Illinois trial bar peddles myths about workers’ compensation
The trial bar’s claim of profiteering is misdirection from the real issues. But if the trial bar wants more regulation of profit rates, it should begin with regulation of the profit rates of law firms that make their business on workers’ compensation cases.
Christopher Hurley’s letter to the editor, “Weak oversight of workers’ comp insurers should be Illinois’ focus,” advances the false narrative that insurance company profiteering is the cause of expensive workers’ compensation insurance in Illinois. Hurley, a Chicago-based personal injury lawyer, is president of the Illinois Trial Lawyers Association. His claim about profiteering is demonstrably false, and is an attempt to draw attention away from the real cost drivers that make Illinois home to the most expensive workers’ compensation system in the region. Illinois’ system drives manufacturers and workers out of the state while enriching personal injury attorneys like Hurley.
Illinois Department of Insurance data completely disprove Hurley’s central claim. Illinois insurers have had a profit rate below the national average in every single year from 2011-2015, with an average annual profit rate of 2.7 percent in Illinois, compared with a national average of 7.1 percent.
Illinois has more insurers writing workers’ compensation policies than any other state. This is a sign that Illinois’ market is competitive, and that competition pays off for customers. Low, competitive profit rates for insurers mean their customers are getting a good deal. Yet somehow Hurley sees insurance profiteering as the problem in Illinois, even though Illinois profit rates are below average. There is no profiteering happening, and Hurley shouldn’t claim that there is.
However, businesses and workers aren’t getting a good deal overall, because Illinois’ system is rigged against them in favor of special interests. Businesses and workers are forced to look to other states to create jobs or find employment because the table is tilted against them in Illinois.
The real problem with Illinois’ system is that the interests of workers and businesses take a back seat to special interests that profit off the system. Illinois’ system is overly litigious, medical benefits are unusually expensive, doctors have a financial incentive to overprescribe dangerous drugs, and many workers have a financial incentive to stay off work, to name some of the real cost drivers. Illinois’ system creates strong financial incentives for attorneys, doctors and workers to act against the best interests of the state. The law should align the interests of all parties with good policy, which is the opposite of what happens now.
According to the Workers Compensation Research Institute, Illinois is among the minority of states that do not tie their medical fee schedules to Medicare. As a result, major surgery in Illinois has a 300 percent premium over Medicare rates, and pain management injections carry a nearly 200 percent premium over Medicare prices, far out of line with other states. Costs also go up and injury times last longer due to physician dispensing – the dangerous practice of doctors selling drugs directly to patients at a significant markup.
Illinois’ wage replacement rates, which govern the size of settlements from which the trial bar profits, are in the top three nationally for temporary total and permanent total disability injuries. Settlements for permanent partial disability injuries are famously high in Illinois. And the trial bar benefits from a generous formula that calculates the slice of the final settlements lawyers receive.
The trial bar’s claim of profiteering is misdirection from the real issues. But if the trial bar wants more regulation of profit rates, it should begin with regulation of the profit rates of law firms that make their business on workers’ compensation cases. Insurers have to report their profit rates – so why not the trial bar too?