The 2011 Rewrite of the Illinois Workers’ Compensation Act

Make no mistake, this is not the workers' comp act you knew two months ago. This article highlights key changes.

Sometime in the 1950s, someone asked Chairman Mao Tse-Tung what were the consequences of the French Revolution. His response was that "it was far too early to tell."

The same can be said for the sweeping changes to the Illinois Workers' Compensation Act signed into law a few weeks ago. It will be up to lawyers, IWCC arbitrators and commissioners, circuit court judges, appellate court justices and, inevitably, the Illinois Supreme Court to give shape to the new workers' compensation landscape.

Medical providers have seen their fee schedule cut by 30 percent. The employee's right to choose a medical provider has been limited. All arbitrators have been terminated but will continue to serve until replaced. These and many other changes represent the broadest reform to Illinois workers' compensation law since 1975, one that purports to improve Illinois' business climate. The process was long, complicated, tedious, and often frustrating for the parties involved.

This article highlights some of the most important changes, which are presented in miscellaneous order below. This discussion is far from comprehensive and is not designed as a substitute for actually reading the act. While the article does not delve in depth into the political process, it does describe some of the ways in which the final product differed from that sought by key stakeholders.

AMA Guidelines now determine permanent partial disability

Under new section 8.1b, permanent partial disability will be determined in part according to the most current edition of the American Medical Association's "Guide for the Evaluation of Permanent Impairment" for injuries occurring on or after September 1, 2011. The AMA guidelines shall define loss of range of motion, loss of strength, any atrophy or tissue mass reduction, or any other measurement that may establish the nature and extent of the impairment.

The commission must base its determination of the level of permanent partial disability on the amount of impairment as defined by the AMA guidelines but also must consider factors such as the occupation of the injured employee, the age of the employee at the time of the injury, the employee's future earning capacity, and evidence of disability corroborated by the treating medical records.

Contrary to the wishes of the business community, which prefers that disability be based on the AMA guidelines only, no single enumerated factor shall be the sole determent of disability. In determining the level of disability the relevance and weight of any factors used in addition to the level of impairment as reported by the physician must be explained in a written order.

Workers' choice of doctor limited

Sections 8.1a and 8.a.4 qualify a petitioner's right to have two separate choices of medical provider. The employer or its representative (insurance company) can now create a panel of medical providers and submit that panel to the Illinois Department of Insurance for approval. While the employee can opt out of the provider's network, disincentives for doing so are built into the law, as described below.

After an injured employee notifies the employer of his injury or files a claim for workers' compensation, the employer must inform the employee in writing of his right to be treated by a physician of his or her choice from the preferred provider network. The Illinois Workers' Compensation Commission will create the forms necessary to comply with this section.

If the employee accepts the medical provider within that network, that constitutes his or her first choice. Referrals within the network will not count as a choice. Note, however, that employees may not jump from doctor to doctor even within the network without a referral.

An employee may decline in writing to be treated within the network, but the act of declining constitutes a choice, which effectively limits the petitioner to one choice of doctor. If the employer is not participating in a preferred provider program, the employee retains the right to choose two separate medical providers.

The business community wanted but did not get total control over the pool of doctors from whom employees could choose.

Recovery for hand injuries limited

Section 8(e)(9) reduces the number of weeks for a hand injury to a maximum of 190, down from 205. It also limits carpal tunnel permanency to a maximum of 15 percent of the loss of use of a hand unless there is clear and convincing evidence of more disability, with an upper limit on recovery at 30 percent loss of the use of the hand. This was apparently a reaction to the headline-grabbing carpal tunnel claims made by employees at Menard prison in southern Illinois.

It has come to light that Central Management Services hired Dr. Anthony Sudekum, a hand specialist from Missouri, and CorVel to investigate the Menard cases. He concluded that a great majority of the settled and tried cases were legitimate. This study was done in March 2011.

The business community would have preferred that repetitive trauma be removed as an accidental injury compensable under the Act.

Causation

Section 1(d) codifies the case law governing causation. In other words, an employee seeking recovery under the act must prove that his or her accident "arose out of" and "in the course of" employment.

Business representatives sought a standard under which the employee had the burden of proving that the accident was a "significant factor" or the "primary cause" of the injury.

Wage loss differential limited

Section 8(d)1, which provides for wage loss differentials for workers whose injury forces them into a lower-paying job, has been amended so that an employee is entitled to his wage loss differential only until age 67 or five years from the date of any final award, whichever is longer.

Reimbursement

Fee reductions to docs. In a massive change for medical providers, section 8.2.(a) rolls the fee schedule back by 30 percent. Medical implants will be reimbursed at 25 percent above the manufacture's invoice price, less rebates. Prescriptions that are filled outside a licensed pharmacy will be reimbursed at a rate that does not exceed the average wholesale price plus $4.18 for a dispensing fee.

Beginning January 1, 2012, the geo-zips will be consolidated and there will be four geo‑zips for non‑hospital fee schedules and 14 geo‑zips for hospital fee schedules, down from 29 geo zips today.

Fee billing: a victory for medical providers. Section 19(k)1 provides that medical providers must now be paid within 30 days after the employer has received the bill and appropriate records or face a one percent per month interest charge. The interest will be payable to the medical provider.

It also requires the creation of an electronic billing program, which will be overseen by the director of insurance.

Employer-friendly changes to utilization review

Section 8.7 (a through j) deals with utilization review, which in the workers' comp context is an employer-sought review of the employee's treatment to determine whether it is excessive. UR will now be based upon recognized treatment guidelines and evidence based medicine. It will be overseen by the department of insurance.

Upon receipt of written notice that an employer or its agent wishes to invoke the utilization review process, the medical provider is required to submit to the review and make reasonable efforts to provide timely and complete reports of clinical information needed to support a request for treatment. Providers who fail to comply might not be allowed to bill the employer or claimant for their services.

On the other hand, the reporting requirements imposed on the provider should not be unreasonable or unduly burdensome, and he or she must be given written notice of utilization review decisions.

An employer may only deny payment of medical services if an accredited utilization review finds that the scope of the treatment is excessive. When that happens, the employee must show by a preponderance of the evidence that the treatment in question is reasonably required.

The medical professional responsible for the review must be available in person or for deposition by telephone, videoconference, or other remote electronic means. The interview or deposition shall be conducted in a fair, open and cost effective manner. The employer must pay for the interview or the deposition.

Any exhibits or other demonstrative evidence to be presented to the deponent must be provided to the officer administering the oath and all other parties within a reasonable time before the deposition. Assuming the utilization review is admissible, the commission must consider it as it would any other evidence and address it in the decision.

What business wanted and did not get was, among other items, admission of the UR report over the hearsay objection and the UR also be allowed to comment on causation.

The effective date for these changes is September 1, 2011.

A new "intoxication defense"

Section 11 now includes an intoxication defense. Employees will not be entitled to compensation if their intoxication was the proximate cause of the accidental injury or they were so intoxicated when the injury occurred that it constituted a departure from the employment.

If at the time of the injury the employee refuses to submit to testing of blood, breath, or urine, that raises a rebuttable presumption that the employee was intoxicated and that the intoxication was the proximate cause of the employee's injury.

The amended act specifies what blood tests are admissible and how that evidence is preserved. Intoxication can be caused by any substance, not just alcohol.

ADR pilot project

Section 4b governs a pilot program for alternative dispute resolution. Two labor unions and their respective employers will be allowed to establish a collective bargaining program. This approach falls short of that hoped for by a few employers and unions, who wanted not a limited pilot program but a full-fledged ADR option open to all.

The employer's business must be related to construction, landscaping, roads, sewage, or other enumerated businesses. The labor union must be the excusive representative of all the employees and recognized or certified by the NLRB and approved by the Illinois Department of Insurance.

The rights and obligations of the employer and employee under the ADR pilot program can be no greater or less than those granted under the workers' compensation act. Participants can create their own panel of medical providers and rehabilitation specialists. All work injuries and procedures must be reported to the Illinois Workers' Compensation Commission.

Arbitrators and commissioners

The legislature took dramatic action on the tenure and distribution of arbitrators.

Termination and replacement of arbitrators. Section 14 provides that all arbitrators were terminated at the close of business on July 1, 2011, though incumbents continue until they are reappointed or their successors are appointed. The governor will make the appointments with advice and consent of the senate.

Once chosen and confirmed, an arbitrator will serve for three years, though some initial appointments are shorter so terms can be staggered. The terminations will be in blocks of 12 and the first set of appointees will see their term expire July 1, 2012. The second set of terms expires July 1, 2013 and the final set July 1, 2014.

The arbitrator must be an attorney, though current arbitrators who are not attorneys are grandfathered in for continued service and reappointment. At the end of the arbitrator's term, the chairman shall evaluate his or her performance and recommend or not that he or she be reappointed to a second or subsequent term by the full commission.

Changes made to this section shall prevail over any conflict with the personnel code. This means that veterans will no longer have preference over other candidates.

These changes were made to address the so-called "cozy" relationship between arbitrators and the attorneys who practice before them. In reality, workers' comp practitioners make up a relatively small community, and many arbitrators are former workers' compensation attorneys and associates.

Just because arbitrators and attorneys know one another does not mean their integrity is compromised or that arbitrators are biased. It does not mean that an attorney who practices on a regular basis has an advantage over another who only occasionally appears before the Illinois Workers' Compensation Commission. However, in reaction to this "cozy" relationship the legislature reconstituted the panels.

Arbitrators per hearing site. Section 14 states that "[t]he Commission shall assign no fewer than three arbitrators to each hearing site. The Commission shall establish a procedure to ensure that the arbitrators assigned to each hearing site are assigned cases on a random basis. No arbitrator shall hear cases in any county other than Cook County for more than two years in each three-year term."

To accommodate this mandate, the commission must consolidate the hearing sites outside of Cook County. This will work a hardship on the counties south of Interstate 80. It will also generate costs for the commission, attorneys, employers, and injured workers. They will be traveling greater distances to the hearing sites regardless of rain, sleet, or snow.

CLE requirement. Under new subsections h, i, j, and k of sections 13 and 14, arbitrators and commissioners must undergo 20 hours of continuing legal education that include ethics, use of the American Medical Association's Guide to the Evaluation of Permanent Impairment, fraud and utilization review, and the substantive and procedural aspects of coal worker's pneumoconiosis (black lung) cases. Each commissioner must take 20 hours of CLE every two years in office.

Fraud prevention

Penalties and analytics. Section 25.5 governs fraud and applies not only to employers and employees but also to medical providers. It makes intentionally presenting a medical bill for payment when there has been no treatment a Class A misdemeanor if it is less than $300. If more than $300 and less than $1,000 it is a Class III felony. If more than $10,000 it is a Class II felony, and if more than $100,000 it is a Class I felony.

Before January 1, 2012, the fraud and insurance noncompliance unit must implement a system using techniques such as predictive modeling, data mining, social network analysis, and scoring algorithms to detect and prevent fraud, waste and abuse. They must report to the chairman of the Illinois Workers' Compensation Commission and others on an annual basis.

Statistics. Section 29.2 requires the department of insurance to annually report to the Chairman of the Illinois Workers' Compensation Commission and legislative leaders the gross amount of premiums collected by workers' compensation carriers in Illinois, the number of insurance companies engaged in Illinois in workers' compensation insurance, the total number of insured participants in the Illinois workers' compensation assigned risk pool, the size of the pool and the proportion of the total Illinois workers' compensation insurance market, the premium rate for workers' compensation insurance in Illinois, and numerous other claims and other statistics.

This was borne, in part, of the four hearings conducted by the legislature, two by the senate and two by the house. What they noted was a total lack of statistics other than the "Oregon study" that purportedly placed Illinois 47th out of 50 in the cost of doing business in the workers' compensation arena, meaning that Illinois was one of the most costly states for employers. This addition to the act will provide the groundwork for future amendments.

Gift ban. A ban on gifts of more that $75 in section 16(b) applies to both respondent and petitioner attorneys. The question will arise whether taking someone to dinner and spending more than $75, provided the food and refreshments are consumed on the premises, is a violation of this section and thus a Class A misdemeanor.

Claims by commission employees. Section 18.1 provides that the cases of all current and former commission employees with work injuries pending before the commission be assigned to a certified independent arbitrator not employed by the commission.

Conclusion

The Illinois Senate's floor debate noted bipartisan support. Republicans did say that the bill, while it did not go far enough to lower the cost of doing business in Illinois, was better than nothing.

The house debate went along party lines. Republicans felt that the reform and cost savings were disproportionally borne by the medical providers and that the bill did not go far enough to reduce the cost of doing business in Illinois.

Both house and senate republicans stated that this bill was a start and they will be back for more amendments in the near future. As for how all of this will affect the practice and the rights and obligations of employers and employees, "it is far too early to tell."

Richard D. Hannigan <truhans@aol.com> of Hannigan and Botha has practiced before the Illinois Workers Compensation commission in Chicago and the collar counties since 1973. He is coeditor of the ISBA Worker's Compensation Section newsletter and a former section chair.