Working in a Winter Wonderland: 4 Things to Know in the Snow

Today’s post was shared by US Labor Department and comes from blog.dol.gov

The bite of winter is fast approaching, with some areas already covered in frosty white. While many workers will be earning a living indoors, plenty of people in the United States will be working outside in the coming months, often in bitter cold. Employers should be aware of the dangers, and plan accordingly.

Here are four things every employer should know in the winter:

1. What do I need to know about shoveling snow?

Shoveling snow can be a strenuous activity, particularly because cold weather can be taxing on the body, and can create the potential for exhaustion, dehydration, back injuries, or heart attacks.

  • Take frequent breaks,
  • Drink plenty of fluids (while avoiding ones with caffeine or alcohol),
  • Warm-up before starting,
  • Scoop small amounts of snow at a time,
  • Push the snow instead of lifting where possible, and
  • Use proper form if lifting is necessary: keep the back straight and lift with the legs.


2. How do you walk safely on snow and ice?

Walking on snow and ice puts workers at an increased risk of slips and falls.

  • Where appropriate, clear walking surfaces of snow and ice and use salt or its equivalent.
  • Proper footwear is essential – insulated boots with good rubber treads are a must for walking during or after a winter storm.
  • When walking on an icy or snow-covered walkway, take short steps and walk at a slower pace so you can react quickly to a change in traction.
  • If the sidewalk is not cleared and you have to walk in the street, walk against the traffic…

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URGENT: Let’s Keep Wisconsin’s Worker’s Compensation System the Best in the Nation!

Wisconsin’s worker’s compensation system—established in 1911 and part of the “Wisconsin Idea” in politics—has been in place longer than any other in the country and is the envy of other states. The Governor’s Budget Bill (2015 SB 21) proposes major changes to the structure and substance of Wisconsin’s nationally-recognized worker’s compensation system. The proposal would remove the Worker’s Compensation Division from the Department of Workforce Development and then split up previously integrated components, with the adjudicatory functions (administrative law Judges) moving to the Office of Hearings and Appeals (in DOA) and the regulatory, customer service, and claims management functions going to the Office of the Commissioner of Insurance.  Among other significant changes, Judges would be reduced to solely adjudicatory functions, no longer assisting with the law’s administration, and then cross-trained for other legal areas.  The proposals also eliminate the requirement that compromise agreements be approved by ALJs.  The proposed changes could have a hugely negative impact on Wisconsin:

1) Destabilizing effect on insurance carriers, employers, and taxpayers:

Worker’s compensation insurance is a major industry and employer in our state. Total premiums collected for worker’s compensation insurance were approximately 1.75 billion dollars in 2013.  The system as a whole works well for all stakeholders.  Workers generally receive timely benefits with excellent return to work rates.  The system cost to employers is low, as employer premiums have been very stable (rising less than 2.35% on average in the past six years; less than inflation).  Worker’s compensation insurance companies like to do business in our state because of the system’s stability and the corresponding ability to earn profits.  Indeed, at the end of 2014, almost 300 insurance companies writing and competing for worker’s compensation insurance business here.

The worker’s compensation advisory council assists with the system’s stability.  The council is comprised of representatives of labor, management, and the insurance industry, as well as medical provider liaisons.  The council’s agreed-upon changes to the worker’s compensation law, which historically were approved by the legislature, allowed for continual effectiveness and efficiency. 

 The current budget proposal had no input from the advisory council or stakeholders. If the bill passes, the advisory council process is likely over.  Without the council’s steadying process, Wisconsin could face substantial swings in its worker’s compensation law.  Fluctuations in the law will have an immediate impact on the bottom line for insurers, employers, and medical providers. Insurance companies could avoid our state. Employers could face large swings and spikes in premium rate.  Medical providers could see negative impacts on reimbursement rates.

 2) Governmental overreach on a system supported by private business: 

The current Worker’s Compensation Division (at DWD) is not funded by taxpayers; virtually the entire system is funded by assessments from worker’s compensation insurers and self-insured employers.  Thus, private businesses fund the Division, including payment for judges, staff, IT costs, rent, etc.  Along with its payments and the advisory council process, the insurance industry has helped shape the law into its current efficient form.

The Budget Bill suggests that the government has a better handle on the system than those private industries that craft and support it.  The bill proposes no changes in the funding of the system—thus, the worker’s compensation insurance industry will be paying for a soon-to-be inefficient and greater litigious system.  Presumably, the worker’s compensation insurance industry wants to fund staff and judges that have expertise in worker’s compensation—not those “cross-trained” in other areas.  The industry should favor a coherent, integrated system for administering their claims.

Additionally, with a current system that uses virtually 0% taxpayer dollars, the Budget Bill proposal creates an increase in taxpayer costs.  The cost of a “simple” physical move of personnel has to come from somewhere.  There is a huge IT cost—likely in the millions—based on the current system and software of the worker’s compensation division.

3) Less efficiency = Increased claim costs = Increased premiums:

Based on independent studies, Wisconsin workers are paid more quickly and return to work sooner than virtually any other state.  Wisconsin is in the top 10 for lowest cost per worker’s compensation claim.  Wisconsin also has one of the lowest amounts of litigated injuries in the country—with almost 85% of cases resolved without dispute or attorney involvement.  The studies indicate that credit for these positive outcomes is from the efficient administrative process and personnel at the current Division, who actively monitor claims and promote timely reporting and administrative resolution of disputes and concerns. For example, a Judge currently can hold an informal telephone conversation between an injured worker and an insurance company adjuster to resolve a dispute about the appropriate legal payment.

The current proposal is to split up this efficient administrative structure without any rational basis.  The Judges would be spun off into an entirely new agency and separated from the other division personnel.  Private settlements could occur without the valuable Judge oversight and protection.  The efficiency of the administrative system is lost by splitting up the division, and increased litigation is a guarantee.  (As an example, if I want to buy a hot dog, it seems blatantly inefficient to require purchase of hot dog in one place and then the bun in another). 

Without division assistance or oversight, workers will seek counsel.  Litigation will occur over previously-resolvable issues.  Attorneys will litigate the validity of the private settlements.  Increased litigation means increased claims costs, which means increased premiums for employers.  The volume of increased litigation also could force the need for more employees at the new agencies.

 We should maintain our place at the pinnacle of worker’s compensation systems and not look to poor analogies suggested from other states like Florida (comp law declared unconstitutional) or Texas (an opt out system, bringing in the possibility of civil litigation).  The administration’s citation to Illinois’ structure is misplaced as Illinois arbitrators/judges are directly part of the state’s worker’s compensation state agency.

4)  Negative impact on medical providers:

Medical cost payment is currently 2/3 of all payouts in worker’s compensation claims (in 2012, medical providers received almost $600 million total, while worker payments were about $275 million). Under current law, Judges review and approve all compromises, which serves to protect the interests of workers, medical providers, and group health carriers.  The Judges make sure the bills are satisfied.  Logic dictates that private settlements mean more claims will be closed—cost-shifting to medical providers.  Insurers will attempt to settle claims early and for smaller sums of money (like in civil litigation).  More closed claims means that medical bills and treatment that would have been covered within the 12 year statute of limitations by a worker’s compensation insurance company will now be shifted to the worker’s health insurance or none at all.  Thus, medical providers will be accepting lower Medicaid/Medicare reimbursement rates for charges that should have been under worker’s compensation.

 5) Cost-shifting of worker’s compensation system to taxpayers, via Medicaid/Medicare. 

Just as the above, with the allowance for private settlements, we will see an exponential increase in claims being closed sooner than in the past.   A closed claim immediately shifts the costs for future medical care to the worker’s own health insurance, including Medicaid and Medicare.  There is no denying an increase in taxpayer-funded health care costs if the current proposal moves forward.

ACTION IS REQUIRED.  Why “fix” a nationally-recognized system that is not broken?  If you favor the continuation of Wisconsin’s worker’s compensation system, contact your Wisconsin legislators now.

Possible Changes to Wisconsin’s Worker’s Compensation System?

Today, from Dee Hall at the Wisconsin State Journal: “Changes Coming to Worker’s Compensation System?” :

Labor representatives and attorneys say they are concerned about a report that Gov. Scott Walker’s two-year budget plan will call for “drastic” changes in Wisconsin’s well-regarded system for compensating injured workers.

An unsigned memo authored by a person with knowledge of the potential changes to the worker’s compensation program states that the Walker administration plans to upend the current one-stop-shop for injured workers, employers and insurance companies by dividing responsibilities among agencies — changes the author said will “clearly have a negative impact on our stakeholders.”

The article continues with input from an insurance company claims director and an applicant’s attorney, who agree that the worker’s compensation system is working well at the current time.  According to the article:

The cost of administering Wisconsin’s program is paid for by worker’s compensation insurers and self-insured employers who pay a yearly fee proportional to what they paid out in worker’s compensation benefits in the previous year. Taxpayers do not pay for the system, and any reorganization would not add or subtract from the 2015-17 budget’s bottom line.

Compensation is paid to injured workers regardless of who’s at fault, but in return, those workers cannot sue the employer for additional damages — such as pain and suffering — that go beyond the law’s limited benefits. Employers’ insurance premiums are generally based on size of payroll, risk of injury and past injury claims.

 

A 2013 study by the nonpartisan Worker’s Compensation Research Institute compared 16 states that handle 60 percent of all worker injury claims filed nationwide. It concluded that “compared to other states we looked at, Wisconsin’s costs were among the lowest,” said the study’s author, Sharon Belton.

Although medical costs in Wisconsin are higher than many other states, workers are back on the job faster. The result is that the median cost of a claim, including medical expenses and lost wages, was $7,118 in Wisconsin compared to the median among the study states of $8,973, said Belton.

 

This author echoes the sentiments of the article.  There is no rational basis for altering the current structure of the worker’s compensation system.  Some quick thoughts, based on information to date:

  • Currently the Worker’s Compensation Division resides within the Dept of Workforce Development.  Worker’s compensation has a strong and lengthy history in our state, dating back to 1911 (when we were the first state to have a constitutional worker’s compensation system in the country!).  We have an incredibly stable system that is the envy around the country.  It is stable because of the structure of our system.  The entire cost of the WC system is funded privately by assessments on worker’s compensation insurance companies and self-insureds (i.e., not state taxpayer money).  Additionally, we have an Advisory Council process that is a group of invested stakeholders in the system that produce an agreed-upon bill, which has prevented our system from being subject to potential instability.  (Stability in the system and premium structure is a huge issue for the insurance industry and employers).
  • The stability in the system is reflected by the huge amount of insurance companies that write insurance in our state–over 250 to my knowledge.  That is a huge number compared to the rest of the country.  Insurance companies write insurance here because of the system’s stability, which assists with known costs and allows known profits.  Worker’s compensation is a profitable business in Wisconsin.
  • We understand that major substantive and structural changes to the worker’s compensation system currently are being proposed as part of the Governor’s upcoming budget bill. This information is comes from solid sources.  Based on information we have received, the plan is to remove the Worker’s Compensation Division entirely from DWD, splitting some functions off to other agencies, while some hugely important functions of WC would just cease completely.
  • It appears the proposal is for the insurance bureau staff to go to Office of the Commissioner of Insurance (OCI).  The worker’s compensation specialized ALJs would go to the Hearings and Appeals section at Department of Administration (DOA), removed from the worker’s compensation division (No information is known as to whether the move to DHA will include court reporters, scheduling staff, health cost dispute staff  and administrative assistants who make up the remainder of the Bureau of Legal Services). Current claims management function in the WC Division – the claims staff, wage analysts, ADR personnel, the individuals that do all the worksheets– may or may not be retained, or where they would go if kept.  We are hearing there may be a complete dismantling of the claims management unit.
  • Currently, approximately 85-90% of work injuries in Wisconsin are not litigated; this is in stark contrast to the rest of the country.  The basis is that the Worker’s Compensation Division generally administers the worker’s compensation act.  Elimination of the claims management function could be hugely detrimental.  Insurance companies, self-insured employers absolutely rely on the Division in administering and paying claims.  Without Division claims management, litigation is guaranteed to increase—with corresponding increase in insurance costs and premiums.  In potential “benefit” in staff decrease will be unsustainable with the increased litigation of claims, even minor ones.  I’m sure employers will not be happy with the increased premium costs. 
  • If the Judges are moved to a new agency, it appears many of their valuable tasks/duties would be eliminated.  If Judges schedule their own hearings, this could result in significant delay in obtaining hearing dates.  It could also mean the removal of remote hearing locations.  Currently, hearings are held all over the state, for the convenience of the stakeholders (employers, carriers, workers). 
  • More importantly, this move of the Judges could mean an end to the statutory requirement that Judges approve and review all Compromises.  Judges review all compromises, even in the 85-90% of non-litigated cases.  That means insurance companies and unrepresented workers could privately settle claims—with no oversight.  The potential for abuse, error, or miscommunication is apparent.   The biggest issue is a shift of the liability for worker’s compensation medical expenses to the taxpayers, health insurance companies, and medical providers.  As opposed to our 12 year statute of limitations, an inappropriate claims close out means that all future medical expenses are through the worker’s own sources—generally Medicaid/Medicare.  The taxpayers are left covering the costs of these expenses that should be the responsibility of the worker’s compensation insurance company.
  • Also, the Division currently tries to protect the medical providers and health insurance carriers to make sure they are protected.  A private settlement means no Division protection.  We assume medical providers would like to hear about this potential change and the possibility that their bills wouldn’t be protected.
  • We can’t see any cost savings to the state here.  The Division is not funded by state dollars.  The agency move itself would create a very substantial one-time costs, with unknown ripple effects.  These moves would increase the litigation in the system—something no stakeholder wants.
  • All this makes no sense to the stakeholders and customers in the system—insurers, employers, injured workers and medical providers.  We are not aware that any stakeholders have been consulted on these changes.  Wisconsin has one of the best worker’s compensation system in the country, a system that has functioned extremely well within DWD, and it could be dismantled.  The current worker’s compensation system currently benefits its major players: insurance companies who profit from the sale of the insurance, employers with worker’s compensation insurance, and the injured workers who are provided benefits.

 

Facebook Postings Hurt Workers’ Compensation Claims

While Facebook is extremely popular and used by over a billion people every day, no Facebook posting has ever helped an injured worker in a workers’ compensation claim. On the contrary, use of a Facebook page poses real dangers for injured workers pursuing workers’ compensation benefits.

Since Facebook is a public site, anything posted can be used by respondent insurance companies in claims denial. Even the most benign postings (birthday parties, family gatherings, etc.) can pose problems. For example, a grandparent lifting a 30 pound grandchild when doctors have imposed a 10 pound lifting limit could damage a claim. Additionally, nothing prevents an Administrative Law Judge from looking at a Facebook page.  Even innocent posts may be subject to misinterpretation. A picture of the worker riding a motorcycle or fishing taken prior to the injury but posted afterward could place the seed of doubt in an ALJ’s mind that the worker is not as limited as he claims. The best advice is to be extremely careful about what is posted because “friends” are not the only one who can access your Facebook page.

File a Workers’ Comp Claim – Get Fired

A new study from the Workers Compensation Research Institute (WCRI) indicates trust or mistrust in the work relationship plays a significant role in the outcome of a workers’ compensation claim.  In a recent benchmark study in Iowa by WCRI, almost four out of ten workers interviewed reported they were concerned they would be fired or laid off after they were injured. 

The Iowa study reflects similar results in Wisconsin and other benchmark states.  All workers who were interviewed received workers’ comp benefits and experienced more than a week of lost work time.  Additional findings noted two-thirds of the injured Iowa workers had other health conditions (having smoked for ten years or had diabetes or lung conditions).  Obviously those with significant pre-existing conditions had predictably worse results.

2014 Top Ten Workers’ Compensation Fraud Cases

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

  Number Value
Non-Employee Fraud Cases 9 $ 74,876,000.00
Employee Fraud Cases 1 $ 450,000.00
Total $ 75,326,000.00

Five of the top ten fraud cases in 2014 are from California. The other five cases are from Florida, Texas, Arizona, Washington and Georgia. As usual, non-employee fraud cases dominated the list and the dollar amounts are staggering, led by the $36 million over-billing case out of southern California. An emerging issue is the misclassification of workers, and we will likely see more of these cases in 2015 as enforcement steps up in this area.

1. (California) Medical Equipment Company Overbills $36 Million (3/17/14)

The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.
The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.

The owners of Aspen Medical Resources had all their assets seized and put into receivership by the Orange County District Attorney. They were indicted in on 49 felony counts of fraudulent overbilling of $36 million for hot-cold physical therapy machines. Although these machines retail between $250 and $500 Aspen often billed Southern California workers’ compensation claims departments thousands of dollars each time a machine was rented.  

2. (California) 15 Medical Professionals Indicted in $25 Million Scheme – Small Child Dies (6/24/14)

Ahmed Kareem, one of 15 doctors accused of participating in a workers’ compensation scam.
Dr. Ahmed Kareem   is accused of participating in a workers’ comp scam.

Fifteen doctors, pharmacists and other medical professionals in Southern California were charged in a $25 million workers’ compensation scam which was linked to the death of a baby. Prosecutors alleged insurance fraud and conspiracy in the 44 count indictment which detailed that the head of a workers’ compensation claims management firm hired pharmacists to produce a pain-relief cream and then gave kickbacks to the doctors that prescribed it and conspired to submit phony claims. A 5-month old boy ate the cream and died when his mother, who was using the prescribed cream for back and knee pain, allowed her son to suck her fingers to sooth him. The next morning he was found dead and tests showed he had ingested lethal amounts of drugs in this cream.

3. (California) Lowe’s Settled Independent Contractor Misclassification Case for $6.5 Million (7/3/14)

Lowe’s misclassified its installers as independent contractors, rather than employees.
Lowe’s misclassified its installers as independent contractors, rather than employees.

Over 4,000 “Lowe’s professionals” in California are members of a class action alleging that Lowe’s misclassified its installers as independent contractors, rather than employees, thus depriving them of a variety of employee benefits, from workers’ compensation insurance coverage to 401(k) plan participation. Lowe’s, without admitting liability, recently settled the case after mediation for a sum that could be as much as $6.5 million. The plaintiffs claimed that Lowe’s retained and exercised control over their work by requiring them to identify themselves as working for Lowe’s, wear Lowe’s hats and shirts, and attend training by Lowe’s.

4. (California) Paving Company Cheats System of $4 Million (6/19/14)

Sabas & Lucia Trujillo
Sabas & Lucia Trujillo face criminal charges for workers’ comp’ fraud.

Five owners (Sabas Trujilo, Lucia Trujilo, Rick Trujilo, Laura Fitzpatrick and Alex Trujilo), operators and employees of a Corona, California based paving company are facing criminal charges for alleged wage theft, premium fraud, workers’ compensation and payroll fraud. The Riverside County District Attorney’s Office alleges that the individuals’ criminal actions enabled them to illegally obtain about $4 million. After launching an investigation, the state obtained search warrants for both companies, seizing computers and bank, payroll and other documents. The state conducted several wage audits on several hundred projects, which ultimately led to the filing of criminal charges.

5. (Florida) False Insurance Certificates Check Cashing Scheme Defrauds Insurance Company of $1 Million (11/18/14)

Arturo Santos Zuniga paid laborers cash to avoid paying workers' comp'.
Arturo Santos Zuniga paid laborers cash to avoid paying workers’ comp.

Arturo Santos Zuniga, who also went by the name David Hernandez, was busted for paying laborers in cash to avoid paying workers’ compensation insurance premiums. Zuniga paid a North Lauderdale man to create and insure a fake or “shell” company, Behar Services Incorporated, and “rented” out insurance certificates to uninsured subcontractors in South Florida. Payments to the uninsured subcontractors were made through checks to the fake company, which were then cashed at check cashing stores. Behar Services Incorporated got its insurance policy by saying it had 10 employees doing carpentry and office work with an annual payroll of $210,000. The annual premium was about $26,500. Law enforcement financial reports show that just in the months from July to October, more than $7.3 million had been cashed out at check cashing stores to Behar Services Incorporated and/or the North Lauderdale man who started the company. A $7.3 million payroll would have cost more than $1 million more than the existing policy. No estimate of lost tax revenue was given.

6. (Texas) Man to Pay $806,000 for Underreporting Payroll to Workers’ Comp Carrier (3/11/14)

Howard Douglas Whiddon of Travis County was ordered to pay $806,000 in restitution.
Howard Douglas Whiddon was ordered to pay $806,000.

Howard Douglas Whiddon was ordered to pay $806,000 in restitution to workers’ compensation insurer Texas Mutual Insurance Co. after pleading guilty to workers’ comp fraud-related charges. He intentionally misrepresented the payroll of a related company, thus lowering his premiums. Mr. Whiddon was sentenced by a Travis County, Texas court to 10 years of deferred adjudication and 160 hours of community service.

7. (Arizona) Paul Johnson Drywall Inc. Agreed to Pay $600,000 in Back Wages, Damages and Penalties to 445 Employees (5/19/14)

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.
Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees, which stripped them of workers’ compensation and other protections afforded to employees. The owner, Robert Cole Johnson agreed to take concrete steps to ensure that misclassification of its workforce does not occur again and to pay $556,000.00 in overtime back wages and liquidated damages to at least 445 current and former employees. The employer also agreed to pay $44,000.00 in civil monetary penalties. Investigators found that the drywall contractor violated the Fair Labor Standards Act overtime and record-keeping provisions.

8. (Washington) Summit Drywall, Inc. Ordered to Pay $550,000 in Unpaid Wages and Damages to 384 Workers (2/20/14)

The owner of Summit Drywall, Inc. was ordered to pay damages to 384 employees.
Summit Drywall’s owner was ordered to pay damages to employees.

Thomas Kauzlarich, the owner of Summit Drywall, Inc. was ordered to pay $550,000 in overtime back wages and liquidated damages to 384 current and former employees. An investigation showed that the company violated the Fair Labor Standards Act’s overtime and record-keeping provisions from October 15, 2009 to April 15, 2013. The article did not report the amount of reduced workers’ compensation premiums paid.

9. (Georgia) Nurse Gets 5 Years in Prison for $450,000 Bogus Workers’ Comp Claims (8/26/14)

A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and fraudulent claims.
A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and mailing fraudulent claims.[/caption] Loretta Smith, a VA nurse from Glenwood, GA, will serve five years in prison and must repay $450,000.00 in federal funds by filing bogus workers’ compensation claims, pleading guilty to two counts of mail fraud in the mailing of fraudulent claims, in which she received more than $450,000.00. She agreed to forfeit the equivalent of $454,740.06 in cash, real estate and other property. She was also sentenced to three years probation after her release.
10. (California) Drywall Company Owners Arraigned on $420,000 in Fraud Charges (12/11/14) The owners of a defunct drywall company, National Drywall in San Bernardino, CA, were arraigned on charges that they defrauded their workers’ compensation insurance carrier of $260,000.00 and stole $160,000.00 from their workers.
 
Honorable Mention 

(Oregon) Uncooperative Hillsboro Businessman Convicted of $481,519 Tax Evasion – Only Gets 30 Days In Jail (9/30/14)

Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.
Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.

Stephen Nagy was the former president of Hillsboro-based S&S Drywall Assemblies. The IRS assessed the company $481,519 in federal employment taxes, penalties and interest between June 2009 and September 2010. Nagy met with the IRS and chose not to comply with the payment plan and engaged in a variety of interrelated fraudulent schemes to evade the payment of the delinquent payroll taxes. Nagy intimidated, manipulated, and threatened the loss of much needed jobs to gain the cooperation of his employees. Special agents of the IRS learned that Nagy had transferred all of S&S Drywall Assemblies income, contracts, receivables and assets to ASM Drywall, Inc. a shell company he created and placed in his sister’s name. The Oregon attorney general prosecuted Nagy in 2011 on allegations of criminal anti-trust and racketeering. He was sentenced to 30 days in jail and five years of supervised probation.

 
For more information, contact:
Leonard T. Jernigan, Jr.
Adjunct Professor of Workers’ Compensation
N.C. Central University School of Law
The Jernigan Law Firm
2626 Glenwood Avenue, Suite 330
Raleigh, North Carolina 27608
(919) 833-0299
neb@jernlaw.com
Website: www.jernlaw.com
Facebook: https://www.facebook.com/jerniganlawfirm
Twitter: @jernlaw
Blog: www.ncworkcompjournal.com

Possible Changes to Wisconsin’s Worker’s Compensation System?

Today, from Dee Hall at the Wisconsin State Journal: “Changes Coming to Worker’s Compensation System?” :

Labor representatives and attorneys say they are concerned about a report that Gov. Scott Walker’s two-year budget plan will call for “drastic” changes in Wisconsin’s well-regarded system for compensating injured workers.

An unsigned memo authored by a person with knowledge of the potential changes to the worker’s compensation program states that the Walker administration plans to upend the current one-stop-shop for injured workers, employers and insurance companies by dividing responsibilities among agencies — changes the author said will “clearly have a negative impact on our stakeholders.”

The article continues with input from an insurance company claims director and an applicant’s attorney, who agree that the worker’s compensation system is working well at the current time.  According to the article:

The cost of administering Wisconsin’s program is paid for by worker’s compensation insurers and self-insured employers who pay a yearly fee proportional to what they paid out in worker’s compensation benefits in the previous year. Taxpayers do not pay for the system, and any reorganization would not add or subtract from the 2015-17 budget’s bottom line.

Compensation is paid to injured workers regardless of who’s at fault, but in return, those workers cannot sue the employer for additional damages — such as pain and suffering — that go beyond the law’s limited benefits. Employers’ insurance premiums are generally based on size of payroll, risk of injury and past injury claims.

A 2013 study by the nonpartisan Worker’s Compensation Research Institute compared 16 states that handle 60 percent of all worker injury claims filed nationwide. It concluded that “compared to other states we looked at, Wisconsin’s costs were among the lowest,” said the study’s author, Sharon Belton.

Although medical costs in Wisconsin are higher than many other states, workers are back on the job faster. The result is that the median cost of a claim, including medical expenses and lost wages, was $7,118 in Wisconsin compared to the median among the study states of $8,973, said Belton.

 

This author echoes the sentiments of the article.  There is no rational basis for altering the current structure of the worker’s compensation system.  Some quick thoughts, based on information to date:

  • Currently the Worker’s Compensation Division resides within the Dept of Workforce Development.  Worker’s compensation has a strong and lengthy history in our state, dating back to 1911 (when we were the first state to have a constitutional worker’s compensation system in the country!).  We have an incredibly stable system that is the envy around the country.  It is stable because of the structure of our system.  The entire cost of the WC system is funded privately by assessments on worker’s compensation insurance companies and self-insureds (i.e., not state taxpayer money).  Additionally, we have an Advisory Council process that is a group of invested stakeholders in the system that produce an agreed-upon bill, which has prevented our system from being subject to potential instability.  (Stability in the system and premium structure is a huge issue for the insurance industry and employers).
  • The stability in the system is reflected by the huge amount of insurance companies that write insurance in our state–over 250 to my knowledge.  That is a huge number compared to the rest of the country.  Insurance companies write insurance here because of the system’s stability, which assists with known costs and allows known profits.  Worker’s compensation is a profitable business in Wisconsin.
  • We understand that major substantive and structural changes to the worker’s compensation system currently are being proposed as part of the Governor’s upcoming budget bill. This information is comes from solid sources.  Based on information we have received, the plan is to remove the Worker’s Compensation Division entirely from DWD, splitting some functions off to other agencies, while some hugely important functions of WC would just cease completely.
  • It appears the proposal is for the insurance bureau staff to go to Office of the Commissioner of Insurance (OCI).  The worker’s compensation specialized ALJs would go to the Hearings and Appeals section at Department of Administration (DOA), removed from the worker’s compensation division (No information is known as to whether the move to DHA will include court reporters, scheduling staff, health cost dispute staff  and administrative assistants who make up the remainder of the Bureau of Legal Services). Current claims management function in the WC Division – the claims staff, wage analysts, ADR personnel, the individuals that do all the worksheets– may or may not be retained, or where they would go if kept.  We are hearing there may be a complete dismantling of the claims management unit.
  • Currently, approximately 85-90% of work injuries in Wisconsin are not litigated; this is in stark contrast to the rest of the country.  The basis is that the Worker’s Compensation Division generally administers the worker’s compensation act.  Elimination of the claims management function could be hugely detrimental.  Insurance companies, self-insured employers absolutely rely on the Division in administering and paying claims.  Without Division claims management, litigation is guaranteed to increase—with corresponding increase in insurance costs and premiums.  In potential “benefit” in staff decrease will be unsustainable with the increased litigation of claims, even minor ones.  I’m sure employers will not be happy with the increased premium costs. 
  • If the Judges are moved to a new agency, it appears many of their valuable tasks/duties would be eliminated.  If Judges schedule their own hearings, this could result in significant delay in obtaining hearing dates.  It could also mean the removal of remote hearing locations.  Currently, hearings are held all over the state, for the convenience of the stakeholders (employers, carriers, workers). 
  • More importantly, this move of the Judges could mean an end to the statutory requirement that Judges approve and review all Compromises.  Judges review all compromises, even in the 85-90% of non-litigated cases.  That means insurance companies and unrepresented workers could privately settle claims—with no oversight.  The potential for abuse, error, or miscommunication is apparent.   The biggest issue is a shift of the liability for worker’s compensation medical expenses to the taxpayers, health insurance companies, and medical providers.  As opposed to our 12 year statute of limitations, an inappropriate claims close out means that all future medical expenses are through the worker’s own sources—generally Medicaid/Medicare.  The taxpayers are left covering the costs of these expenses that should be the responsibility of the worker’s compensation insurance company.
  • Also, the Division currently tries to protect the medical providers and health insurance carriers to make sure they are protected.  A private settlement means no Division protection.  We assume medical providers would like to hear about this potential change and the possibility that their bills wouldn’t be protected.
  • We can’t see any cost savings to the state here.  The Division is not funded by state dollars.  The agency move itself would create a very substantial one-time costs, with unknown ripple effects.  These moves would increase the litigation in the system—something no stakeholder wants.
  • All this makes no sense to the stakeholders and customers in the system—insurers, employers, injured workers and medical providers.  We are not aware that any stakeholders have been consulted on these changes.  Wisconsin has one of the best worker’s compensation system in the country, a system that has functioned extremely well within DWD, and it could be dismantled.  The current worker’s compensation system currently benefits its major players: insurance companies who profit from the sale of the insurance, employers with worker’s compensation insurance, and the injured workers who are provided benefits.

 

The Cold Winds of Workers’ Comp Reform Are Blowing in Wisconsin

Today’s post comes from Bob Wilson at workerscompenstion.com.

I have it on excellent authority that major changes to the Wisconsin workers’ compensation system will be proposed with the release of the state’s budget bill on February 3, 2015. The rumored changes are said to be significant, with some viewing it as a complete dismantling of the current workers’ comp system there. In the absence of the release of the actual budget and proposals, it still sounds like the most dramatic reforms to hit a state since Tennessee and Oklahoma conducted complete overhauls of their WC systems.

Currently in Wisconsin, the Workers’ Compensation Division is part of the larger Department of Workforce Development (DWD). On January 12, 2015, WC Division managers apparently learned of this proposal from the DWD Secretary’s office. It is believed that the person behind this effort is DWD Secretary, Reggie Newsom. Under Newsom’s proposal, the Worker’s Compensation Division would be entirely removed from the auspices of DWD. Other agencies would absorb some of the functions, while some current practices and procedures would cease to exist.
One group that appears to be subject to the greatest changes would be Wisconsin’s current Administrative Law Judges. Under the proposed changes, they would only be responsible for trying cases.  They would not manage claims functions or act in any advisory role for industry stakeholders. They would also be barred from reviewing compromises in cases where attorneys represented the parties.

Other elements of the proposal include moving the insurance bureau staff to the Office of the Commissioner of Insurance (OCI).  Administrative Law Judges would report to the Hearings and Appeals section at Department of Administration (DOA).  Many of the proposed changes will require alterations to the Wisconsin Workers’ Compensation Act, and it is unclear what level of legislative support exists for those statutory changes.

From this point forward, this story will likely take similar trajectories to other reform efforts we have seen around the nation. Opponents will cite the relative stability and success of the Wisconsin workers’ compensation system, and object to the disruption of a system they view as working well. Proponents will claim that the changes are necessary to streamline operations and improve efficiency within an evolving work environment. The changes, which appear will lessen staff in the WC Division, along with a potential reduction in Administrative Law Judges by shifting responsibilities to other existing divisions, will be seen by some as a reduction in bureaucratic overhead.

I will say that this news will be, for many, unexpected as Wisconsin hasn’t exactly been the bastion of controversy in the workers’ compensation arena of late. There are many other jurisdictions where needed reforms are more apparent – like California where reforming comp is seemingly a full time and permanent position…

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