As Illinois’ troubled workers compensation system drives jobs out of state, an Associated Press analysis has disclosed nearly one-third of the permanent disability awards to state government workers have come from just one dozen state-run facilities.
“It’s puzzling that so few facilities in such a small geographic area would generate so many workers’ comp claims,” said Eli Lehrer, who directs The Heartland Institute’s Center on Finance, Insurance, and Real Estate. “Whatever the case is, a serious problem exists. Either these facilities are horrifically dangerous places to work, or, more likely in my judgment, some people getting workers comp payouts do not deserve them.”
Workers Comp Cluster
The Associated Press reported in early December that workers at Menard Correctional Center in southern Illinois collected $19 million in long-term disability benefits from 2007 through 2010, nearly double the amount officially reported.
Menard and other state prisons, juvenile detention centers, and mental health facilities within 80 miles of each other accounted for nearly $41 million in long-term disability compensation during those years. The total for the entire state workforce was $127 million. Approximately 155,000 persons work for the state government.
Federal, State Investigations
Three separate insurance fraud investigations are currently underway at Menard, and federal investigators have subpoenaed emails, computer records, and related information from three state-employed workers compensation arbitrators who were assigned most of the cases originating from the Southern Illinois facilities.
The Illinois Attorney General’s office in December announced it was about to launch legal challenges to many of the repetitive trauma claims state workers have filed in recent years.
Impact on Employment
Meanwhile, also in early December, a Milwaukee, Wisconsin-based company with operations in Illinois announced it had decided to let go 500 Illinois employees because of the state’s high workers compensation insurance premiums.
Parallel Employment Group, a temporary staffing company, incurred 87 percent of its total workers compensation costs in Illinois even though only 35 percent of its business comes from the state. The company also operates in Wisconsin and New York.
“This decision was made due to the rising cost of workers compensation and unemployment with industrial positions in this state,” said Parallel Employment Group Executive Vice President Kirk Ladu. “These operations contributed a small portion of payroll while accounting for almost 90 percent of workers compensation losses. For the last four years, our company has experienced this type of disparity.”
Insurance industry data show four of the five states that border Illinois have substantially lower workers compensation costs. Workers compensation premiums in neighboring Indiana average less than half as much as the premiums in Illinois.