Workers’ Compensation Reform Bill

 

             On May 28, 2005, an historic agreement was reached between business and labor leaders to provide the first fundamental reform of the Illinois' Workers' Compensation system in almost twenty years.  The proposed legislation, known as House Bill 2137, has been passed by the Illinois General Assembly and is expected to be signed into law by Governor Rod R. Blagojevich in the near future.  If signed into law, House Bill 2137 would become effective on January 1, 2006.

 

             House Bill 2137 provides sweeping changes to Illinois' workers' compensation system.  Key changes include substantially increasing worker benefits, implementing a medical fee schedule, establishing a fraud unit, prohibiting medical providers from billing an injured worker for the balance of charges not paid by an insurance company while the workers' compensation claim is pending, allowing medical providers to charge 1% interest per month after 60 days on unpaid medical bills, requiring the Workers' Compensation Commission to certify vocational rehabilitation counselors, adding a third panel to the Workers' Compensation Commission, creating a new category of monetary benefits for some workers on light duty, allowing medical records and bills of treaters to be more easily admitted into evidence at trial, and increasing penalties for the unreasonable delay of workers' compensation benefits to $30.00 from $10.00 per day and increasing the maximum penalty to $10,000.00 from $2,500.00.

 

             House Bill 2137 will add a new category of monetary benefits, Temporary Partial Disability.  Temporary Partial Disability will be paid to workers who are working on light duty due to their injury and are earning less than their average weekly wage.   The workers will be paid benefits equal to two-thirds of the difference between their pre-injury earnings and their current earnings.

 

             The Illinois Chamber of Commerce estimates that House Bill 2137 will result in a 5% increase in benefits paid.  It would increase the number of weeks by 7.5% for loss of use of scheduled body parts and disfigurement.  It would tie the minimum temporary total disability (TTD) and permanent partial disability (PPD) rates to the Federal or Illinois Minimum Wage, whichever is greater, for a 40-hour week. It would set the maximum wage differential rate at 100% of the Statewide Average Weekly Wage for workers who qualify and extend the reopening of the claim to 60 months. It would increase the minimum benefit for fatally injured workers from $250,000.00 to $500,000.00, or from 20 to 25 years of payments, whichever is greater.  It would increase burial benefits from $4,200.00 to $8,000.00.  It would set the minimum rates for amputations at 50% of the Statewide Average Weekly Wage.

 

             Illinois is one of only a handful of states currently without fee schedules for the treatment of work-related injuries.  Illinois is the 19th most expensive state for workers' compensation insurance premiums, which are approximately 40% higher than premiums paid in the neighboring states of Michigan, Wisconsin, and Indiana.  House Bill 2137 would allow medical providers to charge up to 90% of the 80th percentile utilizing Illinois medical databases.  Future increases in the proposed medical fee schedule would be tied to the Consumer Price Index, which traditionally rises more slowly than medical costs.

 

             The National Insurance Crime Bureau estimates that workers' compensation fraud costs employers $6.5 billion dollars each year.  House Bill 2137 would create a workers' compensation fraud investigation unit to investigate charges of workers' compensation fraud committed by medical

providers, employers, and employees.  It also would provide civil liabilities for employees who commit workers' compensation fraud.

 

             The Illinois Chamber of Commerce estimates that, due to its cost containment measures, House Bill 2137 will result in a 6.5% savings to the overall cost of Illinois' workers' compensation system despite its estimate that House Bill 2137 will result in a 5% increase in benefits paid.

 

             The proponents of House Bill 2137 claim that its overall effect will be helpful to Illinois employers.  They opine that, assuming House Bill 2137 survives the inevitable constitutional challenge, Illinois workers' compensation insurance premiums will decline, perhaps even to levels similar to those paid by employers in the neighboring states of Michigan, Wisconsin, and Indiana, due its cost-containment provisions.  We do not expect insurance premiums to decline until House Bill 2137 survives constitutional challenge.  We anticipate, however, that the costs of defending workers' compensation claims in Illinois will remain essentially unchanged, or may even increase, with the lower costs of medical benefits offset by the higher benefit levels paid to injured workers and the higher costs of defending claims. 

 

             We are hopeful that the culture of abuse surrounding the workers' compensation system will slowly but surely change over time after House Bill 2137 becomes law.  Previously, some workers filed questionable claims simply because they knew that it was almost certain that they would not suffer any consequences if their claim was proven to be fraudulent, and their success encouraged workers who would not otherwise file questionable claims to do so.  With criminal and civil penalties now available for fraudulent claims, we are hopeful that these questionable claims will steadily decline over time.

 

             We know that employers pay out less in benefits and legal costs on compensable claims if the injured worker has not retained an attorney.  We suspect that many injured workers with compensable claims retain a Workers' Compensation attorney solely out of frustration resulting from delays or denials of approval for medical treatment, or from harassment by creditors resulting from unpaid medical bills. The new legislation should reduce harassment by creditors resulting from unpaid medical bills by prohibiting medical care providers from billing an injured worker for the balance of charges not paid by an insurance company while the workers' compensation claim is pending.  We expect employers to pay medical bills promptly given the 12% per annum interest rate penalty, which should also reduce harassment by creditors resulting from unpaid medical bills.  Given the stiffer penalties involved, we anticipate that employers will become more reluctant to deny claims without having a sound medical basis to do so, and to seek legal and medical advice earlier and more often when evaluating claims. We are hopeful that the net result of these changes will be an increase in the percentage of pro se workers' compensation claimants, and a consequent reduction in the costs and benefits paid by employers for those claims.

 

             The Illinois Manufacturer's Association, the Illinois Retail Merchants Association, the Illinois Chamber of Commerce, and the Illinois AFL-CIO are some of the many organizations supporting House Bill 2137.

 

             There are several areas regarding medical bills, penalties, Temporary Partial Disability, etc. that we will explore in detail as the enactment date approaches for House Bill 2137.  If you have any questions on these issues, please contact Richard W. Lenkov.

Worker’s Compensation

UPDATE

The attorneys at BryceDowney constantly strive to keep you updated regarding the latest developments in Illinois and Indiana workers’ compensation law. If you would like more information on any of the topics discussed above, or have any questions regarding these issues or any aspect of Illinois and Indiana Workers’ Compensation Law, please contact Richard Lenkov at (312) 327-0032 or rlenkov@brycedowney.com, or any member of our workers’ compensation team.© Copyright 2005 by BryceDowney, LLC, all rights reserved.  Reproduction in any other publication or quotation is forbidden without express written permission of copyright owner.

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