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Compensation Advisory Council
Council on Worker’s Compensation
June 13, 2011
Members present: Mr. Beiriger, Mr. Buchen, Mr.
Collingwood, Ms. Connor, Mr. Kent, Mr. Metcalf, Ms. Nugent, Mr. Olson, Ms. Pehler, Mr. Schwanda and Ms.
Excused: Ms. Bloomingdale, Mr. Brand, Mr. Redman
Staff present: Mr. O’Malley, Ms.
Knutson, Mr. Krueger and Mr. Aiello
- 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.
- 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.
- Correspondence: Mr. Metcalf reported the department received an
e-mail from the Association of General Contractors expressing opposition to
Management proposal #16.
- 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
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
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.
- 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.
- 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
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
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.
Management #2: Labor does not agree; employees need to choose their
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
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
Management #7: There is a committee of attorneys currently working with the
department on the Certification of Readiness (COR) process to resolve any
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
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
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
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
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.
#11: Labor is holding on this proposal.
Labor #12: Labor is withdrawing
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
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.
- 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