Changes to the Workers’ Compensation Act 2011
We have provided for you below a summary of the changes and how they will affect how we handle workers’ compensation
cases going forward (assuming this bill is signed). Please note that not all sections of the Act have been
amended. The first change comes to the Law of the Civil Administration
Code of Illinois. Significant changes were made to this Code as indicated below.
I.
DEPARTMENT OF CENTRAL MANAGEMENT SERVICES 20 ILCS 405/405-105Section 5 of the Department of Central Management Services (“Department”) Law of the Civil Administrative
Code of Illinois was changed such that it significantly affects how state employee claims will be administered.
Changes were made to Sections 405-105 and 405-411. These changes are extensive (and cover liability
and property issues as well) and I will attempt to summarize the information that would be relevant to the workers’
compensation community only.
1.
405-105 10(a) – Insurance for State Agencies effective at bill
signing The Director has the power determine whether it would be in the best interests of the State to prepare
a plan to provide for the purchase of workers’ compensation insurance or arrange for a TPA to administer such insurance.
Impact It will be in the hands of the Program established
by the Director of the Department to determine whether it is in the best interests of the state to purchase workers’
compensation insurance, or have it administered through a TPA for all state employees and agencies.
2.
20 ILCS 405-411 – Creation of State Workers’ Compensation Program Advisory
Board – effective at signingThe Department has also amended this
section of the Civil Administrative Code that specifically relates to the State consolidation of workers’ compensation
functions. The statute provides that the Director of Central Management Services ("Director"),
may direct the consolidation of those workers’ compensation functions that are deemed suitable for centralization.
This gives the state the power essentially to control any aspect of claims that it feels should be centralized.This section has included the creation of the State Workers’ Compensation Program Advisory
Board. This entity is created to review and provide recommendations to improve the State Workers’
Compensation Program. There will be five voting members of this board as well as 8 additional non-voting
members appointed by the heads of various other State agencies. The
Board will meet three times each year and annually prepare a report with a recommended set of best practices for the State
Workers’ Compensation Program. The report will be provided to the Governor, Director and General
Assembly to be delivered initially on September 30, 2011 and every July 1st for each year thereafter. Impact We do not yet know the impact the Workers’
Compensation Advisory Board will have on the handling and processing of workers’ compensation claims at this time.
As this is a new Board, we do not yet know what authority their recommendations will have with the State.
Moreover, at this point it appears their authority will be relegated to workers’ compensation practices relating
to State Agencies only. It remains to be seen whether their recommendations relative to best practices
will affect non-state entities, if at all.
3. Section 10 of the Law of
the Civil Administration Code is amended by changing 8-802 (735 ILCS 5/8-802) – effective upon signingThis Section is amended in part to provide the Workers Compensation Fraud Unit with the power to issue
subpoenas under Section 25.5 of the Workers Compensation Act. The Fraud unit will now have the power to
issue their own subpoenas (enforceable by the courts of this State) for medical records in conjunction with their investigation
of potentially fraudulent claims.
II.
CHANGES TO THE WORKERS’ COMPENSATION ACT 1.
Section 1 of the Act –Effective for injuries occurring after September 1, 2011 This
section of the Act was amended to specifically state that the petitioner now bears the burden of showing by a preponderance
of the evidence that he or she has sustained accidental injuries arising out of or in the course of his or her employment.
We do not believe this provides any impact on the handling of our cases. Case law has
already established that the petitioner bears the burden of proving his or her case. The new codified standard
of proof (preponderance of the evidence) we do not believe will substantially change the petitioner’s burden as it currently
exists.
2.
Section 1.1 Establishes Standards of Conduct for Arbitrators and Commissioners Effective
at signingThis change essentially puts in writing the standards we have always expected
of our Commissioners and Judges; to be official, fair and act without bias. The most significant aspect
of this change is in writing only - the Canons of the code of Judicial Conduct as adopted by the Supreme Court of Illinois
now govern the hearing and non-hearing conduct of members of the Commission and arbitrators. Again, we
do not foresee this change to affect our claim handling or the Arbitrators/Commissioners conduct.This Section also indicates that decisions of an Arbitrator or Commissioner shall be based exclusively on evidence
in the record of the proceeding and material that has been officially noticed. Again, this has already
been standard practice in workers’ compensation proceedings.
3. Section 4(a-2) Employee
Leasing Company Effective at signingAny Employee
Leasing Company (ELC) must provide documented information to the Commission. That information includes
(i) any client company of any ELC, (ii) any schedule attached to the master policy that identifies any individual client company’s
name, FEIN, and job location and finally, (iii) any certificate of insurance coverage document issued to a client specifying
its rights and obligations under the master policy that establishes both the identity and status of thee client as well as
the dates of inception and termination of coverage. ImpactEmployee Leasing Companies are required to provide the Commission with more detailed information relating
to their clients (or borrowing employers) than previously
4.
Section 4(d) – Insurance Investigators can Issue Citations Effective at signingAn investigator with the Commission Insurance
Compliance Division can now issue citations to employers that are not in compliance with their obligations to have insurance
under the Act. If an employer fails to comply with payment of the citation the Commission may issue a civil
penalty of up to $500 per day for each day of such failure or refusal. The minimum payment shall be $10,000.
Of further significance, the Commission can now also assess the civil penalty personally
and individually against the corporate officers and directors of a corporate employer after the finding of a knowing and willful
refusal or failure of such named individual to comply with this Section.
5. Section 4b – Collective Bargaining
Pilot ProgramEffective at signingThe
director of the Department of Labor shall adopt a selection process that will designate two certified labor organizations
to participate in the collective bargaining process relating to construction employers only.
This Section stands for the proposition that the Commission and the courts shall
recognize as valid and binding any provision in a collective bargaining agreement (CBA) between any construction employers
and a labor organization that contain certain procedures relating to workers’ compensation claims including alternative
dispute resolution, an agreed list of medical providers, use of a list of independent medical examiners, light duty or return
to work program, a limited list for vocational rehabilitation and the establishment of a joint labor management safety committee.
A contractual agreement must also be reached with the construction employer’s workers’ compensation insurance
carriers. Finally, it must be filed with and approved by the Chairman after filing. Impact The use of ADR can significantly impact how
workers’ compensation cases are handled in the construction industry.
6. SECTION 8(a) Medical collection
and TPD Effective at signingThis section was modified slightly to provide that the Fee Schedule applies to anyone whom the provider
assigns their accounts to for collection. This does not appear to be a significant change other than to
protect against any collection body stating the Fee Schedule does not apply since they are not a medical provider.This section also has changed the payments made under TPD to now be two-thirds of
the difference between the average weekly wage that the claimant would be able to earn and the gross earnings
of the temporary or limited duty job. Previously the section called for a difference between the average
weekly wage and the net earnings. Impact This will make claims handling easier since it was time consuming and has caused delay in TPD payments
when claimants and carriers must wait for the temporary or light duty job paycheck in order to calculate the temporary partial
disability. Once the gross wages are established for the temporary job the TPD benefits can be calculated
immediately. This change also eliminates any questions regarding how to calculate 8(d)(1) wage differentials
which had historically been based on gross wages but could have been subject to interpretation of using net wages with the
previous provision in Place.
7. SECTION
8(a)(4) Preferred Provider Programs and Medical choices Effective upon signingThis section states that after the effective date of the legislation if a preferred provider program
is available and offered by the employer as defined in 8.1 the rejection of the preferred provider program is equal to one
of the two choices. If there is no provider program then the same rules apply in terms of choice of physicians.
Impact
The impact of this is significant. If an employee chooses
a provider and seeks non-emergency treatment prior to reporting an accident, that provider (or only one of multiple providers,
if applicable) counts as a choice. The employee then only has one other choice available; one physician
in the preferred provider network (along with any subsequent referral from that provider that may be issued subsequently).
We would recommend that employers implement the preferred provider program to avoid treatment
before reporting with multiple referrals.
8. Section
8(d)(1) –Wage Differential Award Limitations Effective for accidents
that occur after September 1, 2011. This Section was amended to limit the length
of time an employee is entitled to receive wage differential benefits under this Section. The benefits
are now limited to either the age of 67 or for 5 years, whichever occurs later. Impact This change is beneficial as it reduces exposure
for many wage differential claims by 10 years.
9. SECTION 8(e)(9) – Carpal Tunnel
Modifications – effective for accidents occurring after September 1, 2011This section was significantly modified to reduce the weeks allotted for a hand injury to 190 weeks.
For a carpal tunnel condition the recovery is limited to 15% of the hand at that rate. The award
can be increased up to 30% of the hand for cause if there is clear and convincing evidence justifying an increase
in the award. What that clear and convincing evidence may be remains to be determined. We
feel that in more cases than not the awards will be limited to 15% of the hand effective September 1, 2011.
10. Section 820 ILCS 305/8.1a – Creation of Preferred
Provider Programs Effective upon signingThis Section now allows an employer to utilize a preferred provider program approved by the Illinois
Department of Insurance. The program must provide an adequate number of occupational and non-occupational
providers to treat common injuries experienced by injured workers. This is significant because employers can now require
their employees to only use physicians within these preferred providers programs. Impact The language of this statute states that the
employer is responsible to pay for all medical, surgical and hospital services provided by the network as well as any subsequent
participating network provider in the chain of referrals. The fact the chain of referrals within
the network providers is alluded to at all we believe can be interpreted to mean that employees still only have two
choices of physicians even within the preferred provider network (assuming a choice was not utilized for treatment prior to
reporting the accident, in which case only one provider within the network would be permitted). 8.1a(b)This section requires the administrator of any preferred provider program to file with the Director of Insurance
a description of any policies related to economic evaluation. This Section defines economic evaluation
as any evaluation of a particular physician, etc. based on the economic costs or utilization of services associated with medical
care. Economic evaluation shall not include negotiated rates with a provider. 8.1a(c)An
employee of an employer using a preferred provider program shall only be allowed to select a participating
network provider from the network. Treatment by a specialist who is not a member of the program
can be considered on a case-by-case basis if the medical provider network does not contain a provider who can perform the
approved treatment. The employer is responsible for all treatment provided by treaters within
this program. An employer does owe the employee a duty to advise them that they also have the right to be treated by a physician
of his or her choice within the provider network. 8.1(a)(d)If
the Commission finds that the care being rendered by the employee’s second choice of provider within the network is
inadequate, the employee may then choose a provider outside of the network at the employer’s expense. The
Commission shall issue a decision on any petition filed pursuant to this Section within 5 working days.
Impact If the Petitioner decides a provider outside of the preferred
provider network is necessary for treatment we are uncertain as to whether they will:A. File a Petition for Immediate HearingB. Obtain
that treatment without approval and then file a petition. It remains to be seen how a
petitioner’s choice of physician outside a preferred provider network will be handled by the Commission.
11. Section 8.1(b) Calculation and awarding of PPDEffective for injuries occurring after September 1, 2011 The new statute for injuries occurring after September 1, 2011 requires that
in order to prove permanent partial disability a report by a physician using the AMA Guidelines to establish permanent partial
impairment must be submitted. The Guidelines to be used are the most current edition which at this time
is the Sixth Edition. Most physicians in states using the Guidelines however have been maintaining the
use of the Fifth Edition of the Guidelines. To
further establish PPD the Commission take five total factors into account in determining a PPD award: (1) the impairment by
the AMA Guidelines provided by the doctor; (2) The employee’s occupation; (3) The employee’s age; (4) the employee’s
future earning capacity and (5) the employee’s evidence of disability corroborated by the treating medical records.
No one factor is to be afforded additional weight. The determination of PPD must be explained in
their written decision. Impact These factors seem to be the same factors that have been used historically by the arbitrators and commissioners
in determining permanent partial disability. The new statute requires a starting floor with the AMA Guidelines.
Fortunately for respondents the AMA Guidelines’ floor is significantly lower than the current case law which
establishes the starting point for determining their permanent partial disability. This should result in
a significant cost savings in terms of overall awards. Unfortunately, it may lead to additional costs in
terms of litigation. We will be unable to determine the extent of those
costs until decisions are written by arbitrators delineating their PPD findings. According to the statute,
if it is not delineated properly it could lead to significant costs in review and remand back to the arbitrators to obtain
the specific Guidelines in their decisions. Additionally, if the PPI rating exam is required as a separate
report we can assume that since the burden is on the petitioner they will obtain a PPI rating exam as well. Respondents
will need to be aware of the rating ranges and the definitions contained in the AMA Guidelines, since if the rating exam is
not comparable to the ratings expected for that particular injury we would be required to obtain an alternate PPI rating exam
at the carrier’s expense. Whether or not these exams will be administered by the treating doctor
or independent physicians is in question. Currently, in other states using the AMA Guidelines, some treating
physicians have taken the position that it would be a conflict for them to issue a PPI rating if they have treated a claimant,
thus causing increased costs by requiring a new physician to perform the exam.
12. MEDICAL FEE SCHEDULE CHANGES – Effective
September 1, 2011820 ILCS 305/8.2.(a-1) Bills from out of state providers shall be paid by either the lessor of that state’s fee schedule or the
fee schedule amount for the region in which the employee resides. The Commission has also stated that fee
schedule amounts shall be grouped into four geographic regions for non-hospital fee schedule amounts and 14 regions for hospital
fee schedule amounts. If there is no medical fee schedule for a give service, the provider
is entitled to reimbursement of their charges at 76% of the fee schedule. After September 1, 2011
if there is no fee schedule for a given service the provider is to be reimbursed at 53.2% of their charges.820 ILCS 305/8.2.(a-2)For procedures, treatments, services
or supplies and rendered after September 1, 2011 the maximum allowable payment shall
be 70% of the fee schedule amount.820 ILCS 305/8.2.(d)(1)All payments to providers for treatment shall be made within 30 days of receipt
as long as the claim contains all required data elements. If it does not, or if the claim is denied for
any other reason, the employer or insurer shall provide written notification of the basis for denial or need for additional
necessary data within 30 days of receipt of the bill. This has changed from the
former requirement of a 60 day time frame for bill payment or basis for denial.8.2(d)(3)In the case of non-payment of any medical bill within 30 days from receipt of the bill shall incur
interest at a rate of 1% per month. Any required interest payments shall be made within
30 days after payment. This is a new provision requiring employers/insurers to now pay interest within
30 days after bill payment. 8.2(e)A provider may not recover from the employee for medical services or treatment determined by the Commission
to be excessive or unnecessary. 820 ILCS 305/8.2a.The Director of Insurance will adopt rules to ensure all health care providers submit medical bills
for payment electronically. The rules shall require all employers and insurers to accept electronic claims
for payment of medical services on or before June 30, 2012.
13. 820 ILCS 305/8.7 UTILIZATION REVIEW PROGRAMSUpon receipt of notice that the employer or insurer wishes to invoke the utilization review (UR) process, the provider
of treatment must submit to the UR the necessary medical records needed to support a request for treatment. If
the provider fails to do so, the charges for treatment may not be compensable or collectable by the provider.
Additionally, a written utilization review decision must be provided to the provider and the employee.
When a payment or treatment has been denied pursuant to a UR the employee bears the burden of providing by a preponderance
of the evidence that a variance from the standards of care used by the UR is reasonably required.ImpactThese changes do not substantially alter the effect the
UR report currently has when submitted into evidence.
14. SECTION 11 Intoxication Defense Effective for injuries occurring after September 1, 2011 This is a new section adding an intoxication defense
to a workers' compensation claim. This defense allows for the denial of benefits if the proximate cause
of the injury was the intoxication or if the claimant was so intoxicated that it resulted in a departure from their employment.
The Act allows for evidence of blood, urine or breath tests to prove the intoxication. If the alcohol
levels are .08 it creates a rebuttable presumption that the intoxication was the cause of the accident. The
Act furthers states that if there is evidence of impairment due to the use or cannabis or other controlled substances or if
the employee refuses to submit to drug or alcohol testing there is a rebuttable presumption that the intoxication was the
cause of the accident. The
employee can rebut that presumption by showing that the intoxication was not the sole proximate cause of the accident.
Unfortunately, this may remove the effectiveness of defense in that it is the inverse of the current standard.
The current standard is that the intoxication must be the sole cause of the injury and not one cause of the injury.
It appears that the standard has been reestablished, however placing the burden on the petitioner to show that it was
not the sole proximate cause to overcome the rebuttable presumption. The
changes have also established that the collection methods used are those which have been recognized nationally regarding chain
of custody, validity and the sample tampering in order to provide proof of intoxication. Those standards
do include the claimant’s ability to be provided an explanation of the test such as prescription drugs for which they
tested positive.
15.
SECTION 13 - Ethical StandardsEffective upon signing This
section establishes more stringent ethical standards. These standards have provided that the commissioners
and the arbitrators would undergo 20 hours of training for every two years that they are appointed.
16. SECTION
13.1- New Advisory BoardEffective upon signing The provision terminates the current Workers' Compensation
Advisory Board and reestablishes the new Workers' Compensation Advisory Board as set forth in the Civil Administration Code.
17. SECTION
14 - Arbitrator Appointments Effective
upon signingSection 14 establishes that all of
the current arbitrators will lose their positions on July 1, 2011 but are allowed to remain in place until they have
been replaced or reappointed. As stated previously, they are also subject to the special training.
If they are reappointed they will be reappointed for a three-year term by the Governor with the advice and consent
of the Senate. Any new appointees currently must be attorneys after the effective date of the statute. The arbitrators once appointed would have terms
as follows: 12 arbitrators whose term would expire in 2012 and 12 whose terms expire in 2013 and the remaining expiring in
2014. The Act further provides for there to be at least three arbitrators assigned to each hearing location.
In the outlying counties (not Cook) the arbitrator is prohibited from serving more than two out of three years of their
term in outlying counties. Impact This provision is probably the most confusing
and could cause the most difficulty in the day‑to‑day operations of the commission. It would
appear to be a scheduling nightmare to have three arbitrators assigned to each site at any given moment without conflicts
in terms of scheduling trial dates and status calls. It also appears that some arbitrators may be subject
to losing their position and not being reappointed. We can only wait for the law to be signed and the Governor
to act to determine the effect this provision has in changing the makeup of our arbitrators with respect to their liberal
or conservative approach to analyzing cases.
18. SECTION 16(b) Gift BanEffective upon Signing
This section has added the provision of a gift ban for attorneys
providing gifts for the assignment of workers' compensation claims. A gift is defined as anything of value
in excess of $75.00 per person per day. We are uncertain whether this is a change at all and we cannot
determine how this would have any effect on the practice before the commission.
19. SECTION 18 AND 18.1 IWCC – Former Commission Employee
ClaimsEffective upon signingThis section establishes that Commission employees, either former or current, with a claim must have that claim
heard by an independent, approved certified arbitrator not employed by the Commission from a list provided by the Commission
Review Board. The arbitrator from that list would be appointed by the chairman. The
decision of that arbitrator, if appealed, would go straight to circuit court bypassing the Commission level .Impact We find it hard to imagine where an independent
arbitrator would be found with knowledge of the intricacies of the Act to fairly determine the rights and benefits to which
a Commission employee may be entitled.
20. SECTION
25.2 Enhanced FraudEffective upon signingThis section establishes a more enhanced and definitive fraud section for the Act. It
specifically lists specific acts that are fraudulent and characterizes and reclassifies the penalties.
21. SECTION
29.2 Insurance compliance and reportingEffective upon signingThis is a section added increasing the reporting requirements by insurance carriers. There
are significant reporting requirements established in that section. Sensitive and confidential information
must be disclosed in reports. This section appears to be aimed at obtaining data to analyze the effectiveness
of the system and the procedures used in the system. Unfortunately it would appear to impose significant
costs on carriers and employers to gather and examine the information and appropriately disseminate the information in the
reports required by the statute.