Tag Archives: Budget Bill

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?

 

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.

 

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.