitled to temporary partial disability benefits since she is still on light duty. We will want to show that the claimant is at MMI and her condition has stabilized to avoid temporary partial disability benefits. We will also want to show that the claimant’s current job falls within her usual and customary line of employment to avoid a section 8(d)1 wage differential. We may also want to wait it out and see if the claimant’s wages increase in order to reduce a potential wage differential.

10. Claimant Is Not at MMI Because She Delays in Arranging Future Surgery/Treatment, Is Working Light Duty at the Same or Reduced Rate, and Is Then Laid Off

In this situation, a strong argument can be made to deny TTD or temporary partial disability benefits. According to section 19(d) of the Act, if a claimant refuses to submit to medical, surgical, or hospital treatment as is reasonably essential to promote recovery, the Commission may reduce or suspend the compensation of any such injured employee. We should therefore argue that the claimant’s failure to continue with treatment is the reason she is not at MMI and is not able to return to her former line of employment.

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11. Claimant Not at MMI, Offered Light-Duty Work and Refuses, and Is Then Laid Off

In this situation, we should argue that no TTD benefits are due and owing since the claimant refused to accept a bona fide job offer. The Appellate Court has made clear that if a claimant does not take a bona fide job offer, benefits will be denied. City of Springfield v. Industrial Comm’n, 216 Ill. App. 3d 1027, 576 N.E.2d 568, 159 Ill. Dec. 899 (4th Dist. 1991). If the claimant does not accept a bona fide job offer, TTD benefits should be terminated if the employer is going to accommodate the claimant’s light-duty restrictions.

C. Limiting TTD Exposure During Layoffs

It should be argued that an employee should not receive TTD benefits (or even wage differential benefits) where the cause of his inability to work is due solely to the economic conditions and not due in any way to his restrictions or inability to find work. The defense should be raised that the claimant’s medical restrictions are not the reason why the claimant is not currently working. Additionally, it should be argued that the claimant is not currently temporarily and totally restricted from work. If the injured worker would not be hired regardless of his physical condition, but rather due to economic conditions, the worker should not be able to receive TTD benefits. It is important to note that if the claimant’s disability does not impair their ability to find other work, then claimant is in no worse position than their coworkers who were also laid off for economic reasons. By focusing on whether the claimant is in the same position as their coworkers who were laid off, this might let us skirt the idea that a claimant’s ability to look for work is not a factor in the TTD analysis. In the end, if a claimant cannot find work because economic conditions are tight, then the ultimate burden will default to the employer, and the employer will be required to find work or show that work is available in the same manner as one does in a permanent total disability situation. This might fit into the argument that there must be a showing, regardless of whose burden, that the inability to work results from the disability. The approach to these claims should also be to aggressively pursue a section 12 IME (and perhaps a Functional Capacity Assessment) with the goal of minimizing the claimant’s restrictions and to actively seek to find them alternative employment. The defense of these claims will be fact oriented and will require that (a) the restrictions are not as severe as claimed, and (b) the restrictions did not interfere with performance of claimant’s former job. III. TTD AND ADDITIONAL ISSUES

A. TTD and Illegal Aliens

The Illinois Workers’ Compensation Act expressly includes aliens in its definition of employee. However, it is unclear whether individuals who are in the United States “illegally” are entitled to benefits under the Act. In a recent case, when a claimant was unable to return to work in a light-

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duty capacity solely due to her illegal immigration status, no TTD benefits were owed by the employer. Gomez v. Illinois Sportservice, 03 WC 19746, 07 IWCC 0798 (2007). In Gomez, after a work-related injury in July of 2003, the claimant was restricted to sedentary, then light duty. The employer could not accommodate the restriction and paid the claimant TTD benefits. When the employer found out that the claimant had used a false Social Security number at the time of hire, it suspended TTD benefits. At arbitration, the employer’s human resource manager testified that the employer could accommodate the light-duty restriction but refused to offer the work because it learned that claimant was not a U.S. citizen. The arbitrator found that the claimant could not return to work “solely due to her illegal immigration status” and denied further TTD benefits. The arbitrator did order the employer to pay claimant’s reasonable and necessary medical expenses. On review, the Commission affirmed the arbitrator’s decision. In Miezio v. Z-Wawel Construction, 00 IIC 0341, 98 WC 16088 (2000), the claimant was released to work with restrictions following a work-related injury, but the employer could not accommodate the restrictions. The employer instituted vocational rehabilitation benefits and paid the claimant TTD until it discovered that the claimant was not a U.S. citizen. At arbitration, the arbitrator found that the claimant was not entitled to further TTD benefits because the claimant was unable to work solely due to his citizenship status. On review, the Commission upheld the decision to deny further TTD benefits. However, the arbitrator found, and the Commission agreed, that the claimant was entitled to a percentage of loss of the person-as-a-whole. The Commission found that the claimant was not entitled to wage differential or permanent total disability benefits in part because he was not legally able to return to work in his pre-injury capacity. The Commission found it unnecessary to decide whether his citizenship status alone precluded a wage differential award. The Commission has not denied all benefits due to a claimant’s illegal immigration status. However, if the claimant is unable to return to work solely because of an illegal immigration status, the Commission will deny both temporary and permanent benefits which are based upon that inability to return to work.

B. TTD and Failure to Attend IME

If an employer complies with the requirements of section 12 in arranging an IME, a claimant must attend the scheduled examination. The employer must pay the appropriate travel expenses prior to the scheduled examination and must also schedule the exam at a reasonably convenient time and place. Refusal to attend the exam does allow the employer the right to suspend the payment of temporary total disability benefits. However, those benefits will need to be reinstated once the claimant does attend the examination. It must also be clear that the claimant refused to attend an exam. The claimant will no doubt claim that he/she was unable to attend the exam because he/she could not obtain travel or because of some other issue. The employer should argue that the claimant simply refused to attend the IME, in order for the employee to suspend temporary total disability benefits.

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C. TTD and Unemployment Compensation

In Illinois, a claimant can collect both temporary total disability benefits and unemployment compensation at the same time. The Illinois Supreme Court addressed this issue in Crow’s Hybrid Corn Co. v. Industrial Comm’n, 72 Ill. 2d 168, 380 N.E.2d 777, 20 Ill. Dec. 568 (1978). In Crow’s Hybrid Corn, the Supreme Court held that the unemployment compensation statute and the workers’ compensation statute were not mutually exclusive and that the receipt of temporary total disability is not inconsistent with the receipt of unemployment benefits for the same period. The Court also noted that the unemployment compensation statute states a claimant is not eligible for unemployment compensation or should receive reduced benefits if the claimant is receiving remuneration under the workers’ compensation statute, and states that once disability benefits are received, either the unemployment compensation should be reduced or the unemployment compensation fund should be reimbursed. To give the employer credit for the unemployment compensation payments suggests the unemployment compensation fund should be liable for that period of disability for which the claimant receives unemployment benefits, but is the disability attributable to his employment? The Workers’ Compensation Commission came to a different conclusion. In Herrera v. Cabrini Retreat Center, Inc., 06 WC 5742, 08 IWCC 0317 (2008), the Commission held that the respondent was eligible for an offset of unemployment compensation earnings against temporary total disability benefits pursuant to section 8(j) of the Workers’ Compensation Act. Section 8(j) of the Act contains broader language concerning credits due the employer than that of the unemployment compensation statute and does not specifically address when a claimant receives unemployment compensation. Why the Commission chose to give a credit to the employer for unemployment benefits rather than the unemployment compensation fund a credit for the TTD payments is not clear. Until the Courts in Illinois consider both statutes and decide how they should interact with each other, employers should always seek a credit for the amounts of unemployment compensation received by the claimant.

D. TTD and Incarceration

The issue of whether or not TTD benefits should be suspended due to incarceration has not been directly addressed in Illinois. In a recent Commission decision, Mills v. AAA Chicago Cartage, Inc., 03 WC 023408, 08 IWCC 0079 (2008), the claimant agreed not to collect TTD benefits during the period in which he was incarcerated due to a violation of his probation. The Commission found that the employer was entitled to a credit for the benefits it paid to the claimant during that time frame. However, neither the arbitrator nor the Commission elaborated as to why this was agreed upon and whether this creates any implications for future scenarios. It should be argued that the claimant is unable to work due to his/her affirmative act of breaking the law or committing a crime, and therefore TTD benefits can be suspended.

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E. TTD and Voluntary Termination

The workers’ compensation division of the Appellate Court recently held that an employee on light duty is not entitled to collect TTD benefits after he voluntarily removes himself from the work force for reasons unrelated to his injury. Interstate Scaffolding, Inc. v. Workers’ Compensation Comm’n, 385 Ill. App. 3d 1040, 1045, 896 N.E.2d 1132, 324 Ill. Dec. 913 (3d Dist. 2008). In Interstate Scaffolding, the claimant was a union carpenter by trade, and sustained work-related injuries to his head and neck in July of 2003. The claimant received medical care, and was eventually allowed to return to work by his treating physician subject to certain lifting restrictions. His employer was able to accommodate these restrictions, and the claimant worked light duty on a regular basis from starting in February, 2005. The employee testified that in April 2005 he used a permanent marker to write religious inscriptions on the walls and shelves in a storage room on the employer’s premises. The claimant admitted that he did not have permission to write these inscriptions and that the writings did not pertain in any way to his job duties. The claimant testified that other employees were aware that he authored the inscriptions and that there was other graffiti and writings which preexisted his inscriptions. However, there was no other place on the employer’s premises where non-work-related slogans or writings appeared on the walls, shelves, or fixtures other than this storage room. In late May of 2005, the employee contacted the payroll department to give notice of the fact that he had been overpaid and no payroll taxes were being withheld from several of his recent paychecks. This precipitated a confrontation between the claimant and the assistant to the employer’s president. The exact discussions held between the claimant and the assistant during this heated meeting were in dispute. However, the claimant shortly thereafter contacted the local police department to file a complaint that he was being harassed and discriminated against on account of his religious beliefs. A police officer was dispatched to the employer’s facility, who then interviewed various individuals and wrote a report. No arrests were made, and no one was charged with a crime. The assistant contacted the employer’s president, who was out of town at the time, to report the incident and the fact that the claimant had notified the police. The assistant then informed the employer’s president for the first time about religious inscriptions that had been made on the walls and shelves in the storage room by the claimant. The employer’s president shortly thereafter terminated the claimant for defacing company property. Since the overriding purpose of the Illinois Workers’ Compensation Act is to compensate an employee for lost earnings resulting from a work-related disability, the Court concluded that an employee should not be allowed to collect TTD benefits after he was removed from the work force as result of volitional conduct that was unrelated to his injury. The Court reasoned that if an employee was allowed to collect TTD benefits in such circumstances that would not advance the goal of compensating an employee for a work-related injury but rather provide a windfall to employees dismissed for unrelated causes. Lastly, the Court held that this same rationale should be applied as well to situations where an employee was dismissed while collecting maintenance benefits as part of a vocational rehabilitation or a trial return to work.

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The two dissenting members of the Court agreed with the general proposition that TTD benefits could be discontinued to a light-duty employee that was terminated from the work force as a result of his volitional acts of conduct that are unrelated to the disabling condition. However, the dissent argued that the majority's decision was incomplete because it lacked standards for a practical application of this new principle. The dissent went on to argue that before TTD benefits can be terminated in these situations, that the employer should have the burden to establish: (a) that the employee violated a rule or policy; (b) that the employee was fired for a violation of that rule or policy; (c) that the violation would ordinarily result in the termination of a non-disabled employee; and (d) that the violation was a voluntary act within the control of the employee and not caused by the employee’s disability. On December 2, 2008, the Appellate Court denied a petition for rehearing but certified the case for appeal to the Illinois Supreme Court. In any event, this case is a bit of fresh air for an employer who is forced to terminate for cause a non-compliant or unruly employee who is working on light duty. Nevertheless, the prudent employer will attempt to meet the more rigorous test outlined by the dissent when faced with a similar factual scenario. This conservative approach should ensure that the denial of payment of TTD benefits following the termination date will be upheld. Also, adhering to this more rigorous standard should be beneficial in the defense of possible collateral litigation such as a wrongful termination suit which could later arise. Employers would still be wise to contact knowledgeable legal counsel before taking any disciplinary action or terminating an employee who is working on a light-duty basis.

F. TTD and Retirement

If the claimant was receiving TTD benefits and retires, in order to terminate TTD benefits, the key will be to show that the claimant could have worked but chose not to when the claimant retired. In City of Granite City v. Industrial Comm’n, 279 Ill. App. 3d 1087, 666 N.E.2d 827, 217 Ill. Dec. 158 (5th Dist. 1996), the claimant suffered a knee injury while working as a police officer. Following surgery, the claimant returned to a light-duty position. He worked intermittently for several months until he took disability retirement. The claimant sought TTD benefits following his retirement. The Workers’ Compensation Commission denied this request, finding that the claimant voluntarily left his light-duty job and removed himself from the workforce in order to collect a pension. The Appellate Court affirmed the Commission’s decision and noted that the claimant did not present any evidence demonstrating that his injury had not stabilized, that he had not been released for light-duty work, or that he could not perform light-duty work. However, in Land and Lakes Co. v. Industrial Comm’n, 359 Ill. App. 3d 582, 834 N.E.2d 583, 296 Ill. Dec. 26 (2d Dist. 2005), the Appellate Court noted that there was competent evidence that the claimant was unable to work and that he retired not by choice but because he needed income. The Court distinguished Land and Lakes based on the fact that the claimant in Land and Lakes could have worked but instead chose not to work.

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In order to terminate TTD benefits when the claimant retires, it must be shown that the claimant could have worked in some capacity but chose not to when the claimant retired.

G. TTD and Social Security Benefits

If the claimant is receiving TTD benefits and also begins to receive Social Security benefits, in order to terminate TTD benefits, the critical inquiry is once again whether or not the claimant voluntarily removed himself from the workforce. In Schmidgall v. Industrial Comm’n, 268 Ill. App. 3d 845, 644 N.E.2d 1206, 206 Ill. Dec. 153 (4th Dist. 1994), following the claimant’s work injury, the claimant worked in a light-duty capacity until his doctor took him off work. At that time, the respondent began paying TTD benefits. A few months later, the claimant also began receiving Social Security benefits. The Workers’ Compensation Commission held that the claimant was precluded from receiving TTD benefits once he began receiving Social Security because the claimant “had removed himself from the workforce.” The Appellate Court, however, disagreed, reasoning that the claimant had not voluntarily removed himself from the workforce. Rather, the claimant’s doctor had removed the claimant from the workforce by not releasing him to return to work. The Court noted that a recipient of Social Security retirement benefits is not required to remove himself from the workforce in order to receive benefits. As the Court noted, the more logical choice would be to reduce or offset the claimant’s Social Security benefits based on the amount of temporary total disability benefits received. As noted in this decision, claimant’s Social Security benefits will be reduced or offset based on the amount of temporary total disability benefits received. However, if we are able to prove that the claimant voluntarily removed himself from the workforce, no TTD benefits will be due and owing.

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Brad A. Antonacci - Associate

A native of Hampshire, Illinois, Brad served as an editor of the Bar Review at Northern Illinois University College of Law. After graduating from law school in 2002, Brad joined Heyl Royster as an associate in the Rockford office. Brad concentrates his practice in the area of workers' compensation and civil litigation. He has arbitrated numerous workers' compensation claims.

Selected Publications • "Personal Comfort Doctrine," IDC Quarterly

(2008) Professional Associations • Illinois State Bar Association • Winnebago County Bar Association • American Bar Association

Court Admissions • State Courts of Illinois • United States District Court, Northern District

of Illinois Education • Juris Doctor, Northern Illinois University School

of Law, 2002 • Bachelor of Arts-Sociology, University of

Illinois, 1999


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WHERE’S THE RELIEF? IWCC NEWS AND LEGISLATION

Presented and Prepared by: Bruce L. Bonds





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I. NEWS AT THE ILLINOIS WORKERS’ COMPENSATION COMMISSION ............................... M-3

A. Medical Fee Schedule ............................................................................................................ M-3 B. News From the Chairman .................................................................................................... M-3 C. News From the Commission ............................................................................................... M-4 D. Illinois Workers’ Compensation Commission Website Features ........................... M-4 E. Legislation and Current Statutory Proposals ................................................................ M-5 F. New Agreed Bill Negotiations? .......................................................................................... M-6

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I. NEWS AT THE ILLINOIS WORKERS’ COMPENSATION COMMISSION

A. Medical Fee Schedule

1. The annual cost of living increase in the medical fee schedule went into effect on January 1, 2009.

2. Effective February 1, 2009, a new medical fee schedule was created that will cover the

following areas:

a. ambulatory surgical treatment centers; b. outpatient, radiology, pathology and laboratory, physical medicine and

rehabilitation services and surgical services; and c. rehabilitation hospitals.

Employer groups have expressed concern to the Joint Committee on Administrative Rules who recommended these rule changes to the Illinois Workers’ Compensation Commission over the accuracy on which the numbers are based. As we reported at our seminar last year, the new fee schedule reveals inconsistencies and disparities between identical services provided by hospitals versus outpatient facilities. For example, in the 601 geozip (Evanston), the reimbursement under the fee schedule for a cold pack or hot pack is $43.00 to a hospital and only $22.00 to a non-hospital. In a 606 geozip (Chicago), the reimbursement for the same cold pack/hot pack is $105.00 to a hospital and $35.00 to a non-hospital. This cold pack/hot pack is probably available on the internet for less than $5.00. There is a question as to why there should be a discrepancy in the cost of the same, rather simple, service which suggests some fundamental flaws in the data on which the fee schedule is currently based. Business groups have expressed concern to the Commission and the Chairman but, to date, labor has expressed no interest, nor has the Auditor General of the State shown a willingness to investigate. Note that there is now one set of rules for treatment under these categories prior to February 1, 2009, and another set of rules for treatment on or after February 1, 2009. 3. Effective June 30, 2009, fee schedule coding covering hospital services will be converted

from “DRG” to “MS-DRG” codes in compliance with new federal requirements during the handling of hospital billing.

B. News From the Chairman

We are frequently asked whether Acting Chairman Amy Masters will be replaced by a permanent Chairman in the near future. No one knows what the Governor’s plans are in this

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regard, but the conventional wisdom is that she is not acting like a “short timer.” It is reasonable to expect she will continue to serve as the Chairman in an acting capacity for many months, if not years, to come.

C. News From the Commission

1. Rumors abound that the Third Panel of Commissioners created by the 2005 amendments is going to be eliminated as a cost cutting move. The current budget submitted by Governor Quinn, however, contains funding for this panel and conventional wisdom is that it is unlikely the panel will be eliminated.

2. Five commissioners continue to serve notwithstanding the fact that their terms have

expired. They are Management Commissioners Mario Basurto and Nancy Lindsay, Public Commissioners Paul Rink and James DeMunno, and Labor Commissioner Barbara Sherman. Business groups such as the Illinois Chamber of Commerce have indicated to the Chairman a desire that Commissioners Basurto and Lindsay be reappointed. She will likely defer to labor’s opinion with respect to Barbara Sherman, and I think it is fair to assume she will be reappointed. If you have opinions with respect to Commissioners Rink and DeMunno which you would like communicated to the Joint Employer’s Group, who will then pass it along to the Chairman, please contact me.

D. Illinois Workers’ Compensation Commission Website Features

The Commission is to be commended for the quality of their website and their continuous efforts to improve it. Recent improvements include: 1. A group email service. If you would like to receive IWCC news at the same time that the

news items are posted to the website, go to the Illinois Workers’ Compensation Commission website at www.state.il.us/agency/IIC/ and forward the web manager your email address by typing “IWCC email news” in the subject line. When your request has been received, you will receive an email confirmation.

2. Users may now search online for an employer’s workers’ compensation insurance carrier

thanks to information provided by the National Council on Compensation Insurance. There are links in the right and left hand columns on the home page to obtain that information.

3. The Case Information web page now allows users to check the status of cases; contact

information for the attorneys is included, as are the status call dates, hearing location and accident date. To protect employee and employer privacy, no personal information is permitted and, at present, searches are permitted by case number only. Hopefully in the future, searches will be permitted by name or employer name. If and when this takes place, this will provide the employer with ease and ability to identify prior workers’ compensation claims. Don’t hold your breath waiting for this feature to be added!

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In June, 2008, the IWCC website added the terms of the settlements and decisions issued for each case, and in September 2008, the website added information about the body part injured. This database is updated at night; thus the case screen is available Monday through Saturday from 7:00 a.m. to 8:00 p.m. and on Sunday from 7:00 a.m. to 5:00 p.m.

E. Legislation and Current Statutory Proposals

There are currently pending three statutory proposals before the Illinois legislature. 1. House Bill 58, addressing comprehensive reform, was filed by Representative Dave Reis

(R-Effingham). As originally proposed, it contained comprehensive changes to the current Workers’ Compensation Act. Representative Reis has amended the Bill to focus attention on three issues:

a. Requiring the workplace to be the principal cause of an injury for it to be

compensable; b. Elimination of all workers’ compensation benefits for injuries caused by

intoxication; and c. Requirement of impartiality and fairness by Arbitrators and Commissioners.

Testimony was recently elicited before the House Labor Committee. The AFL/CIO and Laborers Union testified against the proposal. They indicated that the principal cause requirement would be unfair to injured workers and would deny benefits for repetitive motion and carpal tunnel injuries. With regard to the alcohol provisions, they indicated that while they do not condone alcohol or drug abuse in the workplace, they were concerned that their proposal to deny benefits for drug or alcohol intoxication would not allow a worker who drank a beer the previous night to be compensated if they were injured on the job the following day. For further information, go to website for the Illinois General Assembly at www.ilga.gov/legislation/default.asp and type in “HB 58.” 2. Senate Bill 1420 was filed by Republican Senators Dale Righter, Tim Bivins, and Dan Duffy

and would permit the Illinois Workers’ Compensation Commission to recall a decision or settlement when fraud has been determined to have been committed in the case. It would also require that the Division of Insurance of the Department of Financial and Professional Regulation, charged with investigating workers’ compensation fraud, shall employ one or more attorneys licensed to practice law in Illinois as special prosecutors who shall initiate and prosecute any necessary criminal or civil actions in any competent

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jurisdiction of the state. Also, it would assist state’s attorneys in prosecuting these violations without charge to the county. It would further provide that when the Attorney General or a state’s attorney declines to prosecute a referral from the Fraud and Insurance Non-Compliance Unit, the state’s attorney declining that prosecution shall provide in writing a response to the Unit within 30 days of such decision, setting forth the reasons and basis for the decision, with that response also going to the employer.

This Bill was “held” in subcommittee on a Partisan 3-2 vote. The stated reason was the view of the majority Democrats that this is a provision that should be part of the “agreed bill process.” 3. House Bill 11 was introduced by Democratic Representative Luis Arroyo for the purpose

of moving cases of retaliatory discharge from the circuit courts to the Illinois Workers’ Compensation Commission. It is understood this bill is being strongly backed by the Mexican Alien Defense Fund.

F. New Agreed Bill Negotiations?

There has been discussion in Springfield with respect to the possibility of holding new negotiations under the “agreed bill process” to make additional changes to the Workers’ Compensation Act. The target date for these negotiations to begin would be June of 2009. At present, Governor Quinn and Senate Majority Leader Cullerton have agreed to this proposal. To date there has been no response from Speaker Madigan.

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Bruce L. Bonds - Partner

Bruce is the immediate past Chair of our state-wide workers' compensation practice group and has spent his entire legal career with Heyl Royster beginning in 1982 in the Peoria office. He concentrates his expertise in the area of workers' compensation, third-party defense of employers, and employment law. He represented the combined employers group in the negotiations which culminated in the 2005 revisions to the Illinois Workers' Compensation Act. With extensive experience before the Illinois Workers' Compensation Commission, Bruce has defended employers in thousands of cases during the course of his career. As a result of his experience and success, his services are sought by both self-insureds, insurance carriers, and TPAs. Bruce is an adjunct professor of law at the University of Illinois College of Law where he has taught workers' compensation law to upper-level students since 1998. Bruce is a frequent speaker on workers' compensation issues at bar association and industry-sponsored seminars. Bruce has served as Vice-Chair of the ABA Committee on Employment, Chair of the Illinois State Bar Association Section Council on Workers' Compensation, and currently serves on the Employment Law Committee of the Chicagoland Chamber of Commerce and the Illinois Chamber of Commerce Workers' Compensation Committee. He has been designated as one of the "Leading Lawyers" in Illinois as a result of a survey of Illinois attorneys conducted by the Chicago Daily Law Record; another survey published by Chicago Lawyer Magazine named Bruce one of the "Best Lawyers in Illinois" for 2008. Public Speaking • “The 2005 Amendments, 3 Years Later: The

Respondent's Perspective” Safeworks 16th Annual Work Injury Conference 2008

• “Update on the Illinois Workers’ Compensation Act and Medical Fee Schedule” Illinois-Iowa Safety Council Annual Convention 2008

• “Impact of the New Medical Fee Schedule” SafeWorks 14th Annual Work Injury Conference 2006

• “Penalties, Penalties and More Penalties, The Changes to Section 19 and Strategies for Minimizing Penalties Exposure” CCMSI 2008

• “Recent Changes to the Illinois Workers’ Compensation Statutes” Illinois Manufacturers Association 2005

• “Recent Changes to the Illinois Workers’ Compensation Act” Chicagoland Chamber of Commerce 2005

• “Substantive Changes to the Workers’ Compensation Act” Illinois Bar Association 2005

• “Update on the Newly Enacted Amendments of the Illinois Workers’ Compensation Act” ISBA Workers’ Compensation Law Section 2006

• “Update on the Newly Amended Workers’ Compensation Act” ISBA Workers’ Compensation Law Section 2005



Professional Associations • American Bar Association (Past Vice-Chair of

Employment Law Committee) • Illinois State Bar Association (Past Chair

Workers' Compensation Law Section Council) • Champaign County Bar Association • Peoria County Bar Association • Workers' Compensation Lawyers Association • Illinois Association of Defense Trial Counsel • Counsel of Defense Research Institute



Education • Juris Doctor, Washington University School of

Law, 1982 • Bachelor of Arts-Finance, University of Illinois,

1979


24th Annual Claims Handling Seminars Winning StrAtegieS for

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