Insurance Letter 367

November 8, 1996

To: All Insurance Carriers and Self-Insured Employers

From: Gregory Krohm, Administrator

Subject: Reporting and notice requirements when denying or stopping benefit payments to injured workers.

The Worker's Compensation Division frequently receives complaints from injured workers that their benefits have been denied, discontinued or reduced without receiving notice explaining reasons for the action and their recourse if they do not agree. Denial of benefits without notice often leads to litigation. Insurance carriers, self-insured employers and third party administrators are reminded of the relevant reporting and notification requirements in DWD 80.02(2)(b) and (d) of the Wisconsin Administrative Code:

80.02(2)(b) Make a report within 7 days from the date that payments are stopped for any reason. If any payments are stopped for a reason other than the employe's return to work, an explanation of such cessation must beprovided to the department and the employe. The self-insured employer or insurance carriershall advise the employe as to what the employe must do to reinstate payments. (Emphasis added.)

80.02(2)(d) Notify the department and the employe immediately if liability for payment of compensation is denied, giving the reason for such denial. The notice shall advise the employe of the right to a hearing before the department. (Emphasis added.)

The two most frequent complaints arise from: 1) the denial of TTD payments because of delayed or insufficient medical information, and 2) the reduction of PPD payments based upon medical information from someone other than the treating doctor.

To assist in providing proper notice of denied or reduced benefits, suggested language is provided in the sample letter below. Where applicable, please share this with your third party administrators. Remember to send copies of notices to the Division as required by the rule. Timely notifications with specific information and clear explanations of why benefits are reduced or denied may result in fewer inquiries to you and fewer hearing applications.

In its responsibility to inform injured workers of their rights and reduce hearing applications, the Division may attempt to resolve benefit payment denials and reductions through conversations or correspondence with the insurer or third party administrator. The Division strongly supports all parties using these and other informal dispute resolution practices before petitioning for formal hearings.

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SAMPLE DENIAL LETTER

Dear (injured worker):

Paragraph 1: We received a report of injury from your employer. After investigating the incident on (date), we conclude that this was not a work injury for which (benefits and/or medical bills ) can be paid under Wisconsin's Worker's Compensation law. Our conclusion is based on (specifics of the medical report, findings of facts surrounding the incident and/or interpretation of the rules/statutes)

Alternative Paragraph 1: This is to notify you that we are stopping(or reducing) your Worker's Compensation benefit payments(or payment of medical bills) under the Worker's Compensation Law effective (date). The reason(s) we are stopping (or reducing) benefits (medical bill payments)(is/are)....(state specific facts relating to why payments of benefits or bills are being stopped) In order for us to reinstate payment of benefits (or medical bills) you must ( give specific instructions)

Closing paragraph: If you disagree with our decision or believe the information supporting our conclusion (or decision) is in error, please contact us at ( specific person and phone number) to resolve the matter informally. You may request a formal hearing before an administrative law judge in the Department of Workforce Development, Worker's Compensation Division, P.O. Box 7901, Madison, WI 53707.

Please note: Elements of a proper notice will include specific identifying information including full name of employer and employee, date of injury, SSN, claim number on all documents. Medical bills and medical reports relating to your communication should be reference with specific dates of payment.

Please send copies to all parties, medical facilities, attorneys and the Worker's Compensation Division