Council on Worker's Compensation
June 6, 2002
Members present: Mr. Bagin, Ms. Connor, Mr. Glaser, Mr. Gordon, Mr.
Newby, Ms. Norman-Nunnery, Ms. Vetter
Staff present: Mr. John Conway, Mr. O’Malley, Ms. Knutson, Mr. Shorey,
and Mr. Krueger
- Minutes: Ms. Norman-Nunnery convened the meeting in
accordance with Wisconsin’s
open meetings law. Because there was no quorum, the minutes will be
approved at the next meeting.
2. Medical Costs Study: Dr. Richard Victor from the
Workers’ Compensation Research Institute presented information to the
Council from recent studies entitled CompScope Benchmarks:
Multistate Comparison, 1994-1999 and The Anatomy of Workers’ Compensation
Medical Costs and Utilization: Trends and Interstate Comparisons, which
included a recent study of medical costs for eight states. Major findings
for Wisconsin included that there has been moderate, sustained claim cost
growth, with medical costs as the major and persistent driver. Medical cost
increases were higher in Wisconsin than any of the other seven states
studied (California, Connecticut, Florida, Georgia, Massachusetts,
Pennsylvania and Texas). Medical costs in Wisconsin have increased an
average of over six percent, with chiropractic charges increasing nine
percent, physician visits increasing five percent, hospital charges
increasing one percent, and physical and occupational therapy declining
three percent. The average price per medical service in Wisconsin was the
highest among the eight states studied, with the exception of hospital
charges. Providers can argue that higher prices are due to higher quality
care provided which decreases the duration of disability. The typical paid
to charge ratio is 75 to 80 percent, while in Wisconsin it nears 100%. There
was a discussion concerning the payment to medical providers and the
percentage of payment that exceeded the Medicare reimbursement rates. In
Wisconsin, payments for primary care were 50 percent above Medicare
reimbursement rates. Dr. Victor commented that the Medicare reimbursement
schedule takes into account costs to providers. Mr. Glaser inquired as to
how Medicare costs are adjusted and what factors are considered in setting
the rates. Dr. Victor indicated that he would gather information concerning
reimbursement rates for the Council.
The study also concluded that medical cost containment measures were
least utilized in Wisconsin. The percent of payments to network providers
was 34 percent. Wisconsin has the fastest first payment of disability
benefits and the lowest claims management expenses, due in part to the
monitoring of payments by the Worker’s Compensation Division. Wisconsin has
the lowest benefit delivery expenses due to lower litigation costs.
Wisconsin also has the lowest frequency of permanent partial disability
payments and the lowest disability duration. Mr. Gordon pointed out that
medical costs were harder to close on claims in Wisconsin due to the 12-year
statute of limitations. Dr. Victor responded that the statute of limitations
issue could increase costs given that duration of disability and permanent
partial disability are not as significant in driving claims costs. Ms.
Connor inquired into the use of independent medical evaluations (IME)
compared to other states. Dr. Victor responded that the reference book
includes data regarding the use of IME in other states. In Wisconsin, the
cost per case for an IME is higher than other states. Factors to consider
are that the examination may be more labor intensive and it is used in more
serious cases. Mr. Glaser expressed concern that the legislature and
employers looking at the data may conclude that Wisconsin has a serious
problem with medical costs and that reactive changes could reverse other
positive trends. Dr. Victor indicated that the data does show an area of
concern regarding medical costs. Ms. Norman-Nunnery responded that the
Council is already in a position to say that we are turning our attention to
this issue. Mr. Glaser pointed out that there is a huge disparity in the
increase insurance costs for group health versus worker’s compensation.
Worker’s compensation costs have remained steady with only a slight increase
while group health insurance costs have increased dramatically. Ms.
Norman-Nunnery remarked that if our state has only one issue, compared to
other states we are very fortunate. She further indicated that Dr. Victor
would be appearing before the Joint Committee (Senate Labor and Agriculture
and the Assembly Committee on Labor and Workforce Development) today at 2:00
p.m. at the Capitol.
3. Hearings Backlog Workplan: Ms. Norman-Nunnery indicated
that the Division was in the process of formulating a work plan in response
to the internal audit. Mr. O’Malley indicated that the six-month pilot
project would begin sometime in August due to our hearing calendars. The
audit identified problems with efficiency in litigated cases due to the
process involved in scheduling hearings. The Division will strive to reach a
balance between our need for efficiency and the needs of the attorneys.
Problem areas have been identified with respect to applications filed on
behalf of injured employees. The Division’s focus is to only schedule cases
for hearing that are ready to be heard, and procedures will be developed to
streamline this process. The Division will incorporate recommendations made
at the last Advisory Council meeting which include modifying our forms so
that parties can indicate an interest in alternative dispute resolution
(ADR). The ALJ will be selected from an experienced staff member and will be
involved in case management and ADR issues. The ALJ will be able to identify
cases for pre-hearing conferences where the only dispute is which carrier is
obligated to make payments, and refer appropriate cases to be resolved
through the medical dispute resolution process or tiebreaker examination
The Division has also found that a few carriers are not filing answers
and this is a growing problem. The Division is looking at monitoring whether
answers are filed and following up with the insurers, self-insured employers
and employers. In extreme cases when the Division continues to be ignored, a
default order will be issued if medical support for the claims is contained
in the file. The authority to issue default orders is already contained in
statute. This procedure is used infrequently in serious cases. Ms. Conner
asked whether both parties needed to agree to the ADR process. Mr. O’Malley
responded that it would depend on the issue involved. The Division has
discontinued the use of settlement conferences unless both parties agree.
For tiebreaker examinations, sometimes the parties will agree to the
process, but in other cases the Division has asserted its authority to
appoint a tiebreaker physician. The Division would apply ADR options to
specific case types. For example, of the 400 occupational hearing loss cases
that are set for hearing each year, under 20 proceed to hearing. Mr. Bagin
inquired as to the length of time before cases are now set for hearing. Mr.
O’Malley indicated that currently the average is 7.8 months. Mr. Bagin
commented that 6 months was a good target, but that the Division should look
at prioritizing or expediting certain cases rather than rush to have every
case heard within 6 months. Mr. Glaser indicated that he had not heard many
complaints in the last year concerning the length of time before a hearing
Mr. Bagin indicated that there needed to be a fair application of the law
to everyone. He stated that there should not be a unilateral penalty.
Frequently, the parties agree to waive the 15-day filing requirement. Mr.
Bagin would rather see the focus on timely hearings for those that truly
need it. Mr. O’Malley clarified that the Division does have an informal
process for granting expedited hearings, and that they are regularly
granted. The applicant’s attorney must assure the Division that the case is
ready for an expedited hearing. Ms. Norman-Nunnery assured the Council that
the Division’s proposed plan is not in response to any urgency. The issue of
timely hearings has been a continuing issue. Mr. O’Malley explained that it
would take two months to put the pilot project into place with at least 10
months to be evaluated.
4. Vaccine Injury Compensation Program: Mr. O’Malley discussed
the National Vaccine Injury Compensation Program (42 USC 300aa-10 to 34).
This is a federal no-fault system to compensate individuals or families of
individuals who were injured by some vaccines administered by public or
private vendors. This program went into effect in October 1988. The program
is administered jointly by the U.S. Court of Federal Claims, the Department
of Health and Human Services and the Department of Justice. An injured
individual, parent, guardian or trustee of an injured or incapacitated
individual may file a claim. Claims may be filed for either injury or death.
Claims must be filed within 36 months after an injury or within 48 months
after a death. The amounts awarded under the program include actual damages,
with awards for death and pain and suffering limited to $250,000 and
attorney’s fees and costs. The program covers some childhood vaccines such
as diphtheria, tetanus, measles, mumps and rubella. At this time the program
does not cover anthrax or smallpox vaccines.
5. Safety Investigations Follow-up: Mr. Conway discussed the
Worker’s Compensation Division plan to hire a safety specialist this fall.
It is anticipated that this position will be responsible for referring cases
to the Department of Commerce for investigations concerning safety
violations as well as other duties. Since December 2001, there have been 78
referrals resulting in 29 violations, 20 no-violations and 8 that could not
be investigated. The remainder of the referrals is still under
The Worker’s Compensation Division will be taking an active role in the
Department of Workforce Development’s workplace safety initiative. The
Safety Works program of issuing report cards, certificates and calendars has
been well received by employers. Plans are being made for Governor McCallum
or Secretary Reinert to recognize businesses for good workplace safety
records with the Wisconsin Corporate Safety Award. The Safety Partnership, a
group of several agencies, will be working on ways to promote safety in the
workplace. Awards will be issued to Wrap-Up projects with good workplace
safety records. There will be a press conference at the end of June at which
time the Worker’s Compensation Division’s website (Safety Institute) devoted
to workplace safety will be announced to the public.
6. Claims Caseload Status: Mr. Shorey discussed claims
caseload data from 1993 to 2001. The number of claims for 2000 and 2001
declined from 1999, but the average closed claim cost has increased. The
average claim for temporary total disability remains approximately 21-22
days. The data on the handout for permanent partial disability for the years
1994-99 is more reliable than the data for 2000 and 2001 because payments
for claims in these later years have not been completed. The Worker’s
Compensation Division does not track medical costs.
7. Retreat Planning: Ms. Norman-Nunnery advised the Council
that the retreat is scheduled for October 9 and 10, 2002 at the Heidel House
in Green Lake and encouraged all members to attend. Mr. Howard Bellman was
retained as a consultant to assist with structuring the retreat. Mr. Bellman
will contact members of the Council to collect information to help with the
Scheduling of public hearings was also discussed. Mr. Newby suggested
scheduling one public hearing that could be conducted by teleconference. Ms.
Norman-Nunnery will explore the feasibility of conducting a public hearing
8. Correspondence: Two letters were presented to the Council.
The first letter was from Mr. Russell Leonard on behalf of the Wisconsin
Chiropractic Association. Three letters from third party administrators or
insurance carriers were attached to his letter in which payment for
treatment expense was denied. There was not enough information submitted
with Mr. Leonard’s letter to determine if payment was correctly denied in
these cases. Ms. Norman-Nunnery will contact Mr. Leonard for more
information, which is necessary to monitor these cases.
The other letter was from Mr. Paul Ducklow concerning an ergonomic
product he developed, which he believes will reduce back injuries. The
Council agreed that no further action was necessary since Mr. Ducklow was
previously advised of a grant program that could benefit promotion of his
9. Adjournment: The Council adjourned until the next meeting
scheduled for December 11, 2002.