Workers’ Comp Reform Approved in Illinois Senate

By | May 31, 2011

A plan to overhaul workers’ compensation to cut business costs and curb corruption emerged May 28 and was approved by the Illinois Senate.

The measure, which came after six months of negotiations and now heads to the House, would slash payments to doctors and hospitals that care for injured workers. It would tighten reviews that determine an injury’s severity and cost, as well as cap awards for the increasingly common claim of carpal tunnel syndrome.

Those changes are meant to cut the $3 billion workers’ comp system by up to $700 million a year, or more than 20 percent.

The legislation also terminates all the arbitrators who decide how much workers should be compensated for their injuries. Critics claim these arbitrators are too “cozy” with workers’ compensation lawyers.

Arbitrators could get their jobs back, but for three-year terms instead of six, and they would be barred from accepting gifts.

“The proposal before you is not marginal reform,” Michael McRaith, director for the Illinois Department of Insurance, told a Senate committee. “It is an epic modernization of an archaic and flawed system.”

Critics said it doesn’t go far enough. They wanted requirements barring compensation unless workers demonstrate their injuries are job-related.

Some also complained that most of the measure’s savings come from cutting payments to medical providers.

“This bill is not soup yet,” said Sen. Dan Duffy, R-Lake Barrington. “I refuse to jump on and support a bill just because it has the word ‘reform’ in it.”

The legislation passed 46-8.

The overhaul came together only after the Illinois House had voted to eliminate workers’ compensation altogether, a move opposed by both business and labor. Businesses feared that letting the courts handle worker-injury cases would produce huge lawsuit awards, while labor worried that it would mean long delays in workers getting badly needed money after crippling injuries.

Many legislators said the threat of eliminating workers’ compensation was meant to create pressure for negotiators to reach a deal. But the sponsor of the “nuclear option,” Rep. John Bradley, D-Marion, said he was completely serious.

Workers’ compensation is a business-funded insurance program that covers medical costs for injured workers and compensates them for lost wages.

Businesses say the costs are out of control. They complain that workers choose doctors who exaggerate injuries and get paid too much for providing care. They say arbitrators routinely side with workers and their attorneys.

Senate President John Cullerton began talks to overhaul workers’ compensation after the November election.

Reports of possible abuses in December and January may have added momentum. The Belleville News-Democrat reported that half the staff at the Menard Correctional Center, including the warden, had collected a combined $10 million since January 2008. Many of the 500 claims were for carpal tunnel syndrome from repetitive action, such as locking and unlocking doors.

Then came an income tax increase of 67 percent for individuals and 46 percent for corporations.

Businesses screamed that they were being driven out of Illinois, and politicians saw a need to deliver some good news. That upped the pressure to fix workers’ compensation.

Even with the measure’s 30 percent cut in medical fees, Illinois would still have the nation’s second-highest rates.

Businesses said a 50 percent cut would be best, while medical groups said anything beyond 20 percent would be too painful for doctors and hospitals.

“Yes, Illinois competes for business, but you also compete for physicians,” said James Tierney, lobbyist with Illinois State Medical Society. “Fifty percent leave the state already. This legislation will make a very, very harsh practice environment that much worse.”

A key part of the proposed overhaul is “utilization review” — a requirement that employees prove they need a certain level of treatment in order to be compensated.

National guidelines from the American Medical Association would be used to determine an injury’s severity. Medical payments would be based on those guidelines and a specific formula.

Employers would also develop networks of preferred health care providers, a step intended to keep worker-friendly doctors from overstating the severity of injuries. Workers could still choose a doctor outside the network, but they would only get one pick and couldn’t “doctor shop.”

The legislation would do little to make it harder for employees to file successful claims.

Workers’ compensation is based on a “no fault” philosophy. Workers don’t have to prove their employer did something wrong in order to collect, and the employer doesn’t have to worry about a lawsuit that could produce far larger damages.

But businesses had hoped to change that. They wanted a requirement that employees show injuries are job-related before collecting any money.

Labor refused to go along. Businesses had to settle for limiting the length of payments for carpal tunnel syndrome to 28 1/2 weeks instead of 40 weeks and making it harder to for workers to get compensation if they were drunk when the injury occurred.

Some businesses and their trade associations refused to support the overhaul, saying it doesn’t go far enough. Others embraced it as an important step.

“We have been fighting for this kind of reform since 1975,” said Greg Baise, president of the Illinois Manufacturers’ Association. “In this building, the art of perfect is rarely practiced.”

The bill is HB1698.


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