Council on Worker's Compensation
January 31, 2002
Members present: Mr. Bagin, Mr. Beiriger, Mr. Buchen, Ms. Connor, Mr. Gordon, Mr. Newby, Ms. Norman-Nunnery, Mr. Olson, Mr. Welnak, Mr. Rostan for Rep. Hundertmark
Staff present: Mr. John Conway, Mr. O'Malley, Ms. Knutson, Mr. Shorey, Mr. Frank Conway
- Minutes. Ms. Norman-Nunnery convened the meeting in accordance with Wisconsin's open meeting laws. Mr. Bagin moved adoption of the minutes of the September 13, 2001 meeting; Mr. Welnak seconded the motion. The motion was unanimously approved.
- Internal Audit Report on Hearings. Judi Page from DWD Office of Internal Audit and Performance Review presented the results of the internal audit performed on the Worker's Compensation Appeals Process.
Ms. Norman-Nunnery indicated that she requested the audit due to concern with the backlog of cases waiting for a hearing. The Council had approved the hiring of new ALJ staff. The audit looked at the entire hearing process to see if there were ways to make it more efficient.
Ms. Page indicated that cases were tracked from the time of receipt of the application through hearing to the first closure on the computer system (ICMS). All cases closed for the first time on the computer system between July 1, 2000 and June 30, 2001 were analyzed. At any time, between 6,000 and 6,300 cases are pending. Ms. Page explained the steps involved in processing an application for hearing. The audit revealed that 72% of all applications for hearing are waiting scheduling or awaiting a hearing (this is referred to as the bottleneck). No hearing was held for 74% of litigated cases. Two-thirds of all litigated cases had at least one hearing scheduled and hearings were held in only 30% of all cases. If the hearing is cancelled four or more weeks in advance, the scheduling staff attempts to substitute another case on that calendar. The case analysis revealed that 57% of cancellations and postponements occurred on the day of the hearing. The concern is that there is time and effort put into scheduling hearings that are never held. Ms. Page indicated that part of the audit process involved developing recommendations to alleviate the "bottleneck". Recommendations included: increasing the use of alternate dispute resolution (ADR) methods (including involving one experienced ALJ in this process); develop process controls to identify and monitor cases that are in one of the processing steps an inordinate amount of time; and, to allow limited computer access for parties to review case status information via the Internet. A specific recommendation involved sending out information to an applicant sometime after the application for hearing is filed. The information would state that 74% of cases resolve without a hearing, how long it takes for the average case to be scheduled for hearing and offering alternate dispute resolution as an option.
Mr. Bagin asked if there was information regarding what happened to the cases when a cancellation or postponement was requested. Mr. O'Malley indicated that most of them were settled on the courthouse steps. Mr. Bagin commented that settlement in cases was a good thing and Mr. O'Malley agreed. Ms. Page indicated that the audit did not investigate the ultimate result in cases where a hearing was postponed. In general for cancellations or postponements from the respondents are not granted. Mr. O'Malley indicated that there was a growing trend of postponement by applicants because they are not ready for hearing. The applicant is still receiving medical treatment and there is no final medical report. Mr. O'Malley indicated that the division is considering ways to address this problem. Legal counsel in the hearing process represents over 90% of all applicants.
Mr. Newby asked Ms. Page why ADR would clear up the bottleneck. Ms. Page indicated that there was that assumption because cases move faster through the current ADR process. Older cases are scheduled for hearing first. She acknowledged that if a large number of cases were diverted to ADR, it could create a new bottleneck. Mr. Newby asked how a different system would solve the problem if 60% of cases settle on the day of hearing or are postponed if they are not ready. Ms. Page indicated that readiness of cases is a big issue. There are cases going to the scheduling queue that are not ready for hearing. By an ALJ looking at cases before they are scheduled, some cases may be able to be resolved before a hearing is scheduled.
Mr. Gordon asked if most cases involved compensability as an issue or nature and extent of disability. Mr. O'Malley stated that most cases involve nature and extent of disability and liability as issues. While there have been no recent studies, an old study showed that 40% of cases involved liability as an issue along with nature and extent of disability. In 60% of cases some benefits were paid and the applicant was requesting more benefits. Mr. Gordon commented that ADR was not the way to go if compensability was an issue, only with nature and extent issues.
Mr. O'Malley stated that the division planned to address the recommendations of the audit. One ALJ experienced in worker's compensation law and mediation would be devoted to a pilot project. A letter will be developed to be sent out after the hearing application comes in setting forth the injured worker's rights and options for resolution of the dispute including ADR or tiebreaker examinations where appropriate (i.e. where liability is not an issue). The goal would be to resolve cases before a hearing if possible while not delaying the normal hearing process. Mr. O'Malley indicated that there are ethical issues involved where attorneys represent parties and any contacts by ALJs must conform to the Code of Professional Responsibility.
Mr. O'Malley stated that the division would focus on active case management. This involves carefully screening applications for hearing and not putting the cases in ready for hearing status unless the application clearly states the benefits claimed and medical support is provided for those claims. This should help alleviate the problem of scheduling hearings where the applicant is not ready for hearing. Sometimes employees are lead astray by the attorney who files the application to take some kind of action on the case. The employee is then upset because the hearing is not held quickly. The goal would be to have a more efficient use of the hearing process.
Mr. Gordon indicated that in some states the applicant must certify that he is ready to go to hearing with consequences if later that is not the case. Mr. O'Malley responded that the division had considered that as an option. He stated that in California a certificate of readiness must be filed and if later the attorney is not ready to proceed to hearing, the application is dismissed with prejudice and the attorney is reported to the state bar. In order to keep a balance, it was felt that it was better to not be too heavy handed.
Mr. Gordon stated that the mentality among some attorneys was to file the application to get in line for a hearing. Mr. O'Malley indicated that that was still a problem, but not as bad as in the past, and that the division hoped to address it through case management.
Mr. Newby asked if a hearing was cancelled, was there a presumption that the ALJ time was wasted. Mr. O'Malley responded that ALJ need some cancelled hearings to allow time to write orders, review compromises and perform other administrative duties. If the ALJ had to hold a hearing in every case, the orders would never get written timely. The division is aware that a large number of cases settle and that is built into the hearing calendar.
Ms. Page raised the issue of cancellations that occur when the ALJ is out on the road. Ms. Norman-Nunnery indicated that the division would work on other administrative pieces to make more efficient use of time. Offering the injured worker an option to resolve the dispute more quickly was just one part of the process. The goal was to schedule hearings more effectively. Ms. Knutson explained that the time on the road is used to prepare cases for the next day, hold telephone conferences/mediations, review files to see if a compromise is appropriate, and review files where the hearing was held and begin drafting orders.
Mr. Bagin questioned who was complaining about the process and the nature of the complaint. It was his understanding that the applicant attorneys do not want the time between the filing of the hearing application and the scheduling of the hearing compressed too tightly. Ms. Norman-Nunnery indicated that the goal was to not allow cases with a high likelihood of resolving before hearing, into the scheduling process. Mr. O'Malley stated that primarily applicants make for expedited hearings. Sometimes the request comes through the state legislature. In that case, an attorney must write a letter indicating that the case is ready to go forward before an expedited hearing is scheduled. The applicant an expedited hearing due to economic hardship and sometimes the attorney is not ready to proceed.
Mr. Newby suggested that if the parties must certify that they are ready to proceed to hearing the division might be better able to prioritize hearings. Mr. Buchen indicated that there might be more objections to certification and perhaps the division should not postpone a case unless there is an emergency.
Mr. John Conway indicated that the division appreciated Ms. Page's work in looking at the data, along with Dale Cattenaugh's expertise as a former director of the legislative audit bureau. The purpose was to help find areas in programs that might be subject to legislative audit. The audit was internal within the department. The report was recently received and the division was just beginning to develop a formal response and work plan. Earlier resolution of cases would result in savings of not only ALJ and scheduling time, but court reporter time and witness time as well. The division will be putting together a formal response to the audit that will be presented to the Council. Ms. Norman-Nunnery indicated that the division could incorporate comments from today's meeting into the plan. Mr. Bagin commented that an aspect of scheduling hearings that resulted in settlements at the courthouse steps is part of the nature of the process. Mr. John Conway indicated that sometimes attorneys are looking at the files for the first time at the courthouse steps. Ms. Norman-Nunnery indicated that the division would try and make sure that the injured worker was an active participant in the process.
Ms. Connor indicated that the division needed to look at respondent time frames also. After the hearing application is received, respondents need to assign legal counsel. Mr. O'Malley indicated that while the initial thought was to contact the applicant early on, with issues of liability involved, it might be best to wait until an answer is filed. Mr. Gordon suggested that a question be posed on the hearing application and the answer as to whether the parties would agree to ADR. Ms. Connor asked whether any thought was given to extending the filing deadline from 15 to 30 days. Mr. O'Malley indicated that that idea was discussed as well, but that there must be agreement. Mr. O'Malley assured the Council that a more detailed plan would be presented to the Council before the division would go forward with implementation.
Mr. O'Malley outlined the division's preliminary response. The division would develop process controls including a tickler system to kick out a list of older cases. This would involve an information technology (IT) project. In addition, the issue of publishing hearing cases on the web was discussed. The names of employees should not be on the schedule to keep identification confidential. The information would be disclosed to a party only and could not be used by attorneys to solicit clients. The information would need to be safe guarded so that someone could not identify a name and release a date. The injured worker would be able to look at his/her own claim records. Ms. Norman-Nunnery indicated that the IT staff was looking at confidentiality and security issues so that the division could do what was in the best interest of the system and the parties. Ms. Norman-Nunnery extended her thanks to Ms. Page and indicated that Mr. O'Malley and Ms. Knutson would follow up on the recommendations.
- Budget Reform Bill: Ms. Norman-Nunnery reported that in the developing stages that the Governor shared his plans regarding using GPR funds from Supplemental Benefit funds (which contain a small percentage of GPR funds). If the dollars were removed and in the future there was a need for them, the funds would be restored by the legislature. Therefore, this was more of a paper transaction. The Governor removed this provision from the budget completely so that there would be no adjustment in GPR funds. The Governor's overall budget solved the $1.1 billion deficit with no new taxes; reduced government spending and uses Tobacco Fund money as a bridge loan. His priorities of education, assisting the poor and needy, economic development and security were maintained. While there was an overall GPR reduction in the department, there was none in worker's compensation.
- Video Proposal for "Agreed Bill" Process: Ms. Norman-Nunnery indicated that in the November legislative briefing on the Larson case, the agreed bill process was discussed. There is a need for ongoing communication between the legislature and the Council. In the past, one format the Council used was to have a video developed. The Wisconsin Manufacturers and Commerce and the Wisconsin Insurance Alliance were involved in its production. Videos were produced in 1993 and 1999. The division is proposing that a video be produced for 2003. The content would include representatives from labor and management talking about the agreed bill process and the worker's compensation system. Someone would then show the video to individual legislators. The division was looking for approval from the Council.
Mr. Newby indicated that it was important to take the video to each new legislator every session. Ms. Norman-Nunnery indicated that the video might be dated, that there were some new Council members since the last video. Perhaps a room could be set up at a Council meeting for commentary to be solicited from Council members for the video. Mr. Bagin indicated that perhaps the video could be refreshed. He noted that one-third of the legislature changes every couple of years. In the past, the Council wrote letters to legislators after inquiries, indicating why the Council was not able to accomplish something so that the legislator could touch base with the constituent. Ms. Norman-Nunnery indicated that the process now involved writing a letter acknowledging receipt of the legislator's correspondence and indicating when it would be brought up with the Council. Mr. Bagin and Mr. Newby agreed that it was necessary to take another look at the video and determine if it should be refreshed. Mr. Bagin indicated that it could be a joint effort with the Wisconsin Manufacturers and the AFL-CIO. Mr. Newby asked whether the department had revised the system to respond to legislators. Ms. Norman-Nunnery indicated that the division had implemented the new process and that there were two contacts, one initially when the correspondence is received, and another after the issue had been considered.
- Safety Initiative - Report Card: Mr. Frank Conway presented a report on the Safety Works for Wisconsin Report Card 2000. All the data from 1999 and 2000 was reviewed. The purpose of the initiative was to improve workplace safety. The 2000 report card gives public recognition of Wisconsin employers improving from worse than industry average to better than industry average. This was a change from the previous year's method. There was written notification to 220 employers with poor safety records. These notices contained information to improve workplace safety. Mr. Bagin asked whether employers were responding with for information or resources. Mr. Frank Conway stated that some employers needed industry specific information. Mr. Beiringer indicated that the letter goes to the CEO of the company who might not otherwise be in the loop. Once they become aware of the problem, safety became a top corporate priority. Mr. Frank Conway indicated that responses varied from those employers who were unhappy to those who were eager to improve.
Ms. Norman-Nunnery noted that while the Council had established a Safety Commission, another safety-related group had emerged called the Safety Partnership Group. There were others with safety-related issues that wanted to connect with the division. Ms. Norman-Nunnery questioned how the group could continue so as not to be at cross-purposes with the Council Safety Commission. Mr. John Conway indicated that there were federal and state OSHA people and insurance companies who were interested in education efforts such as safety awareness training. Mr. Buchen indicated that when the Council established the Safety Commission, it was responding to data that showed Wisconsin injury rates were above national averages. Ms. Norman-Nunnery indicated that the Report Card Safety Initiative would continue, but wondered whether the two groups could be consolidated. Mr. Newby suggested that the Safety Partnership was more industry-oriented. The Safety Commission could continue and perhaps meet once per year to decide issues on the report cards. Ms. Norman-Nunnery agreed that the Safety Commission would proceed with the Report Card Initiative and that the Safety Partnership Group would address broader safety related issues in specific industries.
- Safety Investigations/Issues: Mr. John Conway reminded the Council that the Department of Commerce had initially expressed concerns about continuing to do the safety investigations. After several meetings with various parties, including Council members, Jennifer Reinert, Judy Norman-Nunnery and the former Secretary of the Department of Commerce, the division received an extension that allowed Commerce to continue to do the investigation until another resource could be identified. However, the new Secretary of the Department of Commerce has indicated that it is within their mission and scope to do these investigations. A memorandum of understanding between the two agencies was sent to the Secretary of the Department of Commerce in December 2001. The division agreed to have a safety specialist to coordinate the safety investigation process by screening referrals and possibly contacting the injured employee and the employer. The accident reports will then be sent over to the Department of Commerce Safety and Buildings Division. Safety and Buildings may decline to do some investigations and in that event the division may go to a private source.
Mr. John Conway addressed concerns regarding the authority that a private firm would have versus the state in conducting safety investigations. Safety and Buildings was trying to anticipate cases that they could not handle. Safety and Buildings agreed to do safety investigations in perpetuity. However, the memorandum of understanding gives both parties the opportunity to terminate the agreement with 60 days notice. The memorandum of understanding will be reviewed every 6 months. Mr. Bagin indicated that the private vendor idea has some limitations due to areas of expertise needed. Mr. Newby indicated that all members of the Council should have a copy of the report of all cases declined and how those cases were handled. Mr. Bagin indicated that the Council wants to know why the cases were rejected.
- Work Injury Supplemental Benefit Fund Update: Mr. Shorey provided a fiscal year 2001 report and analysis. During the mid-1990 the fund was flush so there was a five-year moratorium on payments into the fund, which ended in 1998. The fund is not in any immediate danger. The fund is no longer in an ultimate recovery mode, but rather is in an ultimate depletion mode. The fund should be monitored on an annual basis. It is expected that there be a fund balance depletion beginning in 2003 and there will not be enough money in the fund to sustain it in the long run. The fund balance is anticipated to drop below $3 M in fiscal year 2007. There is a supplemental benefit increase and second injury benefit increase. Some revenues into the fund have been declining. There are fluctuating numbers of deaths and amputations. Mr. Buchen suggested that it might be better to reduce the penalty for benefits rather than triggering them on and off. Mr. Bagin indicated that for policy reasons the penalty should be in effect every day, every year. Mr. Buchen indicated that there seems to be more fluctuation in occurrence than originally thought. Mr. Bagin commented that with the increase in supplemental benefits to the year 1977, and looking at increasing benefits for more recent years, the Council must look at what can afford to be paid out of the fund. Mr. Shorey indicated that the Council must take a long-term look at this issue.
- Proposed Statute/Rules Changes (REVS): Ms. Norman-Nunnery indicated that the REVS process was created by the department to create efficiencies and to work more effectively. One group in this process looked at statutes and rules. Sherman Mitchell represented the division. Mr. O'Malley indicated that there were several suggestions from this project to change DWD Administrative Rule 80. The proposed changes include:
- Amend 80.05(1). This is a technical amendment to change the reference from s. 56.21, Wis. Statues. to s. 303.21, Wis. Statues. This will correct an obsolete reference.
- Amend 80.15 in reference to timeliness of orders. This recommendation was before s. 102.18(1)(e) was created in the last bill to provide that all orders be paid within 21 days.
- Amend 80.21(4) regarding providing notice of testimony to be offered on loss of earning capacity. This references a 30-day notice period and is outdated. Section 102.17(7)(b) was created by statute a number of years ago and provides a 60-day notice requirement for applicants and a 45-day notice requirement for respondents. The rule needs to be updated.
- Amend 80.26 regarding computing vision loss. The references in the rule pertain to 1932 standards and are outdated. Mr. O'Malley suggested that the division review the rule and that updates be suggested after sending out a questionnaire to ophthalmologists. Mr. Bagin indicated that it was a good idea to poll ophthalmologists to come up with a recommended standard.
- Restoring the safety inspection process to enforce the Wisconsin Safe Place Statute. Mr. O'Malley indicated that the department is already undertaking this action. This suggestion was made before the division knew about the memorandum of understanding with the Department of Commerce.
- Amend 80.24. This suggestion is not one of the REVS proposals. This rule pertains to statements provided by employees. At the last legislative session this rule was codified (s. 102.123 Wis. Statues.). It is recommended that the rule be eliminated. Mr. Newby requested time to review this item. Mr. O'Malley indicated that Mr. Newby should get in touch with the division with his comments after he has had time for review.
- Correspondence: Ms. Norman-Nunnery presented several pieces of correspondence to the Council.
- Secretary Reinert announced that Eric Baker is the new Deputy Secretary and Kim Markham is the new Executive Assistant.
- Ms. Connor received an inquiry regarding employers and insurance carriers paying for negative reactions to small pox and other vaccinations. Specifically a nurse at the Marshfield Clinic raised the issue concerning the Center for Disease Control (CDC) requiring vaccinations. In light of anticipated bioterrorism, the government may mandate that all health employees be vaccinated. The question arises who is responsible if an employee suffers an adverse reaction? There is possibly a federal fund that compensates individuals for bad reactions to vaccines. Mr. Gordon indicated that if the vaccination were required as a condition of employment, any reaction would probably be compensated under worker's compensation. Mr. O'Malley agreed. Mr. Bagin commented that if a prophylactic anthrax vaccine were given, it would be analogous to hepatitis. The carrier would not pay for the shot, but if there were a reaction from the shot, it would be compensable. Mr. Olson indicated there would probably be a subrogation right against any federal fund. Mr. Bagin indicated that the Council could take the simple position now that if the government requires the vaccination any reaction is probably compensated under worker's compensation. The Council asked Mr. O'Malley to investigate the issue of government funding. Ms. Connor will respond to the individual who made the inquiry.
- Representative Montgomery received an inquiry from a constituent regarding 20% attorney's fees. The individual feels that the employer should pay these fees if the applicant prevails. He offered to appear at a Council meeting. Mr. Bagin suggested that the Council should respond with a polite acknowledgement of the correspondence and that the comments would be included in future discussions. Ms. Norman-Nunnery confirmed with the Council that it desired the division to keep a log of these types of letters with a summary sheet (cross-referenced by subject) to be used as a reference at later meetings.
- Ms. Norman-Nunnery referred the correspondence from Mr. Brummel to the Council. Ms. Connor indicated that the Council dealt with Mr. Brummel last year. Ms. Norman-Nunnery will again respond to this inquiry.
- Adjournment: After some discussion of the September 2002 meeting date, Ms. Norman-Nunnery indicated that she will have a new meeting date for the Council in the near future. The Council adjourned until the next meeting.