Worker's Compensation Advisory Council
    Council on Worker’s Compensation
    Meeting Minutes
    Madison, Wisconsin
    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

    Staff present:   Mr. Conway, Mr. O’Malley, Ms. Knutson, Mr. Krueger and Mr. Topp

    1. 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.
    2. Minutes: The minutes of the May 17, 2007 meeting were approved without corrections.
    3. 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.
    4. Reports: Mr. John Neal, a partner with Stafford and Neal Law Firm, reported on the Attorney Fee Discussion Group. The group agreed on three proposals:

      1. 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.
      2. In non-contested cases, the maximum fee should be increased from $100 to $250.
      3. 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.

    5. 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 Secretary’s recommendation.

      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.

    6. Unfinished Business: None discussed.
    7. 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.
    8. 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