NEW ATTORNEY ADDITIONS TO THE GANAN & SHAPIRO, P.C. TEAM

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1 Ganan & Shapiro, P.C. NEWSLETTER Newsletter July, 2012 Edited by Courtney M. Quilter Michelle L. LaFayette NEW ATTORNEY ADDITIONS TO THE GANAN & SHAPIRO, P.C. TEAM Since the last edition of our newsletter, several attorneys have joined Ganan & Shapiro, P.C. We are very pleased to welcome Ian M. White, Jessica M. Bell and Antonio Jeffery. Jessica and Ian joined our Peoria office, and Antonio joined our Chicago office. Ian attended the University of Colorado for his undergraduate work and obtained his J.D. from the University of Illinois at Urbana- Champaign in He previously worked as an associate for Strong Law Office in Peoria, Illinois and joined Ganan & Shapiro, P.C. in April. Jessica attended Duquesne University in Pittsburgh for her undergraduate studies and obtained her J.D. from Saint Louis University in St. Louis, Missouri in Before joining Ganan & Shapiro, P.C., Jessica worked as an Assistant State s Attorney for Tazewell County, Illinois. She joined us in May. We also welcomed Antonio Jeffery to our Chicago office. Antonio recently moved to the Chicagoland area from Tulsa, Oklahoma. Antonio attended Howard University in Washington, D.C. for his undergraduate work, obtained an M.B.A. from the University of Phoenix in Tulsa, an M.P.A. from the University of Oklahoma in Tulsa and his J.D. from the University of Tulsa, College of Law in Before moving to Illinois and joining Ganan & Shapiro, P.C., Antonio practiced workers compensation defense at Perrine, McGivern, Redemann, Berry & Taylor, PLLC in Tulsa, Oklahoma. Antonio is an experienced attorney and is anxious to put his knowledge and talents to work for our clients in Illinois. Antonio is awaiting admission to the Illinois Bar, which he will receive in the next few months. Will County Forest Preserve v. IWCC Update The Appellate Court denied rehearing and certification, making its decision final. Under the Act, shoulder cases are now considered on a man as a whole basis for determining permanent disability. Legislation is pending in Springfield to change the law and provide shoulder cases are considered on a loss of use of the arm basis. We will keep you advised if legislative efforts are successful.

2 Page 2 of 6 19(k) Penalties: Authorization Delay Not Included By: Ian White On March 16, 2012, the Appellate Court upheld a Circuit Court decision which reversed a decision of the Illinois Workers Compensation awarding $40,750 in Section 19(k) penalties for unreasonable delay in authorizing surgery to replace a spinal cord stimulator battery. Hollywood Casino-Aurora v. The Illinois Workers Compensation Commission, 2012 IL App (2d) WC. In Hollywood Casino, an arbitrator s decision adopted by the Commission awarded TTD, PPD, and ordered the Employer to pay for the reasonable and necessary medical expenses incurred by the claimant, including the cost of a spinal cord stimulator. Neither party appealed the Commission s decision, and it became final. Approximately two years later, claimant s doctor requested authorization for a battery replacement in the spinal cord stimulator and the claims adjuster requested a report explaining the medical necessity for the procedure. A report was provided and the claims adjuster admitted she was in possession of everything she needed to agree to payment authorization on June 18, However, authorization was not granted until August 15, 2007 only after the claimant had filed a petition with the Commission requesting penalties and attorney fees for unreasonable delay in granting authorization. The Commission found the delay was unreasonable and vexatious and awarded Section 19(k) penalties in the amount of $40,750. The Commission denied attorney fees and did not address Section 19(l) penalties. Section 19(k) of the Act provides, In cases where there has been any unreasonable or vexatious delay of payment or intentional underpayment of compensation, then the Commission may award compensation additional to that otherwise payable under this Act equal to 50% of the amount payable at the time of such award. 820 ILCS 305/19(k). Hollywood Casino appealed the Commission decision to the circuit court which reversed the Commission decision. In reversing the Commission, the circuit court found there was no legal basis for awarding penalties when PPD has been awarded and there is a delay in authorizing treatment. The claimant appealed the circuit court decision to the Appellate Court. The Appellate Court affirmed the decision of the circuit court and in doing so reasoned that Section 19(k) only addresses delay in payment and underpayment of compensation and says nothing about an award of additional compensation or penalties for an employer s delay in authorizing medical treatment. The Court noted the language of Section 19(k) of the Act is clear and unambiguous and must be interpreted according to the plain and ordinary meaning of its terms without resorting to aids of statutory construction. The Court noted payment is defined as the act of paying or giving compensation and the definition does not include the giving of authorization for a service. Hollywood Casino allows employers and insurers of workers compensation injuries the opportunity to take the time needed to seek counsel or expert medical opinions to carefully address whether authorization should be provided. Adjusters do not need to feel pressured to

3 Page 3 of 6 Page 3 of 6 hastily authorize requested medical care and can instead take what time is needed to analyze the claim, accident, and causal relationship between the requested medical care and the work incident and injury. It should be carefully noted the facts of Hollywood Casino specifically address an unreasonable delay of authorization and do not involve an unreasonable denial of authorization. Hollywood Casino also does not take away the possibility for penalties for nonpayment of TTD. Exactly how long the holding in Hollywood Casino will have effect remains a question. During the last legislative session in Springfield, bills were introduced before the General Assembly which would overturn the holding of Hollywood Casino and provide, by statute, for the imposition of penalties when an employer or carrier unreasonably or vexatiously delays or withholds authorization for medical care. It could be an issue that arises once again during the fall veto session. We will keep you apprised of whether the bill becomes law. An Update on Brown v. Cassens By: Mike Spinazzola Five former employees of Cassens Transport Company filed for workers compensation benefits under the Michigan Workers Disability Compensation Act. Benefits in all five cases were denied. In four of the five cases, Crawford & Co. engaged Dr. Margules to perform an independent medical evaluation. In those four cases, Dr. Margules opined the injuries were not work related. The employees later settled or adjudicated their workers compensation claims. Contemporaneous with their pending workers compensation claims, the employees filed a federal RICO complaint against Cassens, Crawford and Dr. Margules alleging racketeering which caused injury to their property. The property being their loss of workers compensation benefits, attorneys fees, expenses for medical visits and travel. The crux of the RICO claim was the employer, along with the third-party administrator and IME doctor conspired to deprive these workers of their workers compensation awards by wire or mail fraud. This conspiracy is the alleged violation of the RICO statute. The case was previously dismissed by the District Court, affirmed by the Appellate Court and then vacated by the Supreme Court, which held RICO plaintiffs do not need to demonstrate reliance on defendants fraudulent misrepresentations. On remand, the District Court again dismissed the case under Rule 12(b)(6) of the Federal Rules of Civil Procedure; failure to state a claim for which relief can be granted. This dismissal brought about the current decision from the 6th Circuit Court of Appeals. In this most recent decision of the Court of Appeals, the Court held 1) Michigan law cannot prevent a party from pursuing a federal action for violation of federal law (here, the RICO violation); and 2) a right to benefits created by statute (here, workers compensation) is a property interest, as is the claim made by someone for those benefits.

4 Page 4 of 6 Federal Law Trumps State Law The Supremacy Clause of the Constitution provides federal law is supreme to state law when there are conflicts between the two. Here, the Michigan Workers Compensation statute (as do most other state workers compensation laws) has an exclusive remedy provision that allows employees to only seek benefits through the workers compensation system and not State or Federal Court. The 6th Circuit Court of Appeals held Michigan cannot preclude employees from pursuing a federal case as a remedy. Therefore, the Court of Appeals ruled the employees can maintain a RICO claim. Property Defined A RICO claim requires the plaintiff to show injury to business or property. In dismissing the case previously, the lower court held there was no injury to property because all of the monetary value of plaintiff s claims stemmed from their alleged injuries. In reversing the District Court, the 6th Circuit Court of Appeals explained when benefits are created by law, the right to benefits, as well as the right to claim benefits creates an interest in property for the purposes of the RICO statute. The Court compared a work-injury to a personal-injury action not occurring at work. In a personal injury case, the plaintiff seeks losses resulting from the injury. Losses can include loss of income, medical bills, etc. In a workers compensation case, the employee is conferred benefits by law; in this case, the Michigan Workers Compensation Act. The Michigan Act says employees injured in the course of their employment shall be paid compensation within 14 days of notifying their employer. The use of the word shall mean benefits must be paid and the only limit is that the employer must be given notice. There was a lengthy discussion regarding a situation in which an employee claims benefits but is denied because the injury is not work-related. The Court held that an Employee s claim to benefits is a property interest because federal law recognizes a property interest in benefits that have not been awarded if some policy, law, or mutually explicit understanding confers benefits and limits the ability to rescind benefits. In the Michigan Act benefits shall be paid for injuries in the course of employment and the employer can avoid automatic penalties for nonpayment of benefits if there is an ongoing dispute. That means, the employer avoids penalties when the case is disputed; however, the employer does not terminate the right to benefits that is created by the statute when the employer disputes the employee is entitled to the benefit. The Court did cite Pennsylvania law, which requires employees to show their medical treatment is reasonable and necessary prior to being entitled to benefits under that system. Michigan law requires no such burden in determining an employee s entitlement to benefits As the Court of Appeals found there is a property interest, the plaintiffs can defeat the motion to dismiss because it complies with the necessary requirements of the RICO statute. Therefore, the case was remanded back to the trial court for further proceedings. The defendants are pursuing further appeal of this matter through the Federal Courts.

5 Page 5 of 6 Impact on Illinois At this point, the 6th Circuit Court of Appeals decision is still pending further appeal so the immediate impact in Illinois is unclear. If the decision is affirmed, we are likely to see federal claims arise in the Illinois Federal Courts challenging the exclusive remedy provision of the Illinois Workers Compensation Act. It would also be possible to see petitioners bring civil RICO claims (as well as other federal claims) in the federal courts. At this point, we are waiting anxiously to have the final outcome of Cassens determined. Jacobo and the Pursuit of Penalties By: Julie Schum An award of penalties is a goal for many Petitioners attorneys. Several offices we all can name file a Petition for Penalties with every case on the off chance penalties and attorney s fees may be awarded. Generally speaking, many petitions are frivolous and without grounds. Penalties can only be awarded when the Respondent s conduct is found to be unreasonable and vexatious. In fact, most often, the Respondent s conduct in question is simply a matter of doing nothing at all. The recent case of Jacobo v. IWCC and New Breed Leasing of Illinois, 2011 IL.App.3d WC, 959 N.E.2d 772 (3 rd Dist. 2011), is a good example of this. Petitioner sustained injuries when a forklift backed into her. The arbitrator found a compensable claim and subsequently awarded TTD and PPD benefits as well as medical benefits and penalties. The arbitrator awarded penalties, finding the denial based upon the respondent s IME was unreasonable. The Commission affirmed the underlying award, but vacated the award for penalties, finding reliance upon the IME was reasonable. To this point, there was no unreasonable or vexatious withholding of benefits by Respondent. Subsequent to the Commission award, petitioner appealed the Commission decision only with regard to the penalties. The Respondent did not appeal the award. Despite not appealing the award, the Respondent did not pay any part of the award. Over a year passed after the Commission award and the matter remained on appeal on the issue of penalties at the circuit court. During that time, Petitioner s attorney several times communicated to Respondent that the appeal was only concerning the issue of penalties and not the award of benefits. The parties came to an agreement regarding the amount of the award but despite numerous communications from Petitioner s attorney requesting payment, still no part of the award was paid. Petitioner s attorney filed a second Petition for Penalties before the Commission based upon the Respondent s failure to pay the portion of the award which had not been appealed. Ultimately, in two separate decisions, the Appellate Court upheld the Commission s decision denying the initial penalty petition and found that the reliance upon the IME was reasonable. With regards to the second penalty petition for non-payment, the Appellate Court found that the award of penalties for non-payment of the initial award was justified under the Act.

6 Ganan & Shapiro, P.C. Chicago Office 210 W. Illinois Chicago, IL PHONE: FAX: Peoria Office 411 Hamilton Boulevard, Suite 1006 Peoria, IL PHONE: FAX: We re on the Web! See us at: Page 6 of 6 Ganan & Shapiro, P.C. pledges to maintain a level of excellence for the clients that have remained loyal to the firm for so many years, and to the new friends that join our family in the future. We make a In rendering its decision and upholding the award for penalties for non-payment, the Appellate Court focused upon the fact that the employer had not appealed any aspect of the award and the Petitioner s attorney had made it abundantly clear that the only issue they were appealing was the matter of penalties. While there is no statutory provision requiring payment of an undisputed portion of an award, there was no basis at that point either upon which to justify non-payment of the award. Additionally, the Appellate Court noted that prior case law supported the argument that penalties are appropriate when an award has been made and a portion is uncontested upon appeal. In Jacobo, the Appellate Court noted it was clear from correspondence that the Respondent had notice the only portion of the award the Petitioner was appealing was the issue of penalties. It was this certain knowledge and the lack of any other justification for the non-payment which ultimately seemed to turn the Court s decision to affirm the award of penalties for non-payment of the initial award. It was the failure to do anything that doomed the Respondent in Jacobo, both in the failure to pay and the failure to respond when Petitioner s attorney made attempts to come to an agreement. The Appellate Court made it clear in its decision that they felt Respondent passed up numerous chances to remedy the problem. This was not a one-time failure to take action but a repeated failure to respond to requests for action and to respond to Court decisions. It also serves as a warning that the Appellate Court is taking the issue of penalties more seriously. Given the result in Jacobo, we would expect to see this becoming more of an issue in the future. In order to avoid this particular penalties trap, once a decision is issued, if the Respondent declines to appeal any portion of the award, we recommend swiftly working to an agreement as to the amount of the award which is uncontested, and then paying that portion, even if some of the award remains on appeal. That way, penalties such as those in Jacobo are avoided and there is the added benefit of avoiding any interest payments which would accrue on an unpaid award. commitment to vigorously defend claims, to provide personalized attention, and to meet or exceed the expectations of each of our clients. We will continue to actively represent clients throughout the State of Illinois. We will also actively participate in statewide and national organizations which further interests of our clients.