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* Gov. Pat Quinn spoke to the Illinois Chamber this morning and started off his talk with a jobs announcement. According to the governor, Navistar is hiring 500 engineers here, many of them apparently brought from their facility in Indiana. We’ve known about the Navistar move for a while now, but that’s a fairly impressive number.
* Much of Quinn’s talk to the Chamber this morning was about workers’ compensation reform. The Peoria Journal Star’s editorial page laid out the problem pretty well this week…
Marc Collins, associate risk manager for CORE, compared five years’ worth of claims between the local construction firm Otto Baum Company and Sun Valley Masonry, another of their holdings in Phoenix, Ariz. The two companies are of similar size, with about the same number of employees. What he discovered was that local claims averaged $32,807 each over that time frame, compared to $6,212 in Arizona. While some of that reflects differences in wages - employers are required to pay two-thirds of an employee’s compensation while he’s hurt - it most certainly does not account for the more than five-fold difference.
Caterpillar - which obviously deals in much bigger numbers - has an even more dramatic story, one CEO Doug Oberhelman shared with Gov. Pat Quinn when he was in town last week. The Peoria-based company compared an engine manufacturing plant in Illinois to another it has in Indiana. “The jobs are essentially the same. The injury risks are the same. The production work force head count was roughly the same,” noted the company. And yet in 2008, “the total incurred cost of the injuries at the Illinois plant was seven times higher than the cost of the injuries at the Indiana plant.”
That is borne out statewide. If a hernia suffered on the job costs an employer more than $18,700 in Illinois, the next closest state comes in $6,300 less, with we flatlanders nearly 140 percent higher than the national median. A shoulder or elbow injury? The Illinois employer is out almost $24,000, compared to about $14,300 for the runner-up, 160 percent higher than the median. Need an arthroscopic procedure? Illinois is double its nearest competitor, more than triple the median.
While workers’ comp rates have been trending downward across the U.S., Illinois has experienced the opposite. It’s not just the wage coverage while injured employees aren’t working for months or even years, but the medical bills and often the settlement beyond that (all tax free, by the way). In fact, “even if the medical fee schedule were reduced by 30 percent, Illinois would still have the second highest rates in the nation, but our employers could save up to $500 million,” acknowledges the governor’s office.
The startling statistics do not end there, unfortunately. State government is an employer, too, with approaching 70,000 full- and part-time workers. And from that pool there are currently 25,000 open workers’ comp claims. That’s a breathtaking number. It is impossible to believe all of those are legitimate. [Emphasis added]
Oof.
And that state worker stat is just downright appalling.
* More from the Tribune…
Gov. Pat Quinn’s office reports that the medical fees for a hand/wrist injury are $17,180 in Illinois—nearly three times the $6,775 median in the rest of the nation. The fees for a knee injury here are $30,185— more than three times the $9,473 median in other states. Illinois has the second highest costs in the nation. And even if Illinois cut its medical fees in half, it would still be the third most expensive state in the nation.
And we’d be just barely third at that.
* We’ve talked before about Rep. John Bradley’s proposal to repeal the entire workers’ compensation system. He talked passionately the other day about his idea. Have a look…
Bradley has not yet called his bill for a vote. We’ll see what he does today.
* Watch the governor’s speech…
Chamber President & CEO Doug Whitley offered up some high praise after Quinn’s speech, saying they were “great remarks… exactly the kind of commentary that we like to hear from the chief executive officer.”
Words are not deeds, however. We’ll see what actually happens.
[Many thanks to the fine folks at BlueRoomStream.com for both videos.]
*** UPDATE *** The Chamber’s Whitley talked to the media after the event. Watch…
* Meanwhile, business and labor were able to negotiate a Statehouse deal on unemployment insurance, but it has some real costs for both sides…
Starting next year, Illinois businesses will see a tax increase and the recently unemployed will lose a week of jobless benefits, according to a compromise bill passed earlier this month in the Illinois Legislature.
The deal is part of a longer-term plan to help contribute to Illinois’ depleted unemployment trust fund, which owes $3 billion to the U.S. Treasury, according to a story published Monday in the Rockford Register Star.
Illinois Department of Employment Security spokesman Greg Rivara said the tax increase and benefit cut are expected to generate about $100 million for the unemployment fund next year, or about 3 percent of its debt.
Illinois is among more than 30 states that have borrowed money from the federal government to keep jobless benefits going and the state isn’t alone in reducing unemployment benefits to help funding. Michigan recently did something similar and other states are considering it.
posted by Rich Miller
Tuesday, Apr 12, 11 @ 10:36 am
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It is nice to see the real issue finally come to light. Stepping out of the smoke and mirrors of the bnd articles and you cannot avoid the fact our work comp system costs jobs.
Now we see the Gov hit the real issue with facts and numbers. Now do something about it. If you put some sensible people in the room, there are some fairly simple reforms that don’t kill anyone that will make big difference.
Comment by the Patriot Tuesday, Apr 12, 11 @ 10:55 am
So any news on who the new director of DCEO is going to be?
Comment by Winfrey Tuesday, Apr 12, 11 @ 10:57 am
Indiana has some of the worst benefits in the country. They are always the example cited by business. Let’s compare rates to Wisconsin or Minnesota or other midwestern states.
Comment by Marcus Agrippa Tuesday, Apr 12, 11 @ 11:00 am
When there’s a gravy train going through, there’s a lot of folks who want to climb on board.
Comment by Aldyth Tuesday, Apr 12, 11 @ 11:01 am
500 jobs from Indiana, huh?
Let’s look at Navistar’s big picture - they are closing an indiana facility with 1400 jobs. Leaves 900 more unemployed just 3 hours form Chicago… Then there is the downsizeing of the Melrose Park facility. Buyouts/early retiriment. How many will be downsized out of the 1500 or so employed in Melrsoe Park? There are 3100 Navistar employees in IL currently and another 1400 in IN. This will be consolidated to about 3000 and leave empty faciliteis in Warrenville,IL, West Chicago, IL, Downers Grove IL, Fort Wayne, IN and not unlikley that there will be a significantly reduced employment in Melrose Park IL (bond agreement show job retention committment at less than 400 of the 1500 employees. Current employees have stated they they expect the Melrose engine plant to close in the next few years and production to shift to a newly beuilt plant in ALA.
Comment by Steve Tuesday, Apr 12, 11 @ 11:09 am
Before everyone rushes off to buy rope to hang the employees I would like to add a couple of things that I have learned. These have been told to me on numerous occasions by people who deal with this on a daily basis.
#1 There is no pain and suffering included in workman’s comp claims. The settlement is the simply the cost of fixing whatever the injury is.
#2 The award is determined by one of two things.
a. The actual cost of repairing the injury including rehabilitation therapy, and medications.
or
b. An agreed upon amount based on a ball park predetermined figure for that particular injury if the settlement is prior to the repair.
and
c. The final figure can be directed by the court if they feel either side is out of line on their figures.
So the claimant does not have as much impact on the final figure as do attorneys, medical personnel, and the courts.
Comment by Irish Tuesday, Apr 12, 11 @ 11:10 am
Also, the number of state employee cases that are open is used to create a false impression. How many total cases are open? Some of these cases may be five or ten years old? They may have been filed by employees who are long gone from state employment. According to the Commission website there are just under 100,000 cases pending so the state claims (if the figure is accurate) would represent 25%.
Comment by Marcus Agrippa Tuesday, Apr 12, 11 @ 11:11 am
Irish, you are misinformed.
Comment by Hoy Pinot Tuesday, Apr 12, 11 @ 11:14 am
Yup - downsizing in Melrose Park will more than make up for any new jobs imported from IN.
Is it good for IL employees (IL taxpayers) to lose their jobs while our government subsidized jobs for people who have never paid a dime of tax in IL?
Comment by Patty Tuesday, Apr 12, 11 @ 11:14 am
I hate to be repetitive but the real question is: What is driving the claim cost? Medical care? Lost time benefits? Settlements? And why did we go from being in the middle of the pack premium wise just a few years ago to where we are now? We hear a bunch of figures thrown around but no info on what makes up the premium. If we want reform don’t we want to know what to reform, or is this just an excuse to take away workers’ rights?
Comment by Marcus Agrippa Tuesday, Apr 12, 11 @ 11:16 am
So if Navistar employs 4500 in IL + IN and has promised to retain 2600 jobs ( per their EDGE tax application) what becomes of the other 1900 employess? Not retained?
Comment by Dennis Tuesday, Apr 12, 11 @ 11:17 am
Oh, that Navistar hype is just PR smoke and mirrors to to cover up a real corporate consolidation that has nothing to do with real growth of American jobs.
Comment by Bill Tuesday, Apr 12, 11 @ 11:20 am
Anyone that thinks Navistar is growing in the US had better take a closer look. It looks more like they are growing overseas, with partnerships and new production in India, China. Downsizing in US so they can reduce labor costs. The number of Navistar jobs cuts in the US in the past 3 years is stagggering.
Comment by Joe American Tuesday, Apr 12, 11 @ 11:24 am
Can someone start asking multi state employers to report their WC costs after the cases go through the circuit courts? In most states the final amount equals IL.
Comment by CircularFiringSquad Tuesday, Apr 12, 11 @ 11:26 am
Name one Illinos business that paid corporate income tax last year.
Comment by Skeptic Tuesday, Apr 12, 11 @ 11:26 am
Hoy Pinot - Then that misinformation came from members of a law firm that have based their whole practice on personal injury cases.
Comment by Irish Tuesday, Apr 12, 11 @ 11:29 am
If cutting workmen’s comp costs is the goal, surely Illinois can find a better model than Arizona or Indiana. Study Bangladesh, Myanmar, Honduras, or maybe Viet Nam & China.
Another possibility: our domestic garment worker shops.
Comment by Kasich Walker, Jr.'s Telepathic Nerve Center Tuesday, Apr 12, 11 @ 11:39 am
Irish, bad facts and incorrect conclusion. Talk to a work comp attorney instead of a PI attorney.
Comment by Hoy Pinot Tuesday, Apr 12, 11 @ 11:52 am
- Skeptic - Tuesday, Apr 12, 11 @ 11:26 am:
“Name one Illinos business that paid corporate income tax last year.”
Name one that should, given the environment of loopholes, subsidies and other shenanigans instituted by the Springfield Mages.
Remove all of the deductions and loopholes and charge a low flat rate for all corporate income and watch the dollars flow.
Comment by Cincinnatus Tuesday, Apr 12, 11 @ 12:01 pm
Bradley’s idea sounds better every day.
Comment by wordslinger Tuesday, Apr 12, 11 @ 12:17 pm
Whitley suggests that the employee’s “regular health insurance” can/should take care of non work related injuries & pre-existing conditions.
What exactly is “regular insurance” in a nation where health coverage is employment driven & employers push to minimize health benefits while rejecting the possibility of a move to a single payer non-insurance driven health care system?
Comment by Live from Kasich Walker, Jr.'s Elbow Room Tuesday, Apr 12, 11 @ 12:23 pm
Easiest thing a company can do to control worker comp costs is to provide a safer work place. Alot of these work place injury claims are in their control already.
Comment by Carol Tuesday, Apr 12, 11 @ 12:31 pm
Whitley missed the part that worker’s comp pays for more than the medical expenses - it pays your wages for time off. No “regular health insurance” will pay your wages for time off due to a workplace injury.
Comment by Don Tuesday, Apr 12, 11 @ 12:33 pm
Hoy Pinot - Enlighten me, please!
Comment by Irish Tuesday, Apr 12, 11 @ 12:38 pm
Now is the time for Gov. Quinn to stand up to MJM
and Cullerton,if he can’t do that all his words are worthless.He should listen to Rep. Bradley and
his committee, instead of taking orders from Magdigan and Cullerton. Now it’s your turn Gov. Give’m Hell.
Comment by mokenavince Tuesday, Apr 12, 11 @ 1:15 pm
“Indiana has some of the worst benefits in the country. They are always the example cited by business.”
Indiana has a LIFETIME cap on worker’s comp benefits — medical bills and lost wages combined — of $350,000.
Imagine the widow of 23 year-old Emilio Gallardo trying to raise their three-month old daughter on that.
THAT is why Caterpillar’s worker’s comp costs are so much lower in Indiana — not because Illinois costs are too high, but Indiana’s benefits are inhumanly low.
Comment by Yellow Dog Democrat Tuesday, Apr 12, 11 @ 1:27 pm
irish
In the work comp system a human being is deemed to be equal to 500 weeks of work. i.e. if you are killed on the job, then your family is paid 500 weeks at the work comp rate (a formula of your salary which is capped at a certain amount.)
If you receive a temporary disability, but no permaent injury, you get your pay (reduced by the formula and capped) each day your out of work, plus all medical expenses covered. if you have a permanent injury you recieve x number of weeks under the formula I mentioned. There is a schedule which says an arm is worth 200 weeks, a hand is worth 50 etc etc. Work comp settlment are discussed in terms of weeks based on the underlying iea that thre is a max recovery possible of 500 weeks times the capped salary formula.
The whole system i deisgned to protect employers by limitng their damages. One of the huge loop holes, however, is that medical bills can be left open forever. So in addtion to my 100 weeks for my back injury, I can claim I will ned a surgery every 5 years, and daily therapy to get better. the employer can be on the hook forever.
There is incentive for doctors and therpaists to over treat since it is almost impossible to get a dr bill reuced or tossed out, and to build up the specterof huge medical bills to come forever. This hen sparks a settlmenet for money beyound the 500 week system, to get an agreement to close of open medical bills.
One reform, if the employer provides medical insurane, that satisfies the employers medcal coverage obligation. Alternative, cap the number of years you can go out for medical and the amount of dollars for medical claims for certain injuries.
I beleive doctors should be paid fairly, and I oppose medical insurane reform which attacks doctors for making money.
That said, there is a whole industry of work comp doctor’s who milk the system by performing uncessary surgery, ordering un needed therapy etc. If you go look at the medical providers you will often find that the same medical providers appear again and agian on cases, many of the doctors get the patients from the attorney’s. The doctors then testify as to the permanent injuries in support o the attorneys and around it goes. The Work comp arbitrators do a horrible job weeding out these bills and treaters, and it is almost impossible. So you have huge abuse on the medical side which needs fixed. My best solution, insurance companies which have to approve or pre-approve treatments as reasonable, as opposed to whatever the doctor my atorney suggested runs up.
AAnd if you think work comp claims are high, just put these into the court system. St Clair county and Madison county are known for their overly generous court awards.
Comment by Ghost Tuesday, Apr 12, 11 @ 1:33 pm
A number of years ago, a white collar worker at my agency (a planner) turned his ankle badly on a site visit. He filed a workers comp claim and collected $27,000. The “expert” that looked at him said his ankle was now only “70 percent” as good as before. But when his ankle healed, he didn’t walk any different. And as a fat, middle-aged white guy, he was never going to play in the NBA.
This guy was so knowledgeable about the workers comp system that he maneuvered successfully to leapfrog over older cases to get his approval and payment.
Here was a guy with a very good, easy but interesting job with great benefits aggressively taking advantage of the taxpayers, simply because he could.
These are the types of abuses that should be weeded out. The payment formulas and rules are virtually automatic, even if no lasting damage is really done or the employee is repeatedly prone to accidents and injuries, with a pattern of claim filings.
Comment by county worker Tuesday, Apr 12, 11 @ 1:35 pm
And unless I’m mistaken, neither Arizona nor Indiana have the causation language that seems to be so central to the Chamber’s cause.
Comment by Yellow Dog Democrat Tuesday, Apr 12, 11 @ 1:55 pm
To come up with a fair comparison, you can’t use Indiana benefits as they are extremely low.
That being said, our higher comp costs cannot be denied.
There are solutions but everyone is too busy posturing and not negotiating. Sending all the cases to the Circuit Court will make administration of those cases far more expensive and time consuming than it takes to handle such claims now through the Illinois Workers’ Compensation Commission.
Last time I checked, Indiana has the same causation standards of Illinois. I double check to be sure, but if anyone can contradict me please feel free to do so.
Comment by Louis G. Atsaves Tuesday, Apr 12, 11 @ 2:26 pm
County Worker, I get new clients in my office who are always quick to tell me what they heard through the shop grapevine about a fellow injured worker collecting bucket loads of cash for a minor strain or simple fracture. They of course, want a higher figure.
That stuff is easy to check out through the Commission computer system using the last name of the claimant. I always get the name and check it out and discover that the shop grape vine that claimed that settlement for for $65,000.00 really settled for $15,000.00. (The last time I did this was last week and this was the actual result.) The clients are always amazed when I send them that info following the interview.
The Belleville News Democrat reporters clearly have been working the Commission computer system in writing their many articles about the Menard Correction Center and state workers and their settlements.
If everyone sticks to the facts and drops the fiction like the shop talk and general “horror” stories we can fix this system to everyone’s satisfaction
Problem right now is getting everyone to think logically on a hot button issue that always has been a hot button.
Comment by Louis G. Atsaves Tuesday, Apr 12, 11 @ 2:34 pm
County worker,
for what it is worth, I had the same kind of injury and all I got was a couple of days off work and my state health care covered the bills. As I’m typing this, my left ankle is hurting from over use today like it does most days or when the weather changes (this has been going on for about 15 years now). I had filled out work comp forms and turned in to my boss as requested … but then the forms were lost and I never heard about the “lost” paperwork until after the time limit to file had expired. So not all of us know how to game the system …
Comment by Retired Non-Union Guy Tuesday, Apr 12, 11 @ 2:55 pm
I give Bradley a LOT of credit here. I dont always agree with his ideas and he will push his own agenda (STAR bond), but he is tackling a big issue in this case for the benefit of the average Illinois citizen. Particularly with government jobs and unions, there is a lot of abuse in workers comp- along with the legitimate claims. A lot of attorneys and doctors make a very good living out of personal injury and workers comp claims and are huge Democratic contributors (state) for that very reason. I would really like to see the AG’s office go after some of them professionally just to make a statement it will not be tolerated. After the recent tax hike, the Speaker is obviously giving people like Bradley some rope to tackle common sense issues facing the state. This is one issue that I believe can and should be solved with bi-partisan agreement if it is given the green light.
Comment by Anon Tuesday, Apr 12, 11 @ 2:55 pm
1 in every 3 state employee’s have an open workers comp claim? We have 17 people in our office and none of them have an open worker’s comp claim.
Comment by Ahoy Tuesday, Apr 12, 11 @ 3:05 pm
@Louis G. Atsaves -
We have higher insurance premiums — true — but why?
Are insurers in Illinois making higher profits?
Do we have higher accident rates in Illinois?
Is it because Illinoisans have generally higher wages?
Are other states paying miserly benefits?
Governor Quinn is promising he’ll make decisions based on the data, not hysterics, and I certainly hope he’ll share the data with all of us soon.
I think its important to recognize that what Doug Whitley is suggesting — and Blue Cross fears — is a bad idea. We should NOT be shifting the health care costs for worker’s compensation over to the traditional health insurance pool. That’s merely going to drive up health care costs for average Joe’s like me and small business owners and remove any financial incentive for companies with repeated safety problems to clean up their act.
Comment by Yellow Dog Democrat Tuesday, Apr 12, 11 @ 3:13 pm
This is a troubling issue that needs to be fixed sooner rather than later. Problem is like Illeagal Immigration it has people on both sides of the isle with great influence that do not want to see any change. What is fair change? Abuse of the system can come from both sides. One neat little game the providers play is starve you out til you settle on their terms. It goes like this. Joe Blow is badly hurt on the job. Workers Comp kicks in. Joe is okay as long as the money flows. Provider decides Joe is ready to go back to work and cuts off pay. Joe hires Lawyer to get pay restarted. After a few weeks Joe gets behind on bills but money starts back up. Repeat this with hearings and such several times and Joe although knowing the deal is bad takes it to get right with the world. One employer went so far as to then put said Joe back at the same job he got his back hurt on, picking up heavy objects and setting them with a twisting motion. Are we suprised Joe was off the job again in a few weeks permanently. Some contractors rates have gotten so high that they become self insured. They get real serious about safety after that.
Comment by Bemused Tuesday, Apr 12, 11 @ 3:44 pm
That has to be one of the best speeches Quinn has given.
Comment by anon Tuesday, Apr 12, 11 @ 11:02 pm