Council on Worker's Compensation
January 28, 2000
Members present: Mr. Bagin, Mr. Beiriger, Mr. Buchen, Mr. Glaser, Mr. Grassl, Mr. Muelver, Mr. Newby, Ms. Norman-Nunnery, Mr. Olson, Mr. Welnak Mr. Cafuro for Mr. Fronk.
Staff present: Ms. Piraino, Mr. O’Malley, Mr. Shorey, and Mr. Smith.
- Minutes. Ms. Norman-Nunnery convened the meeting in accordance with Wisconsin’s open meetings law. Mr. Bagin moved adoption of minutes of the August 10, 1999 meeting. Mr. Meulver seconded the motion. The motion passed unanimously.
- Legislative Update. Mr. Smith summarized the status of the following proposals:
- 1999 Wisconsin Act 14. The Division will publish the new Worker's Compensation Act and related statutes, rules and forms by June.
- 1999 AB 513. After meeting with representatives of the Department and the Rating Bureau, the bill's authors agreed to withdraw the proposal to mandate a 20% premium dividend for employers that conduct certain drug testing.
- 1999 AB 608. Introduced December 1, 1999, the proposal would allow certain domestic partners the same rights as spouses. The bill would have an impact on death benefits if passed.
- 1999 SB 194. The authors of this proposal to change the distribution of the cushion in third-party situations under s. 102.29 have agreed not to take action until the Council reviews this further as part of the agreed bill for next session. (Also, see minutes from August 10, 1999.)
- 1999 SB 298. Attorney Peter Christenson has advised the Department that the authors of this proposal to regulate the assignment of future benefits through structured settlements will eliminate all references to worker's compensation in the bill. The authors were not aware that the assignment of future worker's compensation benefits is specifically prohibited in s. 102.27(1). They agree that regulating something that is prohibited does not make sense.
- Administrative Code Update. Mr. Smith and Mr. O'Malley summarized the status of several proposed revisions to Chapter DWD 80 of the Wisconsin Administrative Code.
DWD 80.26 relating to loss of vision. Mr. Smith said that this section has not been updated since the 1950's. It contains references to the injuries prior to December 1, 1941 (before Pearl Harbor) and the use of a 1932 AMA reading card. The rule requires ophthalmologists to determine three variables (central visual acuity, field vision and binocular vision) which are then combined in a formula to determine benefits. The formula is fine, but ophthalmologists have had increasing difficulty translating the results of modern tests for field vision (so-called automated or computerized preimetry) to the older arc perimetry tests (state of the art until the 1970's) which are specified in the rule.
Mr. Smith said the State Medical Society and State Society of Ophthalmology volunteered to assist the Department in updating the code to reflect current practices for determining field vision. He asked if the Council wanted to create a formal subcommittee to participate in revising the rule. The Council declined. All members agree that insurers rely on the Department's expertise in this area and that this is not an issue on which there has been any history of disputes. Mr. Smith said the Department would still ask the Council to formally review the rule prior to enacting it.
DWD 80.32(11) relating to the 5% minimum for cervical back surgeries. At its August 1999 meeting Mr. Grassl requested that the Department review the intent of the 1994 amendment to this rule in light of a 1997 LIRC decision. Mr. O' Malley explained the history of the 1994 changes to the minimum PPD ratings. He said that Margaret O' Connell distributed a survey to doctors and that she and four senior ALJs, including Mr. O' Malley reviewed the doctors' survey responses. The survey question specified the lumbar region and no doctors volunteered comments about changing the cervical region.
Mr. O' Malley said the subcommittee intended that cervical surgeries should continue to receive a 5% minimum PPD rate, not 10% as some recent LIRC decisions have determined. He said the note following the rule was intended to apply only to the lumbar area, not to the cervical or thoracic areas. It was added to clarify that the minimums should apply to modern less invasive techniques, not to expand the all spinal surgeries to a minimum 10% PPD. Mr. O' Malley said that the Department is prepared to revise the rule to clarify the original intent and clearly limit the minimum for non-lumbar surgeries to 5%.
Mr. Smith said one immediate problem is that the Department continues to advise insurers to pay 5% for a cervical fusion, but LIRC will award 10% on any appeal. This encourages workers to seek out attorneys to appeal the insurer's (and ALJ's) decision to LIRC (for which the attorney will receive a 20% fee). He recommended that the Department needs to either: (1) change the rule to limit cervical surgeries to 5%, or (2), adopt LIRC's interpretation that they are entitled to 10% under the rule as amended. He asked for the Council's advice.
Mr. Glaser questioned why the Council was being asked in 2000 to re-write a 1994 rule change outside the negotiated bill process based on a 1997 LIRC decision. He questioned whether the request to restore the status quo on cervical surgeries was really timely or would create a bad precedent. He said that given the passage of time perhaps the Department and others should simply live with LIRC's interpretation and that any changes should be negotiated as part of the next bill.
Mr. Grassl responded that he brought the matter to the attention of the Council and the Department in August 1999 when it was first brought to his attention. He said some delay was inevitable to properly research the problem after the 1997 LIRC decision. Unlike court decisions, it can take a while for individual LIRC decisions to reach the broader worker's compensation community.
Mr. Glaser asked why the cervical surgery should not receive the same 10% as the lumbar surgery. He also asked what the cost difference is between 5% and 10%. Mr. Bagin responded that the impact of surgery on the cervical region is far less. The need for someone to change jobs after surgery is far more common with lumbar surgeries than it is with cervical surgeries. Mr. O' Malley said in the typical case, it is $9,200 for the additional 5%.
Mr. Bagin said that the request was timely enough. He said it would be appropriate for the Council to recommend that the Department restore the status quo by rule, without negotiations. Mr. Glaser responded that the passage of time still concerned him. He asked for copies of the survey questionnaire so that he could study the issue further.
Archaic rules. Mr. O' Malley and Mr. Smith said that during the biennium the Department will be recommending some remedial updates to the administrative code to remove outdated language and provisions.
- Legal update. Mr. Smith summarized several recent developments.
Liability for medical expenses under Spencer. Since the 1972 Supreme Court decision in the Spencer case, employees acting in good faith have not been required to pay for treatment that is found unreasonable or unnecessary after a hearing initiated under s. 102.17. Insurers were required to pay. Since s. 102.16 was enacted in 1992, if the dispute about reasonableness or necessity is handled under the s. 102.16 peer review or database processes, neither the insurer nor employee is required to pay for unreasonable or unnecessary treatment.
In late 1999, dicta in footnotes in several LIRC decisions speculated that the amendments to s.102.18 that took effect January 1, 1999 were intended to repeal the Spencer doctrine and that employees would no longer be immune from paying for unreasonable or unnecessary treatment for post-1999 injuries resolved through the 102.17 hearing process. Mr. Smith said that the amendments to s. 102.18 were intended only to clarify an ALJ's authority to either: (1) issue decisions on reasonable and necessary treatment at a hearing (which LIRC had questioned in the Mary Summerfeldt decision) or (2), to refer cases to the 102.16 processes for peer review or data-base information. The amendment was intended to address the LIRC decision in Sommerfeldt not to repeal Spencer for injuries after January 1, 1999 as LIRC's dicta was suggesting.
Still, LIRC's underlying concern is valid. Medical providers are parties to medical-only disputes which they initiate under s. 102.16, but they are not parties to hearings initiated under s. 102.17. Therefore, arguably, it is unconstitutional for an ALJ to deny payment to a provider after a 102.17 hearing since: (1) the provider had no right to participate; and (2), the employee is immunized by the Spencer decision from paying for treatment that is found unreasonable or unnecessary after a 102.17 hearing.
Mr. Smith said that most cases in which ALJs rule on medical necessity and reasonableness, the insurer's liability is really the central issue. Reasonable and necessary treatment issues are almost always secondary. If liability were settled in favor of the worker, it would be unusual if the ALJ ruled against the worker on necessity or reasonableness--and rarer still that the insurer would appeal only that part of the ruling to LIRC.
Therefore, despite waiting a considerable period of time for the hearing, most of the time the providers will be paid. If the ALJ determines the insurer is liable for the injury after a 102.17 hearing, the ALJ typically orders the insurer to pay outstanding medical bills. Conversely, if the ALJ determines it is not a work injury, the provider can legally bill the injured worker or his or her group health insurer.
In the unusual situation where an ALJ rules after a 102.17 hearing that the insurer is liable for the work injury, but feels that the treatment is not reasonable or necessary, Mr. Smith said that the ALJs have recently agreed that they will refrain from making that determination on reasonableness and necessity. Instead, as permitted by s. 102.18, they will exercise their discretion to refer the dispute to the s. 102.16 processes where the employee's immunity for paying for unreasonable or unnecessary treatment is clearly spelled out by statute. ALJs will also continue to refer cases to the 102.16 peer review process when the insurer makes a reasonable request to do so.
Further, on appeal, if LIRC were to reverse an ALJ's finding such that the insurer wins on liability, and if there are remaining issues on reasonableness and necessity of medical treatment, LIRC attorneys will recommend that the Commissioners remand those issues back to the Department for resolution under the 102.16 processes. This will preserve the employee's immunity and allow the provider and insurer to do nothing, settle the issue by agreement, or use the 102.16 processes.
Taken together, these informal procedures can preserve the rights of all parties, and retain the Spencer doctrine's immunity for employees regardless of whether the reasonable/necessity issue was initiated under ss. 102.16 or 102.17.
Mr. Carfaro said this would prevent insurers from ever winning a necessity or fee dispute at hearing. They would always have to defend under s. 102.16. Mr. Smith agreed. He said, in effect, that is what LIRC argued in the Sommerfeldt case--that the 1992 enactment of 102.16 was intended to prevent ALJs from determining reasonableness and necessity in a 102.17 hearing that excluded providers.
Mr. Leonard, Executive Director of the Wisconsin Chiropractic Association, said there is a boiling cauldron of dissatisfaction within the medical community regarding the financial risk of not getting paid under the 102.16 process. However, he said he continues to support the 102.16 process because providers do have a fair opportunity for peer review.
Mr. Bagin said the Council should review the informal solution that Mr. Smith has worked out with the ALJs and LIRC attorneys to see what kinds of problems it might create. Mr. Smith agreed. He said the advantages of the process he outlined are that it does not require a statutory change; it's relatively easy to administer; and, in most cases, it avoids the additional cost to the system of having to run all medical disputes associated with a 102.17 hearing through the 102.16 process too. But, he admitted it is too soon to predict that the procedures are workable, stable and fair.
Open records decisions relating to DataLister, Inc. in Arizona and Minnesota. In 1999, the Attorney General ruled in favor of the Department's interpretation that the Rating Bureau records were closed to public inspection or copying. Mr. Smith shared newspaper articles relating to DataLister's successful suits to obtain insurance records in other states. Mr. Grassl renewed the suggestion he had made at the August meeting that the Council amend s. 102.33 and/or Chapter 626 as part of the agreed-bill process to codify the Attorney General's opinion.
- Federal Update. The Department had mailed material to the Council members regarding OSHA's telecommuting and Ergonomics rules. WMC's John Metcalf had prepared an analysis of the conflicts they see between Wisconsin's worker's compensation system and the federal standards. After a very brief discussion, the Council did not recommend any action at this time.
- Department Update.
- Timely hearings (Status of the litigated-case backlog and the LAB audit). Mr. Smith said the litigated-case backlog remains at about 5,000 ready cases requiring about 9 months from the time an application is ready for hearing until the hearing is scheduled to be held. He said the Department has done about all it can do to reduce the backlog using alternatives to a formal hearing. Recently, there has been some success using para-legal ADR (involving unrepresented applicants) and ALJ settlement conferences (involving represented applicants). He said there are limits to how hard the Department should push settlement discussions before it begins to interfere with the parties statutory right to a formal hearing. He recommended that the Council consider adding more ALJs if they want to make significant progress in reducing the delay from 9 months to 6 months.
- Insurer compliance with reporting requirements (penalties on final medical reports). Mr. Shorey said that DWD 80.02 required insurers to file about 15 different reports with about 250,000 insurer reports filed each year. He said the department routinely monitors three reports--the WKC-13 first report of injury; the WKC-13A wage reports; and the final medical reports--with about 100,000 annual reports filed.
He said the goal would be to recommend sensible amendments to the current rule on filing final medical reports. He said the current rule is not adequate to achieve the purpose for which it was intended.
He explained that most of the penalties issued were for failure to file the supplemental report WKC-13 after filing a WKC-12 on a "no-lost-time" claim (that is, on a claim where no report was required). The Department had to follow up on the WKC-12 and issue the preliminary penalty letter when no WKC-13 was received. However, he said the Department rescinded 80% of these penalties because insurers showed that these were, in fact, no-lost-time claims.
Finally, Mr. Shorey said the Department's website listing of reports and correspondence due from insurers has been popular. In the first two months since it opened in December 1999, there were more than 7,000 separate "log-ons" involving 321 different insurers, TPAs or self-insured employers.
- Council Study Committees for 2000-2001.
Weekly Wage. The Council agreed to establish a subcommittee to study issues under s. 102.11 and related wage questions. In particular, the committee will focus on fringe benefits, part-time employment and multiple jobs. Mr. Bagin and Mr. Glaser agreed to serve from the Council. Other members were Mr. Neil DeClerq, UW School for Workers, Mr. John Metcalf, WMC, attorneys Mr. Bill Sachse and Mr. John Neal, and insurance representatives Mr. John Pattin, United Heartland, and Ms. Jody Connor, Employers of Wausau. Mr. Smith and the Department's wage analysts will provide staff assistance.
- Adjournment. The next meeting was scheduled for April 24, 2000 in Madison at 10 a.m. The Council adjourned.