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Compensation Advisory Council
Council on Worker’s Compensation
June 7, 2007
Members present: Mr. Beiriger, Mr. Brand, Mr. Buchen,
Mr. Furley, Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Mr. Olson, Mr. Redman, Mr. Schimke, Mr.
Shaver, Mr. Scott, Ms. Vetter
Excused: Ms. Bean
Mr. Conway, Mr.
O’Malley, Ms. Knutson, Mr. Krueger and Mr. Topp
- Call to Order/Introductions: Ms. Huntley-Cooper convened the
Worker’s Compensation Advisory Council (WCAC) meeting at 10:00 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 May 17, 2007 meeting were approved
- Presentation by WCAC Medical Liaisons:
Representatives from the Wisconsin Chiropractic Association, the Wisconsin
Hospital Association and the Wisconsin Medical Society presented information
to the WCAC supporting their position in opposition to adoption of a medical
fee schedule as proposed by Management. The presentation cited information
from the May 2007 report of the Workers Compensation Research Institute (WCRI)
entitled “Comparing Outcomes for Injured Workers In Nine Large States”,
indicating that the health care system in Wisconsin delivers an excellent
value with good worker outcomes at lower than average costs to
employers/insurers. Cost per procedure is significantly higher in Wisconsin
compared with other states, but overall cost per worker’s compensation claim
is lower compared with other states, including those states with medical fee
schedules. Information was also presented concerning worker’s compensation
insurance premiums and the percent of claim payments per premium dollar.
Additionally, the representatives cited current cost containment processes
in Wisconsin including necessity of treatment reviews, reasonableness of fee
reviews (i.e. certified databases) and the new treatment guidelines as
sufficient in support of their opposition to a medical fee schedule.
Reports: Mr. John Neal, a partner with Stafford and Neal Law Firm,
reported on the Attorney Fee Discussion Group. The group agreed on three
1. The department should implement a change in procedure in calculating
attorney’s fees in Social Security Disability Offset cases so that the fee
is calculated on the entire benefits (i.e. net worker’s compensation benefit
plus a 20% fee) resulting in the attorney actually receiving a 20% fee
rather than a 16% fee.
- In non-contested cases, the maximum fee should be increased from $100 to
- Amend Wis. Stat. §102.26 to provide that attorney’s fees of up to 33% are
allowable on penalty claims (i.e. bad faith, delayed payment, unreasonable
refusal to rehire, increased compensation for safety violation).
The group has not arrived at a consensus concerning payment of attorney’s
fees on medical expenses. The group will continue to work on this issue for
a recommendation to the WCAC for the next agreed bill cycle (2008-2009). The
group recommended that no action be taken on the proposed amendment to Wis.
Stat. §102.27(2) providing for attorney’s fees on reimbursements to
governmental units. The bill has been referred to the Department of Health
and Family Services for review. The group also suggested that the department
review current administrative law judge decisions regarding attorney’s fees
on unpaid medical expense claims. Mr. Raymond Clausen, a partner with
Clausen and Severson Law Firm, commented that injured workers have
difficulty obtaining legal representation in disputes involving only medical
expenses or small indemnity claims. Labor and Management will review the
recommendations in caucus.
Ms. Knutson reported on the success of the settlement conference pilot
project with ALJ Thurow. Extensive file preparation and case review is
involved in this project. ALJ Thurow has experienced a 93% success rate over
the last 13 weeks that settlement conferences were scheduled. This is due in
large part to the intensive file preparation, case selection, and ALJ
Thurow’s experience, expertise and credibility with attorneys. Currently
there are 3450 cases waiting for a hearing to be scheduled and 168 cases
waiting for a prehearing conference to be scheduled. The median wait time is
dropping and hearing notices are now mailed out 12 weeks in advance of the
scheduled date for most cases.
Mr. Conway provided further information on worker’s compensation insurer
loss ratios/profitability based on the National Association of Insurance
Commissioners 2004 Report on Profitability. With regard to profit on
insurance transactions, Wisconsin is ranked low at 10.2% or 48th in the
state comparison; with regard to underwriting profit Wisconsin is ranked
14th. Mr. Schimke explained that there is a major difference in expense
ratios between health care insurance and worker’s compensation insurance. In
looking at a five year average, health carriers experienced an 84% loss
ratio compared to a 67% loss ratio for worker’s compensation carriers in
Wisconsin. In comparing loss ratios between states, how it is calculated may
vary with respect to premium collected and credits that are applied.
Correspondence: Ms. Huntley-Cooper reviewed Secretary Gassman’s June
7, 2007 letter to the WCAC regarding the encumbrance to the Uninsured
Employer’s Fund (UEF) and the cash balance available to pay existing claims.
The WCAC has approved a proposed amendment to Wis. Stat. §102.80(1)(ag) that
would eliminate the requirement to consider incurred but not reported (IBNR)
claims in calculating the encumbrance to the Fund and the cash balance
available to pay claims. Mr. Krueger explained that the UEF was just
presented with a new claim involving a hospital bill of $1.5 million. If
IBNR claims are considered in the encumbrance calculation, the UEF is over
the statutory maximum of 85%, but if they are not considered, the
encumbrance is less than 50%. By statute the Secretary, after consulting
with the WCAC, must make a decision on whether to continue to accept and pay
claims. If the UEF ceases to accept claims, the contractor-over statutory
provision in Wis. Stat. §102.06 becomes effective again. The UEF’s excess
carrier has been notified of this claim. The UEF carries a $1.5 million
retention per incident. This is only the second claim triggering the excess
policy within the last 11 years. The Secretary proposes that the UEF
continue to accept and pay claims. The WCAC unanimously approved the
Mr. Conway reviewed the correspondence from Senator Robson and
Representative Sheridan concerning the 7% interest credit on advancement of
worker’s compensation benefits. Sen. Robson and Rep. Sheridan are proposing
that the statute be amended to eliminate the interest credit on advance
payments. Mr. O’Malley explained that the interest rate was increased in
about 1980 to 7%; prior to that time it was 3%.
Ms. Knutson reviewed the new proposals by the department to amend Wis. Stat.
§§102.35(1) and 102.75(2) to provide that surcharges are due within 30 days
of billing by the department and interest would accrue beginning in 30 days
if the surcharges are unpaid. The proposed change from 90 to 30 days could
synchronize payments with the State’s accounting system.
Unfinished Business: None discussed.
Labor/Management Proposals: Mr. Beiriger commented that the
presentation by the WCAC liaisons assisted the WCAC by clearly advising the
members of the issues and concerns regarding a medical fee schedule. At the
next meeting, the members will continue discussion on that issue and others
including possible cost containment solutions. Mr. Newby indicated that
Labor is concerned with maintaining good health care and return to work
outcomes in the Wisconsin worker’s compensation system. Management is
concerned with the affect on the worker’s compensation system as well.
- Adjournment: Discussion on all agenda items concluded and the
meeting was adjourned at approximately 3:35 p.m.
Future meeting dates are as follows:
Monday, June 25, 2007
Wednesday, July 11, 2007
Wednesday, August 1, 2007
Thursday, September 6, 2007
Target date for agreed bill is June 1, 2007