Illinois House balks on real workers’ compensation reform

Illinois’ economy remains hamstrung by a broken system.

On June 4, the Illinois House of Representatives passed House Bill 1287, including three amendments that made up the Democrats’ version of a workers’ compensation reform package. But the overarching theme of the debate was whether the amendments could be called “reform” at all.

A careful review of HB 1287 shows the House passed a bill lacking the cost-saving reforms Illinoisans desperately need.

Gov. Bruce Rauner has remained adamant for months that reform of the workers’ compensation laws in Illinois is one of the most important structural changes the General Assembly must address this session before the governor will consider revenue increases. Insurance to cover workers’ compensation claims is a huge expense for Illinois employers, who are paying premiums for this insurance far beyond employers in other states and choosing to leave the state in droves.

The administration’s reform legislation and other components of the governor’s “Turnaround Agenda,” were predictably defeated in committee last week. On June 3, House Speaker Mike Madigan released the Democratic response to Rauner’s bill in the form of four amendments to HB 1287, noting, “The governor stated he believes this is one of the top issues, so we want to help him address it.” The term “help him address it” may, however, have been a generous characterization of what Madigan’s bills actually did.

By the time these amendments came to a vote on June 5, the governor had identified them as “phony reform” and legislators on the right, such as state Rep. Jim Durkin, R-Burr Ridge, had classified the bill as a piece of legislation that shows “no movement” from the status quo and is “not a sincere effort” at reform.

It is worth taking a look at the divide between the two reform proposals to better understand why Republicans feel these bills are not a good-faith effort at fixing a broken system.

The Democrats’ three amendments address issues of causation of workplace injuries, liability for cumulative injuries and include a small oversight component.

The issue of whether an injury was caused by a workplace accident is arguably the most significant component in workers’ compensation reform. As it is, the no-fault system means that an employer can be 100 percent liable for an employee’s on-the-job injury, even if the employment is barely related to the injury, such as an aggravation of a preexisting condition where most of the injury was unrelated to the workplace.

The governor’s reform package would have redefined what constitutes injuries “arising out of and in the course of employment” – a term that is currently undefined by the statute but has been interpreted by Illinois courts – for which a worker can receive compensation. The goal of this reform is to ensure that the workers’ compensation system is in fact paying for injuries attributable to the workplace and not outside factors or injuries that are triggered by a minor workplace incident. The governor’s bill would have allowed compensation for injuries where the employment-related injury is the “major contributing cause” of the medical condition being compensated – meaning “the cause that is greater than 50% of all combined causes” of the injury. The bill also would have reformed the standard for what constituted a “traveling employee” who can recover for injuries sustained while traveling for the job, specifying that the travel must be required for the employee’s job, that the employer must pay or reimburse the cost of travel, and that the injury must occur while performing a specific task for the employer – not on a break or normal commute.

On the other hand, the Democrats’ amendment on causation attempts to codify the standard for injuries “arising out of” and “in the course of employment” that the Illinois Supreme Court announced in the “Venture-Newberg” and “Sisbro” cases. It says the injury must have its origin in “some risk connected with or incidental to the employment so as to create a causal connection between the employment and the accidental injury.” While the word “causal” is there, the employment can still be a minor cause of the overall injury and trigger compensation. Traveling employees could still recover for accidents caused while on personal errands while traveling as well, as long as the errand is “insubstantial,” a vague standard that will still be sent to the courts to interpret.

The problem with codifying the court’s decisions and calling it “reform” is that it does not change the status quo. When the Illinois Supreme Court announced its interpretation of the statute, it became the law of Illinois. By codifying these decisions, the bill does not change the substance of worker’s compensation law. In fact, as state Rep. Ron Sandack, R-Downers Grove, noted, this amendment “doubles down” on what current law is. And what should be clear is that current law is not working. The only good thing about this amendment is that it would, as the amendments’ spokesperson Rep. Jay Hoffman, D-Belleville, noted, prevent future courts from expanding the current statute’s language even further.

It’s hard to see that as “coming half way” as Hoffman claimed Democrats were doing with this bill.

The other significant opportunity for reform that appears in both workers’ compensation packages is the issue of “cumulative injuries” that can develop over the course of a career and over the span of multiple jobs. These injuries create a situation in which one employer ends up needing to compensate an employee for a lifetime of workplace injury – such as years of jackhammer usage on various jobs – that culminated in a compensable incident on one employer’s watch.

The governor’s system would allow compensation for these injuries, but would cut back the number of incidents in which employers would have to pay by extending the causation standard to these situations – injuries must be at least 50 percent caused by work in the occupation or industry that ultimately led to the current medical condition. It would also give credits to employers for past workers’ compensation payments the employee has received for the same medical condition, and make the previous employer pay for cumulative injuries if the employee has been at a new job for less than three months.

The Democrats’ bill again did not include a causation standard for these injuries, but set up a system in which the employer that was ultimately required to compensate an employee could then turn to previous employers for reimbursement of their fair share of the injury. While this joint liability seems intriguing, the idea behind reform is ultimately to save employers money before they flee the state. Under this amendment, employers would have to pay as much as they are now up front because causation does not need to be proven. They will then need to lawyer up quite a bit before having a chance at the reimbursement option offered by this legislation. Republicans such as state Rep. Mark Batinick, R-Plainfield, highlighted these increased litigation costs that cut into any potential reimbursement as both current and previous employers will defend what is and isn’t their “fair share” of the injury. One small effort made at cost saving was to not factor the cumulative injuries of new employees (under three months at a job) into the calculation of premiums.

The oversight component of the Democrats’ reform package would add a redundant reporting requirement for self-insured businesses that already report much of the information required, as well as setting up what Batinick called “yet another task force” to study whether Illinois premiums are out of line.

Even if oversight and study aren’t destructive measures, they – like the rest of the amendments – are not the cost-saving reforms employers have been demanding for years.