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Board Policy Statement:
Workers’ Compensation

June 16, 2006

Overview: Workers' Compensation costs are significant bottom-line items for employers doing business in Illinois. The National Council on Compensation Insurance most recent data indicates the following costs per claim.

Source: Annual Statistical Bulletin, National Council on Compensation Insurance., Information is not available for the five states with exclusive state insurance funds (ND, OH, WA, WV, WY).

Recognizing the importance of workers’ compensation as an economic development issue, Governor Blagojevich called for workers' compensation changes in his 2005 State of the State message. The Governor embraced the “agreed bill” process that has been used previously to achieve labor-management legislation affecting unemployment insurance and workers' compensation laws. He invested the prestige and influence of the Governor’s office and directed business and labor leaders to craft compromise legislation containing positive changes that could be mutually agreeable. The 2005 legislation made significant changes to Illinois workers’ compensation statute including the addition of two key elements we argued were ignored in proposed 2004 legislation…focus on benefits for serious injuries and utilization review of medical services.

We believe that the legislation approved in 2005 is a step in the right direction but more does need to be done in the area of workers’ compensation to return balance and fairness to our system of paying benefits to legitimately injured workers in our state.

What additional changes are needed to help retain and expand jobs in Illinois:

Many Illinois politicians will claim they “reformed” workers' compensation and all is well for employers. From an employer’s perspective, the 2005 changes help, but are not worthy of being characterized as “reform”. Illinois employers will continue to be burdened with high indemnity costs and frustrated by interpretation of the law that lead to benefit payments to workers who are not injured on the job.

Chamber members doing business in other states consistently advise us that Illinois is their highest cost state when it comes to workers’ compensation. A number of other states have adopted far more sweeping changes. In 2004, Missouri lawmakers enacted reforms on issues Illinois also needs to fix. Until we address other critical cost drivers, the states that border Illinois will continue to flaunt their lower workers’ compensation cost structures as they compete with us for jobs.

Some of the important needed changes include:

1. Requiring the workplace to be the principle cause of an injury. Missouri law now defines "accident" to include only events that are "an unexpected traumatic event or unusual strain identifiable by time and place of occurrence producing at the time objective systems of an injury, caused by a specific event during a single work shift". Missouri also defines an "injury" to only allow compensation if the accident was the prevailing factor in causing the condition. Missouri law also limits benefits for pre-existing conditions in cases where a work-related injury causes increased permanent disability and reduces compensation by the amount of permanent partial disability that was pre-existing. These are areas of constant abuse in Illinois.
   Specifically, Illinois must address the following:
   
   • Provide clearer and more concise definitions of “accident” and “injury” to assure that benefits paid to workers are for injuries caused by the workplace.
   • Regulate percentage of man as a whole claims allowing credit for previous man as a whole claims to same body parts and limiting permanent partial disability to 100% of man as a whole.
   • Allow reopening of wage differential cases for changes in economic circumstances, provide credit for previous wage differential claims and cap benefits to retirement age instead of lifetime.
   
   
2. Achieving balance, understanding, and efficiency in the workers’ compensation process. Many employers perceive the Illinois workers’ compensation system is so biased against the employers that it effectively serves as an alternative social welfare system or additional employment benefit. To achieve greater balance, efficiency and understanding of the process, we propose:

• Requiring medically defined objective evidence for disability determinations that include, but are not limited to, the following: loss of range of motion; loss of strength; measured atrophy of tissue mass consistent with the injury.
• Requiring utilization review reports conducted according to Section 8.7 of the Act to be presumptively valid.
• Clarifying that any denial of medical benefit under a Utilization Review will create a rebuttable presumption that the employer will be free from all claims for additional compensation, penalties, 19(k), delay in payment 19(l) or attorneys’ fees under Section 16.
• Enhancing the impartiality of the Illinois Workers’ Compensation adjudication system by:
  1. Merit review of all future Arbitrators by the Workers’ Compensation Advisory Board requiring a majority vote of the Advisory Board for appointment as an Arbitrator.
  2. A requirement that all future Arbitrators and Commissioners have ten years of experience in workers’ compensation.
  3. Apply impartiality ethics akin to Illinois courts’ review of judges’ conduct.
  4. Apply judicial ethics and demeanor to all Arbitrators and Commissioners.
     
     
• The Illinois Chamber will continuously conduct educational seminars workshops and provide guidance manuals to educate employers on workers’ compensation practice, including, the processes, the law, and the rules of evidence, to create an enhanced understanding by Illinois employers of the system.

3. Involving employers in the selection of medical providers. Illinois’ current employee choice approach encourages doctor shopping, causes unnecessary disputes between employer and employee and discourages return to work. Too often the emphasis is not on getting the injured worker healthy and back to work.
4. Acknowledging workers have responsibilities to be alcohol and drug-free in workplaces. A number of states including Missouri eliminate or dramatically reduce benefits when workers’ injuries are caused by their intoxication.
5. Allow the use of alternative benefit delivery systems for the construction industry, more commonly referred to as collectively bargained or jointly negotiated (labor and management) workers’ compensation systems.

Ultimately, it is all about the costs of doing business in Illinois. Employers must be relentless in assuring workplace safety to reduce expenses and suffering, but the state can help Illinois employers achieve these objectives. In order to grow jobs and be competitive with other states and other nations, we must press lawmakers to revisit the topic repeatedly until employers realize quantifiable savings. Illinois’ cost structure is routinely measured against costs in other places, so we cannot afford to perpetuate an environment that employers find unnecessarily cost prohibitive. The Council will work to pass legislation to guarantee stable and predictable WC costs for employers in this state.