Everyone knew that Illinois workers' compensation was a run away train, but until now it wasn't really quantified.
A report released by Illinois' state auditor's office on Wednesday blasted the Department of Central Management Services (CMS), the Workers' Compensation Commission and the Attorney General's Office for lax practices, some bordering on gross negligence or blatantly in violation of state law. These agencies are involved in management of workers' compensation claims by state employees.
Not only did these three agencies engage in program mismanagement, the costs can't even be fully accounted for yet because the state is still trying to deal with its abysmal financial situation.
According to the audit, state employees filed 26,101 claims from 2007 to 2010 and the state made payments in 17,500 claims. The state paid $295 million in workers' compensation benefits during that period, but because of budget issues last year the state started delaying payment to vendors, such as medical providers, by 180 days and as of May, 2011 there may be an additional $61.5 million in liabilities from fiscal year 2010 that have not yet been paid.
Some of the more egregious findings:
The eight adjusters for CMS may each be responsible for as many as 1,577 open claims, but the agency can't be sure because it cannot identify what portion of the claims are actually active and which are merely being held open until the statute of limitations runs out.
Not only did the Workers' Compensation Commission not conduct annual performance reviews as required by law, but arbitrator's awards for the same body parts varied by as much as 95%.
The Attorney General's Office does not have specific policies or procedures to identify or control fraud and the state's Insurance Fraud Unit has not implemented a data analytics system to detect fraud, despite a statutory mandate to do so.
In addition, the audit found:
- The state has a Commission Review Board that is responsible for conducting investigations of complaints against arbitrators and workers' compensation commissioners, but the board did not hold any meetings for two and a half years, from February 2008 until September 2011, even though the commission received several allegations of fraud, unethical practices and favoritism during that time. I'm assuming commissioners were paid during this period.
- Claims adjusters for CMS negotiated directly with claimants' attorneys to settle cases without conferring with the defense attorneys assigned by the Attorney General's Office.
- CMS adjusted claims and made decisions on compensability without submitting the proper forms, or submitting forms that were sometimes incomplete. Adjusters' decisions about whether a claim was compensable were not reviewed by supervisors.
- In three cases, the auditor found that state employees filed additional claims while they were on leave for a prior claim. In one instance, an employee who had been on leave for nearly two years for a workplace injury filed an additional claim for carpal tunnel syndrome. The state settled the first claim for a neck injury for $149,999.99 and the carpal tunnel syndrome for $51,320.76.
- A random sample of claims filed showed that many claims were settled or awards paid even though required forms were not in the files. Out of 109 claims files examined, the employee's notice of injury was missing in 23, the initial medical report was missing in 56 and the supervisor's report of injury was missing in 21.
- The workload among the state's 31 arbitrators was not spread evenly, with some arbitrators hearing far more cases than others. Some arbitrators held more than 200 trials a year, while others held fewer than 50.
One question not addressed by the audit is whether the Illinois legislature has the fortitude to fix things. It hasn't shown much interest in the past with a weak "reform" passed last year. Perhaps the embarassment of this audit will change attitudes in Springfield. Perhaps not.
The audit is here.