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New Law Reforms Illinois Worker' Comp, Raises Payouts

August 19, 2005

The Illinois worker's compensation system has received its first substantive overhaul in 30 years under a bill Gov. Rod Blagojevich recently signed into law. The Illinois Chamber of Commerce estimates the reforms will cut the system's costs by about 6.5 percent, while boosting benefits by 5 percent.

"This bill will lead to lowering costs for businesses, more benefits for working people, cracking down on phony cases and making sure we can rein in the unlimited rise in medical costs that puts pressure on small businesses," Blagojevich said. The governor signed into law the long-in-the-works reform at Product Development Technologies Inc., a die cast mold manufacturer in Lincolnshire at a ceremony. State Sen. Terry Link (D-Lake Bluff) and Rep. Jay Hoffman (D-Collinsville) sponsored the bill, and the state Chamber of Commerce, the Illinois Manufacturers Association and the state AFL-CIO supported it.

Democratic state Sen. Terry Link said it took him two years to get business and labor interests on the same page to get the system's first major overhaul in three decades. "I think the governor's persistence at the end was the biggest factor," Link said. Praise also came from both AFL-CIO President Margaret Blackshere and Illinois Manufacturing Association President Greg Baise, who pointed out the state sees 300,000 workplace-related injuries a year and 70 percent end up in state arbitration.

Previously, workers injured on the job in Illinois have long received lower worker's compensation benefits than those in other states. At the same time, companies here have been paying more into the state system than companies elsewhere. Nobody was watching out for fraudulent claims from workers, employers, medical providers or insurers.

To illustrate the problem, companies in Illinois had been paying 40 percent more for worker's compensation coverage than companies in Michigan, Wisconsin and Indiana. At the same time, minimum benefit rates for low-wage workers hadn't been adjusted upward to take inflation into account since the 1970s.

The new law increases the maximum benefit for workers killed on the job, boosts burial benefits and raises benefits for those low-wage workers. The bill sets up a medical fee schedule for treating worker injuries, something that 42 other states and the District of Columbia already have done. Illinois' fee schedule will be tied to the Consumer Price Index to allow for future increases. But the fee schedule alone is not enough to control worker compensation medical costs. Critically, the bill also sets up an ongoing mechanism for reviewing and containing those costs. And because delay costs money and deprives people of justice, the bill also sets up a panel at the Illinois Workers' Compensation Commission to expedite disputed claims.

The National Insurance Crime Bureau estimates that worker's comp fraud costs U.S. employers $6.5 billion a year. Nobody has known how many claims in this state are fraudulently inflated, because nobody has had the responsibility to look for, and then remedy, that fraud. To combat fraud, the new law sets up a fraud unit in the Illinois Department of Financial and Professional Regulation dedicated to worker's comp. It also strengthens penalties and fines.

"We want to attract more jobs to Illinois," Blagojevich said when he signed the bill. Attracting more jobs means making sure Illinois employers gain a competitive edge.