On Wednesday, December 8, IML staff attended the second hearing of the Senate Special Committee on Workers’ Compensation Reform. The hearing was held at the James R. Thompson Center in Chicago. The IML submitted written testimony to the Special Committee.
The bipartisan six member committee listened to approximately five hours of testimony from those seeking changes to the Illinois Worker’s Compensation Act and interests desiring the preservation of the status quo. The following is a general overview of what occurred:
The first panel of speakers largely defended the current workers’ compensation system. In response to a proposal by employers to use American Medical Association (AMA) guidelines (rather than subjective arbitrator judgments) to determine the degree of impairment, the opponents of reform offered forth the testimony of Dr. Linda Forst of the University of Illinois at Chicago. Dr. Forst argued that the AMA guidelines should not be used in Illinois because of the lack of determinative studies as to their legitimacy. Two witnesses put forth by the Illinois State Medical Society, a Dr. Tierny and Dr. Wolin, defended the importance of allowing patients to continue to choose their own physicians (rather than employers), opined that the current fee schedule is generally fair even though it has resulted in a decrease of revenue to physicians and therapists, opposed the adoption of a Medicare-based fee schedule, and offered that utilization review should be predicated on peer-to-peer evaluations. The next speaker, Mr. Howard Peters, who is the Executive Vice President of the Illinois Hospital Association, testified that any changes made to the workers’ compensation system should rely on the “agreed bill” process. Mr. Peters also argued that the current fee schedule was a “give back” by medical providers and should be given more time to work. His testimony included the claim that the current fee schedule lowered medical costs in 2010.
The next speaker was Illinois Department of Insurance Director Mike McGraith. Director McGraith opined to the Committee that existing comparisons of workers’ compensation systems between Illinois and other states are flawed. He also testified that 83 cents of each workers’ compensation dollar goes to patients and that this loss ratio exceeds that of Missouri. He further testified about the lack of appropriate funding for the Workers’ Compensation Fraud Unit. The Fraud Unit is not funded through General Revenue Funds. Rather, the Fraud Unit receives funds from an industrial compensation surcharge. In recent years, the Fraud Unit’s funding has been cut approximately 50%, from $960,000 per year to $480,000 per year. Committee members were very interested as to why this money was cut. Director McGraith stated that the cut initially occurred during the Blagojevich Administration.
Interests favoring reforms to the workers’ compensation law were introduced by Mr. Kevin Martin, Executive Director of the Illinois Insurance Association. Ms. Barb Malloy was the first speaker. She is a consultant and former workers’ compensation administrator for the City of Chicago. She was also involved with the 2005 reforms. Ms. Malloy stated that the cost-savings that were supposed to result from the reforms were largely “ephemeral.” Another speaker was Mr. Max Carney, CEO of Midwest Insurance. Mr. Carney explained why he believes that the Illinois workers’ compensation system is not profitable for insurance companies. He blamed the lack of predictability, particularly on the indemnity side, for the high costs of the system.
Senator Martin Sandoval (D-Chicago), while not a member of the Special Committee, read a prepared statement whereby he was critical of the insurance industry panel and the Special Committee for a lack of minority representation.
Following Senator Sandoval’s statement, testimony resumed with representatives from the Operating Engineers and the Iron Workers Association. Operating Engineers Executive Director Marc Poulos and Iron Workers President Eric Dean testified about the need to adhere to the “agreed bill” process. Another witness, workers’ compensation lawyer Louis Cairo took umbrage with the prospect of workers’ compensation reform taking away worker protections in order to increase profits to businesses. AFL-CIO President Michael Carrigan warned legislators that it would be inappropriate to try to undertake workers’ compensation reform in a five-week period. Mr. Carrigan then yielded to a panel of injured workers and a survivor who discussed how they believe they were mistreated by the workers’ compensation system.
The next panel consisted of the joint employer representatives. Companies represented included the Olin Corporation, Safeway/Dominicks, American Airlines, and Kenny Construction. Ms. Misty Handbright with American Airlines discussed fairly recent workers’ compensation reforms that were approved in Texas. While Texas is the airlines’ largest state, Illinois is the most expensive workers’ compensation state per claim. Employer representatives echoed the theme that Illinois is a high-cost workers’ compensation claim state. Mr. Mike Roark with the Olin Company testified that workers’ compensation costs for the Olin Company are one-tenth of the cost in Missouri than they are in Illinois. The Kenny Construction Company was represented by Mr. John Tuisl. Mr. Tuisl was critical of Illinois’ automatic presumption that an injury likely arose out of employment. Senator Haine (D-Alton) expressed concern that the system could be changed to deny awards to employees with legitimate cases of on-the-job injuries.
Another issue that was raised by employer groups was the case of Flynn vs. the Industrial Commission, 211 Ill.2d 546 (2004). According to an employer representative, the State Supreme Court ruled in the Flynn case that the Workers’ Compensation Act should be liberally construed despite such an interpretation being absent from the Act.
The House Special Committee on Workers’ Compensation Reform has scheduled two meetings for next week. The first will be held in Bloomington on December 15. The second will be held in Mt. Vernon/Marion on December 16. The IML has been invited to participate in a local government employer panel and will present testimony at one of the hearings.
The IML also covered the first two hearings with our Twitter feed. If you have a Twitter account, follow our tweets. If you don’t have a free Twitter account, sign-up and then follow our tweets.
Click here to read our story entitled, “Senate and House Form Committees on Workers’ Compensation Reform.”
Click here to read a story from the Senate Democrats about the December 8 hearing.
Article by: By Joe McCoy, Senior Legislative Advocate, IML
Source: Illinois Municap League (IML)