Category Archives: Legislation

Walker’s Workers’ Compensation in Wisconsin

Mark my words, Scott Walker will use his attempts to revamp and revise Wisconsin’s workers’ compensation system in his national campaign for the presidency in 2016. 

He will tout attempts at “increased efficiency” and cost cutting when, in fact, these efforts are patently false.  His recent assault on workers’ compensation prompted me to revisit a review I wrote of the Center for Justice and Democracy Study “Workers’ Compensation: A Cautionary Tale,” now a decade old. When objective observers corroborate your own instincts, it is gratifying. The study on workers’ compensation, undertaken by the Center for Justice and Democracy, concluded that since workers struck their bargain with employers early in the 20th Century, legislators and administrators have cut benefits and ushered many injured workers completely out of the system. 

Particularly insidious has been the workers’ compensation insurance carrier’s malicious, relentless campaign to advance the notion of employee fraud. In Wisconsin, the aggressive insurance media blitz prompts a response (when I say that I represent injured workers) at every social gathering, wedding, birthday, or cocktail party, about  employees “ripping off” the workers’ compensation system. This, in the face of irrefutable statistical evidence that employee fraud is infinitesimally small is a boil on the butt of the workers’ compensation system.

On the other hand, employer fraud dwarfs employee fraud. Under-representing payroll, mischaracterizing heavy-lifting laborers as clerical workers or independent contractors, and forcing injured workers to claim work injuries against their health insurance is fraud, but not as “media-sexy” as filming an alleged injured worker bowling or rock climbing.

This media barrage of employee fraud has created a milieu in which some workers, legitimately injured, do not even report injuries. For immigrants with an already tenuous status in America, the Center’s study reports that just six in ten workers hurt on the job report their injuries for fear or retaliation. The Center’s study reports alarming national trends that I see in my practice daily, resulting in denials and delays of legitimate claims. These include stricter criteria for proving a workplace injury and insurance company efforts terminating benefits at age 65 (despite increasing evidence that the retirement age is increasing). 

Lastly, ubiquitous adverse medical examiners’ reports assigning causation to some pre-existing condition corresponds to an alarming alteration in the standard for causation. Legislation requiring “substantial” or “major contributing” cause or replacing “contributing” with “prevailing” factor makes workers jump over higher hurdles to obtain compensation more than ever before. Those of us who represent injured workers will continue to try to give injured workers a boost, despite Governor Walker and Republican legislators’ efforts to the contrary.

“Independent” Medical Examinations in Workers’ Compensation (Anything but “Independent”)

“I thought their doctor Independent Medical Report was the last word on my case. I didn’t know any better.” 

This statement from a client I just met sums up the experience of many injured workers unfamiliar with the workers’ compensation process in Wisconsin (and many other states).

An insurance company or self-insured employer may request an injured worker submit to reasonable examinations by a physician, chiropractor, psychologist, dentist, podiatrist, physicians assistant, or Advanced Practice Nurse Practitioner of its choice. Wis. Stat. §102.17(1)(b). This examination is usually referred to as an Independent Medical Examination or “IME” although “adverse medical examination” more accurately reflects the process.  An Independent Medical Examination may be requested by the insurance company or self-insured employer in order to determine whether the claim is compensable and the extent of the disability or the necessity and type of treatment. 

Since only about one in ten injured workers in Wisconsin is represented by an attorney, nine out of ten unrepresented workers are not aware that the insurance company’s “IME” is actually an adverse exam by a doctor hired by and paid by the insurance company to issue his report. Although IME examiners would deny they routinely render an opinion in favor of the insurance carrier, my forty years of experience suggests just that. For many years lawyers representing injured workers have been proposing the terminology “Adverse Medical Examination” apply to give represented and unrepresented workers a more fair assessment of the process. Many IMEs make hundreds of thousands of dollars annually performing these examinations. At one of these examinations, my client overheard the IME physician (who had rented a motel room) speaking to a prospective young doctor trying to convince that doctor to perform IMEs. “This is a great practice.” He said.  “All you have to do is review the medical records, meet with the worker for a few minutes, and deny the claim. And for that you can charge $1,500.” Although my client’s testimony to this effect was barred, the underlying accuracy of his testimony is undisputable.

Beware the “Independent” Medical Examination.

Legislative Changes To Workers’ Compensation – Wisconsin and National

As we in Wisconsin wrestle with Governor Walker’s ill-advised proposal to split up an efficient and time-honored workers’ compensation system (for alleged purposes of “efficiency”), it is instructive to reflect on the legislative proposals during the first quarter of 2015 across the nation in workers’ compensation. 

A National Council on Compensation Insurance, Inc. (NCCI) annual issue symposium in Florida reported that over 600 workers’ compensation bills were filed in the first quarter of 2015. Over 10% of these (65) deal with presumptive coverage for First Responders, giving First Responders the presumption of workers’ compensation coverage for their injuries and occupational exposures. (This is a topic that has come up a lot since the September 11 attacks, bolstered by other tragic news such as the 2012 Sandy Hook Elementary School shooting).

The next most popular type of bills filed during the first quarter of 2015 included bills revising the definition of an employee (37 bills), occupational diseases (36 bills), reimbursement and fee schedules (33 bills) and indemnity benefits (32 bills).

The definition of employee versus Independent Contractor or subcontractor has been a popular issue regarding lawsuits such as Uber Technologies and Lyft, Inc. and the self-storage and moving marketplace eMove, Inc. Interestingly, on the issue of benefits (and attorney fees that apply to those benefits) “If you increase attorney fees you are likely to increase attorney involvement,” aid Lori Lovgren NCCI Division Executive of State Relations . However, she also noted: but “injured workers are going to need assistance. If the compensation to attorneys is not enough for attorneys to assist, then there is going to be an access problem.” Her reference was to the Florida Supreme Court case Ciastellanos v. Next Door Company, which explores whether attorney fee caps were constitutional.

 

Illinois Facing Proposed Rollback Of Workers’ Compensation Law

Wisconsin is not alone. While Wisconsin is facing a proposed dismantling of the basic structure of its incredibly efficient worker’s compensation program, based on the Governor’s Budget proposal, the workers in Illinois are also facing major legislative problems. As part of a series of articles in ProPublica and NPR, which discuss the overall dwindling of worker’s compensation benefits, a recent story discusses the worker’s compensation deforms currently proposed in Illinois.

One of the foremost experts on worker’s compensation, Professor John Burton, testified at an Illinois legislative hearing on the issue. Of note is that Burton’s national research generally shows that whenever and wherever the worker’s compensation eligibility standards are tightened the Social Security Disability and Medicare/Medicaid rolls go up in virtual direct proportion. Legislatures should be wary off unintended consequences on the taxpayers of alleged worker’s compensation “reforms.”

Poverty And Social Insurance

My business-owning friends harp constantly about “entitlements,” which, they say, cost them money in taxes and premiums. I routinely reply that these programs are a social safety net, the small price we pay to live together relatively peacefully  in a “civilized” nation.

My friend and Iowa workers’ comp colleague Paul Mc Andrew sent me an email that sums up this concept succinctly:

Did you know that in 2013, there were more than 25 million reasons to give thanks for social insurance? According to Census Bureau data released this fall, more than 45 million people in the U.S., or 14.5% of the nation, lived in poverty in 2013. The good news? Three vitally important social insurance programs – Social Security, unemployment insurance (UI), and workers’ compensation – and a related program, Supplemental Security Income (SSI), kept the poverty rate from being much higher. Together, these four programs kept more than 25 million people out of poverty.

Workers’ Compensation alone lifted 87,000 people out of poverty in 2013, including:

  • 16,000 children; and
  • 60,000 non-elderly adults; and
  • 11,000 elderly adults aged 65+

−−Elisa Walker, National Academy of Social Insurance

We workers’ comp lawyers can only help one injured workers at a time, but collectively…..

“No Tengo Documentos”: Undocumented Workers’ Compensation

Representing injured workers in Wisconsin is a challenge; representing undocumented workers presents some additional obstacles. 

Many undocumented workers toil in extremely hazardous jobs resulting in injuries. While federal law clearly bars their employment, the real world practice of hiring undocumented workers is undeniable. The U. S. Immigration and Naturalization Services and the Immigration Reform and Control Act (IRCA) have made it illegal for employers to knowingly employ undocumented workers. 

Employers have attempted to use the IRCA as a defense to deny payment to injured workers by stating they would rehire the employee were it not illegal to do so. The Wisconsin Worker’s Compensation Act contains no provision for terminating disability compensation where an employee is terminated, so long as the employee is still temporarily disabled. The Commission has so indicated (see Arista-Reav Kenosha Beef, 1999 WL 370027, LIRC May 5, 1999).  The Commission has routinely rejected employer claims that undocumented workers occupy a different position under workers’ compensation because they are legally precluded from obtaining other employment until they resolve their immigration status.

Employers may still argue that certain benefits are not available given the circumstances of each case. For example, federal law requires valid citizenship to qualify for vocational rehabilitation benefits, so vocational rehabilitation (school retraining) would not be available to an illegal immigrant whose permanent restrictions cannot be accommodated by the employer due to illegal status. Denying an injured illegal immigrant Loss of Earning Capacity benefits on the notion that “but for” the illegal status, the employer could accommodate permanent restrictions is a trickier question. The Commission recently ruled in Zaldivar v. Hallmark Drywall, Claim No. 2014-WL-5350849 (Sept. 30, 2014) that an undocumented worker does in fact have a Loss of Earning Capacity and that one factor in determining that loss would be his illegal status.

Other states have wrestled with the same issue and come up with a similar result. In Iowa the Supreme Court held that an undocumented worker was indeed an employee potentially entitled to benefits. Staff Management v Jimenez, 839 N.W. 2d, 640 (Iowa 2013). The Iowa Court said the purpose of IRCA was to inhibit employment of undocumented workers, not to diminish labor protections (such as workers’ compensation) for undocumented workers. Tennessee held that an undocumented worker was an employee and had the same rights under workers’ compensation that all other employees had.  (See Torres v. Precision Ind, Inc. Tennessee Court of Appeals Aug 5, 2014). A similar result was reached in Wyoming (Herrera v. Phillips, 334 p. 3rd 1225 (Wyo. 2014), where, after an injury, the employer asked the worker: “You’re illegal, aren’t you?”.  The Pennsylvania Supreme Court reflects the rule in most states that an undocumented worker is an employee but once the employee recovers so that they can pursue some level of work, the disability benefits may be suspended.  Reinforced Earth v. W.C.A.B., 810A. 2d 1999 PA 2002.

Representing undocumented workers continues to pose challenges, but the courts have recognized their right to compensation for work injuries.

Alternatives to Workers’ Comp: Paranoia or Possibility

I joined a national organization of lawyers representing injured workers (the Work Injury Law and Advocacy Group) twenty years ago when it was first formed. Then, I heard horror stories about legislators messing with an otherwise stable workers’ compensation system after every election cycle. My colleagues in other states were constantly fighting battles over workers’ compensation “deform.” 

I thought we were insulated in Wisconsin because we had a workers’ compensation advisory council composed of labor and management who every two years fought out a compromise bill and submitted it to the legislature, which automatically rubber-stamped the proposed bill without changes. That changed in Wisconsin in 2014. For the first time in nearly 50 years, the Republican legislature rejected the “agreed upon” bill proposed by the workers’ compensation advisory council, despite the approval of the bill by management members.

Governor Scott Walker’s most recent budget contains a provision to dismantle the workers’ compensation system as we know it. Those of us representing injured workers (and those rational members on the management side) are busy lobbying to remove the workers’ compensation dismantling provisions from the budget.

It is no secret that many major corporations dislike workers’ compensation, despite statistics indicating premiums are at their lowest for employers, and profits at their highest for insurers. However, nearly two dozen major corporations including Wal-Mart, Nordstrom’s and Safeway are behind a multi-state lobbying effort to make it harder for workers hurt on the job to collect workers’ compensation benefits. The companies have financed a lobbying group the Association for Responsible Alternatives to Workers’ Compensation (ARAWC) that has already helped write legislation designed to have employers “opt out” of a State workers’ compensation system. ARAWC has already helped write legislation in Tennessee. That group’s executive director Richard Evans told an insurance journal in November that the corporations ultimately want to change workers’ compensation laws in all fifty states. Lowe’s, Macy’s, Kohl’s, SYSCO Food Services, and several insurance companies are also part of the effort. The mission of ARAWC is to pass laws allowing private employers to opt out of the traditional workers’ compensation plans that almost every state requires businesses to carry. Employers who opt out would still be compelled to purchase workers’ compensation plans, but would be allowed to write their own rules governing when, for how long, and for which reasons an injured employee can receive medical benefits and wages. Two states, Texas and Oklahoma, already allow employers to opt out of State-mandated workers’ comp. In that state, for example, Wal-Mart has written a plan that allows the company to select the physician and the arbitration company that hears disputes. A 2012 survey of Texas companies with private plans found that less half the companies offered benefits to seriously injured employees or the families of workers who died in workplace accidents. 

Oklahoma passed an opt out measure in January 2014 and the oil and gas industry along with major retailers such as Hobby Lobby pushed hard for the change. ARAWC wants to take that Texas and Oklahoma model nationwide. Seeing the workers’ compensation provision in Wisconsin’s budget bill as part of this overall “scheme” may seem paranoid, but the history of recent “deform” legislation suggest the connection is at least a possibility. 

See the complete article at http://www.motherjones.com/politics/2015/03/arawc-walmart-campaign-against-workers-compensation.

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.