Worker's Compensation Advisory Council Meeting Minutes

Madison, Wisconsin

February 14, 2017

Members present :Ms. Bloomingdale, Mr. Dernbach(Chair), Mr. Fugina, Mr. Gunderson, Ms. Johnson, Mr. Kent, Mr. Reader, Mr.Redman, Mr. Schwanda, and Mr. Tindall

Member Excused: Mr. Buchen, Ms. Seiler, and Ms. Thomas

Staff present: Mr. Aiello, Ms. Baldwin, Mr. Evenson, Mr. Krueger, Mr. Lonergan, Ms. Maxwell, Ms. McCormick, Mr. Moreth, and Mr. O'Malley

Call to Order/Introductions: Mr. Dernbach convened the Worker's Compensation Advisory Council (WCAC) meeting at approximately 10:05 a.m. in accordance with Wisconsin's open meetings law. Mr. Dernbach called the roll of the members. Worker's Compensation Division staff and members of the audience introduced themselves.
Approval of minutes: A motion was made by Ms. Bloomingdale to approve the minutes of the January 10, 2017 meeting. Mr. Reader seconded the motion. A correction was made to delete Ms. Johnson's and Mr. Redman's names from the list of members present at the last meeting to appropriately reflect they were excused. The minutes were unanimously approved as corrected.
Assembly Bill 25 - Child Labor permit requirements: This agenda item was moved up in the meeting as a courtesy to Representative Amy Loudenbeck, a co-sponsor of 2017 Assembly Bill 25 (AB-25), who was present to discuss the bill and answer questions from WCAC members. Mr. Dernbach provided background information that the bill, as amended by Assembly Amendment 1, would remove the requirement for minors ages 16 or 17 to receive a child labor permit from the Equal Rights Division of the Department of Workforce Development (DWD) before beginning employment. This would affect the Worker Compensation Division (WCD) in that the WCD would likely collect about $25,000 less in penalties assessed under s. 102.60 (1m) (a), Wis. Stats., when a minor is injured in the workplace in allowed employment but did not have a child labor permit. Currently, the majority of penalties under this provision, which are equal to the amount of indemnity paid or $7,500.00 per claim, whichever is lower, occur for minors 16 or 17 years of age. The penalties collected are paid into the Work Injury Supplemental Benefit Fund. In 2015, about $17,000 in penalties were assessed under s. 102.60 (1m) (a), Wis. Stats., involving about 16 claims.

Representative Loudenbeck advised that a hearing was held last week by the Assembly Committee on Labor regarding AB-25. The intent of the bill is to change the terminology in current law from "child labor" to the "employment of minors" and to eliminate the work permit requirement for minors 16 and 17 years old. Rep. Loudenbeck indicated the original idea for the bill came from working with unaccompanied and homeless youth advocates who stated the current permit process acts as a barrier for legal employment of this vulnerable population. Investigation into how other states such as Illinois, Iowa, and Minnesota handle this issue led to the discovery that many other states do not require permits for older teens. Instead of doing a carve out just for unaccompanied or homeless teens, the bill's authors looked at eliminating a layer of paperwork and bureaucracy to allow parents to decide with their teens whether work is appropriate and to not have government be a part of that process.

Rep. Loudenbeck assured the WCAC that the bill did not change any of the statutory protections for working minors under current law and reinforced the rules and restrictions, including the number of hours and times that could be worked, would remain in effect. Mr. Dernbach added the WCD would continue to issue penalties if a minor is injured while working in any prohibited employment or without a permit when one is required.

Correspondence: Mr. Dernbach requested Tracy Aiello, WCD Claims Management Bureau Director, to address the fiscal impact of the proposed law changes suggested in the December 30, 2016 letter from Attorney John Edmondson, as requested by the WCAC at the last meeting. Attorney Edmondson put forth three proposals for the Council's consideration. Mr. Aiello advised that he was only able to gather cost-related data for one of the proposals. The WCD does not require reporting of medical only claims or the cost of medical treatment for reported claims, information that would be needed to analyze Attorney Edmonson's proposal about payment of amounts written off by providers who initially accepted payments from Medicare or Medicaid for treatment performed before a finding of liability under the Worker's Compensation Act. The WCD also does not have a way to track how much additional LIRC or Court interest would be owed to successful litigants if the calculation method was changed as proposed by Attorney Edmondson.

Attorney Edmondson's remaining proposal related to increasing the cap from $15,000 to $25,000 where an injured worker receives increased compensation due to a safety violation by the employer related to the work injury. Mr. Aiello determined that of the reported claims for injuries occurring in the years of 2009 through 2013, an additional $232,238 in increased compensation under s. 102.57, Wis. Stats., would have been due over those five years had the cap been $25,000 instead of $15,000.

Mr. Dernbach followed up on a question presented by Mr. Buchen at the previous meeting regarding the transfer of administrative code provisions in ch. DWD 80 from the DWD to the Division of Hearings and Appeals. Mr. Dernbach advised he had been in contact with Bruce Hoesly at the Legislative Reference Bureau. It appears that a limited transfer of only the procedural rules related to the hearing process would be possible. Mr. O'Malley emphasized that rules of a more substantive nature such as those relating to the calculation of benefits should remain with DWD.

Mr. O'Malley summarized a letter to the WCAC and to Mr. Gunderson dated January 6, 2017 from Attorney Russell Wilson. In the letter, Attorney Wilson provided some background information about clients who are husband and wife with a limited liability company who had dealings with the Uninsured Employers Fund (UEF). Based on their experience, Attorney Wilson proposes four statutory changes. One is to provide specific authorization for the UEF to enter into compromise and limited compromise agreements with injured persons in the same manner that workers, insurers, and self-insured employers routinely do. The second proposal is to allow or authorize the UEF and the Worker's Compensation Division to enter into compromise and limited compromise agreements with uninsured employers on claims for reimbursements and assessments in the same manner that workers, insurers, and self-insured employers routinely engage in. The third proposal is to provide for the creation of a defense to claims for the reimbursements and penalties assessed against uninsured employers, including their directors, officers, shareholders, and members based on their good faith, knowledge, understanding, and belief under the totality of the circumstances. The fourth proposal is to have these amendments apply retroactively. Mr. O'Malley added that with regard to the first proposal there is a provision in s. 102.81(6), Wis. Stats., that specifically authorizes the WCD and the Uninsured Employers Fund to enter into compromise agreements involving benefit payments to workers. There are no statutory provisions that cover the other proposals

Mr. Kent inquired about the request for a retroactive provision indicating the Wisconsin Supreme Court previously had a problem with a Council bill taking effect retroactively. Mr. O'Malley clarified that statutes that have procedural implications can have retroactive applicability but those that involve substance in the law are to have prospective applicability. Issues of applicability can arise, however, depending on whether a statute is interpreted as procedural or substantive.

Mr. Kent asked how one would show the intent of the employer. Mr. O'Malley explained intent of an employer would need to be determined based on evidence and testimony presented at a hearing to establish what the intent of the parties might be and then there may have to be some inference drawn from the facts presented.

Mr. Dernbach added there was one final item of correspondence received from Attorneys Doug Feldman and Charlie Domer regarding a proposal to allow the WCD to distribute information about Kid's Chance Wisconsin to injured workers and their families. Attys. Feldman and Domer will give a detailed presentation about their proposal at the next meeting.

Public Proposals: Mr. O'Malley advised of the handout in today's packet that briefly summarizes all of the proposals that have been made up to this point, including those mentioned today. The spreadsheet will soon be available on the WCD website.
Workers Compensation Research Institute Overview & WCRI Opioid Study Results: Dr. Sharon Belton and Dr. Vennela Thumula appeared from the Workers Compensation Research Institute (WCRI) to provide data gathered from WCRI studies about state variation in the use of opioids in worker's compensation and to show how the Wisconsin worker's compensation system compares to other states. Their verbal report was accompanied by a PowerPoint presentation.

Dr. Thumula discussed the primary approaches states have taken to address opioid prescribing and dispensing including using drug formularies, imposing prescription limits, creating treatment guidelines, and implementing prescription drug monitoring programs (PDMP). Of the 25 states surveyed, most experienced significant reductions in the amount of opioids used per claim in the 2012 to 2014 period, including 6 states with more than a 20% decrease, compared to the 2010 to 2012 period.

Washington was the first worker's compensation jurisdiction to adopt a drug formulary in 2002. Its prescription cost per claim is 40% lower than the median. Texas adopted a closed drug formulary based on Official Disability Guidelines (ODG) followed by Arizona, Oklahoma and Tennessee. Several other states also have formularies. Ohio's Bureau of Workers' Compensation reported their formulary resulted in a 25% decrease in opioid prescriptions, a 74% decrease in muscle relaxant prescriptions, and a 15% decrease in prescription drug costs between fiscal years 2011 and 2014. During a similar time period, the total prescription costs decreased by about 30% in Texas.

Several states also have policies limiting the prescribing and dispensing of opioids. Florida banned physician dispensing of class II and class III opioids. Kentucky limits physician dispensing of class II opioids to a 48-hour supply. In worker's compensation specifically, Tennessee restricts the dispensing of opioids and benzodiazepines to a 30-day supply and Michigan limits reimbursement for opioids for chronic pain to 90 days without detailed reporting of necessity. Twenty-one of the states surveyed had changed the rules governing reimbursement for physician-dispensed drugs.

Treatment guidelines for management of long-term opioid use have been developed at the national level and by several states. These guidelines include random urine drug testing, psychological and psychiatric evaluation and treatment, active physical therapy, and adding interdisciplinary, multidisciplinary, or alternative care to treatment plans. More guidelines address acute and subacute opioid use with the lowest effective dose of immediate release opioids recommended in acute situations.

Prescription drug monitoring programs with prescriber use mandates have been adopted in 20 states, including Wisconsin, (effective on April 1, 2017). Other reforms that are likely to affect opioid prescriptions include mandatory provider education, regulation of pain clinics, doctor shopping laws, physician exam requirements, and laws requiring an ID prior to the dispensing of a controlled substance.

After a short break, Dr. Belton continued the WCRI presentation comparing Wisconsin's worker's compensation program to other states. Wisconsin total costs for all paid claims were 16% lower than typical. The lower overall costs resulted from lower indemnity payments and expenses which offset higher than average medical payments. Medical payments were the key cost driver in Wisconsin from the 2009-10 period to the 2014-15 period.

Wisconsin's system features contribute to lower indemnity benefits and less litigation. These features include standards for the termination of temporary disability benefits, low weekly maximum permanent partial disability (PPD) benefits, an efficient disability assessment process, and a two-tier structure for PPD benefits. The duration of temporary disability benefits in Wisconsin was about three weeks shorter than typical. Wisconsin benefit delivery expense per claim was the lowest among the states studied. Wisconsin also had faster first indemnity payment compared with many states due to faster payment upon payor notice.

Nonhospital medical prices in Wisconsin grew faster than in fee schedule states. States with no medical fee schedule experienced faster hospital outpatient cost growth compared with states with fixed-amount fee schedules. Stable utilization of medical services moderated continued increases in nonhospital prices and hospital outpatient payments per service from 2009 to 2014. There does appear to be little change in prices in 2015, though.

Transition to Electronic Litigated Documents: Mr. Dernbach informed the Council that he has started working with WCD Bureau Directors to transition to a fully electronic file for all litigated claims, hopefully by the end of the year. Currently, all litigated documents travel between the ALJs and WCD staff and are received in paper form. The goal is to have all litigated documents available electronically so that when the Office of Worker's Compensation Hearings of the Division of Hearings and Appeals (OWCH-DHA) moves to the new Hill Farms location, files and documents can be accessed without physically having to move them. Eventually, the goal is that all stakeholders will be able to submit documents to the Department electronically as well.
Other Business of the Council: Mr. Dernbach reviewed two assembly bills that affect Chapter 102 or the worker's compensation system. The first was 2017 Assembly Bill 59 (AB-59) that changed the term "first responder" to "emergency medical responder" and the term "emergency medical technician" to "emergency medical services practitioner." WCD staff has no concern with these changes.

The other bill is 2017 Assembly Bill 64 (AB-64), which is the Governor's Executive Budget. AB-64 contains staff changes for DWD. Currently, the Worker's Compensation Division (WCD) has five staff working under a Memorandum of Understanding with DWD and the Division of Hearings and Appeals (DHA). The budget makes those positions permanent with the DHA. There will also be a transfer of one computations technician away from the WCD to the DHA so that the DHA ALJs can have computations completed without needing the WCD to do them.

AB-64 eliminates the Labor and Industry Review Commission (LIRC) and changes the way appeals are handled. The next level of appeal after an Administrative Law Judge holds a hearing will be to the division administrators of the Unemployment Insurance Division and the Equal Rights Division at DWD and, for Worker's Compensation, to DHA Administrator Brian Hayes. Last year there were 157 worker's compensation cases that were appealed to LIRC.

The language related to court reporters has been changed in AB-64 so that testimony at a hearing under Chapter 102 can be recorded by a stenographic reporter or a recording machine. It appears that the method used will be at the discretion of the DHA.

The WCD will receive five additional positions from vacant positions in other areas of DWD if AB-64 is approved as written. These positions would be used to address increased workload and maintain customer service such as in health cost disputes.

Ms. Bloomingdale requested that the WCD provide a more detailed analysis of how these changes proposed in the Governor's budget will affect the worker's compensation system.

Mr. Kent asked if a transcript would be prepared when a recording machine is used at a hearing. Mr. Dernbach will include an answer to this as part of the analysis for the next meeting.

Adjournment: A motion was made by Mr. Reader to adjourn and for the labor and management members to go into caucus. The motion was seconded by Ms. Bloomingdale The motion passed unanimously. The meeting was adjourned at approximately 1:00 p.m.

The next Worker's Compensation Advisory Council meeting will be held on Tuesday, March 14, 2017. The Council will not meet in April.