End Fraud and Abuse in Illinois’ Workers Compensation System

Published May 31, 2011

Is it possible Illinois lawmakers will end their legislative session doing little or nothing to fix the state’s workers compensation system?

Sadly, but not surprisingly for this ill-governed state, that appears more likely by the day.

Allegations of rampant fraud and abuse long have plagued the Illinois workers compensation system. This being Illinois, we probably should be not surprised that state government agencies could be among the worst offenders.

Federal prosecutors are investigating possible workers compensation abuses involving tens of millions of dollars at Illinois government agencies. The Associated Press has obtained five subpoenas from U.S. attorneys demanding injury-claim data and five years of email and personnel records for Workers’ Compensation Commission arbitrators and other state employees. They’re following leads that state-hired arbitrators might be helping other state workers defraud the system.

Before the Associated Press obtained copies of the federal subpoenas, the Belleville News-Democrat reported on $10 million of workers compensation awards that have gone to more than half the staff at the Menard Correctional Center in Chester. A common claim among the nearly 400 Menard workers – if we can call them that – who are now on the workers compensation dole: carpal tunnel injuries caused by locking and unlocking doors.

Wouldn’t you think lawmakers who run a state government that is billions of dollars in debt, and that apparently has fallen victim to thousands of fraudulent workers compensation claims that are costing tens of millions of dollars, would be sympathetic to pleas for reform?

House Speaker Michael Madigan (D-Chicago) recently threatened to advance a bill that would scrap the workers compensation system and put decisions on payments for workplace injuries in the hands of state courts. This would be worse than no reform.

Workers compensation was created to keep workplace injury cases out of the courts while quickly paying for medical bills and lost wages. Putting claims in court would make employers and employees more adversarial, delay reimbursement for medical bills and lost wages as cases slog through courts, and send legal costs soaring.

And courts can be corrupted, too. Google “Operation Greylord” for one of the most infamous judicial scandals in American history – one in which Illinois judges in the 1980s were found guilty of rigging cases for defendants with the right lawyerly connections, including mob hit men who went free despite strong evidence of the murders they committed.

There’s no telling if Madigan is serious about the threat, but we should remember three things: 1) Madigan has ruled the House for some three decades and therefore has presided over the mess the state’s workers compensation system has become; 2) the state government is totally in control of Democrats who are friendly to labor unions because labor unions have been so friendly to them; and 3) labor unions oppose reform.

Illinois, remarkably, allows compensation for injuries not directly related to the job.

This is one of the major sticking points with labor union representatives, who object to reform proposals that would tie compensation to injuries directly related to the workplace. Is anyone surprised?

Requiring an injury to be directly related to the workplace should be the minimum reform requirement. Other good reforms would include:

* Using American Medical Association and utilization review standards when determining a person’s degree of injury and treatment following an injury. More than three dozen states use these standards because they are medically based and provide a measure of objectivity.

* Denying benefits to persons who were under the influence of illegal drugs or alcohol at the time of injury, unless they can prove the workplace caused the injury.

* End awards that can last a person’s lifetime. Workers compensation is supposed to make up for lost wages. There is no reason for monetary awards that last beyond retirement age.

Illinois’ workers compensation system harms employers by imposing high insurance costs. It harms employees by forcing employers to hold wages and benefits down to pay for the insurance. And it harms the state’s economy by making other states with lower costs more attractive for business and industry.

Lawmakers need to end the abuses in the workers compensation system.

Steve Stanek ([email protected]) is a research fellow at The Heartland Institute in Chicago.