Worker's Compensation Advisory Council
Council on Worker’s Compensation
Crowne Plaza
Madison, Wisconsin
March 13, 2009


Members present:   Mr. Beiriger,  Mr. Buchen, Mr. Collingwood, Ms. Connor (for Mr. Scott), Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Ms. Nugent, Mr. Olson, Ms. Pehler, Mr. Redman, Mr. Schwanda, Ms. Vetter

Excused:  Mr. Brand 


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

  1. Call to Order/Introductions: Ms. Huntley-Cooper convened the Worker’s Compensation Advisory Council (WCAC) meeting at approximately 09:30 a.m. in accordance with Wisconsin’s open meetings law. WCAC members, staff and members of the audience introduced themselves.
  2. Minutes: The minutes of the February 13, 2009 meeting were unanimously approved with correction.
  3. Public Comment:  None.
  5. Correspondence: None.
  7. Reports: Ms. Knutson presented information on the reasonableness of fee and necessity of treatment dispute resolution process which has been in place since 1992. Necessity of treatment disputes involve submitting the dispute to a member of the department’s expert review organizations. The overwhelming majority of these disputes involve chiropractic care. Reasonableness of fee disputes involve a number of issues. The department currently has three private certified databases plus the Wisconsin Hospital Radiology database. The certified databases contain maximum amounts payable for individual, certified billing codes for a specific area of the state. The maximum amount payable is calculated at 1.4 standard deviations from the mean based on billed charges. If there is no certified database amount for a particular billing code, the department may, in its sole discretion, use any other information that it considers reliable and relevant to the disputed fee to resolve the dispute. Ms. Knutson provided a chart showing the number of total health cost disputes filed since 1996 with a projected record number of 4000 for the calendar year 2009. Not only has the number of disputes (overwhelmingly reasonableness of fee) increased significantly, their complexity has increased as well. The issues involved include proper coding, bundling of charges, late filing of disputes by providers, defaults against carriers for failure to respond, erroneous assertions by carriers that a certified database was used, and insurers recoding hospital charges into a global DRG code (resulting at times in large reductions in reimburse-ment rates). The number of WCD staff assigned to process these disputes is very small and the workload is overwhelming. The department has proposed three administrative rule amendments to address just a few of these issues (see Department Proposals 12, 13 and 14).

    Mr. Aiello provided a report on the Work Injury Supplemental Benefit Fund (WISBF). For fiscal year 2008, expenditures totaled $4.9 million and revenues totaled $4.9 million. For fiscal year 2009, as of March 1, 2009, the balance in the WISBF equaled $10.4 million. Expenditures for fiscal year 2009 to March 10, 2009 total $1.5 million with revenues during the same period totaling $3.9 million. However, the department had not yet received and processed all reimbursement from carriers for supplemental benefit payments for the year. Mr. O’Malley reminded the WCAC that payments into the WISBF primarily result from assessments against insurers and self-insured employers for deaths, dismemberments and death benefits when the decedent had no dependents. The WCAC requested additional information from the WCD on balance, revenue and expenditures from the WISBF from past years in comparison to the current year.

    Mr. Aiello presented the department’s rationale for proposing an amendment to Wis. Stat. §102.31(3) (Department Proposal No. 2). As part of its claims monitoring function, the department sends out letters to carriers requesting information or reports. The department correspondence can be grouped into different categories including information required to calculate the average weekly wage which can result in a finding of underpayment of disability benefits and a balance due letter and requesting final medical reports or comparative x-rays to calculate permanent partial disability payments due to the injured worker. The department monitors benefit payment information to determine whether benefits are paid promptly and accurately. Carriers have access to information on correspondence due through a hard copy of the letter and an electronic copy included in the pending report. The department’s proposal no. 2 pertains to referring insurers to the Office of the Commissioner of Insurance for enforcement proceedings for failure to reply to correspondence. This would only be used in rare situations when there is a pattern of failure to reply to correspondence and other interventions with the insurer have not resulted in adequate improvement. OCI has indicated that a language change is needed before they would have statutory authority to act on enforcement referrals.

    Mr. O’Malley reported to the WCAC on his survey of other states (all 50 states plus the District of Columbia) to determine if they require continued group health insurance coverage to injured workers or retirement contributions. Most states have no specific statutes referencing continuation of group health insurance. Four states have statutory worker’s compensation law provisions requiring employers who provide health insurance coverage to continue such coverage for injured workers. Hawaii has a statutory provision requiring employers to provide employees with coverage by a prepaid group health care plan. Coverage continues for three months after the month the employee becomes hospitalized or disabled. The District of Columbia’s statutory provision requiring employers to continue the provided health insurance coverage for up to 52 weeks; however, the U. S. Supreme Court held that federal law (Employment Retirement Income Security Act of 1974 – ERISA) preempted this statute. This federal preemption would apply to similar statutory provisions in other states. Some states include the amount of the employer’s contribution for health insurance coverage in the calculation of the employee’s average weekly wage subject to the statutory maximum wage if the employer ceased coverage. There were no states that provided continuation of employer’s contributions to retirement benefits for injured workers on disability benefits. A few states added the value of the employer’s contribution to retirement into the average weekly wage calculation.
  9. Department Proposals:  Mr. O’Malley reviewed the four new department proposals (numbers refer to proposal numbers) as follows:

    15.  Amends §§102.17(4) and 102.66(1) regarding the retroactive application of the 2006 amendments to the statute that provided insurers were responsible for benefit payments for certain barred traumatic injuries.  To date there have been two circuit court decisions on insurers’ challenges to the constitutionality of the retroactive application of the statutory amendments.  The circuit court in Fond du Lac County found the statute unconstitutional and that case is on appeal to the Court of Appeals, District 2.  The circuit court in Dane County found the statute constitutional.  If that case is appealed, it would be heard in the Court of Appeals District 4.  If the statutory amendments are found unconstitutional, there would be no coverage for injured workers with certain barred traumatic claims for a period of time.  The department is proposing a contingent amendment to provide that in the event the retroactive application is found to be unconstitutional, payment of benefits would revert to the WISBF for a period of time.

    16.  Amends §102.29(10) to use correct terminology.  This amendment is requested by the Legislative Reference Bureau drafter.  The statutory section was added to our law effective January 19, 2006 and the amendment did not come through the WCAC agreed bill process.  It provides protection against third party claims for health care facilities filed by health care providers who provide care under a declared state of emergency.

    17.  Amends §DWD 80.49 regarding vocational rehabilitation benefits to update terminology.

    18.  Repeals §DWD 80.62(8) regarding providing quarterly reports to the Governor and Legislature on the Uninsured Employers Fund.  The statutory provision requiring the reports expired many years ago.

    Mr. O’Malley explained that statutory amendments to the Worker’s Compensation Act are contained in the 2009 budget bill (2009 AB 75).  Domestic partners would be defined as dependents and entitled to death benefits.  The WCD has not been asked to prepare a fiscal estimate on the impact on the WISBF.  Death benefits are paid to the WISBF in 5 yearly installments if the decedent left no dependents. 

    The budget bill also contains an amendment to Wis. Stat. §102.64(2) and (3), providing the WCD an option of retaining the Department of Administration (DOA) or a third party administrator to handle claims for payments into or out of the WISBF.  The costs of claim administration would be paid out of the WISBF.  The Department of Justice would still represent the WISBF at hearings or on appeal.  This proposal came through the budget drafting process at DOA. 

    The WCAC members expressed concern with these two budget bill provisions and the circumvention of the agreed bill process.  While the proposed change in claims administration is ministerial, the addition of domestic partners as dependents involves a change in a substantive benefit provision in the Workers Compensation Act.  The Labor and Management co-chairs will author a letter to the Governor and the Joint Finance Committee of the Legislature expressing their objection to the process of including such provisions in the budget bill rather than referring the matter to the WCAC for deliberation and possible inclusion in the agreed bill.

  10. Labor & Management Proposals:  Mr. Buchen presented Management Proposals as follows:

    1.  Provide that the exclusive remedy applies to contractors and subcontractors and financial responsibility for the third party may not be transferred back to the statutory employer.

    2.  Institute an effective medical cost containment system, with details to be provided at a later date.

    3.  Amend §102.17(4) to provide that for barred traumatic claims, the employee must have had the prosthesis implanted prior to the statute of limitations running.

    4.  Eliminate payment of medical expenses or hearing aids for cases where there is no compensable hearing loss.

    5.  Cease permanent total disability benefits upon receipt of Social Security Retirement benefits.

    6.  Management is requesting information from the WCD on the status of the WISBF including payments for hearing aids where there has been a previously compromised claim.

    7.  Eliminate death benefit payments for employees who are permanently totally disabled and who die from causes not related to the work injury.

    8.  Require that employees state the basis for bad faith claims with reasonable specificity and have WCD staff conduct an initial review of such claims to determine if there is probable cause to proceed.

    9.  Limit benefits for permanent total disability (PTD) to situations where employees are unable to perform any work (statutory permanent total disability claims).  All other claims would be treated as loss of earning capacity.  Increase PTD rates to a six-year lag level and index benefits for inflation.

    10.  Disallow temporary disability benefits for individuals that are legally not able to work.  This includes individuals that are incarcerated and illegal aliens.

    Mr. Newby presented Labor Proposals as follows:

    1.  Raise indemnity levels for employees receiving PTD benefits up to current levels with a six-year lag.  Index PTD benefits annually going forward.

    2.  Increase benefits for burial expense to $10,000.

    3.  Increase permanent partial disability maximum benefit rates $10 each year.

    4.  Provide that the employer/insurer shall pay the reasonable cost of the rehabilitative training program recommended by the Division of Vocational Rehabilitation (DVR) counselor.  Attorney David Weir explained that currently for those employees served by DVR, tuition and book costs are paid by DVR.  However, DVR is limiting funding to up to $4,000 and is not providing funding if there is another payer.  Labor’s proposal would provide that the carrier must pay the tuition and book costs in these cases.  The WCAC requested that the WCD gather information on the cost of a technical school and public university education.  Management requested information on DVR rules for regular attendance and academic progress.

    5.  Labor that the WCD provide information on the current cost of their Department Proposal No. 1.

    6.  Labor that the WCD provide information on the comparison of Wisconsin indemnity rates with those of other states.

    Management indicated that it was considering support of Public Proposal No. 7 (Part 2) with regard to recording of hearings by a party or the public, due to past demeanor issues of administrative law judges.  If they are in agreement with that proposal, it will be included in Management’s proposal list at the next meeting.  Management has questions on Public Proposal No. 2; Labor also has questions on this proposal.

    Mr. Beiriger provided Management’s response to the Department’s proposals as follows (numbers reference the proposal numbers)

    1.   Yes
    2.   Yes
    3.   Yes
    4.   Yes
    5.   Yes
    6.   Yes
    7.   Yes
    8.   Yes
    9.   Yes
    10. Yes
    11. Yes
    12.  through 14 Management has no position at this time
    15.  WCD to present more information
    16.  The proposed language change is okay; however Management has a question on whether the coverage provided by the statute should be broader
    17.  Yes
    18.  Yes.

    Mr. Newby provided Labor’s response to the following Public Proposals:

    7.  Part 2.  No position.
    8.  No.

    Mr. Newby also provided Labor’s response to the following Department Proposals:

    15.  Need more information.  Labor suggested that perhaps this issue should wait   to be addressed at the next agreed bill cycle.
    16.  Okay.
    17.  Okay.
    18.  Okay.

    Mr. Newby indicated with respect to Management Proposal No. 2 that Labor was hoping for a joint provider/management proposal with respect to medical cost containment.  It is getting late in the agreed bill cycle to consider a new major proposal.  With regard to Management Proposal No. 8, Labor a response from WCD referencing estimated cost and due process considerations.

    For the Public Proposals that Labor agreed with, they will become part of Labor’s proposal list.  If Management agrees with any of the Public Proposals, they will become part of Management’s proposal list.

  12. Adjournment: Discussion on all agenda items concluded and the meeting was adjourned at approximately 2:35 p.m.

    Future meeting dates:  March 27th, April 13th, May 8th and June 5th. All meetings are scheduled to be held at the Crowne Plaza in Madison with the exception of the May 8th meeting which is scheduled at the Clarion in Madison.
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