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Legislative Action Worker's comp and the fight over standards AT LEAST Hope and Crosby faced only one foe in their classic "road" comedies. The business community, which wants to reform Illinois' worker's compensation (WC) law, faces at least two roadblocks in trying to reduce WC rates they pay. Liability is one, but ever-increasing costs is an even more formidable obstacle. WC benefits awarded employees have tripled in the last five years, increasing manufacturers' insurance premiums by an average of 600 percent. Business says the increase is due as much — if not more — to the Illinois Industrial Commission's administration of the law as it is to the 1975 amendments to the WC statutes. Those amendments increased benefits by replacing flat rates with a formula that allows benefits to rise with the average weekly wage. Business specifically criticizes the Industrial Commission for not setting standards to determine the degree of disability and benefits. Business has gone on record as willing to tolerate high benefits if standards are set by the commission. Business argues as follows: Since there are no standards, worker's comp cannot be based on the loss of earning capacity, as was intended; instead, worker's comp is based on the loss of health, and, therefore, benefits are so high, workers have no incentive to return to work. Labor, on the other hand, argues that reform is not necessary because the law does not rob the worker of the incentive to return to work. Worker's comp is never higher than wages and it never covers overtime, vacation, bonuses or other benefits beyond wages. It is labor's position that worker's comp was intended to cover the loss of health as well as earning capacity because any loss of health results in a potential, if not an evident loss of earnings. If business doesn't agree with the commission's decisions, labor argues that the law allows for appeal to the court. In general, labor maintains that any increase in WC cost is due to insurance companies who are taking advantage of WC increases to raise premiums. Illinois WC law authorizes compensation according to the kind of disability: death; permanent total; permanent/partial; temporary (total or partial). Neither the statute nor any regulations spell out how the Industrial Commission should determine a degree of disability for any category, with one exception: a standard for determining 100 percent loss under permanent/partial disability. This so-called "specific loss standard" was included in the WC law prior to 1975, and when Illinois amended its WC law in 1975, the so-called "man-as-a-whole" provision was added to help determine losses under permanent/partial disability cases.
More standards were expected to be established by the Industrial Commission after the General Assembly extended its rule-making powers in 1977 to include "determining the extent of disability sustained." Business says that the Industrial Commission — rather than setting standards — has arbitrarily determined the degree of disability and benefits on the cases it decides. Business says the statutory authorization to set such substantive standards is clear; labor says the statute requires only procedural standards, which the commission has put into use. The Illinois Manufacturers' Association (IMA) and the Illinois State Chamber of Commerce (ISCC) say the lack of these standards is responsible for a great deal of the increase in costs over the last five years. Since benefits are determined on the basis of the loss of health, not earning capacity, business contends the chance is great that the commission will unfairly burden employers by mistaking permanent total for permanent/partial or permanent/partial for temporary, which results in higher benefits in both cases. Business argues that standards should be established to determine the loss of earning capacity and then benefits could be awarded reasonably on those findings. The IMA and ISCC both advocate adoption of the standards promoted by the American Medical Association (AMA). These standards would be applied under a process whereby the findings of the examining physical would define a disability according to a schedule that would correlate the injury or disease to the loss of physical or mental capabilities. Right now, two workers who suffer the loss of a leg may get widely varying benefits, and decisions appear to have no bearing on the loss of earning power. The IMA and the ISCC want to know why the commission awards different benefits for a similar disability, and they would 28/October 1980/Illinois Issues prefer specific medical definitions and schedules. However, it is impossible to predict how effective the AMA standards would be in limiting WC costs. Labor argues that further standards are not necessary since benefits should be based on the loss of health. If benefits were based on the loss of earning capacity, workers would lose benefits because the incident may have resulted in a loss of potential, rather than actual, earnings. The Illinois Federation of Labor and Congress of Industrial Organizations (IFL-CIO) maintains that the chance for less benefits would be greater if the percentage of disability were tied to a percentage of benefits. From labor's viewpoint, individual workers are hurt in individual accidents which must be compensated on a case-by-case basis. There are so many variables for every injury or disease as it relates to a job, that a list or schedule could never cover them all. Extent of disability For the single category of permanent total disability, which represents only about 5 percent of overall WC costs, the worker is theoretically forever unable to work — and thereby is qualified for the highest level of benefits. In practice, however, business alleges that permanent total benefits are awarded when a worker is still able to work to some extent, although the injury or disease has usually left the worker unable to resume his old job. Business says the commission apparently awards benefits only on the basis that the worker has not returned to work at his old job. Business argues that the workers may still be perfectly capable of doing other jobs. The IMA and the ISCC cite two examples. In one case, a prison guard who suffered a total nervous breakdown and did not return to work at all was awarded permanent total benefits. In the other, a machine operator, who sustained a back injury that left him a paraplegic, was awarded permanent total benefits and medical and rehabilitation benefits which covered the cost of a college education. The ex-machinist returned to work for the same company as an accountant. In both cases, business agreed the incidents resulted in permanent disability, but argued that because they resulted in only a partial loss of earning capacity, benefits should have been lowered to the permanent/partial level. Business wants a standard for permanent total disability that limits benefits to those workers who are literally permanently and totally disabled — never able to work again. Labor maintains that no new standards are necessary because the commission correctly awards permanent total benefits to workers who do not return to work because they cannot work. Labor says an employer who thinks the worker is capable of doing another job should appeal the case to the court. Lack of standards is more crucial to business in cases of permanent/partial disability, because these cases now represent about 60 percent of all WC costs, according to business. In this disability category, the worker is unable to work to the extent he once did. Business, however, says the Industrial Commission apparently awards permanent/partial benefits on the presumption that there is a disability, or the potential for disability, whether or not it can be identified. Business says that the worker is these cases is often capable of doing his same job as well after the incident as before.
Labor views such a standard as the greatest of all threats to WC rights. Because the loss of health would no longer be considered under such a standard, labor says the worker would be denied permanent/partial benefits if the disability did not result in an actual loss of earning capacity, even though the disability could result in a potential loss of earnings. What about an assembly-line worker who loses a leg? According to the IFL-CIO, the worker could presumably continue the same job seated in a wheelchair, but shouldn't he be compensated for the loss of the leg? Perhaps he aspired to a better paying job, requiring the use of both legs? Shouldn't he be compensated for the potential loss of earnings? Benefits in death cases Another WC issue involves automatic benefits for surviving dependents in death cases. These benefits represent about 5 to 8 percent of all WC costs. Prior to 1975, Illinois authorized limited death benefits for the surviving spouse and children according to their degree of dependence on the deceased. In 1975, the General Assembly followed the recommendation of the 1972 National Commission on State Worker's Compensation Laws (NCSWCL) and authorized automatic benefits for: 1. the spouse, for life, unless the spouse remarries when he or she could waive WC rights in exchange for a lump sum equal to two years of benefits; 2. the children, if no spouse survives, for a minimum of six years and until the children reach the age of 18 (25 if in college), and if the children are disabled, for the length of their disability. Business says these automatic death benefits represent a windfall for the survivors and a double burden on the employer, which the General Assembly October 1980/Illinois Issues/29 did not intend, in cases where the employer also pays benefits under life insurance, pension or wage continuation. Business contends that death benefits should again be tied to the degree the survivors were dependent on the deceased. They want standards set to award death benefits to dependents based on loss of income derived from the deceased's earning capacity. They further want an adjustment to account for the decrease in income that would have occurred when the worker retired. Labor maintains that such a dependency standard is unfair. Death benefits, labor says, should be based on loss of life because survivors have lost a breadwinner, whose earning capacity may have increased through promotion or a new and better paying job. In addition, labor argues that a dependency standard would rob the employer of the incentive to keep the workplace safe. In 1980, the General Assembly did authorize a reduction in WC death benefits in an amount equal to life insurance benefits paid by the employer to the dependents. The IMA and ISCC see that change as a step in the right direction, although they want similar credit for all other employer-paid death benefits. Changes in death benefit payments, however, may have little effect on total worker's comp costs since they account for so little of the overall costs. In the temporary disability cases, it is the high level of benefits, rather than the lack of standards which business criticizes. Temporary cases now account for about 12 to 15 percent of overall WC costs. The IMA and ISCC want to eliminate the alleged abuse by a few who claim temporary disability benefits long after they should be ineligible. Theoretically, a temporary disability leaves a worker unable to work for some length of time. In practice, however, business argues that temporary benefits awarded by the commission in disputed cases are allowed to continue long after the worker is able to return to work. In those few cases, the worker knows the recovery time is questionable and intentionally avoids returning to work for as long as possible. The basis for terminating or continuing these benefits is the treating physician's recommendation to the Industrial Commission. In the vast majority of temporary cases the worker seeks the opinion of only one or two physicians, but in the few cases of alleged abuse, the worker continues to see physicians until he finds one who agrees he has not yet recovered. To avoid this "doctor shopping" abuse, business wants the level of benefits reduced so the worker has no reason to avoid returning to work.
In the undisputed cases, according to labor, the employer has the right to terminate temporary benefits whenever he feels the worker is able to return to work. If the worker doesn't then take his case to the commission, he remains without benefits unless or until the commission decides his benefits should resume. That often takes months. WC benefits also include medical and rehabilitation expenses, which now represent about 7 to 12 percent of overall WC costs. Cost control is the problem, and the focus is on medical expenses since only a handful of cases involve rehabilitation. Business wants to limit these costs by setting standards to link the degree of disability to the extent of expenses. Business also wants to limit the choice of treating physician. Payment of medical costs Illinois requires employers to pay all medical costs, including "first aid, medical, surgical and hospital costs," plus prostheses and all rehabilitation costs, including "treatment, instruction, and training costs," and, if required, the costs of institutionalization for life. In 1975, the General Assembly followed the NCSWCL recommendation and authorized unlimited medical and rehabilitation benefits, expanding them to include vocational as well as physical rehabilitation. Business says these provisions, in effect, allow the Industrial Commission to arbitrarily approve payment of all medical expenses. Although the statute authorizes only "reasonable" medical and rehabilitation costs, the commission has not set any further standards to define "reasonable." Business says the lack of discretionary standards has contributed to the increase in WC medical costs, but it is impossible to tell how much. Without any medical cost standards, benefits are awarded on the basis of what is needed to restore health, not earning capacity, which business believes should be the standard. And physicians can differ on treatment they regard as necessary to restore health. As a result, according to business, medical benefits can be so high the worker does not consider rehabilitation or ever returning to work. The IMA and the ISCC advocate adoption of regional standards based 30/October 1980/Illinois Issues on the "usual and customary" medical costs so that a worker injured in Peoria would be covered for medical expenses as charged in Peoria. Labor maintains there is no reason to suspect the commission of approving excessive medical and rehabilitation expenses. If employers disagree, they should appeal. Labor says the chances are great that the worker would lose benefits if the extent of medical benefits were tied to the degree of disability, rather than decided on a case-by-case basis. The chances would be greater still for loss of benefits if regional standards were adopted because a worker hurt in Peoria may need special treatment in Chicago where costs are far more expensive. Choice of physician Choice of the treating physician has been at issue since 1975 when it was switched from the employer to the employee. Prior to 1975, unless a worker wanted to pay a physician himself, it was the employer who had the right to choose the physician in a worker's comp case. The NCSWCL recommended the worker be allowed to choose the initial physician, and in 1975, the General Assembly gave workers the right to choose as many physicians to treat his case as the worker wanted. In 1980, that choice was limited by the General Assembly to two, although the worker may have an unlimited number of physicians referred to his case. The IMA and ISCC want qualified medical specialists to determine the medical treatment necessary to restore a worker's physical capabilities. They propose local panels of such specialists be selected by the Industrial Commission from nominations by employers and employees. Labor maintains any such panel would not be impartial because all physicians are biased toward business or labor to some extent. The roadblocks to reforming Illinois' worker's comp law are indeed formidable. At least Hope and Crosby traveled with Dorothy Lamour. The Illinois General Assembly should have it so good. October/Illinois Issues/31 |
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