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crisis is an employer issue at the fore, second only to the medical malpractice insurance crisis.
"Workers' compensation is one of those costs that weigh in heavily when a business decides whether to come to Illinois or
whether to expand its Illinois operations," said Shattuck. "I just spoke with a company out of Decatur whose hourly cost for
workers' comp is over $2. The same company has a facility in Virginia where the cost for workers' comp is 25 cents. When
manufacturers are looking to compare the costs of production in Illinois versus other states, it's a tough argument."
A groundswell of plant managers Shattuck has visited over the past several months say they are not competing with foreign
enterprises - they are competing against their sister facilities in other states.
"And that's scary," he said. "In the case of this Decatur company, what has happened is that it moved its production here
four to five years ago, making $120 million per year, but now the company is down in the $65 million range. They're losing
production to other plants in other states. Workers' comp costs are not the only factor, but in some cases it's the
decision-making factor," he added.
State Sen. Terry Link, a Democrat from Lake Bluff, is the sponsor of HB 805, legislation introduced to reform the state's
workers' compensation system. Legislators are expecting the issue to draw discussion during the General Assembly's November
veto session in Springfield.
"HB 805 is a jobs bill," Link said. "I started with the intent of making Illinois a more attractive place to do business.
We still manufacture products in the United States, yet many other states have captured a greater share of the remaining
manufacturing jobs. I frequently hear the cost of workers' compensation is one reason a business decided to build a new plant
in another state versus in Illinois."
Link's bill establishes a medical fee schedule and prohibits balance billing - the practice by which a member of an HMO is
billed by that HMO for amounts in excess of the reimbursement paid to the provider. Illinois is currently one of only six U.S.
states that do not prohibit balance billing.
HB 805's recommended fee schedule is tied to 90 percent of the 80th percentile of charges and fees established in a
national database. The schedule would provide standardization and more clarity with respect to pinpointing each injury and its
cost.
"In an effort to speed up payments to healthcare providers, the bill requires employers to pay medical charges within 60
days or pay an additional penalty of one percent per month," Link said.
And under HB 805, if the injured employee demands payment of benefits and there is a 14-day delay by the employer after
receiving the demand, the employer must also pay a $30 per-day penalty for each day he withholds, refuses or delays benefits -
along with paying the costs of litigation. This penalty is capped at $16,425, Link said.
"Establishing a fee schedule with incentives to pay a bill in a timely manner should help reduce the amount of disputes and
hopefully some of the legal costs involved in workers' compensation fees," he added.
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Dennis Ruth, chairman of the Illinois Industrial Commission - the state agency that governs Illinois' workers' compensation
system - praised Link's efforts. An attorney who represented injured workers for 13 years before he was appointed as an IIC
arbitrator in 2001 and as its chairman in 2003, Ruth agrees that the system needs more revamping.
Under Ruth's watch as chairman, the IIC made policy changes, increased state funding and increased staff to handle
Illinois' growing number of workers' comp cases totaling some 6,000 cases per arbitrator at one time; the IIC receives nearly
65,000 claim filings annually.
Thanks to support from Gov. Rod Blagojevich, 13 more arbitrators were hired in 2003, reducing the caseload of each by 40
percent.
With more arbitrators than ever, Ruth said, the timeframe from the filing of an injury claim to a decision and payout is
growing shorter. Opening an IIC claims office in Collinsville in early 2003 has also improved the system's efficiency for
employers in Southwestern Illinois; the agency also has arbitrator offices in Belleville and Carlyle.
"Is HB 805 perfect? No, it's not, but it's a set of compromises to try and reach a consensus we've never been able to reach
through legislation," Ruth said. "One of the reasons the law has never been changed the past 20 to 30 years is that no one
could agree on it. One of the things everyone seems to agree with is that the cost of health care is soaring and we need to
get that under control."
Creating the fee schedule suggested in HB 805, Ruth said, would set the price of workers' comp-related medical treatments
on day one - and in future years, increases could be tied to the Consumer Price Index.
"The trade-off is that there are modest increases in employee benefits, and there is a lot of confusion over that," he
added.
Link said that according to the Illinois Manufacturers' Association, the bill could save Illinois businesses up to $130
million in the first year alone.
"I anticipate the legislature will act on the bill soon, because every day more companies are making decisions expanding or
relocating their businesses," he said. "In these tough times, we want an Illinois business climate that encourages job
creation and puts people back to work. I believe HB 805 helps us toward that goal."
The construction industry, however, still feels as if its needs are not being addressed in the proposed legislation. Tim
Garvey, executive director of the Southern Illinois Builders Association, said that as it stands, Illinois' treatment of
seasonal workers under its workers' comp system is no different than 12-month-long workers.
"The system would reward seasonal workers with a 12-month-year-plus premium time that they do not earn year round," said
Garvey. "This 'windfall' places the construction industry in an unjust position relative to other industrial sectors. We want
a seat at the table during these discussions in Springfield. Contractors are major employers and major payers to the workers'
comp system. We comprise more than 29 percent of overall premiums and more than 29 percent of losses."
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