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Worker's Compensation Advisory Council
Council on Worker’s Compensation
Crowne Plaza
Madison, Wisconsin
June 13, 2011
DRAFT

Members present:   Mr. Beiriger,  Mr. Buchen, Mr. Collingwood, Ms. Connor, Mr. Kent, Mr. Metcalf,  Ms. Nugent, Mr. Olson, Ms. Pehler, Mr. Schwanda and Ms. Thomas

Excused:    Ms. Bloomingdale,  Mr. Brand, Mr. Redman

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

1. Call to Order/Introductions:  Mr. Metcalf convened the Worker’s Compensation Advisory Council (WCAC) meeting at approximately 9:00 a.m. in accordance with Wisconsin’s open meetings law.  WCAC members, staff and members of the audience introduced themselves.
    
   
2. Minutes:  Mr. Kent moved to approve the minutes of the June 13, 2011 meeting without correction; second by Ms. Nugent   The minutes were unanimously approved.
    
   
3. Correspondence:  Mr. Metcalf reported the department received an e-mail from the Association of General Contractors expressing opposition to Management proposal #16.
   
   
4.  Report - Proposal Updates:  Mr. O’Malley reported the department added language in its proposal #7 to clarify that the Department of Administration would have the authority to compromise claims against the Work Injury Supplemental Benefit Fund (WISBF), subject to the department’s approval.  Mr. Kent indicated that Labor will discuss the proposal further in caucus.   
   
   Ms. Knutson explained the additional information gathered by the department on the weekly rate of permanent partial disability benefits as a percentage of the weekly temporary total disability benefits for other states and the number of claims reported to the department that received the maximum PPD benefit rate for calendar years 2008 through 2010.  
   
   Mr. O’Malley reported on projected outcomes of increases in supplemental benefits as requested by Labor.  The anticipated balance in the WISBF in August 2011 is $6.2 million.  Ms. Knutson explained the current balance is $9 million, but the requests from insurance carriers for reimbursement for supplemental benefit payments are late in being filed with the department and the department has received a reimbursement request for $1.4 million that has not yet been processed.   
   
   Mr. O’Malley explained the four options calculated by the department for extending eligibility for supplemental benefits as provided in the handout.  If supplemental benefits are extended by one year, the result is a projected negative fund balance of $2.4 million by the year 2013.  Assuming current benefit payments only, the WISBF balance is projected to be $3.7 million by August 2012.  
   
   Mr. O’Malley explained that in addition to increased supplemental benefit payments, traumatic barred claim payments have increased as a result of the Wisconsin Supreme Court decision in the Society Insurance case.  The most expensive claims are those for hip and knee replacements.  In addition, the Court of Appeals has recently issued a decision in Madison Gas & Electric v. LIRC, (2010 AP 1849, June 16, 2011) regarding stacking of minimum PPD ratings for scheduled injuries.  The department’s longstanding view is that for scheduled injuries, there is always a deduction for pre-existing disability; for example, if someone has a prior anterior cruciate ligament repair prior to a knee replacement surgery, the total PPD payable for both surgeries would be 50%, not 60%.  This decision is on appeal to the Wisconsin Supreme Court.  
   
   Ms. Knutson also reported that the department has been receiving correspondence from the Center for Medicare & Medicaid Services demanding repayment for conditional payments made by Medicare.  To date, the demands have not correlated to claims paid by the WISBF.   
   
   Mr. Metcalf commented that the revenue system (of penalties for deaths and dismemberments) for the WISBF was created in 1919.   
   
   With regard to Department proposal #20, Mr. O’Malley reported that he had contacted Ms. Jennifer Seidel and the matter will need to be discussed with the Health Care Provider Advisory Council, so it will not be pursued further this year.  
   
   Mr. Metcalf reminded the WCAC that August 8th is the next meeting, and that in order for the new amendments to be effective on January 1, 2012, the agreed bill will need to be sent to the Legislature before October 8th.
    
5. Large Deductible Insurance Coverage Wis. Insurance Alliance:  Mr. Steve Ginsberg and Mr. Charles Buren from Liberty Mutual Insurance Company provided information regarding the large reimbursement policy filing.  Mr. Ginsberg indicated in 1991 a new product was introduced to the national worker’s compensation insurance market that involved large claim reimbursements from the employer to the carrier in amounts of $100,000 or $250,000 per claim with an aggregate cap of $700,000 per year.  The carrier adjusts the claims, pays the claims, and bills the insured.  The result is a reduced premium for the insured and a tool provided to risk managers to influence safety enforcement.  Wisconsin is currently the only state that does not permit these types of policies.  Liberty Mutual intends to make a filing with the Office of the Commissioner of Insurance (OCI).  There are issues that OCI wants addressed.  While premium will be reduced significantly, so will premium taxes and revenue to the Wisconsin Insurance Security Fund (WISF).  Liberty Mutual agrees there should not be a shift in burden of the tax and assessment rates.  Statutory amendments are required to ensure there is no cost shifting.  The Rating Committee of the Wisconsin Compensation Rating Bureau (WCRB) met in June and has approved this insurance proposal.  A letter of credit or some other form of financial security would be required as collateral for the loss reimbursement.  Mr. Paul Reigel, legal counsel for the WCRB, commented that all legislative issues must be vetted.  Mr. Metcalf responded there are a number of issues with amendments to Wis. Stat. ch. 102 that must be addressed as well as insurance code and WISF law changes.  Addressing these numerous law changes will likely not be accomplished during this agreed bill cycle.  The department is concerned not only with the assessment, but that the Uninsured Employers Fund is not impacted by loss reimbursement policies.  Mr. Ginsberg responded that most of these types of policies involve multistate underwriting for large hotel chains, interstate trucking companies, etc.   
   
   Motion by Mr. Beiriger, second by Mr. Kent that the WCAC go into closed caucus session.  The motion carried unanimously and the WCAC went into closed caucus at approximately 10:20 a.m.
   
6. Discussion all proposals:  Labor and Management returned from closed caucus at approximately 1:20 p.m.  
   
   Labor and Management agree to Dept. Proposal # 7 concerning the department retaining the Department of Administration to handle WISBF claims.   
   
   Dept. Proposal # 14:  Labor requests the language requires the carrier to provide a specific reason for the denial.
   
   Dept. Proposal #16:  Labor requests that the department draft more specific language, but generally Labor agrees to the proposal.  
   
   Management further explained their proposals as follows: Management #1:  Mr. Beiriger explained only actual wage loss should be compensated because Wisconsin is a wage replacement system, and granting benefits now for potential wage loss does not fit into a wage replacement system.  
   
   Management #9:  A claim must be received by the carrier before a health cost dispute can be filed. The carrier cannot respond to a dispute until they have notice of a claim.  Ms. Knutson explained the health cost dispute default order process.  If the carrier does not file an answer, or fails to respond after the department issues a letter indicating the carrier needs to investigate the claim, an order by default is issued.  The department has no information regarding the circumstances of the carrier not having a claim on file, whether it is due to the employer not reporting the injury or the employee not reporting the injury to the employer.  Ms. Connor indicated that providers are using the health cost dispute process inappropriately.  Ms. Knutson indicated the department would be willing to discuss this issue with Ms. Connor to arrive at a reasonable solution to this problem.  
   
   Management #11:  This proposal creates parallel language to specify when the statute of limitations begins to run.  Ms. Connor explained their attorney was concerned that the term “compensation” could be construed as indemnity and medical expense.  The longstanding department interpretation is that only payment of indemnity extends the statute of limitations.  
   
   Management #12:  This proposal refers to applications that are filed only to toll the statute of limitations.   Management #13:  Mr. O’Malley indicated the administrative law judge should be sending the information with the impleader letter.  The Department can handle this issue internally.  
   
   Management #14:  Both sides should have the opportunity to cross-examine the doctor rendering the tiebreaker opinion.  The tiebreaker doctor may be forming an opinion based on only partial information.  
   
   Management responded to Labor Proposals as follows: Labor #1:  While Management may agree to modify the maximum PPD benefit rate, they are not ready to adjust the benefit rate to the amounts indicated in this proposal.  
   
   Labor # 2:  Management indicated if there is a limitation on what constitutes permanent total disability, there is a possibility for agreement.   There is a concern on how to pay for additional supplemental benefits considering the financial state of the WISBF.  The information provided by the department does not include the cases where PTD is alleged, and the parties settle rather than proceed to hearing.  The WCAC must find another way to fund the benefits payable from the WISBF other than deaths and dismemberments, without resorting to an assessment against employers or significantly increased premium.     
   
   Labor #3:  There is some opportunity for agreement.  The intent is for the employee to attend retraining.  Some states use a voucher system and the employee must complete the course before the tuition is paid.  
   
   Labor #4:  There are questions concerning how the health insurance benefit is valued and how the increased cost (of including it in the wage calculation) would be paid.   
   
   Labor #5:  Valuing retirement benefits is a more variable situation than health insurance.  
   
   Labor #6:  Management’s only issue with the proposal is the proposed penalty.  In addition, penalties are paid to the school fund.  The $100 payment could be termed additional compensation.   
   
   Labor #7:  Management had its own proposal that addresses both parties accessing the information.  
   
   Labor #8:  Management is opposed to this proposal.  In order to provide the maximum benefit to the injured worker, the attorney fee would need to be paid in addition to the medical expenses owed.  
   
   Labor #9:  Management is opposed to this proposal.  All benefits are paid based on gross payments, not net payments after taxes.  
   
   Labor # 10:  Management indicated that with continued discussion there may be room for agreement.  Management does not want to penalize workers who need the extra income during retraining.  There may need to be an income threshold before the offset would apply.  
   
   Labor #11:  Management is opposed to this proposal.  If a person is terminated for cause, there may be an order for prospective retraining benefits.   
   
   Labor #12:  Management understands Labor’s position that the insurer’s medical examiner is not really “independent” and that the employee must be aware that the physician conducting the examination is doing so at the direction of the employer/insurer.  Management suggests it should just be called a medical examination.   
   
   Labor #13:  This appears to be an issue with only one provider.  Management is not agreeable to dealing with this issue unless there is evidence of a larger problem.    Management and Labor went into closed caucus session at 2:35 p.m. and returned at 3:20 p.m.  
   
   Mr. Kent, on behalf of Labor, responded to Management proposals as follows: Management #1:  Labor presented draft language amending Wis. Stat. §102.56(2).  
   
   Management #2:  Labor does not agree; employees need to choose their treating doctor.  
   
   Management #3:  Labor indicated this is a topic to study and perhaps it could be combined with Labor #4 on health insurance coverage.  
   
   Management #4:  Labor will respond to this proposal at a later date.  
   
   Management #5:  Labor indicated they are not in agreement as more research is needed.  
   
   Management #6:  Labor indicated they are not in agreement; due to the nature of occupational medicine, there is not an abundance of doctors in this medical specialty.  
   
   Management #7:  There is a committee of attorneys currently working with the department on the Certification of Readiness (COR) process to resolve any outstanding issues.  
   
   Management #8:  Labor would like more background information in reference to what is included in “all medical records and evaluations”.  Does this include old records predating the date of injury?  
   
   Management #9:  The department is willing to work with the WCAC to deal with default issues.  This references an internal department policy and the department must develop appropriate procedures.  
   
   Management #10:  Labor is taking a holistic approach in looking at the PTD system.  Due to financial problems with the WISBF, Labor will seriously modify its proposal #2.  
   
   Management #11:  Labor agrees as this proposal only involves clarifying the language of the statute.  
   
   Management #12:  The COR process largely deals with this issue.  
   
   Management #13:  The department already does this; there is no need to rewrite department policy.  
   
   Management #14:  This may result in a serious problem in retaining doctors to perform tiebreaker examinations.  Parties already have the right to rebuttal by providing additional medical reports.  The parties’ medical reports and/or testimony are given equal weight with that of the tiebreaker doctor.  
   
   Management #15:  Labor could agree with this proposal if this appears to be a reasonable issue after considering the department’s explanation.  
   
   Management #16:  This issue regarding a hold harmless clause in construction contracts appears to be a matter of contract law.  This issue should be addressed by the Legislature since it goes beyond the scope of worker’s compensation law.  
   
   Labor expounded on its proposals as follows: Labor #1:  Labor is willing to look at reasonable counterproposals including past methods of increasing benefits.   
   
   Labor #2:  Labor will re-write this proposal.  
   
   Labor #3:  Labor is willing to work with Management on this proposal as it dovetails with Management proposal #11.  
   
   Labor #4:  Labor is interested in reviewing this further in conjunction with Management proposal #3.  
   
   Labor #5, 6, 7, 8 and 9:  Labor is withdrawing these proposals.  
   
   Labor #10:  Labor wants to continue discussions with Management on this proposal as it concerns efforts to return injured workers to work.  
   
   Labor #11:  Labor is holding on this proposal.  
   
   Labor #12:  Labor is withdrawing this proposal.  
   
   Labor #13:  Labor is holding on this proposal as this is part of a larger issue concerning health cost disputes.  Labor is not foreclosing the possibility of this issue being included in the study committee process.  
   
   Mr. Metcalf commented that it would assist the WCD staff if the WCAC would provide a specific charge for a study committee.  
   
   Labor and Management acted on Department proposals as follows: Dept. #7 and 17:  Mr. Beiriger moved, second by Mr. Kent to approve these proposals; motion unanimously carried.  
   
   Dept. # 14 and 16:  Mr. O’Malley explained these proposals stem from complaints staff receive from employees.  Claims are denied and the denials are sent to the health care providers, but not to the employees.  Weeks or even months later the provider bills the employee.  The carrier’s communication to the health care provider should be sent to the employee also.  Mr. Olson and Ms. Connor responded that carriers send denial letters on medical only claims.  The WCAC requests additional information on the frequency of complaints.  No agreement at this time.   
   
   Dept. # 18 and 19:  These proposals involve a larger issue and may be included in any re-engineering of the health cost dispute process.  While Management is not specifically opposed to this proposal, larger discussions must take place.  No agreement.  
   
   Labor has no objection to Dept. # 14, 16, 18 and 19.  
   
   Mr. Metcalf indicated the WCAC should advise the WCD of any research needs prior to the next meeting.  The next meeting is scheduled for August 8, 2011 to begin at 9:00 a.m.  Additionally, the WCAC agreed to meet on September 12, 2011.
   
   
7. Adjournment:   Motion by Mr. Beiriger, second by Mr. Redman to adjourn.  The motion carried unanimously and the meeting was adjourned at approximately 4:15 p.m.
   
   Next Meeting:  August 8, 2011