Council on Worker's Compensation

Meeting Minutes
Madison, Wisconsin
May 24, 2001

Members present: Mr. Bagin, Ms. Connor, Mr. Beiriger, Mr. Buchen, Ms. Coakley, Mr. Fronk, Mr. Glaser, Mr. Gordon, Mr. Gleichert, Mr. Newby, Ms. Norman-Nunnery, Mr. Olson, Ms. Vetter, Mr. Welnak.

Staff present: Mr. O’Malley and Mr. Smith.

  1. Minutes. Ms. Norman-Nunnery convened the meeting in accordance with Wisconsin’s open meetings law. Mr. Welnak moved adoption of minutes of the April 19, 2001 meeting. Mr. Bagin seconded the motion. The motion passed unanimously.
  2. Introduction of new Council member. Ms. Norman-Nunnery introduced Mr. Don Gordon, Claim Program Manager, General Casualty, Sun Prairie, who was selected as one of the three insurance industry members on the Council. He replaces Mr. Fronk, who recently resigned. Mr. Gordon said he had enjoyed working on Iowa's Council in a similar capacity and was looking forward to now serving on the Wisconsin Council.
  3. Discussion of LIRC issues. Ms. Norman-Nunnery introduced Mr. David Falstad, Chairman, Labor and Industry Review Commission (LIRC), and Mr. James Pflasterer, LIRC's General Counsel. Mr. Falstad said that LIRC has a renewed interest in the activities of the Council.

    Mr. Falstad briefly summarized the experience of the current members. He said the three Commissioners serve staggered six-year terms. Mr. Falstad said that he came to LIRC after more than 20 years in the private sector; Mr. Rutkowski had 27 years of experience in the Legislature; and Ms. McCallum, who will join the Commission when the Senate confirms her nomination, has many years of experience at the Personnel Commission.

    Mr. Falstad said that, as a quasi-judicial body, LIRC Commissioners adhere to the Judicial Code of Conduct, although it may not technically apply. He explained that this often means LIRC remains silent in the face of media criticism of its decisions. In his first 4 years, LIRC had low visibility. Currently, there has been more interest as a result of the Supreme Court's decisions in several cases--Honthaner's, Theuer, and particularly, the Larsen decision. He said that, given an opportunity to explain, he thought LIRC does pretty well. He emphasized that, while the Commissioners may agonize when common sense seems to conflict with the dictates of the law, they do not pursue a political agenda. They follow the law. He concluded by saying that Wisconsin has an excellent system, in large part, thanks to the Council. LIRC wants to play its role in helping to preserve and improve the system.

    Mr. Pflasterer said LIRC has five full-time attorneys. Typically, one or both parties will petition for review of the ALJs' orders in 35- to 40-percent of the cases. Currently, he estimated it was 38%. He estimated the appeals rate from LIRC to the circuit court is about 15%. The parties have 21 days after the ALJ's order to petition LIRC for review. He said that the ALJs dictate a synopsis of the hearing (a para-phrased transcript that LIRC prefers to use in lieu of an actual transcript) and prepare the exhibits and hearing file for LIRC's review within 30-40 days. He complimented the ALJs for doing a good job in preparing the synopses. He estimated that in 85% of the employees’ appeals and in 100% of the insurers’ appeals, those parties are represented by attorneys

    Mr. Pflasterer said that when LIRC receives the synopsis it sets up a 50-day briefing schedule: 20 days for the petitioner’s brief; 20 days for a response brief and.10 days for the petitioner’s reply brief. In 25-35% of the cases the Commissioners are inclined to follow the staff recommendation. In the rest, the staff prepare a 2- to 20-page staff recommendation for discussion with the Commissioners. He said the process may be extended a little longer if it’s necessary to have a credibility conference with the ALJ.

    Mr. Bagin asked if it is customary to consult with ALJ on a reversal. Mr. Falstad said that, when in doubt, they will call the ALJ just in case credibility is an issue. Mr. Bagin asked if they did so in Larsen and Honthaner’s. Mr. Falstad said he did not recall specifically in those cases.

    Ms. Norman-Nunnery asked if the Commissioners called the ALJs if the synopses were not adequate. Mr. Falstad said that if there were problems with the synopses, LIRC expects the parties to point it out in their briefs.

    Mr. Buchen said that certain medical experts have little credibility in the system. He asked if that was a factor in the Honthaner’s decision. Mr. Falstad replied that certain doctors have a bad reputation, but sometimes an ALJ will treat those doctors as credible in certain cases. LIRC does the same thing. Mr. Pflasterer said that if the only issue is the written opinion, the ALJ is in no better position to assess that opinion than LIRC. He said it is on "demeanor" issues that consultation with an ALJ is required.

    Mr. Glaser said that in one sense the Larsen case was routine. The problem is that the employee and the employer were the same person. If the injured employer were not also the owner, perhaps the owner would have challenged the payment—or would have fired him for intoxication. Or, perhaps the co-owner would have fought the payment, except she was the wife of the injured employee. That’s what unusual about this case. The restraints that operate on an employee in an ordinary case—especially getting fired—did not apply here.

    Mr. Buchen said Larsen is not significant. Honthaner’s does change the law. And, the ALJ saw credibility very differently than LIRC. Mr. Pflasterer said the LIRC staff attorneys have recently discussed the viability of Spencer. Mr. Bagin said the ALJ did not accept the 60 weeks of disability based on the lack of credibility. Mr. Pflasterer said that LIRC did not think the ALJ applied Spencer properly.

    Mr. Newby said he did not want to re-try the two cases. He said the Council should focus on the process, not the individual cases.

    Mr. Falstad said LIRC staff would try to attend future Council meetings to improve the communication between the Council and the Commission.
  4. Safety Investigations Update. Mr. Buchen said he and Mr. Newby had run into some scheduling difficulties in trying to arrange a meeting with Commerce Secretary Blanchard.
  5. Budget Update—ALJ Positions. Ms. Norman-Nunnery said DOA had approved the Department’s request under s. 16.515, Stats. Unless the Joint Finance Committee objects, the positions and funding will be approved June 13th. Mr. Glaser asked Ms. Norman-Nunnery to thank the Secretary for her efforts to secure the positions.
  6. 2001 Assembly Bill 397. Representative Walker appeared to discuss his proposal to allow the circuit courts broader authority to review LIRC decisions. He said AB 397 would apply the same standard of review to LIRC decisions that the Court of Appeals has in reviewing circuit court decisions. He said he became interested in the subject after reading articles by Judge Eich and Judge Deininger, a former legislative colleague. He said his bill is more the result of Judge Deininger’s article than the Larsen decision.

    Mr. Glaser said the system needs a body like the Council that sees the "big picture." He said that too many people forget that worker's compensation is a no-fault system, with the exclusive remedy principle protecting the employer from any further legal action. He said that while the Supreme Court has often ignored the needs of labor, and what seem to be the clear words of the statute, they have done so in deference to those, like LIRC and the Department, that have administered this highly technical law over a long period of time. He said that while he may not like the outcome in a particular case, he respects the Supreme Court for applying that deference rationale. Under AB 397, he said, it’s possible that the courts would have decided the outcome in Larsen differently; but it could also fundamentally hurt the system. While that is not the intent, it could easily be the result.

    Mr. Bagin said the weakness in the system is between the ALJ level and LIRC, and it is not necessary to give courts broader discretion.

    Mr. Smith said that under the current system the final decision comes earlier in the process than it would if AB 397 were enacted. He said the system does not favor litigation—or extended litigation. A fundamental principle is that insurers should pay benefits due promptly and accurately, rather than litigate. In fact, only about 10-percent of Wisconsin reported injuries are litigated—which is considered the lowest litigation rate of any industrial state. Mr. Smith said that, in his opinion, LIRC commissioners are also far more consistent and knowledgeable regarding the legal issues than are circuit court judges. He predicted the 38% appeal rate that Mr. Pflasterer cited from the ALJ level to LIRC would now occur between LIRC and the courts. Currently that rate is about 15%. Mr. Smith noted that there were other experienced worker's compensation attorneys in the audience, and asked whether they would agree or disagree.

    Mr. Roston, Representative Hundertmark’s aide, said he was interested in the attorneys’ opinions about how much litigation into the courts would increase. He said Rep. Walker had asked Rep. Hundertmark to hold a hearing on the bill. Attorney Dennis Wicht said that he had 32 years of experience doing worker's compensation for both applicants and insurers; he guaranteed litigation would significantly increase.

    Mr. Newby said he was very troubled by the idea that the legislature would take an independent course and hold a hearing on a bill opposed by the Council. Mr. Glaser said either there is an "agreed bill" process or there is not. Mr. Newby said that Council members are very sensitive to the process and that this kind of action has the potential to break the system apart. Mr. Roston said that Rep. Hundertmark had not decided anything; he was merely reporting Rep. Walker’s request to the Council.
  7. Review Department Proposals. Mr. Smith briefly explained the Department’s legislative proposals, as introduced at the February 28, 2001 meeting.

The Council unanimously approved:

 

 

Subject

Statute

Proposal

Definition of employer subject to the Act

102.04(2)

Amend 102.04(2) as follows:

Except with respect to a partner or member electing under s. 102.075 members of partnerships or limited liability companies shall not be counted as employees. Except as provided in s. 102.07(5)(a) a person under contract of hire for the performance of any service for any employer subject to this section (1961) shall not constitute an employer of any other person with respect to such service and such other person shall, with respect to such service, be deemed to be an employee only of such employer for whom the service is being performed.

Comment. This deletes an obsolete reference.

Definition of employer subject to the Act

102.07(4m)

Amend 102.07(4m) as follows:

For the purpose of determining the number of employees to be counted under s. 102.04(1)(b) or (c), but for no other purpose, a member of a religious sect is not considered to be an employee if the conditions specified in s, 102.28(3)(b) have been satisfied with respect to that member.

Comment: 102.04(1)(b) excludes certain religious sect members when counting non-farm employees to determine if an employer is subject to the Act. 102.04(1)(c) relates to farm employees, to whom the same counting provision should also apply. This corrects an inadvertent oversight.

Employee defined

102.07

Create a cross-reference in Chapter 102 to s. 166.03(8)(d).

102.07 Employee defined. "Employee" as used in this chapter means:

(19) An emergency management employee or volunteer as defined in s. 166.03(8)(d).

Comment. An attorney representing an injured volunteer suggested the cross-reference.

Section 166.03(8)(d) reads as follows:

Employees of municipal and county emergency management units are employees of the municipality or county to which the unit is attached for purposes of worker's compensation benefits. Employees of the area and state emergency management units are employees of the state for purposes of worker's compensation benefits. Volunteer emergency management workers are employees of the emergency management unit with whom duly registered in writing for purposes of worker's compensation benefits. An emergency management employee or volunteer who engages in emergency management activities upon order of any echelon in the emergency management organization other than that which carries his or her worker's compensation coverage shall be eligible for the same benefits as though employed by the governmental unit employing him or her. Any employment which is part of an emergency management program including but not restricted because of enumeration, test runs and other activities which have a training objective as well as emergency management activities during an emergency proclaimed in accordance with this chapter and which grows out of, and is incidental to, such emergency management activity is covered employment. Members of an emergency management unit who are not acting as employees of a private employer during emergency management activities are employees of the emergency management unit for which acting. If no pay agreement exists or if the contract pay is less, pay for worker's compensation purposes shall be computed in accordance with s. 102.11

Work-experience students

102.077(3)

102.07(12m)

102.29(8)

Delete the sunset provisions related to work-experience students.

Comment: Current law authorizes schools to voluntarily insure work-experience students, but only if they get no wages from the work-site employer. The option is rarely used. The exclusive remedy provision immunizes the work-site employer from tort suits. The sunset provisions were enacted in 1996 and extended in 1998 and 2000. No problems have been reported to the Department.

Weekly wage

  • Overtime
  • Employer's normal full-time work week

102.11(1)(a)

Amend 102.11(1)(a) as follows:

Daily earnings shall mean the daily earnings of the employee at the time of the injury in the employment in which the employee was then engaged. In determining daily earnings under this paragraph, overtime shall not be considered. Overtime means hours worked beyond the employer's normal full-time workweek. Premium pay such as time-and-a-half or double time may be earned during the normal workweek or during overtime…..

Comment.

Overtime and premium pay are not synonymous. Overtime is not used to calculate earnings under par (a), but is used under par. (d). For most employees, earnings are the larger of paragraphs (a) or (d).

Fraud report

102.125(2)

Delete the requirement for an annual fraud report to the Governor and Legislature (or, alternatively, have the Department report to the Council).

Comment. The Department refers only about 15 cases of alleged fraud annually to district attorneys. They prosecute about 3. This low level of fraud reported and prosecuted does not justify such high-level annual reporting. The Department has issued reports covering the first 5 years of the program. There is nothing new to report.

Medical necessity of treatment disputes

102.16(2m)

(c)

Amend 102.16(2m) (c) as follows:

Before Except as provided in ss. 102.16(1) or 102.18(1), before determining the necessity of treatment provided for an injured employee who claims benefits under this chapter, the department shall obtain a written opinion on the necessity of the treatment in dispute from an expert selected by the department. To qualify as an expert, a person must be licensed to practice the same health care profession as the individual health service provider whose treatment is under review and must either be performing services for an impartial health care services review organization or be a member of an independent panel of experts established by the department under par. (f). The department shall adopt the written opinion of the expert as the department's determination on the issues covered in the written opinion, unless the health service provider or the insurer or self-insured employer present clear and convincing written evidence that the expert's opinion is in error.

Comment. Peer review in 102.16(2m)(c) is an option for compromise orders under 102.16(1) or for an ALJ issuing orders after hearing under 102.18(1), but it was never intended to be a requirement.

Multiple parties

102.17(1)(c) and (e)

102.20

102.23(1)(d)

Substitute "any" for "either" in four statutes:

102.17(1) (c) Either Any party shall have the right to be present at any hearing, in person or by attorney, or any other agent, and to present such testimony as may be pertinent to the controversy before the department….

102.17(1) (e) The department may, with or without notice to either any party, cause testimony to be taken….

102.20 Judgment on award. If either any party presents a certified copy of the award to the circuit court for any county, the court shall, without notice, render judgment in accordance therewith…

102.23(1)(d) …The action may thereupon be brought on for hearing before the court upon the record by either any party on 10 days' notice to the other….

Comment. "Any" is more appropriate if there are more than 2 parties.

Voluntary direct deposit of benefits

102.26(3)(b)

Create a new subparagraph in 102.26(3)(b).

102.26(3)(a) Except as provided in par. (b), compensation exceeding $100 in favor of any claimant shall be made payable to and delivered directly to the claimant in person.

(b) 1. The department may upon application of any interested party and subject to sub. (2) fix the fee of the claimant's attorney or representative and provide in the award for that fee to be paid directly to the attorney or representative.
2. At the request of the claimant medical expense, witness fees and other charges associated with the claim may be ordered paid out of the amount awarded.

3. If the claimant and the insurer mutually agree, the claimant may request an insurance carrier or employer to deposit payments or awards under this chapter directly in a financial institution by electronic transfer or as otherwise approved by the department. The claimant may revoke consent by providing appropriate written notice.

Comment. 102.26(3)(a) requires compensation over $100 to be "delivered directly to the claimant." This prevents payment to a third party, e.g., the claimant's attorney. Arguably, it prevents direct deposit in a claimant's bank account. Some states specifically authorize direct deposit because it's faster and safer than mail delivered to the home. At least one state, Texas, mandates that insurers give employees a direct deposit option. The financial services consultant for one TPA that is setting up a system to offer the option in other states has requested permission to offer this option in Wisconsin. Their process to approve and generate payments is not changed. The employee must fill out a direct deposit authorization form and may revoke authorization at any time. At its May 24, 2001meeting the Council amended the Department’s proposal to specificy that the insurer could not be compelled to participate; there had to be mutual agreement.

Open records

102.31(8)

102.33

Section 1. 102.31 (8) of the statutes is amended to read:

The Wisconsin compensation rating bureau shall provide the department with any information it relating to worker's compensation insurance coverage, including but not limited to the names of employers insured and any insured employer’s business, business status, type and date of coverage, manual premium code, and policy information endorsements and reinstatement dates. The department may enter into contracts with the Wisconsin compensation rating bureau to share the costs of data processing and other services. The Wisconsin compensation rating bureau may authorize the department to publish or release information obtained by the bureau under s. 626.32(1) (a). The department shall not make that information public except as authorized by the rating bureau.

Section 2. 626.32 (1) (a) of the statutes is amended to read:

626.32 (1). Acquisition of information. (a) General. Every insurer writing any insurance specified under s. 626.03 shall report its insurance in this state to the bureau at least annually, on forms and under rules prescribed by the bureau. The bureau must file, pursuant to rules adopted by the department of workforce development, a record of such reports with the department. No such information may be made public by the bureau or any of its employees except as authorized or required by law and in accordance with its rules.

Comment. The Council agreed to this change in principle in the last session. In 1982, the AG determined that records of organizations like WCRB are not subject to Wisconsin's Open Records law. See May 7, 1982 letter to Insurance Commissioner Susan Mitchell. In April 1999, the AG supported the Department's refusal to release that WCRB insurer information from a database shared by WCRB and the WC Division. The Division assumes that Datalister, Inc., a Florida firm, intended to use the insurance policy information to solicit employers. The AG encouraged the Department to clarify the statutory intent. This proposal codifies the long-standing working relationship between the Department and the Rating Bureau and is supported by both agencies. In August 1999, Datalister successfully sued to obtain similar data under Arizona and Minnesota laws.

Typographical error

102.32(5)

Amend 102.32(5) as follows:

Any insured employer may, within the discretion of the department, compel the insurer to discharge, or to guarantee payment of its liabilities in any such case under this section and thereby release himself or herself from compensation liability therein, but if for any reason a bond furnished or deposit made under sub. (4) does not fully protect, the compensation insurer or uninsured insured employer, as the case may be, shall still be liable to the beneficiary thereof.

Comment. In the context of a subsection dealing with the relationship of an insured employer to its insurer, the reference to an "uninsured" employer is absurd.

Prompt PPD payments

102.32(6)

Amend 102.32(6) as follows:

If compensation is due for permanent disability following an injury or if death benefits are payable, payments shall be made to the employee or dependent on a monthly basis. Compensation for permanent disability shall begin within 30 days after the end of the employee's healing period or after the insurer receives a medical report with a permanent disability rating, whichever is later. If the insurer notifies the claimant within 30 days after the end of temporary disability or after receiving the rating, whichever is later, that the insurer is scheduling an examination under s. 102.13(1), compensation shall begin within 30 days after the insurer receives the examining report, or within 90 days after the notice to the claimant of the intent to schedule the exam, whichever is earlier. Payments for permanent disability shall continue on a monthly basis, and shall accrue and be payable between intermittent periods of temporary disability, including payments based on the minimum permanent disability ratings set by rule if the insurer has clear information regarding the nature of the injury or the surgery. The department may direct an advance on a payment of unaccrued compensation or death benefits if it determines that the advance payment is in the best interest of the injured employee or his or her dependents. In directing the advance, the department shall give the employer or the employer's insurer an interest credit against its liability. The credit shall be computed at 7%.

Comment.

1. In October 2000, the Department proposed codifying the 30-day payment standard and clarifying how to handle intermittent periods of PPD and temporary disability to a group of about 40 experienced insurance claims handlers and supervisors. In November 2000, an insurance attorney requested the extension for IMEs, with 30 days to give notice of intent to schedule the IME and a 90-day limit on starting payments (even if the IME is not done by then).

2. This also clarifies that if PPD is due because of the minimum ratings in DWD 80.32, it is due during weeks in which no temporary disability is paid—regardless of whether there is an end of healing, permanency rating, or return to work.

3. The Council amended the Department’s proposal to commence payments with 30 days rather than 14 days.

Admin rules;

Electronic media

102.37

Amend 102.37 as follows:

Employers' records. Every employer of 3 or more persons and every employer who is subject to this chapter shall keep a record of all accidents causing death or disability of any employee while performing services growing out of and incidental to the employment. This record shall give the name, address, age and wages of the deceased or injured employee, the time and causes of the accident, the nature and extent of the injury, and any other information the department may require by rule or general order. Reports based upon this record shall be furnished to the department at such times and in such manner as it may require by rule or general order, upon forms in a format approved by the department.

Comment.

1. The term "rule" has replaced the phrase "general order" in almost all other statutory usage. However, since both terms are occasionally used elsewhere (e.g., s. 103.005, which is cross-referenced in s. 102.39) the reference to general orders is retained rather than deleted). The same change is proposed in 102.37, 102.38, 102.39, 102.57 and 102.58

2. The requirement to use a "form" is unnecessarily restrictive. The statute is more restrictive than the electronic reporting rule, DWD 80.02(3). The Department allows and encourages insurers to provide required information in other formats--fax, EDI and over the internet.

Admin rules;

Electronic media;

Insurer reports

102.38

Amend 102.38 as follows:

Records of payments; reports thereon. Every insurance company which transacts the business of compensation insurance, and every employer who is subject to this chapter but whose liability is not insured, shall keep a record of all payments made under this chapter and of the time and manner of making the payments, and shall furnish reports based upon these records or any other information to the department as it may require by rule or general order, upon forms in a format approved by the department.

Comment.

1. Just as employers must provide any information required by rule in 102.37, insurers should provide any information required by rule, not just payment information. For example, insurers (not employers) now provide the first report of injury (WKC-12). See DWD 80.02(2).

2. General order is an obsolete term. The same change is proposed in ss. 102.37, 102.38, 102.39, 102.57 and 102.58

 

Admin. rules

102.39

Amend 102.39 as follows:

General orders; application of statutes. The provisions of s. 103.005 relating to the adoption, publication, modification and court review of rules or general orders of the department shall apply to all rules or general orders adopted pursuant to this chapter.

Comment. The same change is proposed in ss. 102.37, 102.38, 102.39, 102.57 and 102.58

Admin. rules

102.57

Amend 102.57 as follows:

Violations of safety provisions, penalty. If injury is caused by the failure of the employer to comply with any statute, rule or any lawful order of the department….

Comment. The same change is proposed in ss. 102.37, 102.38, 102.39, 102.57 and 102.58

Admin. rules

102.58

Amend 102.58 as follows:

Decreased compensation. If injury is caused by the failure of the employee to use safety devices which are provided in accordance with any statute, rule or lawful order of the department….

Comment. The same change is proposed in ss. 102.37, 102.38, 102.39, 102.57 and 102.58

Vocational rehabilitation

102.61(1m)

Delete obsolete reference to Department of Health and Family Services

Comment. DVR is now a sub-unit of DWD, not DHFS.

 

The Council rejected the following proposal.

Election by corporate officer

102.076

Create 102.076(3) as follows:

Corporate officers engaged in maritime employment or interstate commerce who are covered by the Federal Employers Liability Act, the Longshore and Harbor Worker's Compensation Act, or any of its extensions, or the Jones Act, may not elect to waive coverage under the Wisconsin Worker's Compensation Act.

Comment. The Wisconsin Compensation Rating Bureau requested this change. Their attorney indicates it would affect a small number of Great Lakes fishermen. While there is some precedent for waiver or release of Jones Act benefits, a person may not waive LHWCA benefits. This means insurers have liability for the corporate officers based on federal law. Therefore, when corporate officers eligible for LHWCA benefits elect out of Wisconsin's law, insurers continue to collect premium on their wages to cover their exposure under federal law--negating the benefit from opting out. Eligibility for Wisconsin benefits does not preempt any federal claims the corporate officers may wish to make. In short, since there is no financial advantage for them to opt out, and since by doing so, they give up Wisconsin benefits for which they are being charged a premium, the WCRB proposed this change. WCRB educational efforts with these commercial fishermen have not been successful.

  1. Next meeting. The Council adjourned until its next meeting scheduled for 9 a.m., June 25, 2001, at Local 494, International Brotherhood of Electrical Workers (IBEW), 3303 S. 103rd ST. Milwaukee.