Council on Worker's Compensation
Meeting Minutes
Madison, Wisconsin
March 25, 2003

Members present: Mr. Bagin, Mr. Beiriger, Mr. Buchen, Ms. Connor, Mr. Glaser, Mr. Gordon, Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Mr. Olson, Ms. Vetter, Mr. Welnak

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


1. Call to Order. Ms. Huntley-Cooper convened the meeting in accordance with Wisconsin’s open meeting law. Mr. Conway introduced Ms. Huntley-Cooper, the new Division Administrator. Ms. Huntley-Cooper commented that many other states have tried to duplicate the Wisconsin advisory council system. Both Mr. Bagin and Mr. Glaser welcomed Ms. Huntley-Cooper on behalf of the Council.

2. Minutes. Mr. Beiriger moved adoption of the minutes of the January 16, 2003 meeting; Ms. Vetter seconded the motion. The motion was unanimously approved. Mr. Bagin moved to accept the December 11, 2002 and June 6, 2002 minutes. Mr. Welnak seconded the motion. The motion was unanimously approved.

3. Discussion of WCD proposals. Mr. Bagin had questions regarding Department proposal numbers 1 and 2 regarding reasonableness of fee and necessity of treatment disputes. Mr. O’Malley explained there is an increase in the number of small reasonableness of fee disputes filed with the Department. To improve efficiencies, the Department proposes that the provider lump together disputes for the same claimant and the same claim to total a minimum of $25. Mr. Glaser asked who would pay the small dispute amount if it was not filed with the Department. Mr. O’Malley indicated that under current law, the employee could not be balance-billed. Further, different CPT code charges could be combined. Mr. Russell Leonard indicated that if a provider submits a bill and the insurer does not use a certified database to appropriately reduce a bill, and if the claim falls within the database guidelines that it should be paid by the insurer. Ms. Knutson explained that not all CPT codes are certified in the approved databases. Some insurers and bill reviewers indicate that charges are reduced by using a certified database, but in reality the particular CPT code is not certified due to the low number of occurrences. Approximately 8% of all reasonableness of fee are for amounts less than $25. Mr. Glaser indicated that he agreed with the concept, but that the proposed language needed to be reviewed. Mr. O’Malley stated that virtually all necessity of treatment disputes were for amounts greater than $25. The Department proposed a change for those disputes to have consistency in the statutes for the two types of medical disputes.

Department proposal # 7 corrects erroneous language in the previous amendment regarding payment of compensation for permanent partial disability when the insurer does not dispute liability (Wis. Stat. § 102.32(6)). Mr. O’Malley explained that the proposed language was the Department’s suggestion to correct drafting errors. Mr. Bagin indicated that the two parties could probably agree on some language.

Mr. O’Malley indicated that Department proposal #8 was intended to correct an error in the previous bill draft. Language referring to permanent disabilities in granting advance payments of unaccrued compensation was omitted. Mr. Glaser questioned if the interest credit was tied to some government rate. He indicated that it was advantageous to the insurer to receive a 7% interest credit. Mr. Bagin indicated that the Council could look at language regarding the rate. Mr. O’Malley indicated that the rate has been 7% for over 20 years. Mr. Bagin commented that part of the rationale for setting the interest rate was to avoid advancement . Permanent partial disability benefits were meant to supplement an employee’s income after the healing period, particularly if the employee could not return to his or her previous employment.

Mr. Bagin expressed concern regarding Department proposal # 9, which increases penalties from $100 to $500 for failure to file required reports or to respond to Department for information. Penalties assessed against frequent abusers could be increased. Mr. Glaser commented that perhaps the Department assesses penalties at the current maximum amount because the administrative costs to assess penalties have increased. Mr. Bagin expressed concern that the Department’s records of failure by insurers to respond are not always accurate. The rescission rate is 70%. If the insurer files a WC-12, then a WC-13 should be sent in later. Mr. Bagin agreed that penalties should be increased for insurers who frequently ignore the system. Mr. Shorey explained that 8,000 no-lost time or denied claims are reported to the Department and this accounts for the 70% rescission rate. The Department is not asking for more information to be reported to the State. The notice to the worker of denial of the claim would not be copied to the Department. Mr. Bagin responded insurers/self-insured employers are concerned with potential under-reporting of claims. But, the WC-13 should be filed within a reasonable time after the WC-12 is filed. Mr. Shorey explained that the Department waits 60 days before issuing a forfeiture. Mr. O’Malley further explained that the proposed amendment of §102.35(1)(b) would give specific statutory authority to the Department to issue rescissions of forfeitures. Mr. Bagin indicated that he had no problem with this proposed change. Mr. Shorey commented that the Department has the most difficulty with non-domiciled insurers that have many third party administrators. For those situations, a $100 fine does not have much of an impact in comparison to in-state companies.

Regarding Department proposal #13, Mr. Bagin asked if all insurers and self-insured employers have the ability to electronically report claims. Mr. O’Malley responded that most companies have the ability to electronically report claims, but that the focus would be on companies that are not meeting reporting standards. Mr. Glaser commented that Unemployment Insurance phased in the requirement based on the size of the employer. Mr. O’Malley stated that the insurance carrier could ask for reconsideration. The Department could also develop some standards before an insurance carrier would be required to electronically report claim information. The intention is not to force all carriers to electronically report claims. Mr. Bagin suggested that there be an exception for small employers/insurers.

Mr. Glaser stated in reference to Department proposal #12 that the time frame for carriers to either make payment or give notice of denial of liability be reduced from 45 days to 30 days. In addition, that the notice be required to cite specific reasons for the denial of the claim, not just a general denial. In looking at the Department proposal, the carrier would be allowed a total of 60 days to provide a notice of denial. Mr. Gordon commented that the notice would need to be given within 14 days that the insurer learns of the injury. Mr. Bagin indicated that sometimes the employer/carrier has difficulty obtaining information and there is a reason the investigation is taking longer. Mr. O’Malley clarified that the Department was proposing a repeal and re-creation of the reporting section of the statute, and that the employee would receive the notice, not the Department. Mr. Bagin questioned how the Department would "police" the reporting requirement. Mr. O’Malley responded that the Department may never hear about it. There have been complaints of breakdowns in communication between the employer/carrier and the employee. Mr. Glaser commented that the employer/carrier should explain to the employee that he/she has the right to a formal hearing. Mr. O’Malley responded that most carriers domiciled in Wisconsin do a good job of informing employees of their rights.

4. Submittal of Council Proposals:

Labor Proposals. Mr. Glaser indicated there were issues that needed discussion. Labor’s listed proposals A-D are adopted from public and legislators’ concerns.

    1. Creation of a low interest loan program for employees. Qualifying criteria would need to be developed. The program would be self-sustaining after a period of time. There was a potential for default if the employee lost his/her claim at hearing. There would also need to be provision for a lien for collection of loan disbursements.
    2. Mandated use of a Department form for release of medical information that complies with the new Health Insurance Portability and Accountability Act (HIPAA) requirements on privacy issues (Wis. Stat. § 102.13(2)).
    3. Increase the maximum penalty for bad faith under Wis. Stat. § 102.18(1)(bp) from $15,000 to $50,000.
    4. Include in the Department publication "Facts for Injured Workers" information that nurses and insurance representatives cannot attend doctor appointments, but can make follow-up telephone calls to the doctor. Privacy issues are an increasing concern in light of the new federal HIPAA requirements. This would not require a change in the statutes.
    5. Amend Wis. Stat. §102.01(2)(g)2 regarding date of injury to allow the injured worker to choose the date of injury in occupational disease cases. The choices would be defined similar to the statutory choices for date of injury in occupational hearing loss cases. This proposed change would reduce litigation and speed up the process in these cases. Carriers would not be disputing liability between themselves. Most carriers are large enough that costs would even out over time.
    6. Proposal that in State gaming pacts, casinos be required to have unemployment insurance and worker’s compensation insurance coverage for employees. In the alternative, if worker’s compensation insurance is not required, that an injured employee of the casino be able to sue the casino. Mr. O’Malley clarified that the employee can sue the tribe, but no benefits are allowed from the Uninsured Employers Fund. The Potawatomi Tribe purchased a policy for a period of time. Some tribes have self-contained disability policies. The Department routinely dismisses hearing applications because we do not have jurisdiction over these claims. The date of injury controls in determining if the tribe has a policy. Attorney David Weir commented that the Council could make a suggestion to the Governor to require worker’s compensation insurance coverage in tribal negotiations.
    7. The Council should consider indexing benefit rates in relationship to other rates by some formula amount. If the Council could agree on an indexing rate, benefit rates would not need to be the subject of future negotiations.
    8. Modify Wis. Stat. §102.18(1)(b) to allow a prospective award of temporary total disability benefits. This would go along with changes in the statute last session, which allows a prospective award of medical benefits. This would be beneficial to employees that are waiting for an education program to start.
    9. Require employers to continue payment of fringe benefits when an employee is receiving temporary total disability benefits as a result of a work-related injury.

Management Proposals. Mr. Bagin introduced the Management proposals.

    1. Pre-existing claims or disability are documented as a worker’s compensation issue. Some employees have as many as 10-15 claims. The proposed amendment to Wis. Stat. §102.03(1)(c) prohibits claims where employees knowingly conceal permanent physical/mental limitations imposed prior to the injury date and such concealment caused or contributed to the later claimed injury. In addition, the proposed amendment would remove the barrier from information exchange, understanding privacy concerns regarding access to Department public records. Mr. Glaser commented that presently the employer or carrier has the right to information related to a claim and the Department records are open in this regard. Mr. Bagin explained that in compounded permanent partial disability ratings, the information may be released. Employers/carriers want to know about other similar injuries. The proposed language covers everything. Currently, clinics are getting legal opinions on what medical conditions are "reasonably related" to the claimed work injury.
    2. Mr. Bagin indicated that there was common interest between Labor and Management on the need for a uniform authorization for release of medical information.
    3. Automatic waiver of the physician-patient privilege. Currently information exchange is impeded. An agreed-upon release of medical information form would reduce the impediments to claim investigations. The parties would be compelled to use the form.
    4. Provide a limitation on charges for copies of medical treatment records and clarify that all records requested in connection with the worker’s compensation claim are subject to the charge limitations. Wisconsin sales tax would be collected on copy charges.
    5. This amendment is a corollary to #4. This amendment would provide a penalty to health care providers that refuse to release records.
    6. Provide that if competent legal counsel represents an injured employee, the Department would automatically approve a compromise agreement. Mr. Bagin indicated that the Department should be less restrictive in approving compromise agreements. Mr. Glaser indicated that one of the reasons the Wisconsin worker’s compensation program is a success is that we are tough on compromise agreements. If settlements are expanded, there becomes a reason for other than competent attorneys to become involved in the system. It can happen that lawyers sell out employees. Claims that are the most legitimate are less likely to end up as the subject of a compromise. Mr. Buchen responded that attorneys are obligated to work in their clients’ best interests or they are subject to discipline. Mr. Newby questioned how often the Department does not approve compromise agreements. Mr. O’Malley indicated that in a study he conducted several years ago, out of 200 randomly selected case files, only 1 or 2 compromise agreements were rejected. In a couple of other instances, there was a need for further information before the compromise was approved. Mr. Glaser indicated that the Council was not trying to encourage compromises. The Department’s role was to protect employees from settlements if it was not in their best interests. Otherwise in the future, the individual ends up on some other taxpayer-sponsored program. Mr. Bagin responded that compromises are only one part of the system; permanent partial disability benefits and predictability of claims are also involved. If a case is ripe for compromise, the price of the claim is impeded if the Department makes settlement difficult. There are a couple of administrative law judges who are reluctant to approve compromises. Mr. O’Malley commented that the Department’s review of compromises is a safety valve in the system.
    7. Provide an amendment to Wis. Stat. §102.17 clarifying that the employee has the burden of proof and that the Act is strictly construed rather than liberally construed. Mr. Bagin indicated that this would provide the appearance of neutrality in the way the Department conducts itself. There are penalties for failure of the employer to act, but not for the employee. There needs to be an atmosphere of fairness when the parties walk into the hearing room.
    8. Amend the current statute (§102.42(2)) concerning choice of provider. This is a step towards medical management of claims. Mr. Buchen indicated that when the data is analyzed, in comparison between group health care benefits and worker’s compensation, worker’s compensation pays substantially more (sometimes double) for the same services. There needs to be some control over medical costs in the worker’s compensation system. Mr. Glaser commented there is a perception that the medical community is gouging worker’s compensation, which is not necessarily the case. In situations other than worker’s compensation, there is a discount based on volume or a preferred provider program. Mr. Buchen responded that the charges are the same, it is the amount that worker’s compensation pays that is different. Mr. Glaser stated that private insurance does not pay charges in full. The problem of worker’s compensation costs needs to be worked on. Other areas also need to be scrutinized. Mr. Bagin commented that the practitioners are getting paid better than injured employees. This is management’s number one issue. Providers are taking money from the system that is not going to the injured employee. Mr. Buchen stated there is an incentive for medical treatment in the worker’s compensation system. Mr. Newby expressed concern that this proposal is trying to get at medical costs by telling employees they cannot treat with a particular doctor. The employer has information on medical procedure costs at particular clinics. Mr. Buchen replied that some clinics and individual providers are not practicing in a way to benefit of the injured employee. Mr. Glaser expressed concern that the proposal provides if the employer/carrier does not agree to the employee’s choice of practitioner, the employee ends up paying the bill. Mr. Bagin commented that management could take a look at the proposed language. Mr. Leonard commented that providers do not want to take worker’s compensation cases. Over 70% of the Wisconsin Chiropractic Association members belong to managed care. Further, there are no proposals for regulation of pharmaceutical charges in management’s proposals. Mr. Bagin commented that it is healthy to have debate over these issues.
    9. This proposal, to amend Wis. Admin. Code §DWD 80.47, is in response to the Supreme Court decision in the Brakebush case. The injury can be used as immunity for discipline in the workplace. Temporary disability benefits would be terminated when the employee is discharged for work-related misconduct.
    10. Approximately 10 years ago, the Council discussed a code of conduct for administrative law judges. The proposal would require that the Code of Judicial Conduct apply to worker’s compensation administrative law judges (ALJs). Mr. Bagin commented there needs to be accountability for ALJs as there is for judges in the civil process. Mr. O’Malley commented that ALJs are subject to the Code of Professional Responsibility.

5. Compensation for Smallpox Immunization: Mr. Conway indicated there were three letters distributed to Council members that expressed concerns regarding coverage of injuries and illnesses related to smallpox. A standard reply has been developed by the Division. Also distributed to the Council was an internet article regarding coverage of smallpox. Mr. O’Malley explained that the Bush Administration proposed a federal compensation program for smallpox that includes benefits of $262,100 for death or permanent disability and up to $50,000 for lost wages with a five-day waiting period. In Wisconsin case law, there is a 1927 case, Vilter Manufacturing, that addresses the compensability of smallpox. In that case, the employee contracted smallpox from eating ice cream at a sanitarium. Assuming that getting the smallpox vaccination is a work-related occurrence, the consequences that follow would be work-related as well. Mr. Glaser indicated that he has been receiving telephone calls regarding whether the employee will get paid for the first three days of disability. He has responded that the payment for the first three days is a contractual issue as with all other injuries. Mr. Bagin indicated that the law now covers any industrial disease and therefore no law change is needed. Mr. O’Malley indicated that he has drafted a one-page memorandum regarding smallpox inoculations and reactions. The Council members requested that a copy of the memorandum be sent to them.

6. SB44, Changes in WC Funding Language: Mr. O’Malley explained that SB44 (Budget bill) contained six references to Chapter 102 of the Statutes. The first provision refers to modifications in the W-2 program wherein the private sector employer is selected by this Department for a transitional subsidized private sector job under Wis. Stat. §49.147(3m). Mr. Newby commented that these employees previously were not covered by unemployment insurance because it was determined that the employees were given a grant, not wages. Mr. O’Malley clarified that for worker’s compensation purposes the employees were paid wages. Mr. Newby questioned whether for unemployment insurance purposes there is a change in status due to the proposed statutory language. Mr. Buchen responded that the Unemployment Insurance Advisory Council met and did not discuss the issue. Mr. O’Malley indicated that if the worksite employer does not cover these employees for worker’s compensation purposes, the State covers them. If the W-2 worker is not receiving a grant and not wages, the State of Wisconsin is the employer, not the worksite employer.

The Worker's Compensation Advisory Council reached a general consensus not to raise an objection to the proposed statutory amendments contained in SB44 Sections 1849-1852 pertaining to Chapter 102 if these become law. It was also noted that suggested proposed legislative changes that affect Chapter 102 should be submitted to the Worker's Compensation Advisory Council for review. The new administration should be apprised of this process.

Mr. O’Malley covered the other amendments in the bill. Most of them deleted reference to the State Treasurer and substituted the Secretary of the Department of Administration. Another amendment provided all federal money collected for worker’s compensation must be used for that purpose.

7. Correspondence: Mr. Conway indicated that three letters had been received, and two of them answered by the Division.

1. Mr. O’Malley stated that correspondence from Attorney David Regele requested a change in the definition of date of injury for occupational disease injuries. It can be difficult to determine the date of injury in certain cases. There is significant litigation concerning this particular issue. Mr. Glaser indicated Labor would consider including these changes in their proposed amendments. Mr. Bagin inquired whether there had been a recent court case on this issue. Mr. O’Malley responded that the Court of Appeals recently addressed this issue in the Virginia Surety case. Ms. Connor commented that carriers in worker’s compensation cases disputing the date of injury point to any date of wage loss. Mr. Glaser requested that the Department e-mail the Virginia Surety decision to the Council members.

2. Correspondence from Dr. Seter proposed a new alternative system to avoid disputes between the carrier and the employee regarding payment of medical bills. Mr. Glaser commented that the Council had discussed this issue in the past. If the employer directs care, the employer must pay for the treatment. Mr. Buchen indicated that this issue could be addressed as part of the overall medical care issue.

3. Mr. Jay Haug had concerns with his wife’s specific situation. Mr. O’Malley indicated that based on the limited information provided in the correspondence, the Department was unable to identify his wife’s claim. Mr. Glaser indicated that Mr. Haug seems to be saying benefits are not adequate.

8. Adjournment: Discussion on all agenda items concluded and the meeting was adjourned. The next meeting date is April 22, 2003.