Council on Worker's Compensation
January 16, 2003
Members present: Mr. Beiriger, Mr. Buchen, Ms. Connor, Mr. Conway, Mr. Glaser, Mr. Gordon, Mr. Newby, Mr. Olson, Ms. Vetter, Mr. Welnak
Staff present: Mr. O’Malley, Ms. Knutson, Mr. Krueger, Mr. Shorey
Others Present: Mr. Kent (candidate for labor representative)
- Call to Order. Mr. Conway convened the meeting in accordance with Wisconsin’s open meeting law.
- Introduction of Secretary Gassman. Mr. Conway introduced Roberta Gassman, newly appointed Secretary of the Department of Workforce Development. Sec. Gassman in turn introduced JoAnna Richard, Executive Assistant. Sec. Gassman indicated that Governor Doyle recognizes that the work of the department is important. The Wisconsin Worker’s Compensation Program has the reputation of being the leading program in the country. The state is going through difficult times with the deficit. The state is looking for opportunities to reduce expenses. The Advisory Council has a history of bringing its expertise to the table and advising the department and Legislature. Mr. Newby inquired concerning pending appointments to Labor and Industry Review Commission (LIRC) and Wisconsin Employment Relations Commission (WERC). Sec. Gassman responded that the Governor’s Transition Team has a personnel process that was involved in the appointments. At this point, the secretary’s efforts are concentrated on the budget. Mr. Glaser stated that staffing in worker’s compensation was important to processing claims. Further that the division’s costs are paid from administrative fees, not general purpose revenue (GPR) funds. Sec. Gassman said that hard decisions would need to be made but that she would be as sensitive to this issue as she could.
- Minutes. Ms. Vetter moved adoption of the minutes of the December 11, 2002 meeting; Mr. Beiriger seconded the motion. The motion was unanimously approved.
- Transition. Mr. Conway reported that the Secretary was interviewing for Division Administrator positions.
- Status of the UEF. Mr. Krueger stated that the critical indicators
showed the accumulated accounts receivable balance. The Uninsured Employer
Fund (UEF) began playing
claims in July 1996. Since that time, there have been 425 claims with an
average of 198 days between the injury date and claim being filed with the
UEF. Out of the $7.4 million reserved for active claims, $6 million is
covered by excess insurance. Prior to 2002, the Fund had a $250,000
retention. Major reserves came out of the Janesville van accident. Mr.
Glaser inquired concerning whether a third party action has been pursued and
whether any money may be recovered. Mr. Krueger responded that while there
was an active suit, there was not much hope of a recovery. Since the excess
policy retention was per incident, the Fund’s exposure was only $250,000.
The price of excess insurance has increased dramatically since 9/11.
Incurred But Not Reported (IBNR) claims are considered by the actuary to
arrive at a total amount of outstanding loss reserves for claims of $2.6
million. Under the statutes, if the Fund is encumbered 85%, the Division
must notify the Department Secretary to determine if the fund should cease
paying claims. The amount of penalties has increased due in part to an
automated invoice system, which expedited the process and eliminated the
backlog. The Division collected $1.8 million last year, an increase of
$400,000. There is also an automated levy system to track bank accounts and
garnish wages. $1.1 million was collected in levies alone. In addition, 53
cases were referred to the Department of Justice (DOJ) in 2002 for business closure. There is also
follow up to make sure businesses come into compliance. The Fund continues
to grow; it is a segregated fund and is invested. For the year 2002, the
number of claims increased, but the actual cost of claims decreased
considerably. The majority of claims come from the carpentry/construction
trade. Roofing and trucking also produced a fairly large number of claims.
The Division collects 45% of net assessments. No other state is anywhere
near that rate of collection. The Division’s collections goal is set at
50% of net assessments. Some debt is written off, but if there are warrants
out with liens on the debt, the Division just waits it out. Every month,
money is collected on old debt, usually when someone tries to sell property.
Bankruptcies and deaths may result in write-offs. There is an assessment of
personal liability in corporations under the law. The Division can also
attach tax refunds and lottery winnings. There is approximately a 10% return
on reimbursement for money paid on claims. In most of those cases, the
employer is out of business with no assets. The premium cost of the excess
policy is now $409,980 with a $1 million retention. Currently the Fund has
75 open claims that Gallagher Bassett is administering. The Division
cross-matches data with Unemployment Insurance, the Department of Revenue
and the Department of Financial Institutions on all new companies; and the
Division is a model for other states. Mr. Glaser commented that none of the
problems anticipated when the Fund started accepting claims have occurred;
excess insurance saved the Fund. Mr. Krueger commented that the amount of
the excess insurance premium is based on the amount of the Division’s
billing of assessments. The Division changed excess insurance carriers.
Zurich is no longer in the excess insurance underwriting business. The Fund
is now insured with Midwest Employers Casualty Company.
- Review of Agreed Bill Process. Mr. Conway presented a handout of
timelines for the agreed bill process for this year. The Council agreed to
the work-plan timelines.
- Proposals for Legislative Changes by Interested Persons. Mr. O’Malley covered the summary of legislative proposals from external sources that were collected over the last several months. The summary is comprised of letters received and the testimony of the individual who appeared at the public hearing on December 11, 2002. Mr. Glaser indicated that labor and management would decide which proposals they were interested in, and would include those in their proposals to be presented at the next meeting.
- Low interest loans. There is no current statutory provision that
would cover this proposal. Mr. Gregory Stebler suggested creation of a
low interest loan program for individuals who experience financial
hardship while waiting for a decision on eligibility for worker’s
compensation or social security disability benefits.
- Proposal by the Rating Bureau that would provide for electronic
submission of cancellation notices to the Wisconsin Compensation
Rating Bureau (WCRB) by insurers. There
is no current statutory authority for this proposal.
- Allow corporate officers who elected not to be subject to Chapter
102 to once again become eligible for benefits with 30 days notice.
This would be assuming no injury had occurred. There are policy and
underwriting concerns with this proposal.
- Three day waiting period. The letter had been shared with the
Council previously. Senator Baumgart did not make any suggestions to
address the concern that the three day waiting period encourages
people to remain off work longer than necessary so they will be
eligible for benefits.
- Require use of department’s medical authorization form. Mr.
O’Malley indicated that the department would be revising the form to
address Health Insurance Portability and Accountability Act (HIPPA) concerns. There is also an issue regarding insurance
carriers not making copies of records obtained with the authorization
available to the employee. Practically speaking, even though the law
provides that filing a claim constitutes a waiver of the
physician-patient privilege, some providers will not release records
without a signed authorization. As pointed out by Ms. Connor and Mr.
Gordon, many providers have their own forms. Mr. O’Malley indicated
that providers needed to be educated that any time an employee alleges
a work injury the waiver applies.
- 12 percent interest on overdue payments. Mr. O’Malley
commented that the department had no jurisdiction over the insurance
code and any enforcement of violations of the insurance code.
- Scheduling hearings, bad faith, safety violations, WC handbook,
and appointments with health care providers. Mr. Glaser pointed
out that the department already sends out a brochure of facts for
injured employees. Mr. O’Malley clarified that the Worker’s
Compensation Act does not address the issue of a case worker attending
medical appointments. Ms. Knutson stated that under the law, an
employee can refuse to allow a nurse to accompany him/her to a medical
appointment, but the nurse could speak to the physician after the
appointment because of the waiver of the physician-patient privilege.
Mr. Beiriger questioned whether it was practical to hold hearings in
three to six months in every case. Mr. O’Malley replied that the
average time was currently 8½ months. The department tries to move
cases along and is still striving toward the six-month benchmark.
- Liability for compensation for temporary disability after
discharge for misconduct. This was a proposal by Senator Lazich.
Mr. Glaser commented that most employers do not necessarily terminate
people, but that we need to protect employees from employers that
would take advantage of such a provision. Ms. Connor stated that there
is abuse by employees. Mr. Beiriger stated that temporary disability
benefits were for wage replacement, but that the employee was not
losing wage if he/she was discharged for misconduct. Mr. Glaser
indicated that this would be a major change in the law.
- Date of injury for occupational disease claims. Mr. Glaser
asked if department staff had checked on the status of Ms. Linde’s
claim. Ms. Knutson indicated that Ms. Linde was paid benefits, but at
a rate that was lower than what she requested due to her old injury
- Definition of liability for necessity of treatment disputes. Mr. Russell Leonard, Wisconsin Chiropractic Association, indicated that carriers were retroactively denying liability after treatment was completed. Mr. O’Malley stated that the department had not changed the way it administers the necessity of treatment dispute resolution process, there has just been in increase in the number of carriers asserting liability disputes on these claims. Ms. Knutson indicated that the department issues an order advising the employee that he/she that an application for hearing should be filed. Mr. O’Malley indicated that the department had a rule change proposed to address the issue raised in this proposal.
- Proposals for Legislative and Rule Changes by the Worker’s
Compensation Division. Mr. O’Malley explained the department’s
1.& 2. Require a minimum $25 in dispute for a single charge or combination of charges before the department would have jurisdiction to resolve reasonableness and necessity disputes. The charges would involve the same patient and a combination of Physician's Current Procedural Terminology CPT code charges. Mr. Welnak inquired as to the obligation of the employee to pay the balance due. Ms. Knutson responded that under current law, the employee cannot be balance billed.
3.& 4. Provide that the department had an extra 60 days to correct mistakes in orders on reasonableness of fees and necessity of treatment disputes. Mr. O’Malley explained that this extra time would be just for correcting mistakes, not to consider newly discovered evidence. LIRC has one year to amend an order on the grounds of mistake or newly discovered evidence. Mr. Leonard asked whether interest would be due if there were no mistake. Mr. O’Malley indicated the department had not considered that issue.
5. This amendment is to correct a drafting error in §102.18(1)(e) from the last legislative session. Mr. Glaser indicated that the law changes at that time was not intended to change the current department policy and practice. Mr. O’Malley indicated that there could be a problem if the carriers do not interpret the statute the way it was intended to read.
6. Add a penalty provision for failure to answer correspondence. Currently the forfeitures are $10 to $100 under Wis. Stats. §102.35(1).
7. This amendment is to correct a drafting error in §102.32(6) from the last legislative session. The time period when permanent partial disability accrues and becomes payable is 30 days after the healing period ends.
8. Advance payments of unaccrued compensation. The department in practice only approves advancements on permanent disability and death benefits. The advancement is on unaccrued benefits and the carrier is given an interest credit of 7% per annum.
9 . Increase penalties from $10 - $100 to $100 - $500 for each offense, and statutory authorization for department to rescind penalties. Mr. Shorey stated that forfeitures were down. The department issues 5000 per year and 70% are later rescinded. The billing is done once per year and the carrier can then apply for a rescission. The number of rescissions is due to the reporting requirements in currently law. In addition, the department has difficulty getting responses to correspondence. The Office of the Insurance Commissioner (OCI) and insurers have recommended that the Division handle this internally. The number of forfeitures issued in Wisconsin is low in comparison to other states. The forfeitures are for failure to submit medical reports, supplemental reports and wage reports. There would be approximately an additional 1000 per year if correspondence was included. Ms. Connor inquired as to the response guideline. Mr. Shorey indicated that a schedule had not yet been developed. Usually the department a response within 30 days and there is a 95% response rate within that time. Usually forfeitures are not considered until 60 days later. The forfeiture would be per instance or occurrence, not per day. The current forfeiture amount of $100 does not bring a response from carriers.
10. Require a WKC-13 for all injuries reported to the department. If an injury is reported by a carrier that is not required to be reported, the department still wants a WKC-13 to be submitted to follow-up on and close claims. Mr. Shorey indicated that the department did not intend to require insurers to report medical only or non-compensable claims. The department presumes that all claims are compensable when they are reported. A forfeiture is sent out and then the department is informed that the claim was denied. Ms. Connor indicated that sometimes insurers do not know the claim is not compensable within the time frame of the reporting requirements. If a carrier investigates a claim and files a WKC-12 late, they do not want a penalty imposed. While the department has the authority to do so, Mr. Shorey indicated that currently no forfeiture penalty is sent if a WKC-12 is late and the department encourages investigation of claims prior to submission.
11. Require notice by an insurer or self-insured employer of a decision to deny liability for payment of compensation for reported claims. Mr. Shorey stated that there is confusion regarding when the notice of denial should be sent in to the department.
12. Create reporting requirements from insurers and self-insured employers to employees only in cases that are denied or are under investigation. Mr. Glaser inquired as to what happens if no notice sent. Mr. Shorey indicated that the proposed reporting requirement would avoid the situation where the department receives a copy. Mr. Glaser indicated that there should be a penalty for failure to send notice.
13. Department requirement for reporting by electronic, magnetic or other media. There are no criteria set forth here regarding when the requirement would be imposed. This is subject to discussion. Mr. Beiriger questioned whether this was a punitive measure. Mr. O’Malley indicated that it was an encouragement to meet reporting requirements. Mr. Shorey indicated that the Division did not have any objection to including a process whereby the carrier/self-insured employer could request reconsideration of the Division’s decision to require electronic reporting. The Division envisions that there may be certain forms and circumstances where compliance is an issue. Mr. Buchen asked if the Division is able to characterize which carriers or self-insured employers are better able to comply with electronic reporting. Mr. Shorey responded that the Division could look at the volume of claims submitted. Mr. Buchen stated that in Unemployment Insurance, the number of employees an employer reports wages on determines who must file electronically. He further stated that it would be helpful to specify what reports are to be filed electronically, and the size of the company as factors.
14. & 15. Require notice to be given to providers when liability or extent of disability/liability is an issue in reasonableness and necessity of treatment disputes. Currently the providers in many cases are not notified that liability is in dispute until after the department serves notice of the reasonableness or necessity dispute.
- Pharmaceutical Charges. At the last meeting, there was a concern
expressed about a pharmacist charging an exorbitant amount for
prescriptions. Mr. O’Malley indicated that pharmacists are regulated under
Wis. Admin. Code § Phar 10.03 (13). Mr. O’Malley spoke with Bill Black,
legal counsel to the Pharmacy Examining Board. Anyone in the state can file
a complaint with the Dept. of Regulation and Licensing, and complaints can
be filed through their website. If a violation is found, it could result in
a reprimand, limits imposed on the pharmacist’s license, suspension,
revocation, payment of costs of the investigation and/or forfeitures of
$1000 per day of the offense. Any penalty imposed is at the discretion of
the Board. Mr. Black was not aware of these kinds of violations in the past
(over-charging for worker’s compensation claims). Ms. Connor is in the
process of gathering data on total charges for prescriptions.
- Correspondence. Mr. Conway indicated that the correspondence from
Senator Lazich was contained in the proposal summary. The Council members
indicated that no further action was necessary.
- Review of WCAC Video. The Council members viewed the video entitled
"Wisconsin Worker’s Compensation Initiative". Mr. Buchen
indicated that the goal was to retain people to visit with members of the
legislature and to gauge their response to the worker’s compensation
program and the agreed bill process. Then, Mr. Newby and Mr. Buchen would
visit with individual legislators who had questions or concerns.
- Adjournment. Discussion on all agenda items concluded and the meeting was adjourned.