Worker's Compensation Advisory Council
Council on Worker’s Compensation
Crowne Plaza
Madison, Wisconsin
March 27, 2009

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

Excused:  Mr. Nugent 


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

  1. Call to Order/Introductions: Ms. Huntley-Cooper convened the Worker’s Compensation Advisory Council (WCAC) meeting at approximately 9:30 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 March 13, 2009 meeting were unanimously approved with correction.
  3. Public Comment:  Mr. Eric Farnsworth, trial attorney and Director of the Wisconsin Academy for Justice, commented on Management proposal # 1 relating to contractors and subcontractors. Mr. Farnsworth indicated that it would be a drastic change in precedent in this state if employees were precluded from suing another contractor or subcontractor for negligence on a job site. He referenced the Miller Park and Falk Corporation accidents in support of his position. Mr. Beiriger responded indicating that the intent of Management’s proposal is not to eliminate a worker’s right to bring a third party suit against another contractor or subcontractor on the job site who was responsible for the work injury. Rather, the intent is to eliminate provisions in construction contracts which transfer liability back to the employer for any third party awards against a contractor or subcontractor on the project. Currently the employer and its carrier are liable for the worker’s compensation benefits and the employer may be liable under contract to reimburse the tortfeasor for any third party recovery by the employee. Mr. Newby indicated that Labor would not agree to language that would eliminate third party suits in accidents such as Miller Park and Falk Corporation. Management will work with the WCD and the Legislative Reference Bureau in drafting language for review that conveys their intent with proposal #1.

    Ms. Patricia Grillot stated that she has been receiving permanent total disability (PTD) benefits for 24 years. For the first 20 years that she was receiving PTD, she did not receive an increase in benefits. She suggested that PTD benefits be increased to a 6 year lag. She also suggested that insurance carriers pay attorney’s fees in cases where the dispute involves payment of medical expenses.
  5. Correspondence: None.

  7. Reports: Mr. Aiello provided a handout and report on the Work Injury Supplemental Benefit Fund (WISBF).  The balance as of March 25, 2009 was $10,573,342.  For the years 1996 through 2003, there is no captured data on payment of attorney’s fees.  Revenue sources of surcharges, interests and penalties for illegal employment of minors were not effective until April 1, 2006.  WISBF revenue varies due to the main funding mechanisms of payment into the WISBF following amputations and deaths.  Expenditures out of the WISBF typically remain low until the end of the fiscal year when carriers submit reimbursement for supplemental benefit payments.  Ms. Knutson indicated that the WCD is not able to capture data on payments for hearing aid expense payments or for hearing aids paid after claims had been compromised. 

    Mr. O’Malley explained that statutory amendments limiting claims for occupational hearing loss include the 1992 change to provide a threshold of 20% binaural loss before indemnity would be payable and elimination of benefits for tinnitus.  On April 1, 2008 the most recent statutory amendment became effective providing that hearing aids would no longer be payable on claims when no compensation was awarded.

    Management requested that the WCD review the increase in payments for barred hearing loss claims and report back to the WCAC at the next meeting.

    The WCAC had requested information on the average cost of tuition at the Wisconsin colleges.  Mr. Conway reported that a representative from the Division of Vocational Rehabilitation will attend the next WCAC meeting and will provide information on tuition costs, the current financial aid process and grade and credit requirements.

    Ms. Knutson reported that the WCD did not have any hard data on the number of cases pending where the constitutionality of the retroactive application of the 2008 amendments to Wis. Stat. §102.17(4) is at issue.  In speaking with the Department of Justice, the estimate is a dozen cases are pending with some on hold and some proceeding through the hearing and appeal process.

    With regard to Management proposal #8, Ms. Knutson indicated the WCD could require a prehearing conference in cases where bad faith has been alleged. The administrative law judge would then make a preliminary determination on whether there was enough evidence of bad faith to proceed to a formal hearing on the merits of that issue.

    The WCAC had requested information on an updated cost analysis of bringing PTD benefit rates in old cases up to a 6 year lag with future benefit rate indexing. Mr. Conway provided information on the cost with two possible approaches. The more costly approach would involve bringing all old PTD recipients at once up to the maximum benefit rate with a 6 year lag. The less costly approach would involve increasing benefits over a five year period of time up to a 6 year lag. The more costly option would involve additional increases of $10M to $10.5 per year for a 15 year average for supplemental benefit payments. The less costly option would involve increases of about $7M per year averaged over the next 15 years. These estimates assume no changes to the current law on continuation of PTD benefits for life and the requirements for eligibility for PTD. Mr. Newby asked the amount of indemnity benefits paid out by all carriers. Mr. Conway responded that in 2006 $244M was paid in indemnity and $541M was paid in medical expenses.

    With regard to comparisons of compensation benefit rates in Wisconsin to other states, Mr. Conway referred to a one-page summary and indicated there are multiple variations on the basis for state WC disability payments and duration of payments. It is difficult to rank WI in comparison to other states due to these variations. Mr. O’Malley commented that some states limit temporary total disability benefit payments to 2 years or 4 years. In Michigan, there are no permanent partial disability benefit payments because all benefits are paid on a wage-loss theory. It is hard to make meaningful comparisons across the states.

    Mr. O’Malley indicated that the WCD was withdrawing Department proposal #15 in reference to barred traumatic injuries, based upon a recommendation of the Department of Justice who is representing the WISBF in the cases currently on appeal.

    Mr. Conway reported there is a request in the Governor’s Budget bill for extending purchasing authority for information technology for the WCD. The funds will be used for a major computer software upgrade for the Integrated Clams Management System (ICMS). The software upgrades are necessary because the Powerbuilder application is no longer supported. Mr. Aiello explained there would be no impact on the pending report for the insurance carriers because it is already in the new application.

    Mr. Aiello clarified that in reference to Department proposal #2, it is not the intent of the WCD to impose new $100 penalties; rather, the proposal will give statutory authority to the Office of Commissioner of Insurance to hold a hearing and impose sanctions against carriers that egregiously fail to respond to WCD correspondence.

  9. Labor & Management Proposals:  Mr. Beiriger indicated Management’s proposals seek to restore integrity into the no-fault system. Management’s position on Labor’s proposals as follows (numbers reference Labor proposal numbers):
    1. This is very similar to Management proposal #9; however, Management seeks to limit eligibility for PTD benefits to injured workers that meet the statutory definition of PTD with all other unscheduled injuries eligible for permanent partial disability for loss of earning capacity only. Management would then agree to incrementally increase supplemental benefits in 5 year increments every 2 years until benefit rates are at a 6 year lag. PTD benefits would then be indexed going forward. In conjunction with this, Management would include its proposal #5 providing for termination of PTD benefits at the Social Security retirement age. Persons who meet the definition of statutory PTD would continue to receive benefits for life.
    2. This proposal would raise burial expenses to a maximum of $10,000. This relates to Management proposal #7. If someone dies as a result of the work injury, death benefits and increased funeral expenses are appropriate. If the death is unrelated to the work injury, no death benefits or funeral expenses would be payable.
    3. This proposal would raise PPD benefit rates $10 each year. This relates to Management proposals #3 and 4. There has been an erosion of the statute of limitations.
    4. This proposal refers to paying the cost of a retraining program recommended by a DVR counselor. Management is not able to respond to this proposal until further information is provided by DVR.
    With regard to Management proposal #2, concerning medical cost containment, Mr. Buchen indicated there recently was a meeting with health care providers and Management was waiting for results of a data request from insurance companies. Ms. Pehler explained that Management proposal #8 is needed to require specific information in claims where bad faith is claimed by the employee. Currently employees are required to provide support for indemnity and medical expense claims, and Management is seeking a similar requirement for bad faith claims. In reference to Management proposal #10, if the employee is not available for work because the employee is incarcerated and not legally able to earn a wage, the employee should not be eligible for disability benefits. Management adopts public proposal #7 sub. 2 relating to taping of hearings, but would limit the right to tape hearings to the parties.

    Mr. Newby indicated that the needs of the workers in the no-fault worker’s compensation system should not be compromised. Labor will agree to public proposal #7 sub. 2 as amended by Management. Labor will advise at a later date if any of the other public proposals will be incorporated into the Labor proposals. If Department proposal #4 is adopted, public proposal #7 sub. 1 should be adopted as well because both proposals deal with benefit offsets. Labor’s response to Management proposals are as follows (numbers reference Management proposal numbers):

    1. Management will submit proposed language to Labor for review.
    2. If Management has a proposal with regard to health cost containment, it needs to be presented soon to be considered this agreed-bill cycle.
    3. No. This proposal relates to amending Wis. Stat. §102.17(4) on barred traumatic claims. Often it is not good medical practice to have a hip or knee replacement until much later. Most private group insurance excludes coverage for work-related injuries and employees may be without coverage for a knee or hip replacement. Mr. Brand indicated that the law was changed in 2006 in an attempt to find ways to keep the WISBF more solvent.
    4. Just because hearing loss does not rise to a compensable level for indemnity does not mean there is no medical need for hearing aids.
    5. Social Security retirement benefits depend on your earnings throughout your work life. If you are PTD at a young age, your Social Security Retirement benefits will be very low. Also, there are only about 700 people currently receiving PTD benefits. Mr. Beiriger replied that the number of PTD claims alleged in settlements is not known. The costs to the insurance carrier are higher than is reflected in conceded or decided cases.
    6. The department does not have any data available.
    7. This would lessen funds paid into the WISBF in cases where death benefits are due but there are no dependents. If there are dependents, death benefit payments are due whether or not the death is related to the work injury.
    8. The claim must be approved before a bad faith claim is entertained. There is no need for a prior review by the WCD.
    9. An employee who is PTD may not meet the statutory provision but still cannot permanently work. This would eliminate the “odd lot” PTD category. The percentage of employees who meet the definition of statutory PTD is very small.
    10. There are decisions from various courts that undocumented workers are covered by worker’s compensation. There is no data presented on the number of cases where an employee is receiving disability benefits and is incarcerated. More justification on this proposal is needed from Management.
  10. Adjournment: Discussion on all agenda items concluded and the meeting was adjourned at approximately 3:00 p.m.

    Future meeting dates:   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.