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Compensation Advisory Council
Council on Worker’s Compensation
March 27, 2009
Members present: Mr. Beiriger, Mr. Brand, Mr. Buchen, Mr.
Collingwood, Ms. Connor (for Mr. Scott), Ms. Huntley-Cooper, Mr. Kent, Mr.
Newby, Mr. Olson, Ms. Pehler, Mr. Redman, Mr. Schwanda and Ms. Vetter
Excused: Mr. Nugent
Staff present: Mr. Aiello, Mr. Conway, Mr. O’Malley, Ms.
Knutson, and Mr. Krueger
- Call to Order/Introductions: Ms. Huntley-Cooper convened the
Worker’s Compensation Advisory Council (WCAC) meeting at approximately 9:30
a.m. in accordance with Wisconsin’s open meetings law. WCAC members, staff
and members of the audience introduced themselves.
- Minutes: The minutes of the March 13, 2009 meeting were
unanimously approved with correction.
- Public Comment: Mr. Eric Farnsworth, trial attorney and Director
of the Wisconsin Academy for Justice, commented on Management proposal # 1
relating to contractors and subcontractors. Mr. Farnsworth indicated that it
would be a drastic change in precedent in this state if employees were
precluded from suing another contractor or subcontractor for negligence on a
job site. He referenced the Miller Park and Falk Corporation accidents in
support of his position. Mr. Beiriger responded indicating that the intent
of Management’s proposal is not to eliminate a worker’s right to bring a
third party suit against another contractor or subcontractor on the job site
who was responsible for the work injury. Rather, the intent is to eliminate
provisions in construction contracts which transfer liability back to the
employer for any third party awards against a contractor or subcontractor on
the project. Currently the employer and its carrier are liable for the
worker’s compensation benefits and the employer may be liable under contract
to reimburse the tortfeasor for any third party recovery by the employee.
Mr. Newby indicated that Labor would not agree to language that would
eliminate third party suits in accidents such as Miller Park and Falk
Corporation. Management will work with the WCD and the Legislative Reference
Bureau in drafting language for review that conveys their intent with
Ms. Patricia Grillot stated that she has been receiving permanent total
disability (PTD) benefits for 24 years. For the first 20 years that she was
receiving PTD, she did not receive an increase in benefits. She suggested
that PTD benefits be increased to a 6 year lag. She also suggested that
insurance carriers pay attorney’s fees in cases where the dispute involves
payment of medical expenses.
- Correspondence: None.
Mr. Aiello provided a handout and report on the Work Injury Supplemental
Benefit Fund (WISBF). The balance as of March 25, 2009 was $10,573,342.
For the years 1996 through 2003, there is no captured data on payment of
attorney’s fees. Revenue sources of surcharges, interests and penalties for
illegal employment of minors were not effective until April 1, 2006. WISBF
revenue varies due to the main funding mechanisms of payment into the WISBF
following amputations and deaths. Expenditures out of the WISBF typically
remain low until the end of the fiscal year when carriers submit
reimbursement for supplemental benefit payments. Ms. Knutson
indicated that the WCD is not able to capture data on payments for hearing
aid expense payments or for hearing aids paid after claims had been
Mr. O’Malley explained
that statutory amendments limiting claims for occupational hearing loss
include the 1992 change to provide a threshold of 20% binaural loss before
indemnity would be payable and elimination of benefits for tinnitus. On
April 1, 2008 the most recent statutory amendment became effective providing
that hearing aids would no longer be payable on claims when no compensation
Management requested that the WCD review the increase in payments for barred
hearing loss claims and report back to the WCAC at the next meeting.
The WCAC had requested information on the average cost of tuition at the
Wisconsin colleges. Mr. Conway reported that a representative from the
Division of Vocational Rehabilitation will attend the next WCAC meeting and
will provide information on tuition costs, the current financial aid process
and grade and credit requirements.
Knutson reported that the WCD did not have any hard data on the number of
cases pending where the constitutionality of the retroactive application of
the 2008 amendments to Wis. Stat. §102.17(4) is at issue. In speaking with
the Department of Justice, the estimate is a dozen cases are pending with
some on hold and some proceeding through the hearing and appeal process.
With regard to Management proposal #8, Ms. Knutson indicated the WCD
could require a prehearing conference in cases where bad faith has been
alleged. The administrative law judge would then make a preliminary
determination on whether there was enough evidence of bad faith to proceed
to a formal hearing on the merits of that issue.
The WCAC had requested information on an updated cost analysis of bringing
PTD benefit rates in old cases up to a 6 year lag with future benefit rate
indexing. Mr. Conway provided information on the cost with two possible
approaches. The more costly approach would involve bringing all old PTD
recipients at once up to the maximum benefit rate with a 6 year lag. The
less costly approach would involve increasing benefits over a five year
period of time up to a 6 year lag. The more costly option would involve
additional increases of $10M to $10.5 per year for a 15 year average for
supplemental benefit payments. The less costly option would involve
increases of about $7M per year averaged over the next 15 years. These
estimates assume no changes to the current law on continuation of PTD
benefits for life and the requirements for eligibility for PTD. Mr. Newby
asked the amount of indemnity benefits paid out by all carriers. Mr. Conway
responded that in 2006 $244M was paid in indemnity and $541M was paid in
With regard to comparisons of compensation benefit rates in Wisconsin to
other states, Mr. Conway referred to a one-page summary and indicated there
are multiple variations on the basis for state WC disability payments and
duration of payments. It is difficult to rank WI in comparison to other
states due to these variations. Mr. O’Malley commented that some states
limit temporary total disability benefit payments to 2 years or 4 years. In
Michigan, there are no permanent partial disability benefit payments because
all benefits are paid on a wage-loss theory. It is hard to make meaningful
comparisons across the states.
Mr. O’Malley indicated that the WCD was withdrawing Department proposal #15
in reference to barred traumatic injuries, based upon a recommendation of
the Department of Justice who is representing the WISBF in the cases
currently on appeal.
Mr. Conway reported there is a request in the Governor’s Budget bill for
extending purchasing authority for information technology for the WCD. The
funds will be used for a major computer software upgrade for the Integrated
Clams Management System (ICMS). The software upgrades are necessary because
the Powerbuilder application is no longer supported. Mr. Aiello explained
there would be no impact on the pending report for the insurance carriers
because it is already in the new application.
Mr. Aiello clarified that in reference to Department proposal #2, it is not
the intent of the WCD to impose new $100 penalties; rather, the proposal
will give statutory authority to the Office of Commissioner of Insurance to
hold a hearing and impose sanctions against carriers that egregiously fail
to respond to WCD correspondence.
Labor & Management Proposals:
Mr. Beiriger indicated Management’s proposals seek to restore integrity into
the no-fault system. Management’s position on Labor’s proposals as follows
(numbers reference Labor proposal numbers):
With regard to Management proposal #2, concerning medical cost containment,
Mr. Buchen indicated there recently was a meeting with health care providers
and Management was waiting for results of a data request from insurance
companies. Ms. Pehler explained that Management proposal #8 is needed to
require specific information in claims where bad faith is claimed by the
employee. Currently employees are required to provide support for indemnity
and medical expense claims, and Management is seeking a similar requirement
for bad faith claims. In reference to Management proposal #10, if the
employee is not available for work because the employee is incarcerated and
not legally able to earn a wage, the employee should not be eligible for
disability benefits. Management adopts public proposal #7 sub. 2 relating to
taping of hearings, but would limit the right to tape hearings to the
- This is very similar to Management proposal #9; however, Management seeks
to limit eligibility for PTD benefits to injured workers that meet the
statutory definition of PTD with all other unscheduled injuries eligible for
permanent partial disability for loss of earning capacity only. Management
would then agree to incrementally increase supplemental benefits in 5 year
increments every 2 years until benefit rates are at a 6 year lag. PTD
benefits would then be indexed going forward. In conjunction with this,
Management would include its proposal #5 providing for termination of PTD
benefits at the Social Security retirement age. Persons who meet the
definition of statutory PTD would continue to receive benefits for life.
- This proposal would raise burial expenses to a maximum of $10,000. This
relates to Management proposal #7. If someone dies as a result of the work
injury, death benefits and increased funeral expenses are appropriate. If
the death is unrelated to the work injury, no death benefits or funeral
expenses would be payable.
- This proposal would raise PPD benefit rates $10 each year. This relates
to Management proposals #3 and 4. There has been an erosion of the statute
- This proposal refers to paying the cost of a retraining program
recommended by a DVR counselor. Management is not able to respond to this
proposal until further information is provided by DVR.
Mr. Newby indicated that the needs of the workers in the no-fault worker’s
compensation system should not be compromised. Labor will agree to public
proposal #7 sub. 2 as amended by Management. Labor will advise at a later
date if any of the other public proposals will be incorporated into the
Labor proposals. If Department proposal #4 is adopted, public proposal #7
sub. 1 should be adopted as well because both proposals deal with benefit
offsets. Labor’s response to Management proposals are as follows (numbers
reference Management proposal numbers):
- Management will submit proposed language to Labor for review.
- If Management has a proposal with regard to health cost containment, it
needs to be presented soon to be considered this agreed-bill cycle.
- No. This proposal relates to amending Wis. Stat. §102.17(4) on barred
traumatic claims. Often it is not good medical practice to have a hip or
knee replacement until much later. Most private group insurance excludes
coverage for work-related injuries and employees may be without coverage for
a knee or hip replacement. Mr. Brand indicated that the law was changed in
2006 in an attempt to find ways to keep the WISBF more solvent.
- Just because hearing loss does not rise to a compensable level for
indemnity does not mean there is no medical need for hearing aids.
- Social Security retirement benefits depend on your earnings throughout
your work life. If you are PTD at a young age, your Social Security
Retirement benefits will be very low. Also, there are only about 700 people
currently receiving PTD benefits. Mr. Beiriger replied that the number of
PTD claims alleged in settlements is not known. The costs to the insurance
carrier are higher than is reflected in conceded or decided cases.
- The department does not have any data available.
- This would lessen funds paid into the WISBF in cases where death benefits
are due but there are no dependents. If there are dependents, death benefit
payments are due whether or not the death is related to the work injury.
- The claim must be approved before a bad faith claim is entertained. There
is no need for a prior review by the WCD.
- An employee who is PTD may not meet the statutory provision but still
cannot permanently work. This would eliminate the “odd lot” PTD category.
The percentage of employees who meet the definition of statutory PTD is very
- There are decisions from various courts that undocumented workers are
covered by worker’s compensation. There is no data presented on the number
of cases where an employee is receiving disability benefits and is
incarcerated. More justification on this proposal is needed from Management.
- Adjournment: Discussion on all agenda items concluded and the
meeting was adjourned at approximately 3:00 p.m.
Future meeting dates: April 13th, May 8th and
June 5th. All meetings are scheduled to be held at the Crowne Plaza in
Madison with the exception of the May 8th meeting which is scheduled at the
Clarion in Madison.