By BILL KNIGHT

Workers comp: renewed battle
over business costs vs. employee rights

Acres of asphalt bordered by chain-link fence surround the dark riverside complex where Archer Daniels Midland turns grain into alcohol for beverages, fuel and feed. Through four seasons and three shifts, day and night, trucks, trains and barges bring in corn and other grain, and take out liquid for liquor and gasohol and powder for feed supplement.

Above the powerhouse and storage silos, the mill and distillery, over older red-brick buildings from Hiram Walker's time here in Peoria, and the newer steel-frame structures put up when ADM arrived in 1981, white clouds drift from smokestacks and unseen sources inside. The edge of an odor indicates fermentation, or maybe dryers not working properly.

Something apparently didn't work properly on December 9, 1993, when ADM worker Sherry Gasparovich was checking on the corn mash containers that release gas in the fermenting process. She became a victim. And a workers comp statistic.

"I was on my feet one minute, and the next I was on the floor looking up at my supervisor," Gasparovich recalls. "I was in pain and I was out of it."

Alone in her work area several stories above the ground, Gasparovich was one of a crew of seven among a work force of hundreds that day. Apparently overcome by fumes, she'd fallen unconscious to the dusty floor. She chipped a tooth, nearly bit off her tongue and injured her neck. After another crew member discovered the collapsed Gasparovich, ADM had a crane lift her out of the building and an ambulance transport her to a hospital. Later, a nurse told her she'd been minutes from death when she arrived in the emergency room. Still later, a neurologist discovered two ruptured discs in her neck. Severe pain and headaches persist, requiring prescription medicine. Doctors limit the weight she can lift; there's a risk of paralysis.

Gasparovich, 43, is typical of many people hurt on the job: Every day in Illinois, more than 1,000 are injured and one is killed. Most victims get treatment and return to work not long afterward, and many are helped by the state's workers compensation law. Some, like Gasparovich, are not, especially if their injury isn't visible.

"The company wouldn't recognize my injury or let me work," she says. "They never called me. After a month, I got an attorney."

Oddly, Gasparovich had a loyalty to the plant that stemmed from her father, George Stears, who last year retired as mill supervisor after more than 45 years with ADM and Hiram Walker.

"Over the time when I worked at ADM — six years — I'd had minor accidents," she says. "I hurt my knee; I've had hernias." But, she says, she never filed for workers comp. "It's like they think I'm trying to pull off something crooked."

And that is precisely how some view workers comp claims. The skepticism shows when lawmakers consider Gov. Jim Edgar's recent comment that workers comp is "expensive and inefficient" as a signal to upend the system. By mid-March, there were a handful of workers comp bills pending in the leg-

"We just want to tighten up a few loopholes." Carol Simpson is a cartoon team comprised of Estelle Carol and Bob Simpson. Their bad attitudes enliven a variety of U.S. and Canadian publications. Estelle draws the pictures and Bob handles the words.

islature to restrict victims' choice of physicians and to cancel eligibility for Illinois workers whose employment takes them out of state.

Republicans recognize a political opportunity. Labor feels threatened. And business sees little tangible return on their spending for workers comp insurance. Originally a cost- and time-saving way to avoid court, workers comp has become abstract, its advantages invisible. So talk circulates about reducing benefits, limiting conditions of eligibility or liability, and increasing penalties for fraud.

Fraud: "no one's clean'

Echoing reports by California Insurance Commissioner John Garamendi, Chicago lawyer Douglas F. Stevenson says fraud could be extensive, and people and politicians should be concerned.

"When some succeed on fraudulent, exaggerated claims, less money is available for those genuinely injured," Stevenson says. "The needy get sacrificed for the greedy."

There are three areas of financial abuse damaging workers comp nationwide, critics say: individual con artists, organized scams and once-unusual injuries now deemed compensable, such as stress or communicable diseases contracted on the job.

"We shouldn't be talking about fraud; there's so little fraud," counters John Lesaganich, the Peoria attorney who in 1987 won a landmark state Supreme Court workers comp case about cumulative stress. "So often, there are situations where employers penalize real victims under the guise of monitoring so-called fraud."

Lesaganich — a former employers' attorney whose law firm, Goldfine & Bowles, is handling Gasparovich's claim — says it's misleading for a debate about workers comp to focus on fraud.

"It seems like every year there's talk of reform — in the '70s, '80s, now the '90s — and I confess, I don't know what people want," he says. "But I do know, if fraud happens, no one's hands are clean — employers, medical providers, insurers. No one."

In fact, there seem to be extensive and expensive improprieties by other players in workers comp, according to a report by the Chicago-based Coalition for Consumer Rights. According to the report, employers have underreported the size of their work forces, incorrectly classified jobs and lied to their workers comp policy-holders. For their part, insurers have deliberately delayed or denied legitimate claims and improperly raised rates and fixed prices of premiums.

"Claimant fraud is not a significant problem," says research associate David Morrison, who wrote that report. "One study concluded that, at most, 5 percent of 18,000 cases examined were fraudulent. Most likely, Illinois' claimant fraud rate is very much below the national average. The state's low claim rate — 12 filed injury claims for every 1,000 workers covered — suggests that there are more worthy claims that are not getting through than there are bad claims succeeding. Plus, anyone who commits fraud — workers, employers or insurers — should be held accountable, even indicted."

Indeed, accusations of insurance company restraint of trade, deceptive trade practices and collusion are being made by current employer lawsuits in Alabama and North Carolina and by the attorney general of South Carolina.

Fear of claimant fraud is only one reason workers comp remains part of the GOP's "Illinois Agenda," a still-developing series of bills that Republicans hope to send to Edgar before the end of the session on May 26. Just as in other recent party targets — the Structural Work Act (which provided an alternative remedy for workers at construction sites), medical malpractice and other liability issues — workers compensation is considered costly for business.

It is and it isn't, according to interest groups and various comparative studies.

Illinois is neither the costliest nor the cheapest state, according to Actuarial & Technical Solutions of Bohemia, N.Y.,

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which ranked the state 25 out of 44 in insurance costs, and 43 out of 50 in worker benefits (with 50 being the most costly). Some catastrophic cases of permanent total disability are costly, according to the Springfield office of the National Council on Compensation Insurance (NCCI). Those claims average $206,000 each. However, most claims are medical only, and those average $343 each.

"Workers comp is a bargain for Illinois employers," Momson says. "It limits obligations to employees. Even when injuries are caused by aggravated negligence or willful violations of safety statutes, employers enjoy the limited liability of workers comp."

Employers have the power to disagree about whether an injury happened, challenge that it was work-related and argue about its extent, length and value. Insurers have the power to profit.

The insurers who underwrite the system made $257 million in net income in 1991, the third most profitable state, according to the National Association of Insurance Commissioners. And though workers comp amounted to only 20 percent of property/casualty premiums in Illinois, dividends from workers comp amounted to 80 percent of all dividends paid from Illinois insurers' property/casualty lines, the state Department of Insurance reports.

"Premium rates are below the national average, and businesses pass those costs along to employees by demanding higher productivity at relatively lower wages," Morrison continues. "And benefits are average to below-average — the average injured worker gets a very modest sum."

Lost wages are replaced at the rate of two-thirds of the average weekly wage of a victim of a temporary total disability, a permanent total disability and a fatal injury, up to $735.41 for someone earning $1,103.12 weekly. Workers suffering a permanent partial injury are compensated less, at 60 percent of their average weekly wage.

Further, completely unprotected under Illinois' workers comp are farm workers, independent contractors and the self-employed, who total 14 percent of the state's 6 million workers, according to the state Industrial Commission, which oversees the law.

Costs of medical treatment could become contentious in any General Assembly discussion on workers comp reform,

In 1911 workers comp was seen as way to get disputes over injuries out of the courts Illinois was the 11th state to pass a workers compensation law when the legislature approved it in 1911 — a time when the United Mine Workers union in Illinois was still powerful and the Titanic was still unsinkable. Until then, employers' responsibilities to their workers were largely limited to providing safe work sites with equipment that functioned properly. However, employers also could be sued if an accident occurred, and their defenses were few, though formidable: plead "assumption of risk," wherein workers theoretically accept a job's risks along with the paycheck; blame a co-worker, escaping liability under the "fellow-servant" negligence argument; and claim "contributory negligence," wherein the victim is partly or fully responsible for the injury. The legislature created a state Employers' Liability Commission, which noted that thousands of workers were injured and hundreds killed each year. In 1911, it reported that most victims received little or no compensation from their employers, and in half of the fatal accidents survivors received nothing from employers. The public was already aware of a few, high-profile cases, such as the 1909 Cherry Mine disaster in north-central Illinois, where 282 miners were killed. There, the employer denied any liability and initially offered about $188 to each survivor. The commission reported that "insurance is desirable both for the employer and the injured employee, lest a serious accident bankrupt the former and deprive the latter of indemnity." Soon, Illinois Gov. Charles Deneen — a Republican with Progressive sympathies — included workman's compensation in his social reforms: higher school funding, shorter work days for women, diptheria vaccinations for children and a civil service. The workman's comp measure was an exclusive-remedy system requiring workers to give up their rights to sue employers for workplace injuries, and a no-fault system requiring employers to give up their legal defenses and pay victims' medical expenses and lost wages until they could return to work. The rates were set up by the General Assembly. Workers also gave up claims to recover lost wages in full, or damages for pain and suffering from sympathetic juries and judges. In return, employers received a limit to their liability, a fixed cost to be budgeted in their overhead. Workers got a guarantee of compensation. From the beginning, employers usually bought insurance to cover themselves against worker injuries and to ensure prompt payment of victims' medical and rehabilitation expenses, a percentage of lost income, and compensation for permanent disability or a fatality. The idea was to remove the dispute from courtrooms, where almost anything could happen, and have employers and/or their insurers pay claims rather than fight them. The costs of workplace accidents would be transferred from the victim or the state— as ultimate guardian — to the industry in which the worker labored. Compensation funds don't come from state coffers, but from employers or their insurance carriers. Only the administration of the law through the Industrial Commission is paid by tax dollars. Bill Knight

Changes proposed in other states Illinois isn't unique in efforts to change workers compensation. It's targeted for tightening in 32 states, according to the AFL-CIO, which is backing relaxed eligibility or higher benefits in six others. Following are changes in some states noted by the AFL-CIO: • Alabama. Proposals redefining workers' fraudulent claims as felonies were approved. Similar bills to penalize employers or insurers for willfully withholding payments on legitimate claims were defeated. • Arkansas. A 1993 law changing some definitions made it more difficult for workers to qualify for benefits. • Florida. Injured workers receiving temporary total disability benefits are cut off after 104 weeks under 1994 reforms. Such benefits used to last 260 weeks. Also, some costs of workers comp are shifting from employers to workers as employer premiums are cut up to 25 percent. • Maine. After a year-long study, the state replaced; if Workers Compensation Commission with a board made up of four labor and four management representatives. For contested claims, there's now a dispute-resolution system based on consensus and mediation. • Nebraska. Starting January 1, benefits were increased and cost controls installed through managed care. Employers have tighter restrictions and must set up joint safety committees with workers. • New Hampshire. Lawmakers cut benefits 10 percent and stressed safety as the ultimate cost-saving action. New provisions help injured workers keep their jobs and employers escape expensive assigned-risk insurance pools. • Ohio. Injured workers can no longer choose their medical care, as a new measure requires an extra out-of-pocket co-payment charge for those who seek care outside of a managed-care system. • Pennsylvania. Benefits for some injuries were reduced, and medical fees for doctors and hospitals were capped. • West Virginia. A bipartisan measure severely cuts benefits, restricts victims' choice of doctors and removes confidentiality of patients' medical histories. Bill Knight

according to Jay Shattuck, chief executive officer of the Management Association of Illinois and a member of the Joint Employers' Policy Committee on Workers Compensation.

"Medical costs are higher in Illinois than in other states, for some services, and I think that's going to be debated more openly than ever," Shattuck says. "There are a half dozen common cost controls for medical treatment, but Illinois has maybe one. Overall, I suspect that the disagreement over indemnity and lost wages, and the gray area of compensability will mean a push for reform, but we're still re-evaluating our proposals."

Business proposals probably will include changing the basic mission of the Industrial Commission.

"The commission could better help employers and workers avoid arbitrations by being less adversarial," Shattuck says. "If they're more proactive, they can mediate settlements and cut down on hearings and costs."

Other observers advocate the opposite approach.

"Illinois' Industrial Commission isn't aggressive enough," says John Burton, the Rutgers University workers comp expert who edits the newsletter John Burton's Workers' Compensation Monitor. "The commission serves as a passive court instead of advocating benefits for those entitled to them, and protecting employers and insurers from unreasonable awards."

Backlog means delays

Meanwhile, the Edgar appointee whose job it is to help administer the workers comp law in Illinois expresses caution and doubt, and a labor lobbyist warns that workers comp reform could be the wrong target at the wrong time for the wrong reasons.

"I guess I feel somewhat caught in the middle, with some Republicans looking at revamping parts of workers compensation, but that's part of the job," says Industrial Commission Chairman Robert Malooly, who supervises 158 commission employees arbitrating disputed claims and administering 1,700 larger, self-insured firms.

"All sides ideally should recognize that it's in each of their best interests to have a strong, fair workers comp system, but that's not easy to do," Malooly continues. "Illinois' total costs — insured and self-insured, medical and rehabilitation, premium costs and settlements of disputed cases — might top $2 billion a year, with about $900,000 going to injured workers. But that was 66,000 cases in 1993, the last year we've got statistics for. Also, 87 percent of resolutions are settled before hearing."

But a backlog of claims continues to mount, according to the commission's most recent annual report, for Fiscal Year 1993. More employers are disputing claims, resulting in a 26 percent increase in cases between 1987 and 1993. There were almost 70,000 new cases in 1993, so even though 66,000 were closed, 4,000 remain in the backlog, which in turn contributes to institutional delays. It takes an average of 3.4 years for a case to be arbitrated and settled, and an additional 2.2 years if it's appealed to the review stage.

"If employers do the right thing, act quickly, pay bills, help workers recover and return to work, then morale is boosted, productivity goes up and workers comp costs go down," Malooly says. "To do otherwise is foolish, and causes bottlenecks for everybody."

One obstacle is Illinois' relatively few arbitrators: 28 arbitrators handle cases from a work force of 6 million. Iowa, with a work force of about 1.5 million, has 20 arbitrators.

Sean Stott, assistant legislative director for the state AFL-CIO, recognizes that the commission is improving, adding a new accident-reporting system, resuming publication of its handbook and borrowing funds to meet cost-of-living obligations to recipients of death or disability benefits. But he's both-

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ered by an unreliable computer system and nagging delays. "The commission has four duties: fair and timely resolution of disputed claims, ensuring compliance, overseeing self-insured employers and collecting claims statistics," Stott says. "The commission's ability to pursue these duties is continually hampered by inadequate funding. They could use more money. Somehow, the legislature has got to expedite the dispute-resolution process."

Possible GOP changes to workers comp could include freezing benefit levels for workers who are permanently, partially disabled; restricting new claims by victims already receiving permanent partial disability benefits; limiting choice of physicians; setting up standards for repetitive stress or even all injuries based on guidelines such as the American Medical Association's; and addressing drug- and alcohol-related injuries and fraud.

"I don't know for sure what the business community will propose. There's no comprehensive package anywhere out there," Stott says. "But any proposal that slows down the delivery of benefits runs counter to the intent of workers compensation."

In fact, not all politicians seem anxious to suggest specific reforms, and not all Republicans aim at workers comp with an unfeeling zeal to trim waste regardless of the consequences.

"I'm afraid we stirred up a hornet's nest with the repeal of the Scaffolding Act," says Rep. Al Salvi, a Republican from Wauconda. "I don't have a hint of any package, but I guess that we won't dismantle it, but just fix what's broken. I sure hope we don't get some huge plan the day before a vote so we have to make a decision in a day.

"For workers comp, my own advice is to not gut it, but to go slow, conservative and limited," Salvi adds. "If we start getting too mean, too cold-hearted, then we'll have gone too far."

Two downstate Republicans predict that there will be an approach more deliberative than the fast-track method used to dispose of the Scaffolding Act.

"I don't think anybody's happy with workers comp now," says Rep. David Leitch, a Peoria Republican. "There are delays and it doesn't seem to be helping the people it's supposed to. I think there'll be an agreed-bill process with everybody trying to reach some consensus before proposals are considered for votes."

The agreed-bill process is a series of meetings between representatives of business, labor, the governor and the General Assembly, held privately to encourage candor and compromise.

Sen. Carl Hawkinson, chairman of the Senate Judiciary Committee — from which tort reform emerged in early March — acknowledged that an agreed-bill process might be more efficient for any substantive look at workers comp.

"My instinct is that we'll try to reduce costs but not benefits," the Galesburg Republican says. "I haven't seen drafts yet, and I'd like to be a part of it. But there's still some time before we adjourn."

Time could let lawmakers appreciate what's good in the system and separate problem-solving from posturing. For example, a report by business consultants Towers Perrin showed that almost two-thirds of employers surveyed feel that workers comp costs aren't significant in deciding where to do business.

"This idea of connecting workers comp with Illinois being more competitive economically isn't valid," Salvi adds. "Illinois is one of the best states in the country for business. It is the best state in the country for insurance companies. Illinois does better at attracting business than Indiana, where benefits are lower."

Reform is relative and difficult. Sweeping change took place in 1951 and 1975, the latter after recommendations by a federal commission appointed by President Richard Nixon. Less happened after 1989 recommendations by consultant John H. Lewis, who said, "It's rare for any state legislature to do anything substantial." Even less resulted after separate studies through the years by the Trial Lawyers, the state Chamber of Commerce, the Campaign for Responsive Government or the Civic Committee of Chicago's Commercial Club.

"Genuine reform isn't simple," says Morrison, the Chicago researcher. "Reform isn't cutting benefits to workers who've suffered workplace injuries. It's cutting down the injuries, preventing deaths and disabilities, and helping injured workers get back to work. Illinois should study alternatives to private insurance, from a state fund to 24-hour health care; investigate fraud in all of its forms; and, most of all, ensure that workers comp pays for all treatment medically necessary to provide for the worker's physical, mental and vocational rehabilitation from work-related injuries.

"Employers have it in their power to reduce the costs of workers comp," he adds. "Numerous studies show that employers who take affirmative steps to reduce the frequency and severity of injuries can do more to cut the costs of workers comp than legislative reform."

Lesaganich, the Peoria lawyer, concedes that he's scared.

"I'm just afraid we're losing sight of Illinois having a remedial system to compensate an injured worker," he says. "People here have to decide whether we want a humane, realistic system or do we want a situation like Indiana's, where a victim of a workplace injury — a legitimate injury — can be destroyed.

"I pray to God no radical legislation goes through that does something at the expense of injured workers," he says. "These people have families."

His firm's client, Gasparovich, and her family stay together at their north Peoria home not far from the same river that passes the ADM plant. They try to prepare themselves for a long fight.

"I'm a Christian, I try to be, and I can't understand treating people like this," she says, sipping hot coffee and petting the head of a panting dog. "But it's like my neck and my headaches: You've got to learn to deal with the pain." *

Bill Knight is a journalist who teaches at Western Illinois University, Macomb. He's written on labor and business issues for The Labor Paper in Peoria and he's a weekly commentator on Illinois Public Radio. His latest book is RFD Notebook.

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