Worker's Compensation Advisory Council

Council on Worker’s Compensation
Meeting Minutes
Madison, Wisconsin
February 21, 2005

Members present:  Mr. Beiriger, Mr. Brand, Mr. Buchen, Ms. Connor, Mr. Furley, Mr. Gordon, Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Sen. Reynolds, Mr. Shaver, Ms. Vetter, and Mr. Welnak

Excused:  Ms. Bean
Absent:  Mr. Olson

Staff present: Mr. Conway, Mr. O’Malley, Mr. Shorey, Mr. Krueger, and Ms. Knutson

  1. Call to Order/Introductions:  Ms. Huntley-Cooper convened the Worker’s Compensation Advisory Council (WCAC) meeting in accordance with Wisconsin’s open meetings law. 
  2. Minutes:    Mr. Vetter moved adoption of the minutes of the December 8, 2004 meeting; Mr. Buchen seconded the motion.  The motion was unanimously approved. 
  3. Public Comments:  None.
  4. Subcommittee Reports

    Medical Cost Committee –

    Mr. O’Malley reported that at the meeting held in the morning, Dr. Mark Seter discussed the American College of Occupational and Environmental Medicine (ACOEM) guidelines/protocols and Mr. Greg Krohm discussed the Minnesota treatment protocols.  The committee’s next meeting is March 11, 2005.  The committee will look at the Minnesota parameters in conjunction with the department’s necessity of treatment dispute resolution process.  Provider groups must be involved in developing and modifying the Minnesota protocols and health care providers would need to be trained in the new process.  Mr. O’Malley clarified that any changes to the statute or administrative rules that are to be included in the agreed bill process should be completed by May 1, 2005.  Mr. Newby commented that unless there is a consensus from the committee, the issue becomes a part of the agreed bill bargaining process.  The committee may continue to meeting into the fall, past the agreed bill introduction in the legislature.

    Permanent Disability Rates

    – Mr. Conway reported that rather than the committee recommending a specific proposal to the WCAC, the committee was looking at a range of options including information on frequency of permanent total disability (PTD) claims, the amount of benefits paid, how PTD benefits could be indexed, how the additional benefits would be funded, an age limitation or a limitation on the number of payments, adjustment to death benefits and redefining permanent total disability.  Costs will be assigned to the different methodologies analyzed by the committee and the information will be presented to the WCAC.

  5. DWD Secretary's Comments:   Secretary Roberta Gassman thanked the WCAC members for their service and acknowledged the importance of the WCAC in maintaining continuity and balance in the worker’s compensation system.  She introduced the DWD budget director, Mr. Tom Smith, and Rita Black-Radloff, the DWD policy advisor.  Sec. Gassman explained the difficulty in addressing budget issues in difficult economic times.  Governor Doyle is committed to balancing the budget without raising taxes.  Each state agency was required, by statute, to submit a biennial budget request to the Governor by September 15, 2004.  The agencies were requested to put together preliminary budgets for Governor Doyle with a recommendation on position reductions by November 15, 2004.  This included a reduction of 10% in overall spending and a 10% reduction in positions in all programs including worker’s compensation.  Following this guideline, the department’s proposal was for 13 position reductions in the Worker’s Compensation Division, primarily to generate sufficient savings to meet the 10% budget reduction.

    In response to the plan submitted for the 2005-2007 biennium by the Department, Governor Doyle decided to reduce both the budget reduction and attending position reductions from 13 to 5 FTE.  To accomplish the required dollar savings, these positions will be eliminated soon after budget enactment, estimate to be at the end of the 1st quarter of fiscal year 2005-06.  Governor Doyle is committed to protecting customer service.  No ALJ or claims processor positions will be affected by the position reductions; the reductions will consist of four clerical and one supervisory position.

    Sec. Gassman explained that starting approximately 18 months ago, DWD convened a Select Committee on Health Care Workforce Development to address workforce shortages, including retention and recruitment in health care.  Back injuries were identified as a factor for retention of health care workers.  In Australia, back injuries were identified as a major factor in high absenteeism, worker’s compensation claim costs and the loss of workers in the health care system.  In response, in 1988 Australia initiated a “lift-free environment”.    The result was a 48% decrease in missed time from work and a reduction of 75% in worker’s compensation claims.  To address this issue raised through the Select Committee,  Governor Doyle included in the budget the creation of a $500,000 fund for each of the two years in the biennium.  On a matched basis, funds would be available for health care sites to train their workers in the use of  “no-lift” equipment.  The two-year pilot program would be evaluated for effectiveness and would include a staff position to manage and evaluate the program.  Sec. Gassman said she looked forward to working with the WCAC in the future and strengthening ongoing communication.

    Mr. Newby questioned the source of the $500,000 funding for the pilot project.  Mr. Tom Smith explained that the funding would come from the WCD’s assessment.  Out of the $11 million assessment, the pilot project funding would comprise 5% of the total assessment.  Mr. Buchen commented there is a problem with subsidizing safety improvements for a particular industry.  If the healthcare industry invested in the safety improvements themselves, they would eventually save money.  Mr. Buchen explained that worker’s compensation is not a fund, assessments from the insurance industry and self-insured employers pay for the program.  If savings accrue to the insurer through reductions in claims, that savings is passed to the employer with reduced worker’s compensation insurance rates.  It is hard to tell self-insured employers that they must pay for safety equipment for other employers.  All employers have safety issues that must be addressed.  Ms. Connor questioned who would monitor the pilot project.  Ms. Gassman explained there would be a research component to the program with documentation of results.

    Mr. Buchen questioned if there was carryover in WCD budget funds from the previous biennium due to reductions.  Mr. Smith replied that any carryover amounts are factored into the assessment calculation for the succeeding year.   Mr. Buchen further inquired as to whether any excess amounts were lapsed.  Mr. Smith replied there were legislatively imposed information technology (IT) reductions in the last biennial budget.  Governor Doyle vetoed the portion of the bill that mandated the reductions be made specifically to IT expenditures.  The reduction affected all nonfederal programs.  In order to accommodate the Legislature’s reduction, difficult choices had to be made regarding where the funds might be taken from.  The WCD budget did have significant cash balances at the time, and a decision was made to lapse some of the excess funding, rather than reduce the actual operating budget of the Worker’s Compensation program.  The decision reflects the fact that the lapsing of a cash balance would have a much less detrimental impact on the program than an immediate reduction in current operating budgets and the operations they fund.

    Sec. Gassman commented that the WCD is looking at ways to increase efficiencies in the hearing process and utilization of ALJ positions.  She has authorized two vacant positions to be filled.  The quality improvement team is being lead by Mr. Hal Bergan who has 20 years’ experience in the private sector with process improvement.

    Mr. Newby requested information on the impact to the WCD of funding the pilot project and reducing positions.  There is concern that the WCD cannot carry out its functions as efficiently and promptly with less positions.  Sec. Gassman replied that the WCD can deliver services within the required reductions.  No positions that involve customer service will be reduced (the 5.0 FTE positions eliminated include 3.0 Word Processing Operators, 1.0 Program Assistant, and 1.0 supervisory position – all administrative support positions versus direct service).  Mr. Buchen emphasized that worker’s compensation is a well-established program in Wisconsin, with a need for appropriate staffing levels to ensure a team operation. The parties in interest are paying for this program.  Sec. Gassman concluded by saying that the state is in tough fiscal times with difficult decisions that need to be made throughout state government.  These decisions do not reflect an under-evaluation of the work performed in the WCD.
  6. DWD WC Division Law and Administrative Rule Proposals:  Mr. O’Malley explained the department proposals (all references are to the proposal numbers).

    1.  Employee leasing is excluded from the definition of a temporary help agency.

    2.  A new subsection is created to define a professional employer organization   (PEO) and employee leasing organizations.  This is the same definition that is used in the Unemployment Insurance (UI) statutes.  The proposed definitions reflect the nature of these business entities in a more accurate manner.  Mr. Buchen indicated there is a recent Labor and Industry Review Commission  (LIRC) decision interpreting the UI statutes, specifically concerning the rate of pay set in consultation with a client.  The UI Division is considering proposing a statutory amendment to address this issue.

    3.  The reference to employee leasing arrangements is deleted from the current statute. 

     4.  A new section is created mirroring the language in §102.04(2m), making the  terms of that statute regarding liability under §102.03 applicable to PEOs and employee leasing organization (as the liable employer for worker’s compensation injuries).  The department is proposing that corporate officers be included as employees if they are included in the leasing agreement.  This is permitted under current UI law.

    5.  This new section applies to insurance coverage for PEO and employee leasing organizations.  Now the WCD is not notified when a leasing contract is terminated and employees are returned which can result in lapses in coverage.  This proposal mirrors current law for giving notice of alternative employer           endorsements.  The notice would be provided to the Wisconsin Compensation Rating Bureau (WCRB) like any other notice of termination of coverage.  The carrier provides notice to the WCRB and the notice is recorded on Spectrum (computer database) to avoid potential lapses in coverage.  The cancellation of the endorsement is not effective until 30 days after the notice is received by the WCRB.

     6.  A new subsection is created which provides that an employer remains subject to the Worker’s Compensation Act (the Act) after entering into an agreement with a PEO or employee leasing organization that results in the discontinuance of  employees for the employer.  This will protect employees and avoid lapses in coverage.

    7.  This new section provides that the employees of a PEO or employee leasing company may not maintain an action in tort against the employer with whom they    are placed in accordance with the exclusive remedy doctrine.  Mr. Krueger explained there is no need for insurance coverage if there are no employees, but if the agreement is cancelled, the employer needs immediate coverage without any threshold before becoming subject to the Act.

     8.  This proposal is intended to remedy situations where the treating doctor charges an unreasonable amount for a final report.  Only the issue of demanding prepayment is addressed.  If the report is provided, the carrier can challenge the fee charged through the reasonableness of fee dispute resolution process under §102.16(2).  The WCD public service specialists suggested this proposal.  A final   report is due when an employee has been off work for more than three weeks.

     9.  This proposal requires disclosure of evidence 15 days before hearing.  Currently, medical evidence is served and filed 15 days prior to hearing, but other documents and information the parties intend to use at hearing including listing witnesses are not served and filed.  This proposal will encourage parties to proceed to hearing and avoid surprise.

    10.  The issue of timely payment of permanent partial disability benefits (PPD) has been addressed previously by the WCAC.  When the employee is still in the healing period, returns to work and is earning wages, PPD benefits should begin when the extent of permanent disability can be determined based on a minimum PPD rating.  Payments would begin within 30 days of the earlier of the end of the hearing period or the employee’s return to work when there is no dispute on causation.  If the employee is receiving temporary partial disability benefits (TPD), PPD benefits would not be paid.  Temporary disability and PPD are not pay concurrently.

    11.  Advances on PPD are a problem and require a large amount of staff time.  The proposal would limit an employee to 3 advancements per calendar year.  This will discourage monthly advancement .

    12.  This proposal relates to the open records law and provides that the department is authorized to release confidential information to government agencies, educational institutions and non-profit research organizations when the department is satisfied that confidential information will not be re-released.  The WCD is not subject to the federal HIPAA law.  The WCD would have a written agreement with the organization that provides how confidential information will be protected.  Currently, the WCD interfaces data with the Wisconsin Department of Health and Family Services (DHFS) regarding Medicaid payments.  The employee signs a general release under DHFS regulations.

    13.  This proposal amends §102.31(3), providing a forfeiture (penalty) for failure  by the insurance carrier or self-insured employer to answer department correspondence. 

     14.  This proposal is related to proposal number 13.  The current forfeiture  amounts have been in the law since 1931.

    15.  This proposal provides for accrual of interest on forfeitures not paid within 90 days after billing at the rate of 1% per month.  The forfeiture payments are deposited into the school fund.  The department’s billing cycle would remain the same.

    16.  LIRC has requested that §102.33(2)(b) be amended to add that the Commission’s records are also confidential and not open to public inspection.  Currently, files on appeal to LIRC can be accessed by others that are not parties to the case.

    17.  This proposal adds interest at a rate of 1% per month on any billed assessments not paid within 90 days after billing.  There is a problem with some carriers not paying the assessments.  For a few of these carriers, they have been declared insolvent and a proof of claim has been filed with the liquidator.  There are 14 unpaid assessments for a total of $158,500.

     18.  There has not been an increase in the amount of additional benefits added to the amount of accrued benefits (for a total lump sum payment) when a compromise is ordered paid since 1982.  Currently the injured worker in a compromise receives the accrued benefits plus $5,000 in a lump sum with the balance of the compromise proceeds placed in a restricted account.  The department that the additional amount be increased to $10,000.  This should reduce the number of for advancement.

     19.  This proposal is a technical amendment to DWD 80.03(1)(g) which provides a correct reference to the department of workforce development.

     20.  DWD 80.15 is outdated due to the amendment to §102.18(1)(e) in the last legislative session.  The department therefore proposes repealing this rule.

    21.  The proposed amendment to DWD 80.39(1) updates the rule to coincide with the current statutory reference.       

    22.  The proposed amendment to DWD 80.49 corrects the reference from the Department of Health and Family Services to the Division of Vocational Rehabilitation.

    23.  The proposed amendment to DWD 80.51(4) reflects the current law setting a 24-hour minimum workweek for part-time employees.

    24.  This proposed amendment to DWD 80.72 correctly defines the formula amount as the mean fee plus 1.4 standard deviations from the mean to conform to the amendment to §102.16(2)(d).

    The Division has formed a work group consisting of ALJs, staff, private attorneys and Mr. Hal Bergan to review the hearing process.  The group has identified problem areas, but has not yet proposed specific solutions.  If there is a consensus in the group that statutory changes are necessary to effect solutions, those will be added to the department proposals at a later date. 

    Mr. O’Malley provided the WCAC members with a spreadsheet of proposals from the public.

  7. Correspondence:  Recent correspondence received by the Division will be added to the spreadsheet on public proposals maintained by the Division and provided to the WCAC members.
  8. Adjournment:  Discussion on all agenda items concluded and the meeting was adjourned.  The next meeting has been scheduled for March 22, 2005 beginning at noon.