* Omri Ben-Shahar writing in Forbes about Illinois’ workers’ comp mess…
The commission handling workers’ claims and the courts that supervise it have endlessly expanded the liability of employers, forgetting that the system was supposed to cover only employment-related injuries. One Illinois court held, for example, that a worker was entitled to benefits when he was injured throwing himself up against a vending machine in an attempt to dislodge a stubborn bag of potato chips. The court said that the injured employee was a deserving “Good Samaritan” on a rescue mission to help a fellow co-worker who had deposited the coins. The court thought that the defect in the vending machine “created a need for action to dislodge the bag of Fritos.” (I am not making this up!)
Illinois courts are generous to workers even when it defies common sense. A firefighter that was injured when he was out of town for a seminar and engaged in “horseplay” with a fellow worker in their hotel room (“wrestling like two oversized kids”) succeeded in persuading a court that the injury is work related. Numerous employees have had great success receiving lifetime benefits for degenerative injuries like carpal tunnel syndrome, even when it was proven highly unlikely that they were caused on the job. Ex-workers often continue to receive lost wages awards after returning to work elsewhere!
Illinois’ bottomless workers’ compensation system has contributed to the state ranking as one of the most labor-expensive states. In the construction industry, for example, $20 of every $100 of wages goes to workers’ compensation (in neighboring Indiana it’s less than $5). It is perhaps one more reason why the state has lost 300,000 manufacturing jobs since 2000, and why, unlike its Midwest neighbors, it has not enjoyed any manufacturing job growth since the Great Recession.
In the public sector, the effect is even grimmer. State workers file workers’ compensation claims far more often than in any other employment sector, costing more than 4 percent of government payroll. A whopping one third of Illinois state employees have open claims alleging work-related injuries. (Is it really that dangerous to work for the state?) The claimants are often counseled by lawyers, whereas poor Illinois does not have the resources to either defend this Tsunami of claims or pay the insurance premiums.
It is not obvious why the Illinois workers’ compensation system unraveled, but let’s see who benefits from this cash cow. As in any litigation-intensive area, lawyers do well. The paradigm of a litigation-free insurance system is long dead in Illinois, where 52 percent of workers’ compensation claimants—more than in any other state—are represented by an attorney. (In neighboring Wisconsin only 13 percent are represented.) Health care providers also benefit, since the fees for work injury medical treatments are much higher than the fees Medicare pays for the same treatments. But a big part of the blame is on judges. Don’t courts realize that dealing out insurance benefits makes premiums more expensive? That such reckless courtroom generosity would drive employers out, and the state’s finances to the ground?
As the article shows, workers’ comp is a state and local budget issue.
* Referenced articles…
* Illinois taxpayers’ tab for workers’ comp: $1 billion a year
* Worker Attorney Involvement: A New Measure [52 percent represented by attorneys]
* Circuit City Stores v. IWCC [Vending machine case]
* Background on Workers’ Compensation Claims Filed by State Employees and Reforms Proposed by the Office of the Atto rney General [”Horseplay” case]