Reforms enacted in 2011 helped, but Rauner wants more
Changes to the Illinois workers’ compensation system enacted four years ago have reduced the system’s costs, according to a new report.
The findings come amid wrangling in the Illinois Statehouse over whether workers’ compensation and other issues should be addressed before the state’s budget impasse is resolved. While the Democrat-controlled Illinois General Assembly is loath to make further changes yet, Illinois’ Republican governor wants action now.
The Washington, D.C.-based Workers’ Compensation Research Institute released a report in October measuring the effect of changes Illinois made to its workers’ compensation system in 2011.
The report says that the 2011 changes lowered the amount insurers spent per claim by 20 percent. However, Gov. Bruce Rauner is pushing for further changes to workers’ compensation, tying action on that issue – among others – to passage of the overdue state budget.
The details of the workers’ compensation system are complicated, but the basic idea is simple: when a worker is injured at work, the system helps offset the cost of lost wages and medical treatment. Workers’ compensation covers both government and private sector workers.
In 2011, Illinois lawmakers attempted to address high costs in the workers’ compensation system by lowering the rates paid to medical providers by 30 percent across the board. Some rates were nudged back up in 2014 because the 2011 reduction dropped them below what the federal Medicare system pays for comparable services.
The 2011 changes also included adopting guidelines from the American Medical Association for determining certain disability awards, exempting from coverage injuries that were caused by drug or alcohol use, capping payments for medical implants, giving employers more rights to question medical services, capping payouts for carpal tunnel syndrome and other provisions.
The report released in October by WCRI focuses mostly on the reduction of fees for medical providers and appears to support a belief by some people in the Illinois Statehouse that the 2011 changes are working. Between 2010 and 2012, the amount of money spent by insurers on each claim in Illinois dropped by 20 percent, which put Illinois closer to being in line with other states.
The findings are in keeping with what the Illinois Workers’ Compensation Commission reported in its 2012, 2013 and 2014 annual reports, which cite a trend of decreasing insurance premiums for employers and a 19 percent decrease in benefit payments between 2011 and 2015.
Whether or not workers’ compensation insurance premiums paid by employers have actually dropped to match the decrease in spending on claims is a subject of debate. The workers’ compensation commission cites a yearly study from the Oregon Department of Consumer and Business Services which says Illinois saw the largest decrease in premiums of any state. Perry Browder, president of the Illinois Trial Lawyers Association, says some workers’ compensation insurers have not passed along their savings in the form of lower premiums. Indeed, a report from the Illinois Department of Insurance shows that profits within the Illinois workers’ compensation insurance sector have increased since the 2011 changes. Browder notes that Illinois has the most workers’ compensation insurers of any state.
“How could this possibly be the case if the conditions in Illinois didn’t already favor the interests of those insurers,” Browder said. “Further changes in workers’ compensation laws must focus on the insurance industry and promote insurance premium transparency and oversight.”
Gov. Bruce Rauner is calling for a handful of additional, controversial changes to the workers’ compensation system as part of his broader “Turnaround Agenda.” Rauner wants the agenda implemented before he’ll negotiate with Democrats on a budget for the current fiscal year.
Chief among Rauner’s demands for workers’ compensation are further reducing the fees paid to medical providers, adopting stricter guidelines for determining disability awards and raising the threshold to trigger an employer’s liability for an injury. Currently, an injury can be ruled as work-related if the job contributed at all, but Rauner wants the “causation standard” raised so that an employer isn’t liable unless more than 50 percent of a workers’ condition is attributable to their employment. In exchange for those changes, Rauner’s revised Turnaround Agenda calls for gradually increasing the minimum wage to $10 per hour by 2022.
Catherine Kelly, a spokeswoman for Rauner, noted that, even after the 2011 changes, Illinois’ workers’ compensation costs are still seventh-highest in the country and double those of neighboring Indiana. Indeed, the WCRI report highlights lingering issues with Illinois’ system, such as higher-than-average payments for “nonhospital” services like occupational therapy.
“It’s clear we need major workers’ compensation reform if we want to grow manufacturing jobs in Illinois,” Kelly said.
According to Marty Haxel, a Springfield attorney who handles workers’ compensation cases for both businesses and workers, Rauner’s proposed changes would give an unfair edge to employers fighting an injury claim. Haxel says it would be very difficult to prove that a worker’s job contributed 50 percent or more to an injury in many cases. He cited an example of a worker whose preexisting condition is exacerbated by an activity on the job. Additionally, Haxel says the American Medical Association guidelines for partial permanent disability are too strict.
Bill LaMarca, a Springfield attorney who primarily represents injured workers in workers’ compensation cases, says that the AMA guidelines don’t take into account the demands of specific jobs. He says that under the AMA guidelines, two workers with identical work-related leg injuries would receive the same “impairment rating” even if one worker uses his legs for work and the other doesn’t.
Haxel and LaMarca both say that employers and insurance carriers are more aggressive than ever before about defending against injury claims, thanks in part to the 2011 changes.
“It has never been better for employers in front of the (Illinois) Workers’ Compensation Commission than it is right now,” Haxel said.
“The political atmosphere is clearly in favor of the employer and the insurance industry,” LaMarca said. “Cases that were fairly pedestrian are now being scrutinized very carefully.”
LaMarca says that the positive results of the 2011 changes somewhat undermine the governor’s push for further changes.
“I think if the statistics were saying there’s been little or no change, then we might have to go back and consider that maybe the changes didn’t go far enough,” he said.
Contact Patrick Yeagle at [email protected].
