Newsletter of Garofalo, Schreiber, Hart & Storm, Chartered

LAW UPDATE - SUMMER, 2011 From the Desk of Joe Garofalo Culminating months of hearings, consideration of numerous competing bills, and protracted negotiations among representatives of business, labor, the medical community and ITLA, House Bill 1698 passed both houses of the Illinois General Assembly on May 31, 2011. The bill marks a major reform of The Illinois Workersʼ Compensation Act. Anticipated annual savings to businesses resulting from the changes are estimated at $500 to $700 million. Governor Quinn signed the bill into law on June 28, 2011. The law became effective the day it is signed into law unless specific provisions within the law designated different effective dates. These will be discussed in this summary. It is further necessary to understand those aspects of the law that are procedural changes as opposed to substantive changes. With the amendments that do not have specific effective dates assigned to them, the changes that are procedural apply not only to future claims, but also to pending claims. The changes that are substantive only apply to claims occurring on or after June 28, 2011. Generally speaking, and based upon prior case law, substantive changes are those that limit or expand the right of recovery of a party. Procedural changes are those that impact the manner in which the parties pursue or defend their respective rights. For example, the changes regarding wage differential are substantive, but this is also an example of a change that has an effective date (9/1/2011) assigned to it. An example of a procedural change, applicable to pending as well as future claims, would be the fraud unitʼs power to subpoena records. Another example of a change that is likely procedural is the Alternative Dispute Resolution provision pertaining to two unions to be selected. Note that because the benefits under the provision are not to be changed by requirement of the statute the recovery rights of the parties are neither limited nor expanded. We have outlined the major changes made in these Amendments. In each portion we have recited the statutory language for the new provisions or underlined the new provisions in the context of the existing statute. A summary and comment follows each new change. We hope you find this to be helpful in understanding these changes and welcome your questions and comments. Joe Garofalo

 DISCLAIMER  

The   following   contains   materials   pertaining   to   workers’   compensation   law.     Editorial  inquiries   should   be   directed   to   Joseph   A.   Garofalo   at   Garofalo,   Schreiber,   Hart   &   Storm,  Chartered.     This   information   does   not   provide   solutions   to   individual   problems.     Please  consult   an   attorney   concerning   your   particular   situation.     If   you   do   not   want   to   receive  similar  information  in  the  future,  please  advise  and  you  will  be  removed  from  our  mailing  list.        Under  professional  rules,  these  materials  should  be  regarded  as  advertising  materials.    ©2011.    All  rights  reserved.  

Garofalo,  Schreiber,  Hart  &  Storm,  Chartered  55  W.  Wacker  Drive  –  10th  Floor  

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TABLE OF CONTENTS

PAGE TOPICS 5 A VENDOR FOR STATE WORKERS’ COMPENSATION

PROGRAM – effective June 28, 2011

5 STATE WORKERS’ COMPENSATION PROGRAM ADVISORY BOARD CREATED – effective June 28, 2011

6 FRAUD UNIT ALLOWED TO ISSUE SUBPOENAS FOR MEDICAL RECORDS – effective June 28, 2011

7 BURDEN OF PROOF – effective June 28, 2011

8 STANDARDS OF CONDUCT FOR ABITRATORS AND COMMISSIONERS – effective June 28, 2011

9 EMPLOYEE LEASING COMPANIES REQUIRED TO DISCLOSE INFORMATION – effective June 28, 2011

10 ALTERNATIVE DISPUTE RESOLUTION SYSTEM CREATED – effective June 28, 2011

14 CITATIONS OF EMPLOYERS FOR NON-COMPLIANCE – effective June 28, 2011

15 MEDICAL CHOICES (See also Preferred Provider Programs

at page 21) - effective June 28, 2011.

17 WAGE LOSS – effective September 1, 2011

19 SPECIFIC LOSS CLAIMS FOR CARPAL TUNNEL SYNDROME – effective June 28, 2011

21 PREFERRED PROVIDER PROGRAMS – effective June 28, 2011

26 EVALUATING PERMANENT DISABILITY – effective September 1, 2011

31 FEE SCHEDULE – effective September 1, 2011 39 MEDICAL PROVIDERS PROHIBITED FROM COLLECTING

AGAINST CLAIMANTS FOR MEDICAL SERVICES FOR

TREATMENT DETERMINED BY THE COMMISSION TO BE EXCESSIVE OR UNNECESSARY – effective June 28, 2011

41 TEMPORARY PARTIAL DISABILITY – effective June 28, 2011

42 UTILIZATION REVIEW PROGRAMS – effective September 1, 2011

45 INTOXICATION DEFENSE – effective September 1, 2011

49 TRAINING PROGRAMS FOR COMMISSIONERS –

effective June 28, 2011

50 WORKERS’ COMPENSATION ADVISORY BOARD – effective June 28, 2011

51 AMENDMENTS PERTAINING TO ARBITRATORS – effective June 28, 2011

55 GIFT BAN – effective June 28, 2011

57 CLAIMS BY COMMISSION EMPLOYEES – effective June 28, 2011

58 UNLAWFUL TO PRESENT FALSE MEDICAL BILL FOR PAYMENT – effective June 28, 2011

62 RECALCUATION OF PREMIUM RATES – effective June 28, 2011

62 INSURANCE OVERSIGHT – effective April 1, 2012

A VENDOR FOR STATE WORKERS’ COMPENSATION PROGRAM This following provisions change The Department of Central Management Services Law of the Civil Administrative Code of Illinois: 20 ILCS 405/405-105 (10a) If the Director determines it would be in the best interests of the State and its employees, prepare and implement a plan providing for: (i) the purchase of workers' compensation insurance for workers' compensation liability; (ii) third-party administration of self-insurance, in whole or in part, for workers' compensation liability; or (iii) a combination of purchased insurance and self-insurance for workers' compensation liability, including reinsurance or stop-loss insurance. Any contract for insurance or third-party administration shall be on terms consistent with State policy; awarded in compliance with the Illinois Procurement Code; and based on, but not limited to, the following criteria: administrative cost, service capabilities of the carrier or other contractor and premiums, fees, or charges. By April 1 of each year, the Director must report and provide information to the State Workers' Compensation Program Advisory Board concerning the status of the State workers' compensation program for the next fiscal year. Information includes, but is not limited to, documents, reports of negotiations, bid invitations, requests for proposals, specifications, copies of proposed and final contracts or agreements, and any other materials concerning contracts or agreements for the program. By the first of each month thereafter, the Director must provide updated, and any new, information to the State Workers' Compensation Program Advisory Board until the State workers' compensation program for the next fiscal year is determined. Summary We consider this change to be procedural and effective immediately. This provides that the Director can purchase workers’ compensation insurance and/or secure the services of a third-party administrator to administer the workers’ compensation program for the State of Illinois and its employees. The Director of Insurance is required to provide certain information to the State Workers’ Compensation Program Advisory Board regarding the status of the State workers’ compensation program. STATE WORKERS’ COMPENSATION PROGRAM ADVISORY BOARD CREATED (e) There is hereby created within the Department of Central Management Services an advisory body to be known as the State Workers' Compensation

Program Advisory Board to review, assess, and provide recommendations to improve the State workers' compensation program and to ensure that the State manages the program in the interests of injured workers and taxpayers. The Governor shall appoint one person to the Board, who shall serve as the Chairperson. The Speaker of the House of Representatives, the Minority Leader of the House of Representatives, the President of the Senate, and the Minority Leader of the Senate shall each appoint one person to the Board. Each member initially appointed to the Board shall serve a term ending December 31, 2013, and each Board member appointed thereafter shall serve a 3-year term. A Board member shall continue to serve on the Board until his or her successor is appointed. In addition, the Director of the Department of Central Management Services, the Attorney General, the Director of the Department of Insurance, the Secretary of the Department of Transportation, the Director of the Department of Corrections, the Secretary of the Department of Human Services, the Director of the Department of Revenue, and the Chairman of the Illinois Workers' Compensation Commission, or their designees, shall serve as ex officio, non-voting members of the Board. Members of the Board shall not receive compensation but shall be reimbursed from the Workers' Compensation Revolving Fund for reasonable expenses incurred in the necessary performance of their duties, and the Department of Central Management Services shall provide administrative support to the Board. The Board shall meet at least 3 times per year or more often if the Board deems it necessary or proper. By September 30, 2011, the Board shall issue a written report, to be delivered to the Governor, the Director of the Department of Central Management Services, and the General Assembly, with a recommended set of best practices for the State workers' compensation program. By July 1 of each year thereafter, the Board shall issue a written report, to be delivered to those same persons or entities, with recommendations on how to improve upon such practices. Summary This is a procedural change and effective immediately. This creates an Advisory Board to review, assess and provide recommendations to improve the State workers’ compensation program. The members who will serve on the Board will be political appointees—with one member appointed by the Governor whom will be the Chairperson and the other members appointed by the Speaker of the House of Representatives, the Minority Leader of the House of Representatives, the President of the Senate, and the Minority Leader of the Senate. FRAUD UNIT ALLOWED TO ISSUE SUBPOENAS FOR MEDICAL RECORDS The following is a change to the Code of Civil Procedure: Sec. 8-802. Physician and patient. No physician or surgeon shall be permitted to disclose any information he or she may have acquired in attending any patient

in a professional character, necessary to enable him or her professionally to serve the patient, except…upon the issuance of a subpoena pursuant to Section 25.5 of the Workers’ Compensation Act. Summary We consider this change to be procedural and effective immediately. As a procedural change it would apply to currently pending investigations as well as those occurring after June 28, 2011. This allows the fraud and non-compliance unit of the Illinois Workers' Compensation Commission to subpoena medical records as part of their investigation and requires physicians to release the subpoenaed medical records. The following are changes to the Illinois Workers' Compensation Act: BURDEN OF PROOF Section 1(d) To obtain compensation under this Act, an employee bears the burden of showing, by a preponderance of the evidence, that he or she has sustained accidental injuries arising out of and in the course of the employment. SUMMARY This amendment is effective June 28, 2011. To the extent that this amounts to a change in the law we consider it procedural and we intend to argue this point in all pending cases. By a cursory reading of this amendment, it appears that the legislature has simply restated the previously well-established standard a claimant always needed to achieve in order to prove a compensable accident arising out of and in the course of his employment. However, while codifying this well established standard of proof, we believe that a strong argument now can be made that the legislature also changed the standard of roof required in repetitive trauma cases. This amendment addresses the standard of proof for proving all “accidental injuries arising out of and in the course of the employment”. This includes accidents on specific dates as well as injuries that “manifest themselves” as in cases brought under a theory of repetitive trauma. For repetitive trauma cases, implicit in a finding of “manifestation” is that the injury is causally related to the work activity since the “manifestation” is said to occur when it becomes apparent to a reasonable person that there exists an injury and it is causally related to the work activity. In repetitive trauma cases brought before this amendment it was necessary for a claimant to show only that the work activity “could or might have been a causative factor” in order to successful carry claimant’s burden of proof on the issue of causation. Once accomplished, a finding of “manifestation” occurred and thus the claimant successfully proved an accident arising out of and in the course of the

employment. Accordingly, a lesser standard of proof appears to have been required in repetitive trauma cases than in cases where a sudden definable breakdown occurred on a specific date, where a preponderance of the evidence was required to prove accident in such cases. Now with this amendment, since it is necessary for a claimant to prove an accident arising out of and in the course of employment by a preponderance of the evidence, a claimant in a repetitive trauma case will be required to prove causation by a preponderance of the evidence or otherwise he would be unable to carry his burden of proof on the issue of accident by a preponderance of the evidence. Now if a claimant in a repetitive trauma case is able to prove only that the work activity could or might have been a causative factor in causing an injury, his claim should fail since the burden of proof by a preponderance of the evidence on the issue of accident will not have been achieved. Based upon our analysis of this new amendment, we believe that a claimant’s burden of proof in repetitive trauma cases has been raised from the heretofore minimal burden to prove that the work activity could or might have been a causative factor in causing an injury to one now requiring that the claimant prove causation by a preponderance of the evidence in order to establish a compensable accident arising out of and in the course of the employment. STANDARDS OF CONDUCT FOR ARBITRATORS AND COMMISSIONERS Sec. 1.1. Standards of conduct. (a) Commissioners and arbitrators shall dispose of all Workers' Compensation matters promptly, officially and fairly, without bias or prejudice. Commissioners and arbitrators shall be faithful to the law and maintain professional competence in it. They shall be unswayed by partisan interests, public clamor, or fear of criticism. Commissioners and arbitrators shall take appropriate action or initiate appropriate disciplinary measures against a Commissioner, arbitrator, lawyer, or others for unprofessional conduct of which the Commissioner or arbitrator may become aware. (b) Except as otherwise provided in this Act, the Canons of the Code of Judicial Conduct as adopted by the Supreme Court of Illinois govern the hearing and non-hearing conduct of members of the Commission and arbitrators under this Act. The Commission may set additional rules and standards, not less stringent than those rules and standards established by the Code of Judicial Conduct, for the conduct of arbitrators. (c) The following provisions of the Code of Judicial Conduct do not apply under this Section: (1) Canon 3(B), relating to administrative responsibilities of Judges. (2) Canon 6(C), relating to annual filings of economic interests. Instead of filing declarations of economic interests with the Clerk of the Illinois Supreme Court under Illinois Supreme Court Rule 68, members of the Commission and arbitrators shall make filings substantially similar to those required by Rule 68 with the Chairman, and such filings shall be made available for examination by the public. (d) An arbitrator or a Commissioner

may accept an uncompensated appointment to a governmental committee, commission or other position that is concerned with issues of policy on matters which may come before the arbitrator or Commissioner if such appointment neither affects his or her independent professional judgment nor the conduct of his or her duties. (e) Decisions of an arbitrator or a Commissioner shall be based exclusively on evidence in the record of the proceeding and material that has been officially noticed. Any findings of fact made by the arbitrator based on inquiries, investigations, examinations, or inspections undertaken by the arbitrator shall be entered into the record of the proceeding. (f) Nothing in this Section shall prohibit an arbitrator from holding a pre-trial conference in accordance with the rules of the Commission. Summary This amendment is procedural and effective June 28, 2011. This establishes that Arbitrators and Commissioners are required by statute to conduct themselves and treat the parties fairly and without bias or prejudice. They are required to follow a code of judicial and professional conduct. Their rulings and decision shall be based solely on the evidence and record. They are also allowed to conduct a pre-trial conference. This might seem like a small provision, but this is important because it firmly states and establishes that the Arbitrators and Commissioners must conduct themselves with appropriate judicial demeanor. EMPLOYEE LEASING COMPANIES REQUIRED TO DISCLOSE INFORMATION (a-2) Every Employee Leasing Company (ELC), as defined in Section 15 of the Employee Leasing Company Act, shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers' compensation insurance policy issued to the ELC: (1) Any client company of the ELC listed as an additional named insured. (2) Any informational schedule attached to the master policy that identifies any individual client company's name, FEIN, and job location. (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client, as well as the dates of inception and termination of coverage, if applicable. Summary This change is procedural and is effective immediately. The legislative intent clearly is for this information to be provided by existing companies regarding existing obligations. Leasing or loaning companies are required to provide the Illinois Workers' Compensation Commission with

information regarding the identity of any client or borrowing company listed on a workers’ compensation policy as an additional named insured; information about the client or borrowing company listed on a master insurance policy; and specifics regarding any rights and obligations, identification information, and coverage information listed on any certificate of coverage issued to a client company. ALTERNATIVE DISPUTE RESOLUTION SYSTEM CREATED (820 ILCS 305 / 4b new) Sec. 4b. Collective Bargaining Pilot Program. (a) The Director of the Department of Labor shall adopt a selection process to designate 2 labor organizations to participate in the collective bargaining process provided for in this Section. (a-5) For purposes of this Section, the term "construction employer" means any person or legal entity or group of persons or legal entities engaging in or planning to engage in any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom fabricating, maintaining, landscaping, improving, wrecking, painting, decorating, demolishing, and adding to or subtracting from any building, structure, airport facility, highway, roadway, street, alley, bridge, sewer, drain, ditch, sewage disposal plant, water works, parking facility, railroad, excavation or other project, structure, development, real property or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to, or fabrication into, any project, structure, development, real property or improvement herein described, and shall also include any moving of construction-related materials on the job site or to or from the job site. For purposes of this Section, "labor organization" means the exclusive representative of a construction employer's employees recognized or certified pursuant to the National Labor Relations Act. (b) Upon appropriate filing, the Commission and the courts of this State shall recognize as valid and binding any provision in a collective bargaining agreement between any construction employer or group of construction employers and a labor organization, which contains certain obligations and procedures relating to workers' compensation. This agreement must be limited to, but need not include, all of the following: (1) An alternative dispute resolution ("ADR") system to supplement, modify or replace the procedural or dispute resolution provisions of this Act. The system may include mediation, arbitration, or other dispute resolution proceedings, the results of which shall be final and binding upon the parties; (2) An agreed list of medical treatment providers that may be the exclusive

source of all medical and related treatment provided under this Act; (3) The use of a limited list of impartial physicians to conduct independent medical examinations; (4) The creation of a light duty, modified job, or return to work program; (5) The use of a limited list of individuals and companies for the establishment of vocational rehabilitation or retraining programs that may be the exclusive source of rehabilitation and retraining services provided under this Act; or (6) The establishment of joint labor management safety committees and safety procedures. (c) Void agreements. Nothing in this Section shall be construed to authorize any provision in a collective bargaining agreement that diminishes or increases a construction employer's entitlements under this Act or an employee's entitlement to benefits as otherwise set forth in this Act. For the purposes of this Section, the procedural rights and dispute resolution agreements under subparagraphs (1) through (6) of subsection (b) of this Section are not agreements which diminish or increase a construction employer's entitlements under this Act or an employee's entitlement to benefits under this Act. Any agreement that diminishes or increases a construction employer's entitlements under this Act or an employee's entitlement to benefits as set forth in this Act is null and void. Nothing in this Section shall be construed as creating a mandatory subject of bargaining. (d) Form of agreement. The agreement reached herein shall demonstrate that: (1) The construction employer or group of construction employers and the recognized or certified exclusive bargaining representative have entered into a binding collective bargaining agreement adopting the ADR plan for a period of no less than 2 years; (2) Contractual agreements have been reached with the construction employer's workers' compensation carrier, group self-insurance fund, and any excess carriers relating to the ADR plan; (3) Procedures have been established by which claims for benefits by employees will be lodged, administered, and decided while affording procedural due process; (4) The plan has designated forms upon which claims for benefits shall be made; (5) The system and means by which the construction employer's obligation to furnish medical services and vocational rehabilitation and retraining benefits shall be fulfilled and provider selected;

(6) The method by which mediators or arbitrators are to be selected. (e) Filing. A copy of the agreement and a statement identifying the parties to the agreement shall be filed with the Commission. Within 21 days of receipt of an agreement, the Chairman shall review the agreement for compliance with this Section and notify the parties of its acceptance or notify the parties of any additional information required or any recommended modification that would bring the agreement into compliance. If no additional information or modification is required, the agreement shall be valid and binding from the time the parties receive acceptance of the agreement from the Chairman. Upon receipt of any requested information or modification, the Chairman shall notify the parties within 21 days whether the agreement is in compliance with this Section. All rejections made by the Chairman under this subsection shall be subject to review by the courts of this State, said review to be taken in the same manner and within the same time as provided by Section 19 of this Act for review of awards and decisions of the Commission. Upon the review, the Circuit Court shall have power to review all questions of fact as well as of law. (f) Notice to insurance carrier. If the construction employer is insured under this Act, it shall provide notice to and obtain consent from its insurance carrier, in the manner provided in the insurance contract, of its intent to enter into an agreement as provided in this Section with its employees. (g) Employees' claims for workers' compensation benefits. (1) Claims for benefits shall be filed with the ADR plan administrator within those periods of limitation prescribed by this Act. Within 10 days of the filing of a claim, the ADR plan administrator shall serve a copy of the claim application upon the Commission, which shall maintain records of all ADR claims and resolutions. (2) Settlements of claims presented to the ADR plan administrator shall be evidenced by a settlement agreement. All such settlements shall be filed with the ADR plan administrator, who within 10 days shall forward a copy to the Commission for recording. (3) Upon assignment of claims, unless settled, mediators and arbitrators shall render final orders containing essential findings of fact, rulings of law and referring to other matters as pertinent to the questions at issue. The ADR plan administrator shall maintain a record of the proceedings. (h) Reporting requirements. Annually, each ADR plan administrator shall submit a report to the Commission containing the following information: (1) The number of employees within the ADR program;

(2) The number of occurrences of work-related injuries or diseases; (3) The breakdown within the ADR program of injuries and diseases treated; (4) The total amount of disability benefits paid within the ADR program; (5) The total medical treatment cost paid within the ADR program; (6) The number of claims filed within the ADR program; and (7) The disposition of all claims. Summary Because this amendment is dependent on the collective bargaining agreements of the selected unions, and assuming each CBA contemplates both future and pending claims, this change can be considered procedural. It is effective June 28, 2011. In addition, the change specifically states (para. c) that nothing in this Section diminishes or increases rights or benefits to which the parties are otherwise entitled under the current Act. New Section 4b makes no immediate change in the day-to-day operations of the Illinois Workers' Compensation Commission; but it does introduce concepts that depart from how the workers’ compensation program has been administered for generations. The new section does not apply to everyone. It is only an invitation to several Illinois construction-industry labor unions to join with their respective construction employers in designing an experimental program to manage work-related injuries, and possibly even to adjudicate them. The Illinois Secretary of Labor will identify two collective bargaining units to submit proposals. Such experimental programs could continue to utilize the administrative apparatus of the Illinois Workers' Compensation Commission, but are allowed to “streamline” it with any of the following:

1. 1. An exclusive panel of medical treatment providers, 2. 2. An exclusive panel of doctors to perform Independent medical

evaluations, 3. 3. An exclusive return to work program, 4. 4. An excusive panel rehabilitation service providers, or 5. 5. Joint safety committees or procedures.

The experiment may go much further than just these five streamlining measures. A labor management plan may abandon the Illinois Workers' Compensation Commission entirely and substitute a private alternative dispute resolution system

that is binding on the parties. In general, alternative dispute resolution uses private Arbitrators hired by the parties in place of public employee Arbitrators and Commissioners assigned by the government. “Privatization”, however, is not unlimited since the new Section 4b forbids any labor-management plan from increasing or decreasing the employer’s or employee’s existing rights and responsibilities under the Workers’ Compensation Act. We believe that the General Assembly intended that the substance of the Workers’ Compensation Act will still apply, but the procedures under it may change and that it may be administered privately rather than publicly. Said another way, the new section addresses the how, not the what. It strikes us as ironic that the level of dissatisfaction with the current system has reached a point where an “alternative” is being explored. After all, workers compensation was the original “alternative dispute resolution”, born nearly 100 years ago out of similar dissatisfaction with the legal system that existed at the time. Section 4(d) CITATIONS OF EMPLOYERS FOR NON-COMPLIANCE An investigator with the Illinois Workers' Compensation Commission Insurance Compliance Division may issue a citation to any employer that is not in compliance with its obligation to have workers' compensation insurance under this Act. The amount of the fine shall be based on the period of time the employer was in non-compliance, but shall be no less than $500, and shall not exceed $2,500. An employer that has been issued a citation shall pay the fine to the Commission and provide to the Commission proof that it obtained the required workers' compensation insurance within 10 days after the citation was issued. This Section does not affect any other obligations this Act imposes on employers. Summary This is a substantive change and is effective as of June 28, 2011. This section has been amended to allow Insurance investigators the authority to issue citations in the amount of $500 to $2,500 to “any Employer that is not in compliance with its obligations to have workers’ compensation insurance.” After receiving a citation, an Employer will have 10 days to pay the fine and provide proof that it secured proper workers’ compensation insurance. This provision strengthens the 2005 amendments, which allowed for both Criminal and Civil liability for any Employer who knowingly failed to provide worker’s compensation coverage for its employees.

MEDICAL CHOICES Section 8(a): Every hospital, physician or surgeon or other person rendering treatment or services in accordance with provisions of this Section shall upon written request furnish full and complete reports thereof to, and permit their records to be copied by, the employer, the employee or his dependents, as the case may be, or any other party to any proceeding for compensation before the Commission or their attorneys. Notwithstanding the foregoing, the employer's liability to pay for such medical services selected by an employee of an employer without an approved preferred provider program pursuant to Section 8.1a on the date the employee sustained his or her accidental injuries shall be limited to: (1) all first aid and emergency treatment; plus (2) all medical surgical and hospital services provided by the physician, surgeon or hospital initially chosen by the employee or by other physician , consultant, expert, institution or other provider of services recommended by said initial service provider or any subsequent provider of medical services in the chain of referrals from said initial service provider; plus (3) all medical, surgical and hospital services provided by any second physician, surgeon or hospital subsequently chosen by the employee or by any other physician, consultant, expert, institution or other provider of services recommended by said second service provider or any subsequent provider of medical services in the chain of referrals from said second service provider. There after the employer shall select and pay for all necessary medical, surgical and hospital treatment and the employee may not select a provider of medical services at the employer's expense unless the employer agrees to such selection. At any time the employee may obtain any medical treatment he desires at his own expense. This paragraph shall not affect the duty to pay for rehabilitation referred to above. (4) The following shall apply for injuries occurring on or after the effective date of this amendatory Act of the 97th General Assembly and only when an employer has an approved preferred provider program pursuant to Section 8.1a on the date the employee sustained his or her accidental injuries: (A) The employer shall, in writing, on a form promulgated by the Commission, inform the employee of the preferred provider program; (B) Subsequent to the report of an injury by an employee, the employee

may choose in writing at any time to decline the preferred provider program, in which case that would constitute one of the two choices of medical providers to which the employee is entitled under subsection (a)(2) or (a)(3); and (C) Prior to the report of an injury by an employee, when an employee chooses non-emergency treatment from a provider not within the preferred provider program, that would constitute the employee's one choice of medical providers to which the employee is entitled under Section (a)(2) or (a)(3). Summary This is a substantive change, effective June 28, 2011, and impacting claims on or after that date. This amendment to the Illinois Workers' Compensation Commission Act provides that the employer is entitled to provide a written and approved medical provider program pursuant to Section 8.1a of the Act. To do so, the Employer must provide written notice of the program on a form supplied by the Illinois Workers' Compensation Commission. As of the writing of this summary the forms do not yet exist. If Employer does not have an approved provider plan, the employee's rights to treatment do not change from the existing statute. If the employee reports an accident and provides a written declination of treatment within the Preferred Provider Network, such declination constitutes one of the employee's two choices of medical providers. If the employee does not report an accident and seeks non-emergency treatment outside of the preferred provider plan, the employee is not entitled to seek yet another medical provider because he exercised his choice by seeking non-emergency care, his other choice being waived by his implicit rejection of the employer’s PPP. However, the claimant could still treat with the PPP if he did not provide a written rejection of the PPP. The primary change to this section is the employer's ability to provide a preferred provider plan. This is obviously a response to the freedom that was previously provided the employee and the high medical fees that were associated. In only those instances where the employer does not provide a preferred provider plan is the petitioner given the freedom same to select a doctor that currently exists. WAGE LOSS Section 8(d)1 pertains to claims for wage differential. This provision previously stated:

“If, after the accidental injury has been sustained, the employee as a result thereof becomes partially incapacitated from pursuing his usual and customary line of employment, he shall, except in cases compensated under the specific schedule set forth in paragraph (e) of the Section, receive compensation for the duration of his disability, subject to the limitations as to maximum amounts fixed in paragraph (b) of the Section, equal to 66-2/3% of the difference between the average amount which he would be able to earn in the full performance of his duties in the occupation in which he was engaged at the time of the accident and the average amount which he is earning or is able to earn in some suitable employment or business after the accident.” What was added. “For accidental injuries that occur on or after September 1, 2011, an award for wage differential under this subsection shall be effective only until the employee reaches the age of 67 or 5 years from the date the award becomes final, whichever is later.” Summary This is a substantive change effective September 1, 2011. This should represent a savings for the respondent, the degree of which will depend upon each case scenario. On average, the life expectancy of males is 80 years and females 83 years. At the 67 year cap, this is a reduction of 13 and 16 years of wage differential benefits respectively. What this means in dollars and cents will vary with each case. If we assume a maximum wage differential rate of $930.39, thirteen years of benefits equals $628,943.64. Sixteen years of benefits equals $774,084.48. At a more modest $275.00 per week, thirteen years of benefits is $185,900.00. At sixteen years, $228,800.00. The present cash value savings are also encouraging. For example, assume a 55 year old male with a maximum wage differential rate of $930.39. The present cash value of such a claim, assuming a 5% rate of return before the amendment is $681,866.82. For an accident occurring after September 1, 2011, the same claim has a value of $428,808.00. This results is a potential savings of $253,057.89. Assuming a wage differential rate of $275.00 per week, the same scenario results in a pre-amendment present cash value of $191,818.77. Post-amendment value is $126,745.19 a difference of $65,073.58. Practical application. At present, the majority of wage differential claims are resolved via

settlement. This is due in large part to petitioner’s desire for a lump sum settlement and the insurance carrier’s desire to close the file. The ability to reach a settlement and the settlement value of the case involves several factors only one of which is the life expectancy of the claimant. More often than not, the deciding factors in the resolution of a wage differential are a disputed earning potential, rate of return and or the degree that the present cash value can be discounted in exchange for a lump sum payment. With the advent of the wage differential cap, we will be armed with yet another factor we can use to bring about a favorable outcome. We are very concerned with the language tying the wage differential cap of 5 years to when “the award becomes final”. With this language, we can conceive of situations, particularly as petitioner gets closer to age 67, in which it would be in the claimant’s best interest to hold off proceeding to trial for as long as possible. We can and will motion matters for hearing where an Application has been filed. The difficulty will lie in cases in which no dispute exists. Case law states that wage differential benefits are to be paid once the extent of the differential is known. There is no requirement for an Application to be filed. The statute of limitations allows a filing of an Application two years from the last payment of benefits. Under this scenario we can envision situations in which the “award” is never entered or an award is entered more than 5 years after the petitioner has reached the age of 67. In these cases, our ability to resolve matters at favorable rates and discounts will depend significantly upon either the claimant’s or opposing counsel’s desire for a lump sum over weekly benefits. SPECIFIC LOSS CLAIMS FOR CARPAL TUNNEL SYNDROME Section 8(e) pertains to specific loss claims. This provision has been modified so as to reduce the overall exposure for hand injuries and specifically place limits on carpal tunnel syndrome. The provision previously stated: “For accidental injuries in the following schedule, the employee shall receive compensation for the period of temporary total incapacity for work resulting from such accidental injury, under subparagraph 1 of paragraph (b) of this Section, and shall receive in addition thereto compensation for a further period for the specific loss herein mentioned, but shall not receive any compensation under any other provisions of this Act. The following listed amounts apply to either the loss of or the permanent and complete loss of use of the member specified, such compensation for the length of time as follow: Hand- 190 weeks if the accidental injury occurs on or after the effective date of the

amendatory Act of the 94th General Assembly but before February 1, 2006. 205 weeks if thee accidental injury occurs on or after February 1, 2006.” What was added: “190 weeks if the accidental injury occurs on or after the effective date of this amendatory Act of the 97th General Assembly and if the accidental injury involves carpal tunnel syndrome due to repetitive or cumulative trauma, in which case the permanent partial disability shall not exceed 15% loss of use of the hand, except for cause shown by clear and convincing evidence and in which case the award shall not exceed 30% loss of use of the hand.” Summary: This is a substantive change effective June 28, 2011 and applicable only to accidents occurring after that date. Some practitioners have questioned whether this change reduces the number of weeks to be used in permanency calculations for ALL hand injuries. If that is the case, this would represent an approximate 7% savings on all hand injuries. However, most practitioners interpret this change to 190 weeks for the specific loss of a hand to apply only to carpal tunnel syndrome cases and only if they are causally related to repetitive trauma or cumulative trauma. Carpal tunnel injuries caused by repetitive or cumulative trauma have been further limited to 15% loss of the hand, or 28.5 weeks of compensation. In extreme cases, shown by clear and convincing evidence, the permanency can be increased to 30% loss of the hand or 57 weeks of compensation. Practical application Carpal tunnel syndrome claims at the Commission were fairly common and were generally valued based upon whether surgery was required, the end result and whether the condition involved the dominant hand. For a non-operated carpal tunnel syndrome with a full duty release, a typical exposure would be in the area of 10% of the hand and possibly 12% loss of use if it were the dominant hand. The new maximum percentage enacted will not affect these claims, though we will certainly argue that the intention of the changes was a reduction in permanency. If 15% loss is meant to represent an operated carpal tunnel syndrome with favorable results, a more appropriate award for an un-operated carpal tunnel syndrome should be in the area of 5% to 7% loss of the hand. The inclusion of AMA guides, discussed elsewhere, will also play a role in these assessments. If surgery were required, and again assuming a return to full duty, the typical exposure for such a claim would be in the area of 20% loss of use of

the hand and as high as 25% loss of use if it were the dominant hand. In these types of claims, the recent changes should result in significant savings. Again assuming an average weekly wage of $600.00 per week, an operated carpal tunnel syndrome in the dominant hand would have had an exposure in the area of $18,450.00. Post-Amendment, that same claim will have an exposure of $10,260.00, a difference of $8,190.00. The savings increase as the average weekly wage increases. Assuming an average weekly wage of $1000.00 per week, the operated carpal tunnel syndrome has an exposure of up to $30,750.00. Post-Amendment, the same claim will have an exposure of $17,100.00, a savings of $13,650.00. What the Commission means by “except for cause shown by clear and convincing evidence and in which case the award shall not exceed 30% loss of use of the hand” is not particularly clear. We can only surmise that under certain circumstances, the Arbitrator can award up to 30% loss of the hand. At present, 30% loss of use of the hand for a carpal tunnel syndrome claim would be exceptionally high and would only be seen in unusual circumstances. We suspect the Petitioner’s bar will focus on this language to push for decisions that are consistent with the exposure of between 20% and 25% loss of use of the hand. In addition to the discussion regarding whether this change applies to all hand injuries, an additional debate has ensued regarding the level of proof required to meet the burden to establish a compensable claim. Most practitioners have taken the position that the claimant need only prove by a preponderance of the evidence that he or she has sustained a compensable carpal tunnel syndrome as a result of repetitive or cumulative trauma. Some feel, however, that the legislature intended to increase the burden of proof to that of clear and convincing evidence not only for the enhanced percentage loss (over 15%), but also for causation. Certainly, our position will be that the limiting nature of the language demonstrates a clear intent to reduce the exposure on all carpal tunnel claims caused by repetitive or cumulative trauma. The language “except for cause shown by clear and convincing evidence” would denote an exception to the norm and should be an indication of an unusual circumstance needed to receive any award higher than the 15% mandated by the Amendment (or perhaps even as to causal relationship). The Amendments to the Act do not preclude a claimant from seeking benefits under the previously discussed Section 8(d)1 of the Act. Accordingly, the caps placed on carpal tunnel syndrome claims will not come into affect in situations in which ultimate restrictions are such that a claimant is unable to return to his customary line of work resulting in a reduction in wages.

PREFERRED PROVIDER PROGRAMS 820 ILCS 305/8.1a Sec. 8.1a. Preferred Provider Programs. Starting on the effective date of this amendatory Act of the 97th General Assembly, to satisfy its liabilities under this Act for the provision of medical treatment to injured employees, an employer may utilize a preferred provider program approved by the Illinois Department of Insurance as in compliance with Sections 370k, 370l, 370m, and 370p of Article XX-1/2 of the Illinois Insurance Code. For the purposes of compliance with these Sections, the employee shall be considered the "beneficiary" and the employer shall be considered the "insured". Employers and insurers contracting directly with providers or utilizing multiple preferred provider programs to implement a preferred provider program providing workers' compensation benefits shall be subject to the above requirements of Article XX-1/2 applicable to administrators with regard to such program, with the exception of Section 370l of the Illinois Insurance Code. (a) In addition to the above requirements of Article XX-1/2 of the Illinois Insurance Code, all preferred provider programs under this Section shall meet the following requirements: (1) The provider network shall include an adequate number of occupational and non-occupational providers. (2) The provider network shall include an adequate number and type of physicians or other providers to treat common injuries experienced by injured workers in the geographic area where the employees reside. (3) Medical treatment for injuries shall be readily available at reasonable times to all employees. To the extent feasible, all medical treatment for injuries shall be readily accessible to all employees. (4) Physician compensation shall not be structured in order to achieve the goal of inappropriately reducing, delaying, or denying medical treatment or restricting access to medical treatment. (5) Before entering into any agreement under this Section, a program shall establish terms and conditions that must be met by non-institutional providers wishing to enter into an agreement with the program. These terms and conditions may not discriminate unreasonably against or among non-institutional providers. Neither difference in prices among non-institutional providers produced by a process of individual negotiation nor price differences among other non-institutional providers in different geographical areas or different specialties constitutes unreasonable discrimination.

(b) The administrator of any preferred provider program under this Act that uses economic evaluation shall file with the Director of Insurance a description of any policies and procedures related to economic evaluation utilized by the program. The filing shall describe how these policies and procedures are used in utilization review, peer review, incentive and penalty programs, and in provider retention and termination decisions. The Director of Insurance may deny approval of any preferred provider program that uses any policy or procedure of economic evaluation to inappropriately reduce, delay or deny medical treatment, or to restrict access to medical treatment. Evaluation of providers based upon objective medical quality and patient outcome measurements, appropriate use of best clinical practices and evidence based medicine, and use of health information technology shall be permitted. If approved, the employer shall provide a copy of the filing to all participating providers. (1) The Director of the Department of Insurance shall make each administrator's filing available to the public upon request. The Director of the Department of Insurance may not publicly disclose any information submitted pursuant to this Section that is determined by the Director of the Department of Insurance to be confidential, proprietary, or trade secret information pursuant to State or federal law. (2) For the purposes of this subsection (b), "economic evaluation" shall mean any evaluation of a particular physician, provider, medical group, or individual practice association based in whole or in part on the economic costs or utilization of services associated with medical care provided or authorized by the physician, provider, medical group, or individual practice association. Economic evaluation shall not include negotiated rates with a provider. (c) Except for the provisions of subsection (a) of Section 26 and for injuries occurring on or after the effective date of this amendatory Act of the 97th General Assembly, an employee of an employer utilizing a preferred provider program shall only be allowed to select a participating network provider from the network. [emphasis added] An employer shall be responsible for: (i) all first aid and emergency treatment; (ii) all medical, surgical, and hospital services provided by the participating network provider initially selected by the employee or by any other participating network provider recommended by the initial participating network provider or any subsequent participating network provider in the chain of referrals from the initial participating network provider; and (iii) all medical, surgical, and hospital services provided by the participating network provider subsequently chosen by the employee or by any other participating network provider recommended by the subsequent participating network provider or any subsequent participating network provider in the chain of referrals from the second participating network provider. An employer shall not be liable for services determined by the Commission not to be compensable. An employer shall not be liable for medical services provided by a non-authorized provider when proper notice is provided to the injured worker.

(1) When the injured employee notifies the employer of the injury or files a claim for workers' compensation with the employer, the employer shall notify the employee of his or her right to be treated by a physician of his or her choice from the preferred provider network established pursuant to this Section, and the method by which the list of participating network providers may be accessed by the employee, except as provided in subsection (a)(4) of Section 8. (2) Consistent with Article XX-1/2 of the Illinois Insurance Code, treatment by a specialist who is not a member of the preferred provider network shall be permitted on a case-by-case basis if the medical provider network does not contain a physician who can provide the approved treatment, and if the employee has complied with any pre-authorization requirements of the preferred provider network. Consent for the employee to visit an out-of-network provider may not be unreasonably withheld. When a non-network provider is authorized pursuant to this subparagraph (2), the non-network provider shall not hold an employee liable for costs except as provided in subsection (e) of Section 8.2. (3) The Director shall not approve, and may withdraw prior approval of, a preferred provider program that fails to provide an injured employee with sufficient access to necessary treating physicians, surgeons, and specialists. (d) Except as provided in subsection (a)(4) of Section 8, upon a finding by the Commission that the care being rendered by the employee's second choice of provider within the employer's network is improper or inadequate, the employee may then choose a provider outside of the network at the employer's expense. The Commission shall issue a decision on any petition filed pursuant to this Section within 5 working days. (e) The Director of the Department of Insurance may promulgate such rules as are necessary to carry out the provisions of this Section relating to approval and regulation of preferred provider programs. Summary This amendment is substantive and effective as of June 28, 2011. This is a wholly new section added to the Act with these latest Amendments. This provision essentially gives employers the option to satisfy liability for medical treatment under the Act through the use of a Preferred Provider Program (PPP). The PPP must be approved by the Illinois Department of Insurance and comply with applicable portions of the Illinois Insurance Code. (in order to deal with issues of compliance with the applicable portions of the Insurance Code the employer shall be considered the “Insured” and the

employee shall be considered the “Beneficiary”). Beyond being subject to the approval of the Illinois Department of Insurance the PPP must also meet the following requirements: 1. Include an “adequate” number of BOTH occupational and non-occupational medical providers 2. Include an “adequate” number and type of physicians (or other providers) to treat common injuries experienced by injured workers in the geographic area where the employees reside (not simply where the workplace is located). It is entirely unclear how this will work for companies that frequently employ union members who travel across the state or even from out-of-state. It is unclear whether “reside” refers to the employee’s permanent residence or, if he / she is traveling, to his or her temporary / motel residence. 3. Medical treatment for injuries shall be “readily available” and “readily accessible”, as reasonable, to ALL employees 4. Physician compensation SHALL NOT be structured in a manner that could be said to reduce, delay or deny medical treatment or restrict access to such treatment. In other words, compensation cannot be so low that the employees cannot get access to the physicians. 5. The PPP must establish terms/conditions that must be met for a provider to be able to become a part of the PPP and such terms/conditions cannot discriminate unreasonably. The price of services as a term/condition does not constitute discrimination. However, the employer must file with the Department of Insurance a written description of all economic valuations that are utilized as terms/conditions and the Director of Insurance may deny approval of a PPP that uses any such term/condition in a manner felt to reduce, delay, or deny medical treatment. The employer must provide a copy of the network filing to all participating providers and this shall be a matter of public record. An injured employee of an employer that has established such a PPP is only permitted to select a physician from those within the network. Assuming the employee does so, the employer shall be liable for: 1. All first aid and emergency treatment, 2. All medical, surgical and hospital services within the network from employees first choice of network provider or “within the chain of referral” from the initial network provider

3. All medical, surgical and hospital services arising from employees second choice and within the “chain of referral” from that choice. An employer is NOT liable for any medical services either found not to be compensable by the IWCC or for any services provided by a non-authorized provider when proper notice is given the employee. When an employee reports an injury and/or files an Application the employer must notify the employee of his/her right to obtain medical treatment from a physician within the PPP network, and instructions to access the list of network providers. An exception allows an employee to obtain treatment from a specialist who is NOT a member of the PPP on a ‘case-by-case” basis if the PPP does not contain a physician who can provide the treatment in question (for example, a cardiologist, a dermatologist, a pulmonologist) and the employee complies with any pre-authorization requirements of the PPP. An employer may NOT unreasonably deny such care. If the Illinois Workers' Compensation Commission finds that medical care rendered by employee’s second choice of provider within the PPP is improper or inadequate, the employee may then choose a provider OUTSIDE the PPP at the employer’s expense. This can be determined by way of a Section 8(a) Petition and a Decision must be filed within five (5) business days of any such hearing (expedited process). Historically, case law has established that third parties (employers, adjusters) may not communicate with a treating doctor about treatment issues associated with an injured worker. This amendment does not change that prohibition even though the employer is instrumental in establishing the panel and selecting the panel members that will, in whole or part, treat the injured employee. The exception to this restriction is either that the employer obtain permission (a release) from the employee, in which case communication is allowed, or that the employer seek only the minimal information necessary to administer the claim, e.g. the diagnosis, prognosis, treatment  plan,  restrictions, and copies of records or reports. By the same token, assembling a panel does not mean that the panel members are the agents of the employer or speak for the employer. Nevertheless, it is an accepted observation before the Commission that if an employer selects a doctor to conduct an examination (Section 12) or to provide treatment, the presumption is that the employer respects the doctor’s qualifications and opinions; giving the impression of agency where none actually exists. This amendment clearly creates some medical control heretofore unknown

in Illinois workers' compensation law. The employees, whether (union) organized or not, will not have any input regarding the makeup of the panel(s). On the other hand, the legislation makes it possible for doctors historically known as being “petitioner’s doctors” to seek to join local panels. Paragraph 5, above, requires that the rules to join a panel may not be discriminatory. The legislation does not establish how large a panel may be, only that it may not be so small as to prevent the employees from getting access to medical care with customary treating professionals (orthopedists, neurologists, neurosurgeons, physiatrists, occupational medicine specialists). The reference to “other providers” could allow the inclusion of, for instance, chiropractors or other healers. EVALUATING PERMANENT DISABILITY (820 ILCS 305/8.1b new) Sec. 8.1b. Determination of permanent partial disability. For accidental injuries that occur on or after September 1, 2011, permanent partial disability shall be established using the following criteria:

(a) A physician licensed to practice medicine in all of its branches preparing a permanent partial disability impairment report shall report the level of impairment in writing. The report shall include an evaluation of medically defined and professionally appropriate measurements of impairment that include, but are not limited to: loss of range of motion; loss of strength; measured atrophy of tissue mass consistent with the injury; and any other measurements that establish the nature and extent of the impairment. The most current edition of the American Medical Association's "Guides to the Evaluation of Permanent Impairment" shall be used by the physician in determining the level of impairment.

(b) In determining the level of permanent partial disability, the Commission shall base its determination on the following factors:

(i) the reported level of impairment pursuant to subsection (a); (ii) the occupation of the injured employee; (iii) the age of the employee at the time of the injury; (iv) the employee's future earning capacity; and (v) evidence of disability corroborated by the treating medical

records. No single enumerated factor shall be the sole determinant of disability. In determining the level of disability, the relevance and weight of any factors used in addition to the level of impairment as reported by the physician must be explained in

a written order. Summary This is a substantive change in the law. The legislature has pronounced that the effective date is September 1, 2011. For accidental injuries that occur on or after September 1, 2011, permanent partial disability shall be established using following criteria: A. Level of Impairment:

Physician licensed to practice medicine in all its branches preparing a permanent partial disability impairment report shall report written level of impairment and shall include evaluation of medically defined and professionally appropriate measurements of impairment that include, but are not limited to:

1. Loss of range of motion 2. Loss of strength 3. Measured atrophy of tissue mass consistent with the injury

4. Any other measurements that establish the nature and extent of the injury

5. The most current edition of the American Medical

Association's "Guides to the Evaluation of Permanent Impairment" shall be used by the physician in determining the level of impairment. Currently the 6th Edition, 2008 is the most current edition. In AMA Guides (6th edition 2008), the three–step process for evaluating impairment is contained in section 2.7. This section is required reading, as it contains many important requirements for the impairment rater. See attachment Section 2.7.

a. Step 1 is clinical evaluation, which requires a review of

medical records and documenting inconsistencies. The examinee should be encouraged to give full effort in the physical examination, and the physician should review the diagnostic studies.

b. Step 2 is analysis of findings, including diagnoses, MMI

status, current abilities for activities of daily (ADLs), and flagging of missing data.

c. Step 3 is a specific discussion of how the impairment rating was calculated, and the discussion should cite the pages and tables in the AMA Guides that are used and how they are used.

B. Permanent Partial Disability: In determining PPD, the Commission shall base its determination on the following factors:

1. The reported level of impairment pursuant to subsection (a)

2. The occupation of the injured employee;

3. The age of the employee at the time of the injury;

4. The employee's future earning capacity; and

5. Evidence of disability corroborated by the treating medical records.

C. No single enumerated factor shall be the sole determinant of disability. D. Relevance and weight of factors must be explained in writing.

In determining the level of disability, the relevance and weight of any factors used in addition to the level of impairment as reported by the physician must be explained in a written order.

E. Questions:

1. Section 12 examinations, commonly known as Independent medical examinations are to be done by “duly qualified medical practitioner or surgeon selected by the employer” and “for the purpose of determining the nature, extent, and probable duration and probable duration of the injury received by the employee, and for the purpose of ascertaining the amount of compensation which may be due the employee from time to time for disability” according to the provisions of the Act. Section 8.1b limits the type of evidence that can be relied

upon by the Illinois Workers' Compensation Commission in determining PPD. It refers to physicians “licensed to practice medicine in all its branches” issuing a permanent partial disability impairment report. Does this limit physicians such as chiropractors and podiatrists from issuing permanent partial disability impairment reports or mean that reports from such physicians cannot be relied upon by the Commission, even though Section 12 does not specify this?

2. Section 8.1b places no limitation on treating physicians “licensed to practice medicine in all its branches” from issuing permanent partial disability impairment reports as long as its requirements are followed. However, if such reports are contained in the patient’s medical records, are they subject to an objection by an employer attorney as being made in anticipation of litigation so that such reports do not go into evidence automatically under Section 16? Section 2.7 of Guides to the Evaluation of Permanent Impairment, 6th edition, 2008 - Preparing Reports A clear, accurate and complete report must be pro- vided to support a rating of permanent impairment. The following 3-step process is required by the examiner to estimate impairment according to the Guides: Clinical evaluation, analysis of the findings, and discussion of how the impairment rating was calculated. 2.7a Clinical Evaluation The relevant history is obtained by a review of medical records reflecting past medical history and the patient’s presentation of the current history. It is important to review medical records before performing an impairment rating, as this will enable the examiner, among other things. to: • Clarify or at least document inconsistencies. if any, between the history provided by the patient and the history contained in the medical records. • Reconcile inconsistencies, if any, between the patients history during the examination and other previous medical records. It is necessary to clarify historical inconsistencies because several issues, including causation. are primarily determined by the history.

• Focus on the portions of the history pertinent to the impairment rating. The physical examination should be performed in a manner and setting that facilitates the effective communication between the patient and the examiner, thereby decreasing anxiety and increasing concentration and effort. If the examiner believes the patient may be giving an inconsistent effort during the physical examination, the patient should be encouraged to give a full effort. For extremity impairment evaluations, findings should be documented bilaterally; if the contralateral extremity is uninjured. this may serve as the baseline for defining “normal” for the impaired extremity. The results of specific measurements must be reproducible to be valid. Review of all available diagnostic studies and laboratory data is critical in this step. 2.7b Analysis of the Findings Discuss how specific findings relate to the conclusion of diagnoses and MMI status. Refer to the current abilities of ADLs and any validated deficiencies. Explain the absence of any pertinent data and how the physician determined the impairment rating with limited data. 2.7c Discussion of How the Impairment Rating Was Calculated Discussion of how the Guides’ criteria were applied to medical information that generated the specific rating is required for an impairment evaluation to be consistent with the Guides. Compare the appropriate information obtained on history and objective findings with the criteria described in the applicable chapter of the Guides. Include an explanation of each impairment value with reference, including pages and table number, to the applicable criteria of the Guides. Combine multiple impairments for a final composite whole person impairment number, unless otherwise directed by jurisdictional application. Discuss how individual ratings were combined or added to create a final number; explain why certain ratings were disregarded in the final analysis due to invalid measurements and test results; and perform apportionment, where applicable. Include a summary list of impairments and impairment ratings by percentage, including calculation of the whole person impairment. as appropriate. A standard report format Figure 2-3, that the evaluator may use is provided in this chapter; the purpose of this form is to ensure that all essential elements are included in the impairment evaluation report. This form may be reproduced without permission from the American Medical Association. When relevant chapters include a data collection form or summary form that identifies the specific features to consider for each category of organ system impairment, it must be used to document the data and be attached

with the final report. This will ensure that the process of impairment evaluation according to the Guides is transparent and is subject to understanding by all parties interested in the outcome. The 3-step process described in this section applies to rating all organ systems. Although the underlying impairment evaluation criteria may differ, the process is essentially the same for rating all organ systems. The first 2 steps must be performed by a licensed physician. and if the clinical findings are fully described, any knowledgeable observer may check the findings against the Guides’ criteria. FEE SCHEDULE SECTION 8.2 OF THE ILLINOIS WORKERS’ COMPENSATION (820 ILCS 305/8.2) Sec. 8.2. Fee schedule. (a) Except as provided for in subsection (c), for procedures, treatments, or services covered under this Act and rendered or to be rendered on and after February 1, 2006, the maximum allowable payment shall be 90% of the 80th percentile of charges and fees as determined by the Commission utilizing information provided by employers' and insurers' national databases, with a minimum of 12,000,000 Illinois line item charges and fees comprised of health care provider and hospital charges and fees as of August 1, 2004 but not earlier than August 1, 2002. These charges and fees are provider billed amounts and shall not include discounted charges. The 80th percentile is the point on an ordered data set from low to high such that 80% of the cases are below or equal to that point and at most 20% are above or equal to that point. The Commission shall adjust these historical charges and fees as of August 1, 2004 by the Consumer Price Index-U for the period August 1, 2004 through September 30, 2005. The Commission shall establish fee schedules for procedures, treatments, or services for hospital inpatient, hospital outpatient, emergency room and trauma, ambulatory surgical treatment centers, and professional services. These charges and fees shall be designated by geozip or any smaller geographic unit. The data shall in no way identify or tend to identify any patient, employer, or health care provider. As used in this Section, "geozip" means a three-digit zip code based on data similarities, geographical similarities, and frequencies. A geozip does not cross state boundaries. As used in this Section, "three-digit zip code" means a geographic area in which all zip codes have the same first 3 digits. If a geozip does not have the necessary number of charges and fees to calculate a valid percentile for a specific procedure, treatment, or service, the Commission may combine data from the geozip with up to 4 other geozips that are demographically and economically similar and exhibit similarities in data and frequencies until the Commission reaches 9 charges or fees for that specific procedure, treatment, or service. In cases where the compiled data contains less than 9 charges or fees for a procedure, treatment, or service, reimbursement shall occur at 76% of charges and fees as determined by the Commission in a manner

consistent with the provisions of this paragraph. Providers of out-of-state procedures, treatments, services, products, or supplies shall be reimbursed at the lesser of that state's fee schedule amount or the fee schedule amount for the region in which the employee resides. If no fee schedule exists in that state, the provider shall be reimbursed at the lesser of the actual charge or the fee schedule amount for the region in which the employee resides. Not later than September 30 in 2006 and each year thereafter, the Commission shall automatically increase or decrease the maximum allowable payment for a procedure, treatment, or service established and in effect on January 1 of that year by the percentage change in the Consumer Price Index-U for the 12 month period ending August 31 of that year. The increase or decrease shall become effective on January 1 of the following year. As used in this Section, "Consumer Price Index-U" means the index published by the Bureau of Labor Statistics of the U.S. Department of Labor, that measures the average change in prices of all goods and services purchased by all urban consumers, U.S. city average, all items, 1982-84=100. (a-1) Notwithstanding the provisions of subsection (a) and unless otherwise indicated, the following provisions shall apply to the medical fee schedule starting on September 1, 2011:

(1) The Commission shall establish and maintain fee schedules for procedures, treatments, products, services, or supplies for hospital inpatient, hospital outpatient, emergency room, ambulatory surgical treatment centers, accredited ambulatory surgical treatment facilities, prescriptions filled and dispensed outside of a licensed pharmacy, dental services, and professional services. This fee schedule shall be based on the fee schedule amounts already established by the Commission pursuant to subsection (a) of this Section. However, starting on January 1, 2012, these fee schedule amounts shall be grouped into geographic regions in the following manner:

(A) Four regions for non-hospital fee schedule amounts shall be utilized:

(i) Cook County; (ii) DuPage, Kane, Lake, and Will Counties; (iii) Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe, Montgomery, Randolph, St. Clair, and Washington Counties; and (iv) All other counties of the State.

(B) Fourteen regions for hospital fee schedule amounts shall be utilized:

(i) Cook, DuPage, Will, Kane, McHenry, DeKalb, Kendall, and Grundy Counties; (ii) Kankakee County; (iii) Madison, St. Clair, Macoupin, Clinton, Monroe, Jersey, Bond, and Calhoun Counties; (iv) Winnebago and Boone Counties; (v) Peoria, Tazewell, Woodford, Marshall, and Stark Counties; (vi) Champaign, Piatt, and Ford Counties; (vii) Rock Island, Henry, and Mercer Counties;

(viii) Sangamon and Menard Counties; (ix) McLean County; (x) Lake County; (xi) Macon County; (xii) Vermilion County; (xiii) Alexander County; and (xiv) All other counties of the State.

(2) If a geozip, as defined in subsection (a) of this Section, overlaps into one or more of the regions set forth in this Section, then the Commission shall average or repeat the charges and fees in a geozip in order to designate charges and fees for each region.

(3) In cases where the compiled data contains less than 9 charges or fees for a

procedure, treatment, product, supply, or service or where the fee schedule amount cannot be determined by the non-discounted charge data, non-Medicare relative values and conversion factors derived from established fee schedule amounts, coding crosswalks, or other data as determined by the Commission, reimbursement shall occur at 76% of charges and fees until September 1, 2011 and 53.2% of charges and fees thereafter as determined by the Commission in a manner consistent with the provisions of this paragraph.

(4) To establish additional fee schedule amounts, the Commission shall utilize provider non-discounted charge data, non-Medicare relative values and conversion factors derived from established fee schedule amounts, and coding crosswalks. The Commission may establish additional fee schedule amounts based on either the charge or cost of the procedure, treatment, product, supply, or service.

(5) Implants shall be reimbursed at 25% above the net manufacturer's invoice

price less rebates, plus actual reasonable and customary shipping charges whether or not the implant charge is submitted by a provider in conjunction with a bill for all other services associated with the implant, submitted by a provider on a separate claim form, submitted by a distributor, or submitted by the manufacturer of the implant. "Implants" include the following codes or any substantially similar updated code as determined by the Commission: 0274 (prosthetics/orthotics); 0275 (pacemaker); 0276 (lens implant); 0278 (implants); 0540 and 0545 (ambulance); 0624 (investigational devices); and 0636 (drugs requiring detailed coding). Non-implantable devices or supplies within these codes shall be reimbursed at 65% of actual charge, which is the provider's normal rates under its standard chargemaster. A standard chargemaster is the provider's list of charges for procedures, treatments, products, supplies, or services used to bill payers in a consistent manner.

(6) The Commission shall automatically update all codes and associated rules with the version of the codes and rules valid on January 1 of that year.

(a-2) For procedures, treatments, services, or supplies covered under this

Act and rendered or to be rendered on or after September 1, 2011, the maximum allowable payment shall be 70% of the fee schedule amounts, which shall be adjusted yearly by the Consumer Price Index-U, as described in subsection (a) of this Section.

(a-3) Prescriptions filled and dispensed outside of a licensed pharmacy shall be subject to a fee schedule that shall not exceed the Average Wholesale Price (AWP) plus a dispensing fee of $4.18. AWP or its equivalent as registered by the National Drug Code shall be set forth for that drug.

Summary This is a substantive change; however the real impact is not on the rights of the parties as much as on the rights of the medical providers. To allow the providers to acclimate their practices to the new requirements this amendment will not be effective until September 1, 2011. With the 2005 Amendments, the Illinois Workers’ Compensation Act established a Fee Schedule for medical treatment related to workers’ compensation injuries. At the time, the Fee Schedule was to provide substantial savings to Illinois Businesses and offset the increases in benefits to Petitioners provided along with the 2005 Amendments. Unfortunately, the savings promised by the Medical Fee Schedule did not materialize as hoped. The current Medical Fee Schedule amendments will provide substantial savings to Illinois Business not seen subsequent to the enactment of the original fee schedule. In fact, Politicians and Business groups have suggested that the Medical Fee Schedule changes as part of House Bill 1698 will save Illinois businesses as much as $500,000,000.00 annually. This represents a majority of the overall estimated savings to Illinois businesses anticipated with these amendments. Section 8.2 of the Illinois Worker’s Compensation Act established the medical fee schedule. Substantial changes were made to Section 8.2 of the Act as part of House Bill 1698. The first change concerns treatment rendered by out-of-state providers. The amendment states that providers of out-of-state procedures, treatments, services, products or supplies shall be reimbursed at the lesser of that state’s Fee Schedule amount or the Fee Schedule amount for the region in which the employee resides. If no Fee Schedule exists in that state, the provider shall be reimbursed at the lesser of the actual charge or the Fee Schedule amount for the region in which the employee resides. Even after the current changes to the Fee Schedule, Illinois still has the second highest Medical Fee Schedule reimbursement rate to providers of the thirty-seven states that have Fee Schedules as part of their Workers’

Compensation Act. Therefore, for the majority of out of state medical treatment, the other state’s Medical Fee Schedule will likely control the cost of that medical care. However, there still may be some savings resulting for this amendment. In addition, with regard to the application of the Fee Schedule, there were changes made to the “geozips” identified in Section 8.2 of the Act. Geozips refer to a three digit zip code based upon data similarities, geographical similarities, and frequencies. For treatment subsequent to September 1, 2011, there will be four such regions for non-hospital Fee Schedule amounts and fourteen such regions for hospital Fee Schedule amounts. The regions are identified by county. The four non-hospital Fee Schedule regions are the following:

(1) Cook County; (2) DuPage, Kane, Lake and Will Counties; (3) Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe, Montgomery, Randolph, St. Clair, and Washington Counties; and, (4) all other counties of the state.

The fourteen regions for hospital Fee Schedule amounts are the following:

(1) Cook, DuPage, Will, Kane, McHenry, DeKalb, Kendall and Grundy Counties;

(2) Kankakee County; (3) Madison, St. Clair, Macoupin, Clinton, Monroe, Jersey, Bond and Calhoun Counties; (4) Winnebago and Boone Counties; (5) Peoria, Tazewell, Woodford, Marshall, and Stark Counties; (6) Champaign, Piatt and Ford Counties; (7) Rock Island, Henry and Mercer Counties; (8) Sangamon and Menard Counties; (9) McLean County; (10) Lake County; (11) Macon County; (12) Vermillion County; (13) Alexander County; and, (14) all other counties of the state.

In cases where the compiled data contains less than nine charges or fees for a procedure, treatment, product, supply or service or where the Fee Schedule amount cannot be determined by the non-discounted charge data, non-Medicare relative values and conversion factors derived from established Fee Schedule amounts, coding, crosswalks or other data as determined by the Commission, for charges after September 1, 2011,

reimbursement shall occur at 53.2% of charges and fees as determined by the Commission in a manner consistent with the provisions of this paragraph. For such charges prior to September 1, 2011, reimbursement was at seventy-six percent of the charges and fees. This represents a 30% reduction in these fees and should provide substantial savings where applicable. With the current amendment, Section 8.2 of the Act will now cover implants as well. Implants shall be reimbursed at 25% above the net manufacturer’s invoice price less rebates. Reimbursement will also include actual reasonable and customary shipping charges. House bill 1698 specifically identifies the codes to be considered as implants but does allow substantially similar updated codes as determined by the Commission. Non-implantable devices or supplies within these defined codes are to be reimbursed at sixty-five percent of the actual charge. The most substantial change to Section 8.2 in House Bill 1698 provides that for procedures, treatments, services or supplies covered under the Act and rendered or to be rendered on or after September 1, 2011, the maximum allowable payment shall be seventy percent of the Fee Schedule amount. The Fee Schedule amount is to be adjusted yearly by the Consumer Price Index – U as described in the amendments to the Act and placement of the Fee Schedule in the 2005 amendments. Essentially, House Bill 1698 provides for a thirty percent reduction in the prior Fee schedule. According to Insurance estimates, medical expenses for work related injuries in Illinois are now in the area of $1.5 billion dollars annually. Thus, it has been estimated that the thirty percent reduction in the fee schedule rate will result in savings of approximately $500,000,000.00 for Illinois businesses. The amendment also addresses prescriptions filled and dispensed outside of a licensed pharmacy. Those charges shall be subject to a Fee Schedule that shall not exceed the average wholesale price plus a dispensing fee of $4.18. In addition to amending the Medical Fee Schedule rate and increasing the amount of covered expenses, the amendments also address the timeframe upon which payment for services rendered shall be made. Previously, employers had sixty days from receipt of all of the necessary data elements to adjudicate the bill to make payment. With the amendment, this timeframe is reduced to thirty days. Furthermore, the changes address the responsibility on the employers when the bill does not include all the necessary data elements to adjudicate the bill. In this scenario, or in the case where the bill is denied for any other reason, the employer shall provide written notification to the provider explaining the basis for the

denial and/or describing any additional necessary data elements required to adjudicate the bill. This written notice is to be provided within thirty days of receipt of the bill. The amendments provide that interest is to accrue at a rate of 1% per month in the case of non-payment within thirty days of receipt of a bill that contains substantially all of the required data elements necessary to adjudicate the bill. While the interest charge did not change in the amendment, the timeframe for accrual of interest dropped to thirty days, consistent with the drop in the timeframe to make payment on the bill. The amendment provides that any required interest payments shall be made within thirty days of payment of the bill. With these changes, of course, though reducing the amount that providers will receive under the new Act, the legislature is trying to speed up the payment process. In addition to the above, Section 8.2(a) has been added to the Illinois Workers’ Compensation Act. This section deals with electronic claims for payment of medical services. Under this section, the director of insurance is to adopt rules to: (1) ensure that all healthcare providers and facilities submit medical bills for payment on standardized forms; (2) require acceptance by employers and insurers of electronic claims for payment of medical services; and, (3) ensure confidentiality of medical information submitted on electronic claims for payment of medical services. Where possible, the rules shall be consistent with existing standards under the Federal Health Insurance Portability and Accountability Act (HIPAA) of 1996 as well as standard adopted under the Illinois Health Insurance Exchange and Technology Act. Section 8.2(a) provides that the rules referenced above shall be proposed on or before January 1, 2012. The section requires all employers and insurers to accept electronic claims for payment of medical services on or before June 30, 2012. Finally, Section 8.2 has been amended to include language that a provider shall not bill or otherwise attempt to recover from the employee for medical services or treatment determined by the Commission to be excessive or unnecessary. Prior to this change, employers were not liable for medical services or treatment determined by the Commission to be excessive or unnecessary. However, after such a finding by the commission, the medical providers could seek payment of the medical services or treatment directly from the petitioner. It is hoped that this language will curb excessive or unnecessary treatment, a problem that has plaguing employers, business, and Petitioners alike.

It has been estimated that the amendments will save Illinois businesses a combined 500 million to 700 million dollars annually. The majority of those savings are anticipated to come from changes made to Section 8.2 of the Illinois Workers’ Compensation Act. Savings were promised in 2005 when the Medical Fee Schedule was established. The savings, were not realized. However, these amendments should result in substantial savings for Illinois business. However, as noted above, thirty-seven states presently have Medical Fee Schedules in place as part of their state’s Workers’ Compensation Act. Out of those thirty-seven states, Illinois’ Medical Fee Schedule, prior to House Bill 1698 provided for the second highest reimbursement rate. Even after the thirty percent reduction in the Medical Fee Schedule discussed above, Illinois will still rank as the having the second highest reimbursement rate for medical services rendered as part of a workers’ Compensation injury. Thus, House Bill 1698 was criticized by some as not going far enough to bring Illinois more in line with other states in the Union. MEDICAL PROVIDERS PROHIBITED FROM COLLECTING AGAINST CLAIMANTS FOR MEDICAL SERVICES OR TREATMENT DETERMINED BY THE COMMISSION TO BE EXCESSIVE OR UNNECESSARY (820 ILCS 305/8.2) Sec. 8.2. Fee schedule (e) Except as provided in subsections (e-5), (e-10), and 7 (e-15), a provider shall not hold an employee liable for costs related to a non-disputed procedure, treatment, or service rendered in connection with a compensable injury. The provisions of subsections (e-5), (e-10), (e-15), and (e-20) shall not apply if an employee provides information to the provider regarding participation in a group health plan. If the employee participates in a group health plan, the provider may submit a claim for services to the group health plan. If the claim for service is covered by the group health plan, the employee's responsibility shall be limited to applicable deductibles, co-payments, or co-insurance. Except as provided under subsections (e-5), (e-10), (e-15), and (e-20), a provider shall not bill or otherwise attempt to recover from the employee the difference between the provider's charge and the amount paid by the employer or the insurer on a compensable injury, or for medical services or treatment determined by the Commission to be excessive or unnecessary. SUMMARY There is a debate as to whether this is procedural or substantive. We consider it substantive and effective immediately (June 28, 20111), impacting cases arising after

the signing date. Clearly this does not impact the rights of either of the customary parties to the litigation, but it does affect property rights of medical providers. Based on this new provision, if the Commission determines that medical services or treatment were excessive or unnecessary, the medical provider will be prohibited from pursuing recovery for his charges against the claimant despite the fact that the claimant retained the medical provider and had an implied contract to pay for the medical services rendered. While we welcome this provision which hopefully will end some of the abusive over-treatment, over-utilization of certain medical services, and excessive charges we often see, we expect this to become somewhat problematic in the day-to-day practice before the Commission. In the case where a medical provider has made excessive charges or has rendered unnecessary treatment which are challenged, it now should be necessary, with acknowledgment of due process concerns, to bring that medical provider before the Commission to give the provider an opportunity to be heard and to justify their charges or the reasonableness of the treatment they rendered. If those medical providers whose bills are challenged are not given an opportunity to be heard before their bills are adjudicated, they will have a strong argument that they were denied the due process of law and left with no avenue to recover the charges for the service they rendered. This would clearly be improper. Prior to this amendment, if the Commission found a medical bill to be excessive or medical services to be unreasonable or unnecessary, the Commission would simply deny payment of the bill as part of the award. In that event the medical provider could still pursue recovery for the unpaid balance against the claimant/employee/patient in the Circuit Court under a theory that there had been a valid contract for his services. The claimant would have to dispute the charges in that forum. However, with this provision in effect, the claimant/employee/patient’s liability for the disallowed charges is eliminated by a finding by the Commission. Accordingly, it will be imperative to give such medical providers with challenged bills an opportunity to be heard before their bills are adjudicated. Since now it will likely be necessary to bring medical providers whose bills are challenged (and their attorneys) before the Commission for them to participate in the hearing regarding their bills, it will be necessary for the Commission to create some mechanism or process by which such medical providers can be joined as necessary parties to a pending workers’ compensation case. Since liens for medical services are not recognized under the Workers’ Compensation Act, and there is no established procedure to bring necessary parties before the Commission, it will be necessary for the Illinois Workers' Compensation Commission to promulgate Rules governing how such parties should be joined to the action pending before the Commission. Accordingly, by passing this provision, the legislature had good intentions of protecting claimants from liability for excessive medical bills and bills for unnecessary treatment, but has increased the burden on the Commission which is charged with adjudicating those disputed bills. This will accordingly add additional parties and lawyers to the proceedings which were always intended to be simple and summary. Unfortunately, the practice before the Commission is coming

to resemble the type of litigation previously seen only in the Circuit Court. Until the Illinois Workers' Compensation Commission promulgates rules for bringing such parties before the Commission we expect that petitioner’s attorneys will simply notify the medical providers of a hearing and provide them an opportunity to appear and testify in support of any disputed charges. This may be adequate to protect their rights to due process before their bills are adjudicated. However, we feel it would be better to have an established procedure whereby such parties can be notified of hearing, or as an alternative, testify via evidence deposition so that such parties are not inconvenienced by actually appearing and testifying at a hearing. Most physicians currently testify via evidence depositions now and this would simply be another item to be covered when they testify. TEMPORARY PARTIAL DISABILITY SECTION 8(a) When the employee is working light duty on a part-time basis or full-time basis and earns less money than he or she would be earning if employed in the full capacity of the job or jobs, then the employee shall be entitled to temporary partial disability benefits. Temporary partial disability benefits shall be equal to two-thirds of the difference between the average amount that the employee would be able to earn in the full performance of his or her duties in the occupation in which or she was engaged at the time of the accident and the gross amount which he or she is earning in the modified job provided to the employee by the employer or in any other job that the employee is working. Summary This is a substantive change and effective June 28, 2011. Temporary partial disability payments were contemplated in the prior Workers' Compensation Act when amended on November 6, 2005. The change made to the existing statute is that the gross amount, and not the net amount, of the petitioner’s earnings in his modified job are now subtracted from the average amount that the employee was able to earn at full capacity. This will lower the amount that the employer is required to pay for Temporary Partial Disability benefits. UTILIZATION REVIEW PROGRAMS (820 ILCS 305/8.7) Sec. 8.7. Utilization review programs. (a) As used in this Section:

"Utilization review" means the evaluation of proposed or provided health care services to determine the appropriateness of both the level of health care services medically necessary and the quality of health care services provided to a patient, including evaluation of their efficiency, efficacy, and appropriateness of treatment, hospitalization, or office visits based on medically accepted standards. The evaluation must be accomplished by means of a system that identifies the utilization of health care services based on standards of care of or nationally recognized peer review guidelines as well as nationally recognized treatment guidelines and evidence-based medicine evidence based upon standards as provided in this Act. Utilization techniques may include prospective review, second opinions, concurrent review, discharge planning, peer review, independent medical examinations, and retrospective review (for purposes of this sentence, retrospective review shall be applicable to services rendered on or after July 20, 2005). Nothing in this Section applies to prospective review of necessary first aid or emergency treatment. (b) No person may conduct a utilization review program for workers' compensation services in this State unless once every 2 years the person registers the utilization review program with the Department of Insurance Financial and Professional Regulation . . . (c) In addition, the Director Secretary of Insurance Financial and Professional Regulation may certify alternative utilization review standards of national accreditation organizations or entities in order for plans to comply with this Section. . . . (f) If the Department of Insurance Financial and Professional Regulation finds that a utilization review program is not in compliance with this Section, the Department shall issue a corrective action plan and allow a reasonable amount of time for compliance with the plan. . . . (h) The Department of Insurance Secretary of Financial and Professional Regulation may by rule establish a registration fee for each person conducting a utilization review program. (i) Upon receipt of written notice that the employer or the employer's agent or insurer wishes to invoke the utilization review process, the provider of medical, surgical, or hospital services shall submit to the utilization review, following accredited procedural guidelines.

(1) The provider shall make reasonable efforts to provide timely and complete reports of clinical information needed to support a request for treatment. If the provider fails to make such reasonable efforts, the charges for the treatment or service may not be compensable nor collectible by the provider or claimant from the employer, the employer's agent, or the

employee. The reporting obligations of providers shall not be unreasonable or unduly burdensome. (2) Written notice of utilization review decisions, including the clinical rationale for certification or non-certification and references to applicable standards of care or evidence-based medical guidelines, shall be furnished to the provider and employee. (3) An employer may only deny payment of or refuse to authorize payment of medical services rendered or proposed to be rendered on the grounds that the extent and scope of medical treatment is excessive and unnecessary in compliance with an accredited utilization review program under this Section. (4) When a payment for medical services has been denied or not authorized by an employer or when authorization for medical services is denied pursuant to utilization review, the employee has the burden of proof to show by a preponderance of the evidence that a variance from the standards of care used by the person or entity performing the utilization review pursuant to subsection (a) is reasonably required to cure or relieve the effects of his or her injury. (5) The medical professional responsible for review in the final stage of utilization review or appeal must be available in this State for interview or deposition; or must be available for deposition by telephone, video conference, or other remote electronic means. A medical professional who works or resides in this State or outside of this State may comply with this requirement by making himself or herself available for an interview or deposition in person or by making himself or herself available by telephone, video conference, or other remote electronic means. The remote interview or deposition shall be conducted in a fair, open, and cost-effective manner. The expense of interview and the deposition method shall be paid by the employer. The deponent shall be in the presence of the officer administering the oath and recording the deposition, unless otherwise agreed by the parties. Any exhibits or other demonstrative evidence to be presented to the deponent by any party at the deposition shall be provided to the officer administering the oath and all other parties within a reasonable period of time prior to the deposition. Nothing shall prohibit any party from being with the deponent during the deposition, at that party's expense; provided, however, that a party attending a deposition shall give written notice of that party's intention to appear at the deposition to all other parties within a reasonable time prior to the deposition.

An admissible A utilization review shall will be considered by the Commission, along with all other evidence and in the same manner as all other evidence, and must be addressed along with all other evidence in the

determination of the reasonableness and necessity of the medical bills or treatment. Nothing in this Section shall be construed to diminish the rights of employees to reasonable and necessary medical treatment or employee choice of health care provider under Section 8(a) or the rights of employers to medical examinations under Section 12. . . . The changes to this Section made by this amendatory Act of the 97th General Assembly apply only to health care services provided or proposed to be provided on or after September 1, 2011. (Source: P.A. 94-277, eff. 7-20-05; 94-695, eff. 11-16-05.) Summary This change is substantive. This section affects health care services provided, or proposed to be provided, on or after September 1, 2011. Unlike the Section regarding the Medical Fee Schedule and disallowing collection actions by vendors for unreasonable or unnecessary medical services, this Section may serve to take away the right of the petitioner to obtain desired and prescribed, but not needed, medical services. The change in Section 8.7(a) seemingly does away with regional based standards of care for assessing the reasonable necessity of treatment and requires providers to comply with nationally recognized peer review guidelines and nationally recognized treatment guidelines. It is important to note however, that Section 8(a) has not been similarly amended and thus the reasonable necessity of treatment not addressed by a utilization review would still be subject to a regional or local comparison. Throughout Section 8.7, the responsibilities of the Department of Financial and Professional Regulation have been transferred to the Department of Insurance. This transfers responsibility from an organization that oversees over 100 different industries to an organization whose job it is specifically to oversee the insurance industry’s market behavior. Section 8.7(i) is a new section that outlines some basic guidelines for both providers and employers when involved with an accredited utilization review program. Section 8.7(i)(1) imposes a standard of reasonableness on providers to supply complete reports of supporting clinical information at the risk of not being able to collect their bills. Section 8.7(i)(2) requires that written notice of a utilization review decision with supporting clinical rationale be provided to both the provider and the

employee. Section 8.7(i)(3) mandates the denial of treatment through utilization review where the basis for denial is excessive or unnecessary treatment. When treatment is denied based on a utilization review, Section 8.7(i)(4) places the burden on the employee to show that a variance from the standard of care is reasonably required. Section 8.7(i)(5) requires that the primary medical professional signing off on a utilization review be available for interview or deposition at the expense of the employer, whether in person, by telephone, by video conference, or by other remote electronic means. Exhibits and demonstrative evidence to be used in a deposition must be provided to all parties and the court reporter at a reasonable time prior to the deposition. If either party wishes to be present with the deponent they must give reasonably timed written notice to all other parties of their intention to appear. By referencing an interview in addition to a deposition and requiring the use of a court reporter, this section seemingly sanctions the discovery depositions of utilization review professionals. Section 8.7(i) requires that a utilization review be subject to the Illinois Rules of Evidence regarding admissibility and mandates that the Commission consider and address that evidence when reaching its decision on the reasonable necessity of treatment. INTOXICATION DEFENSE The Amendment to 820 ILCS 305/11: No compensation shall be payable if (i) the employee's intoxication is the proximate cause of the employee's accidental injury or (ii) at the time the employee incurred the accidental injury, the employee was so intoxicated that the intoxication constituted a departure from the employment. Admissible evidence of the concentration of (1) alcohol, (2) cannabis as defined in the Cannabis Control Act, (3) a controlled substance listed in the Illinois Controlled Substances Act, or (4) an intoxicating compound listed in the Use of Intoxicating Compounds Act in the employee's blood, breath, or urine at the time the employee incurred the accidental injury shall be considered in any hearing under this Act to determine whether the employee was intoxicated at the time the employee incurred the accidental injuries. If at the time of the accidental injuries, there was 0.08% or more by weight of alcohol in the employee's blood, breath, or urine or if there is any evidence of impairment due to the unlawful or unauthorized use of (1) cannabis as defined in the Cannabis Control Act, (2) a controlled substance listed in the Illinois Controlled Substances Act, or (3) an intoxicating compound listed in the Use of Intoxicating Compounds Act or if the employee refuses to submit to testing of

blood, breath, or urine, then there shall be a rebuttable presumption that the employee was intoxicated and that the intoxication was the proximate cause of the employee's injury. The employee may overcome the rebuttable presumption by the preponderance of the admissible evidence that the intoxication was not the sole proximate cause or proximate cause of the accidental injuries. Percentage by weight of alcohol in the blood shall be based on grams of alcohol per 100 milliliters of blood. Percentage by weight of alcohol in the breath shall be based upon grams of alcohol per 210 liters of breath. Any testing that has not been performed by an accredited or certified testing laboratory shall not be admissible in any hearing under this Act to determine whether the employee was intoxicated at the time the employee incurred the accidental injury.All sample collection and testing for alcohol and drugs under this Section shall be performed in accordance with rules to be adopted by the Commission. These rules shall ensure: (1) compliance with the National Labor Relations Act regarding collective bargaining agreements or regulations promulgated by the United States Department of Transportation; (2) that samples are collected and tested in conformance with national and State legal and regulatory standards for the privacy of the individual being tested, and in a manner reasonably calculated to prevent substitutions or interference with the collection or testing of reliable sample; (3) that split testing procedures are utilized; (4) that sample collection is documented, and the documentation procedures include:

(A) the labeling of samples in a manner so as to reasonably preclude the probability of erroneous identification of test result; and (B) an opportunity for the employee to provide notification of any information which he or she considers relevant to the test, including identification of currently or recently used prescription or nonprescription drugs and other relevant medical information; (5) that sample collection, storage, and transportation to the place of

testing is performed in a manner so as to reasonably preclude the probability of sample contamination or adulteration; and

(6) that chemical analyses of blood, urine, breath, or other bodily substance are performed according to nationally scientifically accepted analytical methods and procedures.

The changes to this Section made by this amendatory Act of the 97th General Assembly apply only to accidental injuries that occur on or after September 1, 2011.Summary:

This is a substantive change in that it impacts a right to recovery previously held by the claimant. This amendment will apply to accidents occurring on or after September 1, 2011.

Employers have long sought the so-called "intoxication defense"

and could not understand what possible reason unions and attorneys for

employees would have to protect those who risked injury to themselves and others due to transient or chronic impairments related to drugs or alcohol. Sufficient safeguards have been introduced in this amendment so as to protect an innocent employee from the adverse effects of this defense due to improper testing or the use of legitimate medicine.

A claim will not be compensable if intoxication is the sole proximate

cause or the proximate cause of the accident. A claim will not be compensable if, at the time of the accident, the employee was so intoxicated that the intoxication "constituted a departure from the employment." This last statement is a general recitation of the current case law and means that if the employee could not perform the essential functions of his job then this would be a departure from his employment. Case precedent already states that compensation should be denied if intoxication was the cause of the accident or excessive intoxication constituted a departure from the employment.

The bad news is that case precedent still exists that the employee may be under the influence of alcohol or a controlled substance to some degree, or that the intoxicated state may even contribute to some degree to the accident, but the employee may still be able to establish a compensable case. Past cases have established that if the employee could prove that even in the face of intoxication, he / she could still perform his / her job then intoxication would not be a defense. However, this amendment weakens that protection afforded an intoxicated employee such that once intoxication is established there is a presumption that the intoxication was the cause of the accident. The key for the respondent now is to develop evidence that the intoxicated state of the employee was the proximate cause of the accident or that the employee was so intoxicated that his intoxicated state was a departure from the employment (that the employee could not perform his or her job duties). Proof of either of these two prongs of the defense will then shift the burden to the employee to prove otherwise. The proximate cause defense is more science based, whereas the departure from the employment is more fact based, but also more difficult to prove except in the most egregious of circumstances. Proximate cause means "any cause which, in natural or probable sequence, produced the injury of which the employee complains. It need not be the only cause, nor the last or nearest cause. It is sufficient if it concurs with some other cause acting at the same time, which in combination with it, causes the injury." This definition is not in the amendment, but is derived from case law and pattern jury instructions which will likely be the guide for defining the term. The good news is that once intoxication by a listed offending substance is established pursuant to the measurements noted in the amendment AND pursuant to rules to be adopted by the Commission, the burden shifts to the employee to rebut the presumption that his / her intoxication was the proximate cause of the

accident. Evidence of intoxication pursuant to this amendment SHALL be considered in any hearing under the Act and if the employee was intoxicated at the time, or if the employee refuses post-accident testing, then there is a rebuttable presumption that the intoxication was the proximate cause of the accidental injuries. In order to challenge these presumptions the employee must prove, by a preponderance of the evidence, that alcohol or drug intoxication was not the proximate cause of his / her injuries. The rules to be adopted by the Commission must be drafted with deference to the National Labor Relations Act, national and state regulatory standards, "split testing," proper documentation, proper labeling, nationally and scientifically accepted procedures, and the opportunity for the employee to alert the employer of the influence of legal medications. If testing of the sample(s) is not performed by "an accredited or certified testing laboratory" then the evidence produced from the testing will not be admissible in a hearing under the Workers' Compensation Act to determine intoxication. If the employer can demonstrate intoxication of such significance as to be a departure from the employee's employment then it is conceivable that certain defenses normally afforded an employee will not be available to the intoxicated employee. These would include the exclusive remedy defense, without which the intoxicated individual would be subject to civil liability to a co-worker. This also could give rise to an argument that the employer should not be subject to liability under the legal theory of respondent superior ("let the master answer") if a third party is injured, given that the intoxicated employee "departed" from the employment.Bullet points:

• · If intoxication is the proximate cause of the accident or if intoxication renders the employee unable to perform his job duties then the claim will not be compensable.

• · If proof of intoxication is established pursuant to the rules or

if the employee refuses post-accident testing then there will be a rebuttable presumption that the employee was intoxicated and that his / her intoxicated state was the proximate cause of the accident.

• · Proximate cause means "any cause which, in natural or

probable sequence, produced the injury of which the employee complains. It need not be the only cause, nor the last or nearest cause. It is sufficient if it concurs with some other cause acting at the same time, which in combination with it, causes the injury."

• · Proof of intoxication must be considered in a hearing at the

Illinois Workers' Compensation Commission if samples were tested at a certified lab and rules (to be established by the Commission) were followed concerning testing, labeling, and documentation.

• · If testing is not conducted by a certified lab or pursuant to the

rules then evidence of intoxication from such testing will not be considered.

• · The employee will be given the opportunity to provide

information regarding relevant medical history and the use of legal medications.

• · If the employer establishes intoxication, the employee must

prove by a preponderance of evidence (the “more-likely-than-not” standard) that the intoxication was not the proximate cause of the accident.

TRAINING PROGRAMS FOR COMMISSIONERS Section 13 (820 ILCS 305/13) Sec. 13. There is created an Illinois Workers' Compensation Commission consisting of 10 members to be appointed by the Governor, . . . A formal training program for newly-appointed Commissioners shall be implemented. The training program shall include the following: . . .

(h) professional and ethical standards pursuant to Section 1.1 of this Act; (i) detection of workers' compensation fraud and reporting obligations of

Commission employees and appointees; (j) standards of evidence-based medical treatment and best practices for

measuring and improving quality and health care outcomes in the workers' compensation system, including but not limited to the use of the American Medical Association's "Guides to the Evaluation of Permanent Impairment" and the practice of utilization review; and

(k) substantive and procedural aspects of coal workers' pneumoconiosis (black lung) cases. . . . A formal and ongoing professional development program including, but not limited to, the above-noted areas shall be implemented to keep Commissioners informed of recent developments and issues and to assist them in maintaining and enhancing their professional competence. Each Commissioner shall complete 20 hours of training in the above-noted areas during every 2 years such Commissioner shall remain in office. Summary This is a substantive change and is effective June 28, 2011. Clearly the intention of these additional training requirements is to further professionalize the Commission and ensure full use of the Act’s

provisions. This also requires ongoing and continued education of the Commissioners. One complaint after the 2005 reforms was that the Arbitrators and Commissioners did not understand the value of the Utilization Review process and therefore did not afford it much, if any value/weight. These changes are intended to ensure the Commissioners not only understand the value of the Utilization Review process but also the newly enacted use of the AMA ratings for impairments. They are also intended to create a more judicial setting by requiring the Commissioners to act in accordance with the professional guidelines and reporting obligations of judges. The hope is that the cozy environment of the Commission will be a thing of the past and a more professional environment where the Commissioners and other employees of the Workers’ Compensation Commission command and are afforded greater respect by all participants and those presenting before them. We are not confident that this will afford any real cost savings to employers however, that will depend on how the new Commissioners utilize their greater training in rendering their decisions. WORKERS COMPENSATION ADVISORY BOARD Section 13.1 (820 ILCS 305/13.1) Sec. 13.1. (a) There is created a Workers' Compensation Advisory Board hereinafter referred to as the Advisory Board. . . .

(c) The Advisory Board shall aid the Commission in formulating policies, discussing problems, setting priorities of expenditures, reviewing advisory rates filed by an advisory organization as defined in Section 463 of the Illinois Insurance Code, and establishing short and long range administrative goals. Prior to making the (1) initial set of arbitrator appointments pursuant to this amendatory Act of the 97th General Assembly and (2) appointment of Commissioners, appointments to the Commission, the Governor shall request that the Advisory Board make recommendations as to candidates to consider for appointment and the Advisory Board may then make such recommendations.

(d) The terms of all Advisory Board members serving on the effective date

of this amendatory Act of the 97th General Assembly are terminated. The Governor shall appoint new members to the Advisory Board within 30 days after the effective date of the amendatory Act of the 97th General Assembly, subject to the advice and consent of the Senate.

Summary This is a substantive change and is effective June 28, 2011. All members of the current Advisory board are terminated as of the date the bill is signed

into law with new members being appointed by the Governor within 30 days thereafter. This will have little effect on the handling of cases at the Commission in the short term. We also do not believe this change in guard will have any cost savings value going forward. By terminating all members of the current Advisory Board, this might delay the appointment of the new Arbitrators because the Senate is not in session again until after the summer break and the new appointments require the advice and consent of the Senate. Furthermore, while the new Advisory Board is not required to provide recommendations for the new Arbitrator appointments, the Governor must ask for the recommendations of the Board. AMENDMENTS PERTAINING TO ARBITRATORS Section 14 (820 ILCS 305/14) Sec. 14. The Commission shall appoint a secretary, an assistant secretary, and arbitrators and shall employ such assistants and clerical help as may be necessary. Arbitrators shall be appointed pursuant to this Section, notwithstanding any provision of the Personnel Code. . . .

A formal training program for newly-hired arbitrators shall be implemented. The training program shall include the following: . . .

(h) professional and ethical standards pursuant to Section 1.1 of this Act; (i) detection of workers' compensation fraud and reporting obligations of

Commission employees and appointees; (j) standards of evidence-based medical treatment and best practices for

measuring and improving quality and health care outcomes in the workers' compensation system, including but not limited to the use of the American Medical Association's "Guides to the Evaluation of Permanent Impairment" and the practice of utilization review; and

(k) substantive and procedural aspects of coal workers' pneumoconiosis (black lung) cases.

A formal and ongoing professional development program including, but

not limited to, the above-noted areas shall be implemented to keep arbitrators informed of recent developments and issues and to assist them in maintaining and enhancing their professional competence. Each arbitrator shall complete 20 hours of training in the above-noted areas during every 2 years such arbitrator shall remain in office. . . .

Notwithstanding any other provision of this Section, the term of all arbitrators serving on the effective date of this amendatory Act of the 97th General Assembly, including any arbitrators on administrative leave, shall terminate at the close of business on July 1, 2011, but the incumbents shall

continue to exercise all of their duties until they are reappointed or their successors are appointed.

On and after the effective date of this amendatory Act of the 97th General

Assembly, arbitrators shall be appointed to 3-year terms by the full Commission, except that initial appointments made on and after the effective date of this amendatory Act of the 97th General Assembly shall be made as follows:

(1) All appointments shall be made by the Governor with the advice and

consent of the Senate. (2) 12 arbitrators shall be appointed to terms expiring July 1, 2012; 12

arbitrators shall be appointed to terms expiring July 1, 2013; and all additional arbitrators shall be appointed to terms expiring July 1, 2014.

Upon the expiration of a term, the Chairman shall evaluate the

performance of the arbitrator and may recommend that he or she be reappointed to a second or subsequent term by the full Commission.

Each arbitrator appointed on or after the effective date of this amendatory

Act of the 97th General Assembly and who has not previously served as an arbitrator for the Commission shall be required to be authorized to practice law in this State by the Supreme Court, and to maintain this authorization throughout his or her term of employment.

Each arbitrator appointed after the effective date of this amendatory Act of

1989 shall be appointed for a term of 6 years. Each arbitrator shall be appointed for a subsequent term unless the Chairman makes a recommendation to the Commission, no later than 60 days prior to the expiration of the term, not to reappoint the arbitrator. Notice of such a recommendation shall also be given to the arbitrator no later than 60 days prior to the expiration of the term. Upon such recommendation by the Chairman, the arbitrator shall be appointed for a subsequent term unless 8 of 10 members of the Commission, including the Chairman, vote not to reappoint the arbitrator.

All arbitrators shall be subject to the provisions of the Personnel Code,

and the performance of all arbitrators shall be reviewed by the Chairman on an annual basis. The changes made to this Section by this amendatory Act of the 97th General Assembly shall prevail over any conflict with the Personnel Code. The Chairman shall allow input from the Commissioners in all such reviews.

The Commission shall assign no fewer than 3 arbitrators to each hearing

site. The Commission shall establish a procedure to ensure that the arbitrators assigned to each hearing site are assigned cases on a random basis. No arbitrator shall hear cases in any county, other than Cook County, for more than 2 years in each 3-year term.

Summary This is a substantive change and is effective June 28, 2011.

1. Additional Arbitrator Training:

This Amendatory Act requires the same additional training as is required of Commissioners. This is an obvious effort to professionalize the Workers’ Compensation Commission and more toward a more tribunal arena akin to the court systems. The additional training requirements are intended to ensure a more complete understanding – and thereby reliance upon – the AMA guides and the Utilization Review process. The cost savings from the additional training and qualifications will be dependent on the application of the new training to the cases presented for hearing. 2. New Qualifications for Future Arbitrators: All new Arbitrators must be licensed to practice law by the Supreme Court and must retain this status throughout their appointment. This is clearly to ensure that the individuals determining cases are fully trained and well versed on the rules of evidence, evidentiary procedure and due process – again to move toward a more tribunal handling of the trials. It should be noted that the current non-attorney Arbitrators are exempt from this requirement as it only applies to an appointment after the enactment of this Amendatory Act “who has not previously served as an arbitrator for the Commission”. Thus, none of the existing Arbitrators will be disqualified from reappointment based on this new qualification. Requiring all appointments to conform with these requirements seems to be an effort to end “political” appointments. While the initial statement indicates that all new appointments shall be made based on this Section notwithstanding any provision of the Personnel Code, the amendment later states that these amendments shall control when in conflict with the Personnel Code. Thus the additional requirements of the Personnel Code will only apply to the extent that any additional requirements are not in conflict with this Section. 3. Future Appointment/Reappointments: The Arbitrator terms of office have been shortened from six years to three years. They are staggered to avoid complete turnover at the same time. Prior to this amendment, the Arbitrators were automatically reappointed unless the Chairman affirmatively recommended in writing to the Commission against such reappointment 60 days prior to the termination of the six-year term. If such a recommendation was made by the Chairman

it still required 80% of the Commission (8/10) not to reappoint the Arbitrator. The changes are redundant relative to requiring the Chairman to evaluate each Arbitrator’s performance at the end of their term because the Chairman is required by this amendment to assess each Arbitrator’s performance annually. However, the Chairman is now required to submit a recommendation to the full Commission for or against the reappointment of each Arbitrator. Because the legislature removed the super majority vote that was required to not reappoint an Arbitrator, it is presumed that a simple majority vote of the full Commission will now suffice to not reappoint the Arbitrator to a subsequent term. The amendment does not indicate if the Commission must follow or even consider the recommendations of the Chairman. This change is intended to place greater accountability on the Arbitrators and to stop their automatic reappointments. Regardless, the change is written so porously we expect little, if any, change as a result of this amendment. 4. Termination of Current Arbitrators: This Amendatory Act explicitly calls for the automatic termination of all current Arbitrators (whether acting or on leave) at the end of business on July1, 2011. They are further required to continue working as usual until they are either reappointed based on this Act or their replacement is appointed. This change was clearly due to the bad publicity caused by the actions of a couple of Arbitrators in Southern Illinois. The handling of cases and trials at the Commission will not likely change immediately given the need to reseat the Advisory Board before new Arbitrators can be appointed. However, we anticipate some Arbitrators may be reluctant to proceed with hearings of complex cases that may require a bifurcation of the hearing. 5. Assignment of Venues: The Commission is now required to have at least three Arbitrators at each hearing site outside of Cook County. Furthermore, no Arbitrator can be assigned to a particular venue for more than 2 years out of their 3-year term. This time limit does not apply to Arbitrators assigned to hear cases in Cook County. Again, this was enacted based on the actions of a couple of Arbitrators in Southern Illinois. It is aimed at ending the “homer” system by which local attorneys have an advantage based on their familiarity with the Arbitrator at their local hearing site. We expect this new change will actually lead to delays in prosecution of cases as attorneys will try to stall the trial of their cases if they receive what they perceive to be an unfavorable Arbitrator assignment. Our firm defends cases in all venues throughout the State and therefore our reputation was known at all venues. Therefore we did not experience

the “homer” effect. Familiarity of the hearing officer with those practicing law before them is not dissimilar to the circuit court where many of the judges know the attorneys presenting cases before them. In our opinion, this may cause the Commission to consolidate hearing sites and thus require greater travel distances for claimants and witnesses. We also anticipate additional costs to the Commission based on the need for additional travel expenses of the Arbitrators. In our opinion, this was an unnecessary change since the goals are addressed by the professionalism and ethics changes that were already effectuated by this Act. GIFT BANS Sec. 16b. Gift ban. (a) An attorney appearing before the Commission shall not provide compensation or any gift to any person in exchange for the referral of a client involving a matter to be heard before the Commission except for a division of a fee between lawyers who are not in the same firm in accordance with Rule 1.5 of the Code of Professional Responsibility. For purposes of this Section, "gift" means any gratuity, discount, entertainment, hospitality, loan, forbearance, or any other tangible or intangible item having monetary value including, but not limited to, cash, food and drink, and honoraria except for food or refreshments not exceeding $75 per person in value on a single calendar day, provided that the food or refreshments are (1) consumed on the premises from which they were purchased or prepared or (2) catered. "Catered" means food or refreshments that are purchased ready to eat and delivered by any means. (b) Violation of this Section is a Class A misdemeanor. Summary This change is substantive and is effective June 28, 2011. By adding this provision, the legislature has attempted to regulate the conduct of attorneys regarding how they market themselves and develop workers compensation business. Specifically, attorneys who practice before the Commission are now prohibited from giving “gifts” to any person “in exchange for the referral of a client involving a matter to be heard before the Commission” (except for the division of a fee between lawyers not in the same firm as is allowed by the Code of Professional Responsibility). The legislature defined “gift” as any gratuity, discount, entertainment, hospitality, loan, forbearance or any tangible or intangible item having monetary value which includes cash, food, drink, honoraria except for food or refreshments not to exceed $75 per person on a single calendar day with the requirement that the food or refreshments are consumed on the premises from which there were purchased, prepared or catered. If this rule is violated it is punishable as a Class A misdemeanor (punishable by up to 1 year in jail). Before this provision was passed the regulation of the conduct of attorneys had

always been the province of the Supreme Court of Illinois which regulated the conduct of all attorneys through the Code of Professional Responsibility. The Code of Professional Responsibility in Rule 7.2(b) states as follows: “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may:

(1) pay the reasonable costs of advertisements or communications permitted by this rule;

(2) pay the usual charges of a legal service plan or a not for profit lawyer referral service (3) pay for a law practice in accordance with Rule 1.17; and (4) refer clients to another lawyer or a non-lawyer professional pursuant to an agreement not otherwise prohibited under these Rules that provides for the other person to refer clients or customers to the lawyer, if (i) the reciprocal referral agreement is not exclusive, and (ii) the client is informed of the existence and nature of the agreement.” Accordingly, this new provision appears to conflict with the Code of Professional Responsibility in that it allows an attorney to give gifts of food and refreshments consumed in one day on the premises where they were purchased if the value does not exceed $75 per person while the Code of Professional Responsibility prohibits an attorney from providing anything of value in exchange for the recommendation of an attorney. The constitutionality of this provision is very questionable. Since one of the well established functions of the Supreme Court has always been the regulation of the practice of law and the Court has promulgated the ethical standards governing the conduct of all attorneys in the Code of Professional Responsibility, by passing this provision the legislature appears to have usurped a function previously reserved to the Supreme Court. Further, this legislation appears to be “special legislation” governing the conduct of a specific group of attorneys, i.e., those attorneys who practice in the area of workers’ compensation before the Commission. No other group of attorneys is similarly regulated. Accordingly, there is a legitimate question whether it is appropriate to have a different standard of conduct for attorneys practicing in the area of workers’ compensation than is required for lawyers involved in any other area of practice. Given the conflict between this provision and the Code of Professional Responsibility as well as the fact that this is a legislative attempt to regulate the conduct of one specific group of attorneys and does not apply to all attorneys, we

anticipate that litigation will be filed to challenge this provision. Regardless, until these questions are clarified by the Court it will be important for the attorneys practicing in the area of workers’ compensation to comply with this new requirement. CLAIMS BY COMMISSION EMPLOYEES Section 18 (820 ILCS 305/18) Sec. 18. All questions arising under this Act, if not settled by agreement of the parties interested therein, shall, except as otherwise provided, be determined by the Commission. Claims from current and former employees of the Commission shall be determined in accordance with Section 18.1 of this Act. Section 18.1 (820 ILCS 305/18.1 new) Sec. 18.1. Claims by former and current employees of the Commission. All claims by current and former employees and appointees of the Commission shall be assigned to a certified independent arbitrator not employed by the Commission designated by the Chairman. The Chairman shall designate an arbitrator from a list of approved certified arbitrators provided by the Commission Review Board. If the Chairman is the claimant, then the independent arbitrator from the approved list shall be designated by the longest serving Commissioner. The designated independent arbitrator shall have the authority of arbitrators of the Commission regarding settlement and adjudication of the claim of the current and former employees and appointees of the Commission. The decision of the independent arbitrator shall become the decision of the Commission. An appeal of the independent arbitrator's decision shall be subject to judicial review in accordance with subsection (f) of Section 19. Summary This is a procedural change and is effective June 28, 2011. The clear intent of the legislature was to address an immediate and troubling concern about workers' compensation claims by Arbitrators being decided by friends and co-workers. This change was in response to recent events in Southern Illinois where it was determined an Arbitrator’s case was resolved but the case file is “missing,” and based upon the discovery of the number of claims filed by sitting Arbitrators. This will ensure that the case of a current or former employee/appointee of the Commission will have their case handled like all others and without the appearance of impropriety. Their cases are reviewable directly to the Circuit Court pursuant to Section 19(f) to again avoid any appearance of impropriety or favoritism. UNLAWFUL TO PRESENT FALSE MEDICAL BILL FOR PAYMENT

The following additions and changes were made to Section 25.5. (820 ILCS 305/25.5) Sec. 25.5. Unlawful acts; penalties.4 (a) It is unlawful for any person, company, corporation, insurance carrier, healthcare provider, or other entity to: (1)-(8) UNCHANGED (9) Intentionally present a bill or statement for the payment for medical services that were not provided. For the purposes of paragraphs (2), (3), (5), (6), (7), and (9), the term "statement" includes any writing, notice, proof of injury, bill for services, hospital or doctor records and reports, or X-ray and test results. (b) Sentences for violations of subsection (a) are as follows: Any person violating subsection (a) is guilty of a Class 4 felony. (1) A violation in which the value of the property obtained or attempted to be obtained is $300 or less is a Class A misdemeanor. (2) A violation in which the value of the property obtained or attempted to be obtained is more than $300 but not more than $10,000 is a Class 3 felony. (3) A violation in which the value of the property obtained or attempted to be obtained is more than $10,000 but not more than $100,000 is a Class 2 felony. (4) A violation in which the value of the property obtained or attempted to be obtained is more than $100,000 is a Class 1 felony. (5) A person convicted under this Section shall be ordered to pay monetary restitution to the insurance company or self-insured entity or any other person for any financial loss sustained as a result of a violation of this Section, including any court costs and attorney fees. An order of restitution also includes expenses incurred and paid by the State of Illinois or an insurance company or self-insured entity in connection with any medical evaluation or treatment services. For the purposes of this Section, where the exact value of property obtained or attempted to be obtained is either not alleged or is not specifically set by the terms of a policy insurance, the value of the property shall be the fair market replacement value of the property claimed to be lost, the reasonable costs of reimbursing a vendor or other claimant for services to be rendered, or both. Notwithstanding the foregoing, an insurance company, self-insured entity, or any other person suffering financial loss sustained as a result of violation of this Section may seek restitution, including court costs and attorney's fees in a civil action in a court of competent jurisdiction. (c) The Department of Insurance shall establish a fraud and insurance non-compliance unit responsible for investigating incidences of fraud and insurance non-

compliance pursuant to this Section. The size of the staff of the unit shall be subject to appropriation by the General Assembly. It shall be the duty of the fraud and insurance non-compliance unit to determine the identity of insurance carriers, employers, employees, or other persons or entities who have violated the fraud and insurance non-compliance provisions of this Section. The fraud and insurance non-compliance unit shall report violations of the fraud and insurance non-compliance provisions of this Section to the Special Prosecutions Bureau of the Criminal Division of the Office of the Attorney General or to the State's Attorney of the county in which the offense allegedly occurred, either of whom has the authority to prosecute violations under this Section. With respect to the subject of any investigation being conducted, the fraud and insurance non-compliance unit shall have the general power of subpoena of the Department of Insurance, including the authority to issue a subpoena to a medical provider, pursuant to section 8-802 of the Code of Civil Procedure. (d) Any person may report allegations of insurance non-compliance and fraud pursuant to this Section to the Department of Insurance's fraud and insurance non-compliance unit whose duty it shall be to investigate the report. The unit shall notify the Commission of reports of insurance non-compliance. Any person reporting an allegation of insurance non-compliance or fraud against either an employee or employer under this Section must identify himself. Except as provided in this subsection and in subsection (e), all reports shall remain confidential except to refer an investigation to the Attorney General or State's Attorney for prosecution or if the fraud and insurance non-compliance unit's investigation reveals that the conduct reported may be in violation of other laws or regulations of the State of Illinois, the unit may report such conduct to the appropriate governmental agency charged with administering such laws and regulations. Any person who intentionally makes a false report under this Section to the fraud and insurance non-compliance unit is guilty of a Class A misdemeanor. (e) In order for the fraud and insurance non-compliance unit to investigate a report of fraud related to an employee's claim, (i) the employee must have filed with the Commission an Application for Adjustment of Claim and the employee must have either received or attempted to receive benefits under this Act that are related to the reported fraud or (ii) the employee must have made a written demand for the payment of benefits that are related to the reported fraud. There shall be no immunity, under this Act or otherwise, for any person who files a false report or who files a report without good and just cause. Confidentiality of medical information shall be strictly maintained. Investigations that are not referred for prosecution shall be destroyed upon the expiration of the statute of limitations for the acts under investigation and shall not be disclosed except that the person making the report shall be notified that the investigation is being closed. It is unlawful for any employer, insurance carrier, or service adjustment company, third party administrator, self-insured, or similar entity to file or threaten to file a report of fraud against an employee because of the exercise by the employee of the rights and remedies granted to the employee by this Act. (e-5) The fraud and insurance non-compliance unit shall procure and implement a system utilizing advanced analytics inclusive of predictive modeling, data mining, social

network analysis, and scoring algorithms for the detection and prevention of fraud, waste, and abuse on or before January 1, 2012. The fraud and insurance non-compliance unit shall procure this system using a request for proposals process governed by the Illinois Procurement Code and rules adopted under that Code. The fraud and insurance non-compliance unit shall provide a report to the President of the Senate, Speaker of the House of Representatives, Minority Leader of the House of Representatives, Minority Leader of the Senate, Governor, Chairman of the Commission, and Director of Insurance on or before July 1, 2012 and annually thereafter detailing its activities and providing recommendations regarding opportunities for additional fraud waste and abuse detection and prevention. (g) The fraud and insurance non-compliance unit shall submit a written report on an annual basis to the Chairman of the Commission, the Workers' Compensation Advisory Board, the General Assembly, the Governor, and the Attorney General by January 1 and July 1 of each year. This report shall include, at the minimum, the following information: (1) The number of allegations of insurance non-compliance and fraud reported to the fraud and insurance non-compliance unit. (2) The source of the reported allegations (individual, employer, or other). (3) The number of allegations investigated by the fraud and insurance non-compliance unit. (4) The number of criminal referrals made in accordance with this Section and the entity to which the referral was made. (5) All proceedings under this Section. Summary These are procedural changes and are effective as of June 28, 2011. Fraud is a great concern of all participants in the workers' compensation system and it is safe to say that no person could argue a vested right existed before June 28, 2011 to commit a fraudulent act so as to try to argue that this only applies to cases arising after June 28, 2011. The previous Section 25.5 provided various monetary and criminal penalties for persons committing any of eight specific types of fraudulent acts. The amendment adds a ninth punishable offense: presenting a phony medical for services that were not provided. The amendment also increases the monetary and criminal penalties for violations of section 25.5 and adds a provision that a violator must reimburse a victim for any financial loss that the victim suffers as a consequence of the violator’s fraud. The Illinois Department of Insurance becomes the agency for investigating such fraud, and must report any violations it uncovers to the Illinois Attorney General and the local State’s Attorney. The department of insurance is given the power to issue subpoenas to physicians under an expanded Section 8-802 of the Illinois Code of Civil Procedure. The amendment also requires the Department of Insurance to make semi-annual summary reports to the Commission, the General Assembly, the

Governor, and the attorney General. In summary, the amendment not only addresses phony medical bills but it increases penalties for all violation or Section 25.5 and increases enforcement authority. RECALCULATION OF PREMIUMS RATES Sec. 29.1. Recalculation of premiums. On the effective date of this amendatory Act of the 97th General Assembly, the Director of Insurance shall immediately direct in writing any workers' compensation rate setting advisory organization to recalculate workers' compensation advisory premium rates and assigned risk pool premium rates so that those premiums incorporate the provisions of this amendatory Act of the 97th General Assembly, and to publish such rates on or before September 1, 2011. Summary This is a procedural change and is effective June 28, 2011. This section requires the Director of Insurance to direct the appropriate parties within the Illinois Workers’ Compensation Commission to recalculate and publish the premium rates for the Assigned Risk Pool, and the Workers’ Compensation Advisory premium rates to reflect the changes to the Workers’ Compensation Act. INSURANCE OVERSIGHT (820 ILCS 305/29.2 new) Sec. 29.2. Insurance oversight. (a) The Department of Insurance shall annually submit to the Governor, the Chairman of the Commission, the President of the Senate, the Speaker of the House of Representatives, the Minority Leader of the Senate, and the Minority Leader of the House of Representatives a written report that details the state of the workers' compensation insurance market in Illinois. The report shall be completed by April 1 of each year, beginning in 2012, or later if necessary data or analyses are only available to the Department at a later date. The report shall be posted on the Department of Insurance's Internet website. Information to be included in the report shall be for the preceding calendar year. The report shall include, at a minimum, the following:

(1) Gross premiums collected by workers' compensation carriers in Illinois and the national rank of Illinois based on premium volume.

(2) The number of insurance companies actively engaged in Illinois in the workers' compensation insurance market, including both holding companies and subsidiaries or affiliates, and the national rank of Illinois based on number of competing insurers. (3) The total number of insured participants in the Illinois workers' compensation assigned risk insurance pool, and the size of the assigned risk pool as a proportion of the total Illinois workers' compensation insurance market. (4) The advisory organization premium rate for workers' compensation insurance in Illinois for the previous year. (5) The advisory organization prescribed assigned risk pool premium rate. (6) The total amount of indemnity payments made by workers’ compensation insurers in Illinois. (7) The total amount of medical payments made by workers' compensation insurers in Illinois, and the national rank of Illinois based on average cost of medical claims per injured worker. (8) The gross profitability of workers' compensation insurers in Illinois, and the national rank of Illinois based on profitability of workers' compensation insurers. (9) The loss ratio of workers' compensation insurers in Illinois and the

national rank of Illinois based on the loss ratio of workers' compensation insurers. For purposes of this loss ratio calculation, the denominator shall include all premiums and other fees collected by workers' compensation insurers and the numerator shall include the total amount paid by the insurer for care or compensation to injured workers.

(10) The growth of total paid indemnity benefits by temporary total disability, scheduled and non-scheduled permanent partial disability, and total disability. (11) The number of injured workers receiving wage loss differential awards and the average wage loss differential award payout. (12) Illinois' rank, relative to other states, for:

(i) the maximum and minimum temporary total disability benefit level;

(ii) the maximum and minimum scheduled and non-scheduled permanent partial disability benefit level;

(iii) the maximum and minimum total disability benefit level; and (iv) the maximum and minimum death benefit level.

(13) The aggregate growth of medical benefit payout by non-hospital providers and hospitals. (14) The aggregate growth of medical utilization for the top 10 most common injuries to specific body parts by non-hospital providers and hospitals. (15) The percentage of injured workers filing claims at the Commission that are represented by an attorney. (16) The total amount paid by injured workers for attorney representation.

(b) The Director of Insurance shall promulgate rules requiring each insurer licensed to write workers' compensation coverage in the State to record and report the following information on an aggregate basis to the Department of Insurance before March 1 of each year, relating to claims in the State opened within the prior calendar year:

(1) The number of claims opened. (2) The number of reported medical only claims. (3) The number of contested claims. (4) The number of claims for which the employee has attorney representation. (5) The number of claims with lost time and the number

of claims for which temporary total disability was paid. (6) The number of claim adjusters employed to adjust

workers' compensation claims. (7) The number of claims for which temporary total

disability was not paid within 14 days from the first full day off, regardless of reason.

(8) The number of medical bills paid 60 days or later from date of service and the average days paid on those

paid after 60 days for the previous calendar year. (9) The number of claims in which in-house defense

counsel participated, and the total amount spent on in-house legal services. (10) The number of claims in which outside defense counsel participated, and the total amount paid to outside defense counsel.

(11) The total amount billed to employers for bill review. (12) The total amount billed to employers for fee schedule savings.

(13) The total amount charged to employers for any and all managed care fees. (14) The number of claims involving in-house medical

nurse case management, and the total amount spent on in-house medical nurse case management.

(15) The number of claims involving outside medical nurse case management, and the total amount paid for outside medical nurse case management. (16) The total amount paid for Independent Medical

exams. (17) The total amount spent on in-house Utilization Review

for the previous calendar year. (18) The total amount paid for outside Utilization Review

for the previous calendar year.

The Department shall make the submitted information publicly available on the Department's Internet website or such other media as appropriate in a form useful for consumers. Summary This is a substantive change and is effective April 1, 2012 to give all affected parties the opportunity to gather and assess the information at issue. This section requires the Director of Insurance to prepare a detailed report examining the entire Illinois Workers’ Compensation system. The Director will collect and provide information regarding: premiums; the national ranking of Illinois based on premium, profitability, loss ratios for workers’ compensation insurers; a breakdown of the benefits paid to injured employee; case management, utilization review and litigation costs for insurance companies. The Legislature will utilize the information contained in this report to evaluate how Illinois’ Workers’ Compensation system compares with those of the other states in terms of costs, profitability, and benefits paid to injured employees. These annual reports will serve as the basis for future Workers’ Compensation reforms.