Category Archives: Scott Walker

Elimination of Appeals Commission: More Updates

As indicated, Wisconsin’s current Budget proposal (now being considered by the state’s Joint Finance Committee in the legislature) proposes a sweeping change to the stability of the state’s workers’ compensation system.

The proposal axes the independent appeals commission, known as the Labor and Industry Review Commission.  The Commission, or LIRC, handles appeals from workers’ compensation, equal rights, and unemployment insurance cases.

An insightful article about this proposal–from the perspective of unemployment– can be found here.  This article (LIRC’s Elimination) is from one of the state’s foremost experts on unemployment, and it offers a deep dive into some of the potential reasoning behind this proposal. I’d encourage all interested stakeholders to take a look at this article in detail.

MORE changes to Work Comp: Elimination of Court Reporters & Appeals Commission?

Budget Bill Proposes Eliminating Court Reporters

Wisconsin’s Governor recently proposed significant changes to Wisconsin’s best-in-nation worker’s compensation system.  For the second budget cycle in a row, the Governor’s Budget Bill wants to drastically change the structure of worker’s compensation cases.

The Budget Bill, revealed on February 8, 2017, proposes two main changes : (1) the elimination of court reporters in litigated worker’s compensation trials; and (2) the elimination of the independent body that reviews judge decisions.

A base level concern exists, again, because these proposals were made outside the stabilizing force of the Wisconsin Worker’s Compensation Advisory Council.   As mentioned at length in this forum, the Advisory Council, with its balanced membership of labor and management representatives, has produced reasoned, incremental changes historically–creating a beneficial system for all stakeholders.  Hopefully the Advisory Council will weigh in on the other potential effects of the unveiled Budget Bill proposals.

Each of the proposals significantly impact the state’s work comp system:

Elimination of Court Reporters:

The Budget proposes eliminating the use of statutorily-required stenographic court reporters in worker’s compensation trials.  The specific proposal is to eliminate necessary court reporters (who ensure decorum in the court room, properly manage exhibits, make sure parties do not talk over each other, and create an accurate and legitimate transcript) in exchange for some type of ill-defined audio recording equipment.

Employers and carriers in our state—facing six to seven figure exposures—will have concerns about facing such liability based on questionable audio technology.  Imagine if at a critical point in trial, a witness talks to softly or inaudibly, resulting in a blank area in the transcript.  No stakeholder wants this, and our live court reporters ensure that it does not.

Also, the circuit court (and further appellate courts) want an accurate, undisputed transcript of the lower trial proceedings.   If the audio is poor, unclear or inaccurate, we may be forced to re-litigate the trial.  A redo will increase system costs.  Further, if court reporters are eliminated, the private parties will bear the costs by hiring their own court reporters.  We then may face disputes about the “real” transcript between the state’s audio recording (which will need to be transcribed for appeals) and the privately-hired court reporter transcript.

Wisconsin is not alone in its use of court reporters in worker’s compensation trials, as an informal poll revealed the use of court reporters in IN, PA, CT, IA, NC, MT, NE, WY, SC, CA, MA, GA, KS, IL, LA, NY, WA…and the list goes on.

Near universal opposition exists to this unnecessary proposal to eliminate live court reporters.  The State Bar litigation section board voted unanimously to oppose this proposal.  Moreover, all of the three main groups of attorneys that represent clients in worker’s compensation proceedings oppose this proposal.   The Wisconsin Defense Counsel (defense attorneys), the Wisconsin Association of Justice (injured worker attorneys), and the Wisconsin Association of Workers’ Compensation Attorneys (bi-partisan group) jointly drafted a letter to the Governor voicing their opposition (PDF link).

All parties to litigation want a fair and accurate depiction of the trial proceedings, and court reporters help secure that justice.  This proposal faces stiff opposition.

Elimination of the Appeals Commission

Traditionally, the Labor and Industry Review Commission (LIRC) is an independent body of three political appointees that rule on worker’s compensation, unemployment, and equal rights appeals.  The cases are litigated in front of administrative law judges and then the appeal is to LIRC, who have a virtual de novo review.  The appeal from LIRC is direct to circuit court, which has a very deferential standard and will uphold the LIRC decision if there is any “credible and substantial evidence.”  Barring a legal issue, the circuit court upholds the factual and credibility findings of LIRC.

LIRC has been in existence in some form since the inception of the worker’s compensation act in 1911.  LIRC actually serves to define much of the worker’s compensation case law—for over one hundred years.  When I look at our treatise, I’d guess 80% of the cited cases are LIRC cases.  Judges use the LIRC decisions in making determinations.

The current Budget proposal is the complete elimination of LIRC.  However, as opposed to a direct appeal from a judge determination to circuit court, the proposal is to substitute the Division Administrator for LIRC.  Thus, litigants would trial cases to the administrative law judge, with an appeal to the state Division of Hearings and Appeals Administrator (currently Brian Hayes) as the intermediate level of appeal.  Appeal from the Administrator’s decision would be to circuit court–with no apparent change in the standard of review by circuit court.

The upshot is to give much authority and discretion back to the actual administrative law judges–the ones who actually observed the witness and heard the evidence.  One of the statutory proposals indicates that the “findings of fact” by the judge “shall, in the absence of fraud, be conclusive.” That appears to give even less discretion to the Administrator’s ability to review judge decisions.

There is much ambiguity about the reasoning behind these proposals, as well as the potential impact.  I’ve already heard from a number of individuals that the proposal comes from issues within the unemployment insurance arena (and unemployment appeals fill up the majority of LIRC’s docket).  If true, worker’s compensation appeals are being swept up with the issues within unemployment.

However, if implemented, the practical effects are drastic.  Presumably, the Division Administrator would likely be more deferential to the sitting administrative law judges (i.e., approve more ALJ decisions) and probably produce a faster appeal turnaround time than the current LIRC process.   The catch is that it remains unknown how the Adminstrator would handle the influx of worker’s compensation appeals. Would there need to be additional staff?  (if so, budgetary costs need to be considered).  If no new staff, the simple time constraints lead to the likelihood of rubberstamping judge determinations.

In the future though, the Administrator position changes.  Future appointees could have their own political proclivities that could impact the system.  Also, the proposal may have just eliminated 100 years of case law as guidance for future judicial determinations.  The budget is devoid of what happens to the precedential value of past LIRC decisions.

Accordingly, further details really need to be revealed about the proposed plan before the stakeholders can weigh in.

One further item is known, based on the intersection of the two proposals.  If the system eliminates LIRC and provides more deference to the underlying judge determination, the value of court reporters increases exponentially.  If the judge factual determination is conclusive, a reviewing circuit court certainly wants an accurate, credible, and decipherable transript of those all-important findings.

We will explore the further Budget process and these proposals as they progress…

For further information:

The full statutory text of the Budget Bill (2017 Assembly Bill 64/ 2017 Senate Bill 30) can be found here, with a summary found here.

Wisconsin Legislative Update: Major Changes to Administration’s Proposed Break-Up

Ever since the Administration’s initial proposed Budget Bill on February 3, 2015, the status of Wisconsin’s worker’s compensation system has been in doubt. With a recent compromise agreement, we now have a bit of clarity moving forward, yet many questions remain.

Initial Proposal

We previously discussed the proposed changes to the structural integrity of Wisconsin’s worker’s compensation system. Under current law and structure, the WC system is a unified “one-stop-shop” under the Department of Workforce Development (DWD). Administrative Law Judges work within WC Division in close connection with claims management and dispute resolution staff. Judges, who are trained experienced attorneys in WC, have the benefit of 100+ years of case law and Department policy to guide and direct claims administration. (e.gs, does overtime count as “wages” toward WC benefits?; the value for the loss of a finger?; when does an insurer have to submit a final medical report?) Significantly, independent national studies show Wisconsin’s current unified worker’s compensation structure is a major factor in the beneficial metrics of the system compared to the rest of the country: low/stable employer premiums, large number of insurers writing business and making profits, faster return to work rates for workers, low costs per claim, and very low litigation rates.

The Budget proposal was to break up the unified WC Division and split “administrative” functions to the Office of the Commissioner of Insurance (OCI) and “adjudicatory” functions to Division of Hearings & Appeals in Department of Administration (DOA). Administrative Law Judges would move to the DOA. Claims management, customer service, dispute resolution, and wage analyst functions (along with all administrative staff) would go to OCI.

“Drafting” Errors

The initial proposal from February also included a number of substantive changes to the Worker’s Compensation Act, including eliminating the use of court reporters and allowing private settlements. Those—and a huge amount of “drafting” errors—were corrected via the Administration’s Errata report of April 13, 2015. The drafting changes restored the usage of court reporters and the statutory language regarding approving oversight of compromise agreements. The Errata also explicitly acknowledge the impossibility in teasing apart functions of the current unified WC Division, and now proposed using some administrative law judges at both agencies, OCI and DOA. (“although adjudicating functions are being transferred to the Department of Administration’s Division of Hearings and Appeals and administration to the Office of the Commissioner of Insurance, there may be some responsibility for both types of claims at both agencies.”)

Joint Finance Committee: What Actually Happened?

There was a significant amount of lobbying by stakeholders in the system. The Milwaukee Journal Sentinel highlighted questions about the lack of reasoning behind the proposed changes.

In a surprise move on May 27th, the legislature’s powerful Joint Finance Committee agreed to a major change/compromise in the Administration’s proposal for the worker’s compensation system. The WC Division will not be going to OCI; rather, it will stay within DWD (along with a handful of judges). A certain amount of judges, however, will be moving to DOA. Specifically:

  • No transfer to OCI. The transfer of “administrative” functions/personnel from WC Division to OCI was deleted. Thus, entire administrative/wage analyst/dispute resolution staff will remain at WC Division within DWD. 6 worker’s comp ALJs and 2 legal support staff will remain at DWD. (Based on errata language, these ALJs likely to deal with “non-litigated” cases.)
  • ALJs are going to DOA (Div. of Hearings & Appeals). 18 Administrative Law Judges transferred to DOA to do “adjudicatory” functions and hear worker’s compensation cases. The Joint Finance motion specifies that these work comp ALJs must allocate “a minimum of 80%” of their time to worker’s compensation issues. (Thus, appears to allow for alleged cross-training of ALJs. It remains unclear how these positions/functions will be funded if portion of ALJ time is on non-work comp matters).

What’s next?

The Budget Bill, in amended form, now goes to the full legislature. As of June 15th, it still has not passed, and of course, there are many other significant issues in the budget for legislators and the Governor. We still do not have any specific statutory language after the Joint Finance compromise. It will be interesting to see the precise changes to the WC Act.

Overall, we are encouraged that the members of Joint Finance took stakeholder’s concerns into consideration including keeping the administrative functions at the DWD in its Worker’s Compensation Division.

Potential consequences. Assuming the Budget passes, what does these mean for the worker’s compensation system?:

  • Increased litigation? The efficiencies of WC system could be lost by splitting up WC Division. It is no exaggeration that such a change could easily result in delays in claim resolution, less effective oversight, greater confusion, and increased litigation. There are more agencies involved in the process. With degraded active claims management at two agencies, more employers and workers will seek counsel. (When the Legislative Fiscal Bureau analyzed the proposed changes after the Errata revisions: “Because the status of an individual claim can change with some regularity, especially with medical disputes, the transfer of the WC Division …could introduce complexity and confusion to the handling of individual claims …”)
  • Increased employer premiums? Increased litigation means increased claims costs, which is passed on to employers in the form of increased premiums.
  • Delays in medical bill processing? If there is degraded active claims management, medical providers may face greater difficulties and hurdles in the processing and satisfaction of medical treatment expenses.
  • Degraded quality of decision-making? If ALJs are cross-trained, decisions may be less accurate if made by individuals not fully experienced in WC. Further litigation and appeals could result.
  • Hearing procedures unknown. Apparently, DOA judges schedule their own hearings. Current DWD has comprehensive computer system for scheduling hearings throughout the state. The scheduling of hearings via DOA is unknown, with the potential for procedural delay if judges schedule own hearings.
  • Costs? IT costs are unknown. Costs to taxpayers or insurer assessments if IT costs in major reorganization? The Legislative Fiscal Bureau also noted this potential problem.
  • Death knell of the advisory council? The Worker’s Compensation Advisory Council (WCAC) advises the WC Department and legislature on policy matters concerning the development and administration of the worker’s compensation law. The WCAC aims to maintain overall stability of the worker’s compensation system for all stakeholders without regard to partisan changes in the legislative or executive branch of government. While the Budget proposal still allows for use of WCAC, this would be an end-run around the Council and a direct legislative change without Council input. The Council’s viability would be in question. Will WC system now be subject to partisan pendulum of legislature?

 

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.

Not Expanding Medicaid: Deadly Consequences

Please take a moment to ready this story out of Pennsylvania: Study: Many Will Die if Medicaid is Not Expanded.   As part of the Affordable Care Act (“Obamacare”), an expansion of Medicaid was intended.  Medicaid essentially is the joint federal-state program to provide health insurance to low income individuals and families.   The federal government strongly encouraged this expansion by the states, by offering to pay for that expansion for many years.   Unfortunately, the US Supreme Court–in upholding the constitutionality of the bulk of Obamacare–did strike down this Medicaid expansion.  The Supreme Court decision left it up to the state’s themselves to decide whether to expand Medicaid for their residents or not.

In many Republican-led states, the decision was made to not expand Medicaid.  As seen in this article, Pennsylvania was a state that declined to expand.  Wisconsin, with Republican Governor Scott Walker, also decided not to provide this expanded Medicaid coverage to the the state’s low income individiduals.  (Check out the story here and here.) 

Now comes news that failure to expand Medicaid may actually result in increased deaths among the affected population.  The failure to have this expanded coverage, according to the study examining Pennsylvanis, will result in thousands of deaths due to individuals foregoing necessary medication, medical treatment, and preventative screening. Additionally, the expansion failure will result in “catastrophic medical expenses and tens of thousands of cases of untreated depression, diabetes and missed screening tests.”   This is a truly scary scenario–and an avoidable one.

In Wisconsin, Gov. Walker is suggesting that these individuals can now obtain health insurance throught the federal-run exchanges.  The real issue is whether these low-income individuals can truly afford the premiums and whether they actually qualify for the federal subsidies.  These lower-income individuals were the one supposed to be covered by Medicaid expansion–not by the exchanges.    Based on the Pennsylvania study, if these individuals are ineligible for Medicaid and cannot secure health insurance elsewhere, dire health consequences (or even death) loom as possibilities.