Tag Archives: Scott Walker

WILG Turns 20! Worker’s Injury Law And Advocacy Group 20th Anniversary

I joined WILG in its 1995 inaugural year. At those early conferences, my colleagues around the nation were battling workers’ comp “deform,” and engaged in political battles in their respective states, lobbying legislators on behalf of injured workers’ rights.

I thought I was relatively insulated in Wisconsin, the national “model” state for workers’ comp, with an Advisory Council composed of management and labor which each biennium produced an “agreed-upon” bill that was accepted by the legislature.

The Republican ascendancy in Wisconsin (Scott Walker as Governor, and both Assembly and Senate controlled by Republicans) has decided to ignore 100 years of progressive legislation and ignore the Advisory Council’s recommendations. This dangerous precedent will make workers’ comp more politicized, and threaten the stability of Wisconsin’s workers’ comp system. Wisconsin, like other states, will be part of a “race to the bottom” in workers’ rights and benefits.

WILG’s current President, Matt Belcher of Illinois, provided this summary of the state of workers’ comp as WILG celebrates its 20th anniversary:

”We have never been better positioned as a national organization to advocate on behalf of the families of injured workers.

Recent success in reviewing courts have highlighted nationally the unconstitutional danger posed to the community when injured workers lose access to effective legal representation, have capricious benefit limits imposed upon them, or are disabled due to unfair medical treatment bureaucracies.

WILG and its members have been at the fore of litigation battles where catastrophically injured workers have lost their savings, been forced onto welfare rolls and into Social Security Disability plans while simultaneously being denied access to the civil courthouse and the free exercise of their 7th amendment right to a jury trial. See Wade v. Scott Recycling (Virginia); Malcomson v. Liberty Northwest (Montana); Pilkington & Lee v. State of Oklahoma (Oklahoma); Padgett v. State of Florida (reversed on procedural grounds), Westphal v. City of St. Petersburg, and Castellanos v. Next Door Company (Florida).

The United States Department of Labor in coordination with OSHA have finally “discovered” that employee misclassification and wage theft are rampant, and that the cost-shifting externalization of care for injured workers is as poisonous as it is pervasive.

Perhaps most fundamentally, ProPublica, bolstered by the imprimatur and audience of NPR, has created a national conversation and awareness of the oppressed plight of injured workers with its feature The Demolition of Workers’ Compensation which exposed to the public domain the travesty and arbitrary injustice we slog through on a daily basis.

If we are uncritical we shall always find what we want. -Karl Popper

Continual, constructive self-assessment of our organizational efforts is indispensable to the accomplishment of our mission. Are we really doing the best job possible and are we succeeding to our complete potential?

Governors in the traditionally blue states of California and New York have signed away the long term financial security of millions of families of injured workers while Texas and Oklahoma have essentially jettisoned workers’ compensation benefits, allowing indifferent employers to Bail-Out of their responsibility to provide for the safety and security of working families. Further corporate front group Bail-Out initiatives are fermenting in the legislatures of Arkansas, Kansas, North Carolina, South Carolina, Tennessee and Wyoming.

In my view, the state workers’ compensation system is in its most dire situation in at least the last half-century. -Prof John F. Burton, Jr.

Professor Burton is clearly referencing only the perspective of the injured worker and not the immense wealth of the $85 billion insurance industry where insurance carriers now earn $6.20 in profits for every $100 of net premiums; and, private employers on average pay only 44 cents per hour for each employee to be provided with coverage.

Empirical evidence reliably demonstrates that each reduction in benefits to an injured workers’ family subsequent to “reform” has not translated into lower premiums for small business but primarily in greater profit for the self-insureds and the insurance industry. From 2007 to 2012, workers’ compensation benefits and costs per $100 of payroll were lower than at any time over the last three decades, while insurance company investment profits in 2011, 2012, and preliminarily for 2013, have topped 14% annually.

According to OSHA, workers’ compensation benefits now cover only 21% of workers’ compensation liabilities–shifting 79% of the true cost to others, including the injured workers’ family and taxpayers–while our firsthand knowledge demonstrates the inadequacy of current benefit levels and the injustice of the AMA Guides, ODG Treatment Guidelines, Primary Cause, Medical Formularies and the literal evaporation of effective vocational rehabilitation for those injured workers who have lost access to their prior occupation.

Therefore, my beloved brethren, be ye steadfast, unmovable, always abounding in the work of the Lord, for ye know that your labor is not in vain in the Lord. -1 Corinthians 15:58

I believe it will be the exponential participation of you, the existing member, which fosters our mission as much as the sheer addition of new members. The existential purpose of the organization must always be vigorous and exigent advocacy, not just growth and the collection plate. We must collect accomplishments, not only numbers.

Together we can do that, but we must have an active outreach program that communicates to the public, to the media and to state legislators the value of workers’ compensation and the cost of its failure. If business can focus-group a new Doritos flavor, I am confident we can use a similar approach identifying crux “reptile” talking points, plus distilling and building upon the points raised in the ProPublica series to focus our messaging.”

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.

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.

 

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.

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.

 

Refusing Medicaid Expansion Could Hurt Wisconsin Financially

Check out this brief article about the financial impact for states that are refusing Medicaid expansion.  The summary:

“In other words, the non-expansion states really are shooting themselves in the foot. They’re enrolling fewer people, but paying more to do it. They actually prefer spending more money if the alternative is spending less but helping their own poor with medical coverage.”

Wisconsin is a non-expansion state.  Ouch.  That hurts.