Richard D Hannigan reappointed as editor for 2017-2018 of the ISBA Workers Compensation Section Council Newsletter

Editor's Notes By: Richard D. Hannigan

Editorial comments are just that, editorials. There are four people who share the responsibility of producing these Newsletters. Two represent employers and two represent the injured workers. There was a debate amongst the editors as to whether my editorial comment in this Newsletter is appropriate. Two editors felt it is appropriate and two thought it is too political. The Chairman of our section council, John Power, agreed that the editorial comment is appropriate. That being said please understand that the opinions contained in our newsletters are those of the author and are not necessarily those of any other member or group in the ISBA. Please feel free to send any comments to any of the editors. That being said here is my editorial comment:

The Illinois State Bar Association has a lobbyist who has diligently worked for this association for many years. His name is Jim Covington. The Worker's Compensation Council Section members receive copies of any bills submitted, whether by the Senate or the House, asking for our comments. In that sense we are political. Our comments are passed on to Jim who then relays our information to the various senators or state representatives as the case may be. It is up to all of us as attorneys practicing in the state of Illinois to let the lawmakers know how we feel about any particular issue and legislation. It is up to us to educate them has to the mechanisms in the day-to-day activities at the commission. As individuals we should not leave it to others. If you believe that there is the need for new legislation you should submit that to your state representative and senator and work with them to achieve that purpose.

Both respondent and petitioner attorneys have a stake in how the Workers' Compensation Act is administered. Yet we recognize that the Act was not written for our benefit but for the benefit of the injured worker and his/her employer. That being said, as attorneys we have an abiding interest in what is happening in Springfield. Pending legislation is constantly being submitted, churned, revamped but not voted on. Senate Bill 12 just passed out of the judiciary. That may come to a vote by the end of May.

Springfield is still at a stalemate in terms of a budget, the Governor's "Economic Turnaround Package" and the Senate's "Grand Bargain". Amendments to the Worker's Compensation Act are part of the Governors economic turnaround package and the senate's grand bargain. It would appear that the Worker's Compensation Act is being held hostage in that the Governor insists on workers' compensation reform or he will not sign off on a budget.

In May and June of 2011 the business community ran with a banner created by the National Council on Compensation Insurance that Illinois was 47th out of the 50 states when it comes to cost of writing insurance. Since the sweeping changes signed into law on June 28, 2011 NCCI has noted that there has been nearly a:30% rating reduction recommended for Illinois insurance premiums and the reduction should have resulted in a 2 billion dollar savings in insurance premiums for Illinois employers. For 2017, NCCI issued its Worker's Compensation advisory rates and employer's should see a 12.9% drop in the Worker's Compensation insurance premiums which would be the third largest cut in the nation and be more than all rate reductions of the contiguous states with Illinois combined. Unfortunately, those savings have not been passed along to the employers. The worker's compensation lost ratio in Illinois has drastically improved since the NCCI rating in 2011. The lost ratio decreased by 7.2% in 2015, way ahead of the national average. The drop brings Illinois' ratio below the national average. Profits for the insurance companies writing workers' compensation insurance in Illinois have increased by 22% since 2010. Indemnity payments were down by $39 million and medical payments were down by $30 million from 2014. Medical payments for injured workers in Illinois were lower than those for Indiana Wisconsin and Iowa. Between 2010 and 2014 the employers costs were reduced by 4.4% yet the worker benefits in Illinois were reduced by 20%. If there are 332 insurance companies competing for and writing worker's compensation insurance in Illinois it must be a very lucrative business. With all the bad that NCCI had to say in 2010 and 2011 why is the Governor insisting that worker's compensation insurance is driving businesses away from Illinois to the states of Indiana, Iowa, Wisconsin, and Missouri (which it is not) when the statistics show a significant reduction in the benefits paid to the injured worker?

It appears that many of the legislators in Springfield have forgotten why there is a Workers Compensation Act. As discussed in the June 2014 Newsletter, after the Cherry mine disaster of November 1909 where over 500 died as a result of the employer's negligence, there was a "grand bargain" struck in Springfield. In return for the prompt payment of medical expenses, lost time benefits and the benefits for permanent disability or death which resulted from a work related accident the employer would be shielded from civil liability. Negligence of the employer or employee would not be relevant. It was agreed that the cost of worker's compensation should be borne by the employer who will pass those costs onto the consumer. This also shields this State from having to absorb the cost of taking care of indigent injured workers.

As members of the Illinois State Bar Association I believe that we have the obligation to let the general public know that the Illinois Worker's Compensation Act, as it is right now, serves its purpose by affording the injured worker treatment without delay, supplemental TTD benefits and if appropriate PPD/PTD/wage loss or death benefits. The employer enjoys the immunity from a tort claim and a cap on benefits and avoids a jury award that that would have been limited only by the imagination of the jurors.

What Do I Have to Do to Get Them to Pay the Award?

By: Richard D. Hannigan

An attorney has tried his case and the arbitrator has entered an award giving the respondent credit for the temporary total disability benefits claimed and paid, awards 35% loss use of an arm, and all medical expenses contained in claimant's exhibits 1 through 9. The decision was issued May 23, 2014. Having not received the permanent partial disability award or the medical expenses awarded, the attorney files a petition for penalties on October 3, 2014 and fees pursuant to Sections 19(l), 19k) and 16 of the Act.

On October 8, 2014 the respondent issues at check for the permanent partial disability award.

The commissioner hearing the petition for penalties reviews an October 16, 2014 email from the respondent's attorney to the petitioner's attorney which states "I've never received any of your exhibits (medical bills) from trial and I must note I've asked several times since we tried the case. You allowed me to look through your trial exhibits the day of trial however I was never provided a copy." The respondent attorney argued that he could not calculate the correct amount of medical expenses due an owing without the exhibits. On December 4, 2014, the respondent issue to check to claimant in the amount of $55,997.04 for her medical expenses. The claimant's attorney argued that they gave the respondent notice of the outstanding bills prior to proceeding to a hearing. The employer argued that since they never received copies of the medical bills until October 27, 2014 they could not pay them pursuant to the fee schedule.

As for the failure to pay the permanent partial disability award the employer indicated that they were not aware that the award had not been paid until they receive the Petition for Penalties and then immediately cut a check on October 8, 2014. After hearing the evidence, the commission denied the 19(k) penalties and section 16 penalties finding that the employer did not act unreasonably or in a vexatious manner. Specifically the commission indicated that the claimant had not tendered the medical bills at issue until October 17, 2014 or request payment of the PPD award prior to the filing of her petition for penalties and fees. It was the claimant's failure to act in advising the employer to pay the award that resulted in the delay in payment of the award. The commission did award 19(l) penalties for the failure to timely pay the medical bills.

The employer appealed the commission's award on 19(l) penalties and the Circuit Court reversed the commission's award on the penalties and found that the employer's delay in paying the awards was justified. It also confirmed the commission's denial of 19(k) penalties and section 16 fees.

The claimant filed in the Appellate Court. The court viewed the issue on appeal as one involving the manifest weight of the evidence. It noted that section 19(l) penalties (late fee) apply only to the delay in payment of temporary total disability benefits and medical expenses. It is a mandatory late fee for whatever reason unless the employer or its carrier can show adequate justification for the delay. The employer has the burden of justifying why there was a delay in payment. A delay of 14 days or more creates a rebuttal double presumption of unreasonableness.

The employer argued that it could not pay the medical bills because they were never tendered until October 27, 2014. Once tendered, they issued a check on December 5, 2014. That delay was the result of having to determine what bills have in fact been paid and what bills have not been paid and then calculating the fee schedule.

In rebuttal, the employee argued that the claim for medical bills was contained in the Request for Hearing form submitted at the time of trial. Further, the employer had the ability to subpoena the medical bills directly from the medical providers or order a copy of the transcript.

The Appellate Court noted that the employee did not site authority to support the proposition that a written demand for payment of medical expenses contained within a Request for Hearing form in advance of arbitration constitutes a sufficient written a request for payment following an award of medical expenses under section 19(l) of the Act. The commission committed error when they found that the act of submitting medical bills into evidence during arbitration was the same as tendering them to the employer for payment. There is no case authority to support that proposition. The employer's justification for delay in payment was the claimant's failure to tender the medical bills to the employer in a timely manner.

It is this author's opinion that it would behoove the claimant's attorney to make a written demand for payment of any award as soon as that award is received. As for the 19(k) penalties for the failure of the respondent pay the permanent partial disability award the commission bought into the employer's argument that they did not know the award was not paid and therefore the burden was on the claimant to let the employer know what the employer did not do. Sometimes I wonder if looking at these decisions is very similar to looking at a piece of art work. I may think that the piece of art looks absolutely horrendous while the person next to me thinks it is the most beautiful thing they've ever seen. The citation for this case is Brittany M. Theis v IWCC et al. (Steak'n Shake Operations Inc.) 2017 IL App (1st) 16123WC Filed March 17, 2017.

Once an IWCC Settlement Contract is Final Does IWCC Still Have Jurisdiction to Hear Any Motions?

By: Richard D. Hannigan

Millennium Knickerbocker Hotel v IWCC and Rudy Guzman, Jr. 2017 IL App (1st) 161027WC Filed April 14, 2017 involves a lump-sum settlement contract which provided that the respondent had paid all of the claimant's medical bills. Approximately 2-1/2 years after the IWCC approved the settlement contract the claimant filed a "Motion to Enforce Contract and Penalties." The thrust of the written motion was to force the respondent to pay outstanding medical bills as well as impose penalties and attorney's fees for the respondent's failure to pay the outstanding medical bills.

The commission conducted an evidentially hearing. Admitted into evidence was the settlement contract. The first page of the settlement contract indicated that the claimant was injured on October 7, 2006 and the injury was to the rear of his head. The petitioner had chiropractic care and the chiropractor's records had a history of the injury and the subsequent treatment. He treated with the chiropractor through August 2007 and there was a balance of $16,618.88 still owing to the chiropractor at the time the claimant's motion was filed. Offered into evidence was the opinion of Dr. Martin Lanoff who opined that the claimant sustained a mild cervical thoracic strain that should have improved within 6-8 weeks after the alleged accident. He further opined that chiropractic treatment was not warranted. At some point in time the parties (negotiations. The first page of the settlement contract provided that the claimant's injury occurred when a box fell on his neck. It listed the affected body part as the neck and the nature the injury a disc bulge without nerve involvement. They noted that all temporary total disability benefits were paid. The respondent who prepared the settlement contract checked the box that indicated all of claimant's medical bills were paid. They did not list any unpaid medical bills. However, on the second page of the settlement contract the respondent indicated the settlement was for a lump-sum of 5% of the person and that respondent is released for any known and unknown medical and hospital expenses incurred or to be incurred. The settlement contract was signed by respondent on July 31, 2007 and executed by the claimant on October 11, 2011 which is almost 4 years after the respondent. The contracts were approved on October 27, 2011. The motion to enforce the settlement contract and penalties was filed on April 2, 2014. At the hearing the commissioner asked to the claimant's attorney if in fact there was an issue as far as penalties were concerned. The claimant Attorney indicated he did not think penalties were in issue. "There are no penalties asked for."

The commission found that the respondent was liable for the chiropractic treatment and awarded the bill as well as 19(k) penalties and attorney's fees. The Circuit Court affirmed.

Not until the case was brought to the appellate Court did the respondent argue that the commission lacked jurisdiction to consider the motion. (The appellate Court noted that the lack of subject matter jurisdiction may be raised at any time.) It was the respondent's contention that the claimant's only vehicle was to file a motion in the Circuit Court pursuant to section 19(g) of the Act. The basis of their contention was that the settlement contract became final 20 days after it was approved by the commission. The court held that the commission has no power to enforce payment of its own award. The only method to enforce an award of the commission is in the Circuit Court pursuant to section 19(g) of the Act. The purpose of section 19(g) is to provide a recipient of compensation a method of enforcing its award because the commission has no power to do so. Section 19(g) permits this speedy entry of a judgment in cases in which there has been a refusal to pay the award and also serves to compensate a claimant was compelled to incur additional expenses by reason of the refusal to pay an award by allowing him costs and attorney's fees. Under section 19(g) the Circuit Court is limited to determine whether or not the requirements of the section have been met. The court may not question the jurisdiction of the commission or the legality of its actions and it may not review the commission's decision or otherwise construe the Act. The only defense to a 19(g) petition is full payment of the final award. However the Circuit Court may assess whether there has been a refusal to pay; whether a demand was made for payment; the length of time the transpired between the dated the commission's award became final in the filing of the section 19(g) application; the negotiations and communications between the parties that took place during this period; whether the commission's award leaves room for a good faith disagreement as to the amount of the payments; and whether and when a good faith offer of settlement was presented. If the settlement contract is ambiguous the Circuit Court may hold an evidentially hearing to address that matter.

The claimant relied upon Flynn v. Industrial Com'n, 94 Ill. App. 844. In Flynn, the parties entered into a lump-sum settlement contract. The employer failed to tender payment under the contract and the employee filed a petition pursuant to section 19(k) of the Act. That provision allows the commission to award penalties where there has been any unreasonable or vexatious delay of payment or intentional underpayment of compensation. In Flynn, the commission found that the respondent's failure to pay the award was unreasonable and they assessed penalties. Thereafter the claimant filed his 19(g) petition in the Circuit Court to force payment of the award. In the Circuit Court the employer argued that the commission and Circuit Court lacked jurisdiction to award or enforce the penalty provisions of the Act. The Circuit Court agreed and dismissed the case. The Appellate Court determined that the commission is in fact authorized to assess penalties pursuant to section 19(k) following an approved settlement contract. To hold to the contrary would allow a party to enter into settlement contract which they could vexatiously refuse to pay without fear of penalties.

In the instant case the court found that Flynn was procedurally distinct. Under Flynn there was a petition for penalties. In the instant case the claimant's attorney withdrew the penalty petition and therefore the only issue was whether or not the award is due and owing. The settlement was a final award from the commission and therefore the commission had no authority to proceed on the issue of payment. The Court concluded that "pursuant to Flynn, the commission is authorized to assess penalties and attorney fees under the Act against a party who fails to comply with the terms of a final settlement contracting approved by the commission. We further noted that the commission could not decide if the assessment of penalties and attorney fees was proper without first interpreting the terms of the settlement contract to determine if the respondent was liable for the reimbursement amount." Having abandoned the issue of penalties the only issue was whether or not the respondent paid the final award. The commission lacked jurisdiction to make that determination.

What we should take away from this case is the fact that there are numerous motions filed before the commission after an award or settlement contract becomes final. It would appear that unless there is an issue regarding penalties the commission lacks jurisdiction to hear any motion. The claimant who believes that the failure to pay an award pursuant to a settlement contract is unreasonable and or vexatious should file a petition for penalties before the commission. After the commission has ruled on the penalty petition then the claimant, should respondent fail to pay the award/ settlement, should file the 19(g) in the Circuit Court.