Time to wake up Wisconsinites! In a short timeframe, the current administration and legislature in Wisconsin has altered the landscape of our state in ways too numerous to count. Well, now we face another attempt to make-over and deform a progressive era landmark: Wisconsin’s Worker’s Compensation System.
A recent bill (LRB 1768) proposes direct and major changes to our state’s nationally recognized model worker’s compensation (WC) system. The proposed changes would dramatically alter and potentially devastate the stability of the system for all stakeholders. We urge all legislators not to support LRB 1768. Instead, there will be a separate, reasoned bill produced by the Worker’s Compensation Advisory Council.
Current System Works for All Stakeholders
Under the grand bargain of Wisconsin’s first-in-the-nation WC system from 1911, injured workers gave up the right to court lawsuits in exchange for timely, lesser, defined benefits without having to prove fault. Employer, in turn, are protected from unknown jury damage awards. Employers purchase WC insurance for this administrative dispute resolution process. The system safeguards the concept that work injury expenses appropriately are an employer’s cost of doing business rather than costs shifted to taxpayers through public assistance such as disability payments and Medicare and Medicaid.
The current system is highly effective for all stakeholders—making our system the gold standard compared to the rest of the country. Wisconsin traditionally has low and stable employer premiums. We have over 300 private section WC insurance carriers collecting premiums (in excess of $1.7 billion). We have faster return to work rates than in most states. We have incredibly low litigation costs and low litigation rates (only 10-15% of work injuries).
Work Comp Advisory Council (WCAC) is the bedrock of Wisconsin’s WC system
Much of the credit for the beneficial metrics in our national model is from the stability offered by the Worker’s Compensation Advisory Council (WCAC). This Council, composed of voting members of labor and management (including the Wisconsin Manufacturers and Commerce, WMC), has typically produced a biennial “agreed upon” bill for approval by the Legislature. The WCAC produced reasoned, incremental changes that maintained the stability of the system for all stakeholders—employers, carriers, and workers. The WCAC generally has immunized the substance of the Wisconsin WC system from partisan politics and election cycle swings commonly found in other states.
Importantly, the WCAC successfully produced a reasoned Agreed Upon bill in the past weeks! (more details below).
The Proposed GOP Bill (LRB 1768) Would Decimate Worker’s Compensation in Wisconsin
A recent video highlights the egregious nature of the proposed bill:
The bill proposed by GOP legislators was not from or considered by the Advisory Council—it is an end-run around the stability-producing model. LRB 1768 is a direct legislative attack on the WC system, introducing dramatic and foreign concepts to our system. Among the more outlandish proposal are the following:
- Reducing WC benefits by amount of employee negligence!
- This proposal eviscerates the “grand bargain” of WC, whereby a worker who suffers an on-the-job injury receives lower, defined benefits without regard to fault and employers, in turn, are protected from unknown jury damage awards.
- It would force employees to prove the injury was not their fault while still protecting employers with the WC exclusive remedy (and with no corresponding change in benefits for employer negligence/fault)
- Also, without any method provided for determining negligence, there would be a massive increase in uncertainty, litigation, and claims costs/premium.
- Employer-Directed Medical Care
- Currently, workers have the right to medical providers of their choosing—creating a system where workers have access to timely, specialized medical care. This quality, unrestricted medical care produces great results: faster return to work rates than most states in the country!
- Proposed employer-directed medical care allows the employer to choose a specific practitioner for an injured worker (e.g., a podiatrist could be designated to address work injuries, including a back claim). As such, a worker may not receive the appropriate specialized medical care, like physical therapy, chiropractor, psychology, or orthopedic specialist.
- Employer directed medical care likely means a race to the bottom, focusing on which doctors best minimize WC benefits. The focus should be on swift access to quality medical care.
- Harsh Reduction from 12 year to Two (2)-Year Statute of Limitations (SOL)
- WC injuries can result in lengthy healing periods and long-term medical care.
- A 2 year SOL directly cost-shifts the burden for WC injuries to the taxpayers (Medicaid, Medicare, SSDI). Taxpayers should not be left holding the bag for the cost of work injuries.
- A 2 year SOL will result in exponential litigation of WC claims. WC attorneys will be forced to file applications on any/all claims to preserve the SOL. Wisconsin could turn into Illinois (!) where litigation rates are 80-85%, versus our current 10-15% rate.
- Elimination of PPD ratings
- Current law utilizes minimum permanent partial disability ratings, established by an independent panel of physicians decades ago.
- The GOP proposed bill would eliminate PPD minimums. Further explosion in litigation would result as previously uncontested claims would now result in disputes between worker and adverse physician ratings.
- Notably, the recently-produced WCAC bill provided a reasoned approach to any concerns over PPD ratings, by recommending an independent physician panel review of the ratings.
- Elimination of benefits if misrepresentation on employment application
- This ill-considered provision precludes benefits if an employee lied about physical condition on employment application.
- Such a provision introduces potentially discriminatory quizzing of prospective employees. It further introduces more litigation issues into this no fault system
The cumulative effect of the GOP bill provisions were not adequately deliberated. The result would be an exponential increase in litigation and a destabilizing effect on the WC system—meaning increased litigation costs, lengthy delays in claims, and increased employer premiums. Any crack in the grand bargain could open the floodgates to potential unlimited damages in personal injury liability lawsuits. One major injury could result in significant jury awards (See http://nypost.com/2014/12/18/injured-construction-worker-gets-record-62m-single-plaintiff-award/)
In stark contrast is the recent WCAC bill ….
WCAC Successfully Produced a Reasoned Reform Bill
The Advisory Council, on October 26, 2015, successfully produced an Agreed-Upon WC Bill. This reasoned WCAC bill was agreed to by labor and management—including the Wis. Manufacturers & Commerce (WMC), who sit on the Council. All stakeholders should get behind this Advisory Council bill. The full statutory language will be available in the upcoming weeks.
As opposed to the GOP bill (LRB 1768), the Advisory Council bill creates WC changes that benefit all stakeholders, especially the employers of our state. Some “employer-friendly” provisions include the following:
- Worker’s violation of alcohol or drug policy (if related to injury) denies benefits.
- No lost time benefits (TTD) if terminated for good cause (using recent unemployment standards)
- A reasonable and manageable reduction in statute of limitations from 12 to 6 years (vs a 2 year SOL which would drastically alter the system).
- Establishing DOJ position for investigating/prosecuting WC fraud.
- Apportionment of functional PPD payments, so employers not responsible for pre-injury disability amounts.
Thus, the Advisory Council produced a bill that addressed many management/employer concerns about the WC system. The Advisory Council listened and—as it has done for decades—successfully produced reasoned changes to the system. The stability of the system is preserved for all stakeholders. The WCAC Agreed-Upon Bill should be supported.