Press Release - Wednesday, July 20, 2005
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Gov. Blagojevich signs landmark Workers' Compensation reform
LINCOLNSHIRE - Celebrating a major victory for both business and labor, Governor Rod R. Blagojevich signed legislation today that dramatically changes the workers' compensation system to reduce costs for businesses, increase benefits for workers, and fight fraud. After the Governor made workers' compensation reform a top priority in his 2005 State of the State address, he convened negotiations over several months with business and labor leaders and members of the General Assembly that resulted in the first major overhaul of Illinois' workers compensation system in nearly 20 years.
"We want to attract more jobs to Illinois, and helping businesses save money on the cost of workers compensation insurance is a good way to do it. Businesses currently spend too much money on workers comp and workers don't receive the benefits they deserve. This new law addresses both problems," Governor Blagojevich said.
According to the National Insurance Crime Bureau, workers' compensation fraud costs employers $6.5 billion a year nationwide, and Illinois is the 19th most expensive state in the nation when it comes to workers' compensation premiums. Illinois companies pay 40 percent more for workers' compensation than neighboring states Michigan, Wisconsin and Indiana, with many low-wage workers still needing stronger workers' compensation benefits and support.
The Governor worked closely with Sen. Terry Link (D-Lake Bluff) and Rep. Jay Hoffman (D-Colllinsville), sponsors of House Bill 2137, to curb soaring costs of workers' compensation and decrease financial risks for employers, increase monetary benefits for employees who are injured or killed on the job, and heighten enforcement of fraudulent activity.
"Businesses are hit with high costs and working people are paying the consequences by not getting the benefits they deserve. We may now be able to reduce business costs, provide more generous benefits and fight fraud. I am proud to be standing with the Governor today as he signs this critical legislation," said Sen. Link.
"Governor Blagojevich made it a priority to bring labor, businesses and the General Assembly to the table to improve our workers' compensation system, and that's what we did with this law," Rep. Hoffman said.
This aggressive and comprehensive workers' comp reform marks an unprecedented victory for businesses, workers, medical care providers and insurance professionals. The new law:
- Implements a medical fee schedule. Creates cost containment in workers' compensation for Illinois business owners by joining 44 other states in implementing a medical fee schedule that will be indexed to the Consumer Price Index (CPI). This is expected to save Illinois businesses millions of dollars annually by limiting the amount that may be charged for medical procedures. This will reduce medical costs, a primary expense in workers' compensation cases.
- Substantially increases worker benefits. Increases the minimum benefit for a worker killed on the job from $400,000 for 20 years of payments to the greater amount of $500,000 or 25 years of payments. It also increases burial benefits for fatally injured workers to $8,000 from $4,200 and provides more benefits for low-wage workers.
- Establishes a fraud unit. A workers' compensation fraud statute and investigation unit within the Illinois Department of Financial and Professional Regulation's (IDFPR) Division of Insurance will investigate charges of workers' compensation fraud, including uninsured employers. It strengthens penalties and fines, creates a work-stop order for employers who fail to obtain workers' compensation insurance and allows for reporting of fraudulent claims by employees. This unit will help to find fraud and deter future fraud from within the system. It will save businesses money by eliminating the need to pay for unjustified claims.
- Creates a third panel to the Workers' Compensation Commission. Commission will expedite resolution of disputed claims that will allow injured workers to receive quicker treatment and return to work sooner. This reduces costs for business by lowering medical cost due to quicker treatment, as well as decreasing litigation costs. It increases penalties for unreasonable delays of workers' compensation benefits from $10 per day to $30 per day and from $2,500 per claim to $10,000 per claim.
"An extraordinary amount of work and negotiation has gone into shaping this much-needed comprehensive reform of the Illinois Workers' Compensation Act. The changes will improve efficiency and benefits for workers, greatly assist business with cost containment and work to expose fraud by employers, the insurance industry and workers," said Margaret Blackshere, president of the Illinois AFL-CIO. "A huge debt of gratitude goes to Michael Carrigan, secretary-treasurer of the Illinois AFL-CIO for spearheading the negotiations for Labor and to Governor Blagojevich for having the foresight to address this critical issue."
"The changes to this state's Workers' Compensation system signed into law today are the most significant reforms we've seen in decades. Business and labor leaders should be commended for working together to provide improved benefits at a lower cost for employers," said Greg Baise, President & CEO of the Illinois Manufacturers' Association.
"Having been involved with the Illinois Workers' Compensation system for nearly 20 years, this is clearly the most comprehensive workers' compensation reform in a generation. It addresses multiple issues, including fraud investigation, cost containment for employers, improving the hearing process for both workers and employers, and increasing benefits for widows, widowers and orphans. This is a win-win for both employers and employees of the state," Illinois Workers' Compensation Commission Chairman Dennis Ruth said.
"For the first time in nearly 30 years, the Governor and members of the General Assembly used their leadership skills to bring business and labor together to reduce business costs and reform one of the most expensive systems in the country," said Dave Vite, Chairman and CEO of the Illinois Retail Merchants' Association.
"Governor Blagojevich deserves credit for making workers compensation a legislative priority in 2005. Illinois' workers compensation laws were long overdue for attention. The members of the Illinois Chamber are eager to continue to build upon the cooperation and progress that was accomplished this year," said Douglas Whitley, President and CEO, Illinois Chamber of Commerce.
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