Worker's Compensation Advisory Council

Council on Worker’s Compensation
Meeting Minutes
Madison, Wisconsin
December 8, 2004

Members present:  Ms. Bean, Mr. Beiriger, Mr. Brand, Mr. Buchen, Mr. Furley, Mr. Gordon, Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Mr. Olson, Mr. Shaver, Ms. Vetter, and Mr. Welnak

Excused:  Ms. Connor

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

 

  1. Call to Order/Introductions:  Ms. Huntley-Cooper convened the Worker’s Compensation Advisory Council (WCAC) meeting in accordance with Wisconsin’s open meetings law. 
     
  2. Minutes:    Mr. Beiriger moved adoption of the minutes of the July 22, 2004 meeting as corrected; Ms. Bean seconded the motion.  The motion was unanimously approved. 
     
  3. Muelver Resolution:  Ms. Huntley-Cooper introduced the resolution honoring Mr. Emil Muelver, long-time WCAC member.  Mrs. Muelver will be presented with the plaque.
     
  4. Federal BLS/OSH Contracts:  Ms. Huntley-Cooper introduced Mr. Ron Laessig, Director of Public and Environmental Health, University of Wisconsin Hygiene Laboratory.  The contract with the Federal Bureau of Labor and Statistics (BLS) will be assumed by UW, saving the program from elimination in the budget reduction process.  The contract provides federal funds to record OSHA statistics for occupational injuries, illnesses and deaths in Wisconsin.  Mr. Buchen and Mr. Newby, on behalf of the WCAC, wrote to the Governor and relayed the importance of maintaining the contract with BLS.  Ms. Donna Haag, the current staff person, will become a UW employee.  Her delivery rate on statistics is 99.8%.  With the addition of this program, the State Hygiene Lab will be involved in consulting, safety, and data collection and will therefore have an OSHA focus.
     
  5. Committee Updates: 

    Permanent Disability Rates – Mr. Shorey explained that currently there are 750 injured workers receiving permanent total disability benefits (PTD).  PTD rates are increased through the agreed bill process.  There is no schedule in the law for increasing rates.  There exists a gap in benefits for injured workers who have been receiving PTD benefits at an old maximum temporary total disability (TTD) rate.  Supplemental benefits are provided for PTD injured workers whose injuries occurred prior to May 13, 1980.  The committee is considering incremental increases in maximum TTD rates for old PTD claims.  Approximately 140 to 150 injured workers are currently receiving supplemental benefits.  There are 350 injured workers receiving PTD benefits whose dates of injury occurred between 1980 and 1990 so that they are 15 to 20 years behind receiving the maximum TTD rate.  Insurers pay supplemental benefits and the insurers are in turn reimbursed from the Work Injury Supplemental Benefit Fund (WISBF) on an annual basis.  The average supplemental benefit is currently $30 per week.  A worker injured in 1949 is currently receiving benefits.  The next committee meeting is scheduled for December 16, 2004 in Milwaukee.

    Medical Cost Committee – Mr. O’Malley reported that the next committee meeting is scheduled for January 10, 2005.  There is consensus among the committee members to study:  the employee obtaining treatment through the employer’s group health provider and in exchange receiving increased indemnity benefits; prevent providers from providing unnecessary treatment through sanctions; setting limits on pharmaceutical charges.  Mr. Greg Krohm is chairing the committee.
     
  6. Supplemental Benefit Fund Update:  Mr. Shorey indicated the current balance in the Work Injury Supplemental Benefit Fund is $5.4 million.  Wis. Stat. §102.65(3) provides that if the fund balance exceeds 3 times the amount paid out during the fiscal year, the department shall direct a proportional reduction of payments into the fund.  The 3-year expenditure level is $8.3 million, so therefore there is no mandate to direct a proportional reduction.  The last agreed bill increased payments into the fund.  The fund should maintain a steady balance based on current contribution payments.  Barred claims are unpredictable and make up a larger portion of total fund payments every year.  This year fund revenues were a little higher than expected ($1 million more) due to an increase in claims and some carriers pay the death benefit into the fund in a lump sum rather than on the 5-year payment schedule.  The department has recommended to the permanent total disability rate committee that the insurer pay the supplemental benefits directly as opposed to the current process by which the carrier pays the supplemental benefits to the employee and the fund reimburses the carrier once a year for the supplemental benefit payments. 
     
  7. Agreed Bill Timeline:  Mr. O’Malley relayed that the department proposals would be ready for the first WCAC meeting in 2005 (January or February).  At the second meeting in late February or early March, Labor and Management would present their proposals.  By early June, the WCAC would have the proposals finalized and sent to the drafter.  Mr. Newby recalled that the council members agreed to set aside time at regular meetings for individuals to present proposals.  This agenda item should be suspended in May and restarted after the agreed bill process is complete.  Mr. O’Malley indicated that the goal is to have the agreed bill introduced in the legislature by September 1, 2005 and to have the hearing before the legislative committee in September.
     
  8. Meeting Dates 2005:  The following meeting dates were set:
    February 21, 2005 at noon, Department proposals
    March 22, 2005 at noon, exchange of Labor and Management proposals
    April 13, 2005 at 10:00 a.m., discussion and caucuses
    May 11, 2005 at 10:00 a.m., discussion and caucuses
     
  9. WC Safety Initiatives:  Mr. Conway introduced Mr. Warren Brockmeyer, the Worker’s Compensation Division’s (WCD) Risk and Safety Manager for almost two years.  The current memorandum of understanding with the Department of Commerce provides that the WCD will organize referrals to the Department of Commerce.  Mr. Brockmeyer explained that he worked with Mr. Brian Krueger, Insurance Programs Bureau Director on wrap-up projects.  Mr. Brockmeyer has a background in construction and has conducted inspections on jobsites.  For new proposed self-insured employers, he is able to review their safety programs.  He sends injury reports to the Department of Commerce.  If OSHA is conducting an inspection, he their findings under the Freedom of Information Act and reviews the reports for possible assessment of a 15% safety violation penalty against the employer.  He is an active member on the WCD’s Safety in the Wisconsin Workplace Partnership Committee.  The Safety Partnership has been nominated for a regional award by OSHA for service to youth for the development of a training flipchart for the food service industry.

    Mr. Conway reported that the Division has discontinued the safety report card due to difficulty obtaining and maintaining accurate records.  The WCD also lost our research position in the last budget reductions.  This person devoted 50% of his time to clean up the data.  Mr. Brockmeyer will develop a broader based report on workplace safety in Wisconsin that will include the number of employers, employees, injuries, type of injury and occupation.  Through this monitoring process the WCD will be able to identify patterns of accidents by employer.  Employer groups with 20 to 99 employees will be identified and safety information will be sent to those 3000 employers.  Mr. Brockmeyer indicated that the WCD will take a positive rather than a punitive approach through individual consultations.  Mr. Newby questioned whether the WCD was no longer identifying employers with the most injuries.  Mr. Conway explained that they would no longer be tracked through the safety report card.  However, Mr. Brockmeyer tracks reported injuries on the WCD’s integrated claims monitoring system (ICMS).  The Department of Commerce investigates injuries, and for serious accidents OSHA conducts inspections.  Mr. Krueger explained that wrap-up projects involve large construction projects.  One worker’s compensation policy wraps in all contractors.  Quarterly meetings are held regarding these projects.  An example of a current wrap-up project is the construction on the Marquette Interchange in Milwaukee.  Mr. Brockmeyer is also certified to conduct safety investigations and the WCD has a budget to contract with safety investigators.
     
  10. Critical Indicators Review:  Mr. Shorey explained that performance indicators are readily available to the public, the rest of the indicators are used within the department only.  The number of first opened compensable claims is declining.  Due in part to return to work programs, the number of lost time claims has declined.  Promptness of first indemnity payments is monitored.  The carrier must pay 80% of first indemnity payments on time or the carrier is referred to the Office of the Commissioner of Insurance.  The insurance industry overall is on target in making first payments.  A review of the promptness of claims correspondence indicator indicates the need for improvement.  Carriers are required to respond to correspondence within 30 days and performance is measured at 34 days.

    Mr. Krueger reviewed the Uninsured Employers Fund (UEF) critical indicators, which monitor number of claims and Fund assets.  The UEF pays claims to injured employees when the employer is illegally uninsured.  An average of 7 new claims per month is reported to the UEF, with an average lag time of 230 days from the date of injury to the date the claim is reported.  The UEF’s balance is currently over $11 million and is funded by penalties against illegally uninsured employers.  The penalty is double the premium during the period the employer is uninsured or $750, whichever is greater.  If an employee is injured during the time the employer is uninsured, the employer is assessed the amount paid out for the claim.  Under Wis. Stat. §102.80(3)(ag), if the UEF is encumbered by 85%, the DWD Secretary consults with the WCAC  and a decision may be made to stop paying new claims or to fund the UEF in a different manner.  Currently, the UEF is encumbered by 52.24% with 20% based on actual loss reserves and the balance based on incurred but not reported (IBNR) claims.  The UEF pays approximately $2 million per year in claims.  There is excess insurance to cover against catastrophic claims.  The cost of the policy is $669,000 and is paid out of the fund.  The Janesville van accident is the only major claim to date.  The UEF was only liable for $250,000 and $6 million was paid by the excess carrier.  Today, the UEF retains $1 million, the excess carrier pays the next $5 million, and the UEF is liable for the balance of any catastrophic claim. 

    Mr. O’Malley explained the critical indicators maintained by the Bureau of Legal Services.  The first indicator measures the backlog of cases ready for hearing.  The backlog has decreased somewhat due to the hiring of 2 limited term employee (LTE) administrative law judges.  In addition, there is a fairly new staff person screening and entering applications, so there is a delay in data entry.  There is currently a rolling backlog of 10 to 11 months.  The goal is for the backlog number to drop to under 4500, at which time the delay in scheduling a hearing would be under 9 months.  When the backlog reaches 5500 ready cases, the delay in scheduling is over one year.  One administrative law judge (ALJ) resolves approximately 300 contested cases per year.  It is projected that two new ALJs will start in late January 2005.  One of the LTE ALJs is scheduled for 4 more calendars and will not be holding regular hearings after February 2005.  The WCD has not yet received approval to fill the third ALJ vacant position.  The WCD is currently involved with a process improvement team that is examining ways to streamline the hearing process.  Mr. Hal Bergan, Administrator of the Unemployment Insurance Division is facilitating this process.  Ms. Huntley-Cooper explained that the process will take approximately 6 months to complete and that two meetings are scheduled in December 2004.  Changes to the hearing scheduling process will be made on a pilot basis.  The process improvement team will not wait for a report to be completed before making changes.  Mr. O’Malley commented that the goal is to have the ALJ positions fully staffed as soon as possible and to retain an LTE ALJ and a project ALJ position.  Mr. Newby requested that the WCD provide information concerning the delay period in scheduling hearings to the WCAC at the next meeting.  With respect to the applications for hearing critical indicator, Mr. O’Malley indicated that that the projected number of applications for the 2004 calendar year is in the 7000 range.  The WCD’s litigated case load is high and remains steady.  Prehearing conferences are held in all cases where the employee is not represented.  Mr. Newby suggested that the entire packet of critical indicators be provided to the WCAC once per year with the exception of the Bureau of Legal Services indicators, for which a verbal report should be provided at each WCAC meeting. 
     
  11. Training for Council Members:  Ms. Huntley-Cooper stated that an orientation for new WCAC members is being prepared by the Claims Management Bureau and Legal Services Bureau.  This powerpoint presentation could be listed as an agenda item for the WCAC after the agreed bill process is complete in the fall of 2005.  Mr. Gordon requested that the insurance companies be added to the orientation.

    Mr. Newby posed a question concerning the projected budget reduction implications for WCD staffing.  Ms. Huntley-Cooper responded that the reduction for the WCD was 10% in staff and 10% overall budget.  The budget proposal lists a staff reduction of 13 with no specific positions identified subject to the Governor’s review.  There is also listed a budget reduction of $816,000 for both years for supplies and services.  ALJs are not included in the 13 position staff reduction.  Mr. Beiriger commented that a budget reduction results in a lower assessment to insurers and self-insured employer, but does not result in a net savings to taxpayers.  Mr. Kent commented that no general purpose revenue (GPR) dollars are saved.  Mr. O’Malley clarified that the WCD does have a small GPR appropriation to cover the special death benefits to law enforcement dependents under Wis. Stat. §102.475 and it is a sum sufficient appropriation.  Mr. Newby relayed that he, Mr. Buchen and Ms. Huntley-Cooper had a meeting with Secretary Gassman regarding related issues after the July WCAC meeting, and relayed to Secretary Gassman that WCD budget and staff reductions result in no savings to taxpayers.   Mr. Newby indicated that a 10% reduction in staff is impairing the WC program.  The Council is very concerned about the operation of the WC program.  Mr. Beiriger commented that there would be no increase in the assessment to insurance carriers or self-insured employer if the positions are not eliminated. 
     
    Mr. Newby indicated that he would discuss with Mr. Buchen the issue of writing a letter to the Secretary and the Governor expressing concern about the proposed budget cuts for WCD and all WCAC members would sign it.

    Mr. Conway indicated that the proposed budget had built in salary for the 13 positions for the first four months of the next fiscal year - until October 2005.

    The members discussed the possibility of raising this issue with insurance carriers domiciled in Wisconsin and Mr. Eric Englund.  This is a critical problem in Worker's Compensation.

    Mr. Newby indicated that the department as a whole was required to meet budget and position reductions.  There should be a modification of the Governor's commitment to cutting positions from programs when the result will not impact taxpayers.
     
  12. Correspondence:  Mr. Conway stated that Mr. Brian Margan testified at the public hearing in the morning concerning the high cost of worker’s compensation insurance.  In Mr. Margan’s opinion, the employer should be able to choose where the employee receives medical treatment and this would reduce costs.  Ms. Huntley-Cooper has already responded to this correspondence and no further response is necessary. 
    Senator Breske wrote on behalf of Mr. Jack Grzesik concerning the cost of worker’s compensation insurance for sole proprietors.  They are required to have worker’s compensation coverage to compete for contracts.  The contractors must have a minimum-minimum policy.  Mr. Grzesik would like the minimum-minimum policy requirements waived in cases where sole proprietors waive entitlement to benefits.  However, under Wis. Stat. §102.16(5), no waiver of compensation is valid.  Mr. Krueger explained that in these instances, when the sole proprietor contracts with someone, the contractor-over wants proof of insurance so there is no increased insurance risk for the contractor-over.  In the example of truck drivers having a minimum-minimum policy, it does not cover the sole proprietor, but covers any employees hired on by the sole proprietor during that year end policy period if the sole proprietor is audited. If sole proprietor has had no employees, the sole proprietor receives all the premium cost back minus the $210 expense constant.  Under Wisconsin worker’s compensation law the sole proprietor is not required to have a worker’s compensation policy; this issue gets into private contract law over which the WCD has no jurisdiction. Mr. Newby suggested that Ms. Huntley-Cooper respond to Senator Breske indicating this is not a worker’s compensation law issue. 
     
  13. WCAC Annual Report Update:  Ms. Huntley-Cooper indicated that the annual report update should reflect changes in the law and update the biographical information of the WCAC members.  The report has not been updated since December 2002.
     
  14. Adjourn:  Discussion on all agenda items concluded and the meeting was adjourned.  The next meeting has been scheduled for February 21, 2005 beginning at noon.