SB251: Bill Text

LRB-3784/1

GMM:cjs:jf

2001 - 2002 LEGISLATURE

2001 Senate BILL 251

September 26, 2001 - Introduced by Senators Hansen and A. Lasee, cosponsored by Representatives Hundertmark and Turner. Referred to Committee on Labor and Agriculture.

SB251,1,11 An Act to repeal 102.077 (3) and 102.125 (2); to renumber and amend 102.11 (1) (a) and 102.125 (1); to amend 15.227 (4), 102.04 (2), 102.07 (12m), 102.11 (1) (intro.), 102.11 (1) (b), 102.16 (2) (d), 102.16 (2m) (c), 102.17 (1) (c), 102.17 (1) (e), 102.17 (1) (h), 102.17 (4), 102.18 (1) (b), 102.20, 102.23 (1) (d), 102.29 (8), 102.31 (8), 102.32 (5), 102.32 (6), 102.33 (2) (a), 102.37, 102.38, 102.39, 102.43 (5), 102.43 (6) (b), 102.44 (1) (intro.), 102.44 (1) (a), 102.44 (1) (b), 102.57, 102.58, 102.59 (1), 102.61 (1), 102.61 (1m) (c), 102.61 (1m) (d), 102.61 (1m) (e), 102.61 (1m) (f), 102.61 (2), 102.66 (1), 102.66 (2) and 626.32 (1) (a); and to create 102.01 (2) (k), 102.07 (7m), 102.11 (1) (a) 4., 102.11 (1) (am), 102.123, 102.18 (1) (e), 102.26 (3) (b) 3., 102.33 (2) (c), 102.42 (1m) and 102.61 (1g) of the statutes; relating to: various changes to the worker's compensation law.

Analysis by the Legislative Reference Bureau

This bill makes various changes relating to worker's compensation law, as administered by the department of workforce development (DWD).

Liability for disability caused by unnecessary treatment

Under current law, an employer that is subject to the worker's compensation law is liable for worker's compensation when an employee sustains an injury while performing services growing out of and incidental to the employee's employment (compensable injury). Worker's compensation for which an employer is liable includes benefits for temporary or permanent disability arising out of a compensable injury and the expense of reasonably required medical treatment to cure and relieve the employee from the effects of the compensable injury. In addition, the Wisconsin Supreme Court, in Spencer v. ILHR Department, 55 Wis. 2d 525 (1972), held that an employer is liable not only for the consequences of the original compensable injury, but also for the consequences, such as an increased period of temporary disability or an increased permanent disability rating, of any medical treatment for the compensable injury that the employee accepts in good faith even if the treatment on further review turns out to be unnecessary.

This bill codifies the Spencer doctrine with respect to liability for disability incurred as a result of unnecessary treatment undertaken in good faith that is invasive and generally medically acceptable. The bill, however, repeals the Spencer doctrine with respect to liability for disability incurred as a result of unnecessary treatment undertaken in good faith that is either noninvasive or not medically acceptable.

Maximum compensation amounts

Under current law, temporary and permanent disability benefits are subject to maximum weekly compensation rates specified in statute. Specifically, the maximum weekly compensation rate for temporary disability and for permanent total disability is 100% of the state's average weekly earnings as of June 30 of the previous year. This bill provides that, for injuries occurring before January 1, 2006, the maximum weekly compensation rate for temporary disability and for permanent total disability is 110% of the state's average weekly earnings as of June 30 of the previous year. For injuries occurring on or after January 1, 2006, that maximum weekly compensation rate reverts to 100% of the state's average weekly earnings as under current law.

Currently, the maximum weekly compensation rate for permanent partial disability is $184. This bill increases that maximum weekly compensation rate to $212 for injuries occurring in 2002, $222 for injuries occurring in 2003, $232 for injuries occurring in 2004, and $242 for injuries occurring in 2005.

Under current law, an injured employee who is receiving the maximum weekly benefit in effect at the time of the injury for permanent total disability or continuous temporary total disability resulting from an injury that occurred before January 1, 1976, is entitled to receive supplemental benefits in an amount that, when added to the employee's regular benefits, equals $150. The bill makes an employee who is injured prior to January 1, 1978, eligible for those supplemental benefits. The bill also increases the supplemental benefit amount for a week of disability occurring after January 1, 2002, to an amount that, when added to the employee's regular benefits, equals $202.

Method of calculating compensation

Current law specifies the method by which an employee's average weekly earnings are calculated for purposes of determining the employee's compensation rate. Briefly, that method calls for multiplying the employee's average daily earnings, not including overtime, by the number of days and fractional days normally worked per week in the employment in which the employee was engaged at the time of the injury. This bill clarifies that hours worked beyond the normal full-time working day as established by the employer, whether compensated at the employee's regular rate of pay or at an increased rate of pay, are not counted in determining the employee's average daily earnings. The bill also provides an alternate method of calculating an employee's average weekly earnings. Specifically, under the bill, an employee's average weekly earnings are the greater of the employee's daily earnings multiplied by the number of days and fractional days in the normal full-time workweek as established by the employer or the employee's hourly earnings multiplied by the hours in the normal full-time workweek as established by the employer. In addition, the bill creates a presumption that the normal full-time workweek is 24 hours for a flight attendant, 56 hours for a firefighter, and not less than 40 hours for any other employee and provides that the normal full-time workweek for an employee on a multi-week schedule with regular hours alternating between weeks is the average number of hours worked per week, that is, from Sunday to Saturday, under the schedule.

Under current law, the average weekly earnings of an employee who is working part-time for the day are arrived at by multiplying the employee's hourly earnings by the number of hours of the normal full-time working day for the employment involved and then multiplying that result by the number of days and fractional days normally worked per week in the employment. This method of calculating a part-time employee's average weekly wage is commonly known as "wage expansion" because it usually results in an average weekly wage that is based on a 40-hour week rather than on the part-time hours actually worked. If, however, the part-time employee is also receiving wages from another job at the time of the injury, the wages from the other job are offset when computing the employee's actual wage loss. Current law does not specify the amount from which the wages from the other job are offset. This bill specifies that the wages from the employee's other job are offset against the employee's expanded wage and not against the employee's actual earnings from the part-time job in which the employee was engaged at the time of the injury.

The wage expansion method of calculating a part-time employee's average weekly earnings has been limited by the Wisconsin Supreme Court, in Carr's Inc. V. Industrial Commission, 234 Wis. 466 (1940), in the case of an employee who is a member of a regularly-scheduled class of part-time employees. For those employees, the average weekly earnings are based on the normal workweek of the employee's class, subject to a minimum of 24 times the employee's normal hourly earnings at the time of the injury. This bill provides that an employee is a member of a regularly-scheduled class of part-time employees for purposes of calculating the employee's average weekly earnings if the employee is a member of a class of employees that does the same type of work at the same location, the minimum and maximum weekly hours regularly scheduled by the employer for the members of the class during the 13 weeks immediately preceding the injury vary by no more than five hours, at least 10% of the employer's workforce doing the same type of work are members of the class, and the class consists of more than one employee.

Vocational rehabilitation; offer of suitable employment

Under current law, an injured employee may be entitled to receive vocational rehabilitation instruction from DWD under the federal Rehabilitation Act of 1973, or, if the employee is eligible for that instruction, but DWD cannot provide that instruction, from a private rehabilitation counselor. An injured employee must be paid temporary disability benefits and the actual and necessary costs of travel and maintenance while receiving vocational rehabilitation instruction, except that current DWD administrative rules provide that an employer is not liable for those benefits or costs if the employee is receiving vocational rehabilitation services from a private vocational rehabilitation counselor and the employer makes an offer of suitable employment to the employee.

The rules define "suitable employment" to mean a job that is within the employee's permanent work restrictions, that the employee has the necessary physical capacity, knowledge, transferable skills, and ability to perform, and that pays not less than 85% of the employee's preinjury average weekly wage, except that a job that pays 85% or more of the employee's preinjury average weekly wage does not constitute suitable employment if the employee was working part-time at the time of the injury and the employee's average weekly wage as calculated for purposes of determining the employee's compensation rate exceeds the employee's actual average weekly wage for the part-time employment or if the employee was on a demonstrated career or vocational path at the time of the injury, the employee's average weekly wage at the time of the injury does not reflect the employee's earning potential in the demonstrated career or vocational path, and the permanent work restrictions caused by the injury impede the employee's ability to pursue the demonstrated career or vocational path.

This bill extends the offer of suitable employment rule to employees who are receiving vocational rehabilitation instruction from DWD. Specifically, the bill provides that if an employer makes an offer of suitable employment to an employee who is receiving vocational rehabilitation instruction from DWD, the employer is not liable for temporary disability benefits or for the costs of travel and maintenance during the employee's rehabilitation. The bill differs from the administrative rule, however, insofar as under the bill a job must pay not less than 90%, rather than 85%, of the employee's preinjury average weekly wage in order to be considered suitable employment

Statute of limitations

Under current law, an application for worker's compensation that is not filed within 12 years from the date of the injury or from the date that worker's compensation, other than treatment expenses, was last paid, whichever is later, is barred (statute of limitations), except that in cases of occupational disease there is no statute of limitations. In cases of occupational disease, benefits or treatment expenses becoming due 12 years after the date of the injury or after the date that worker's compensation was last paid, whichever is later, are paid not by the employer or insurer, but rather by DWD from the work injury supplemental benefit fund. This bill eliminates the 12-year statute of limitations for a traumatic injury resulting in the loss or total impairment of a hand or any part of the rest of the arm proximal to, that is, toward the trunk from, the hand or of a foot or any part of the rest of the leg proximal to the foot, any loss of vision, any permanent brain injury, or any injury causing the need for a total or partial knee or hip replacement. The bill also provides that in those cases, benefits or treatment expenses becoming due 12 years after the date of the injury or after the date that worker's compensation was last paid, whichever is later, are paid from the work injury supplemental benefit fund.

Hearings and procedures

Under current law, DWD has jurisdiction to resolve disputes between health care providers and insurers or self-insured employers over the necessity of treatment provided for an injured employee. DWD may exercise that jurisdiction when confirming a compromise or stipulation agreed to between the insurer or self-insured employer and the employee, when making its findings following a hearing on a contested case, or when exercising its jurisdiction under a necessity of treatment dispute resolution process set forth in the statutes. Before determining the necessity of treatment provided for an injured employee, DWD must obtain a written opinion on the necessity of the treatment in dispute from an expert selected by DWD. This bill requires DWD to obtain such an expert opinion only when DWD is exercising its jurisdiction under the statutory necessity of treatment dispute resolution process. In all other cases, obtaining such an expert opinion is optional on the part of DWD.

Under current law, in a hearing on a contested case, the contents of certified investigation reports made by industrial safety specialists employed by DWD are prima facie evidence as to matter contained in those reports. This bill provides that certified investigation reports made by industrial safety specialists employed, contracted, or otherwise secured by DWD are prima facie evidence as to matter contained in those reports.

Under current law, within 90 days after the final hearing in a contested case DWD must make an order determining the rights of the parties, which order may include an award of worker's compensation. Pending the final determination of a case, DWD may also make interlocutory orders, which may be enforced in the same manner as a final order. This bill permits DWD to include in any interlocutory or final award or order an order directing the employer or insurer to pay for any future treatment that may be necessary to cure and relieve the employee from the effects of the employee's injury.

Payment of benefits

Current DWD administrative rules require a party that has been ordered to pay an award of worker's compensation following a contested case hearing or a default to pay that compensation within 21 days after DWD mails a copy of the order to the party's last-known address and a party that has been ordered to pay an award of worker's compensation following a compromise or stipulation to pay that compensation within ten days after DWD mails a copy of the order to the party's last-known address. This bill requires a party that has been ordered to pay an award of worker's compensation to pay that compensation within 21 days after DWD mails a copy of the order to the party's last-known address, whether the award results from a hearing, a default, or a compromise or stipulation.

Under current law, subject to certain exceptions, worker's compensation exceeding $100 must be delivered directly to the claimant in person. This bill permits an insurer or self-insured employer to deposit a worker's compensation payment that is due a claimant directly into an account maintained by the claimant at a financial institution, if the claimant so requests and the insurer or self-insured employer so agrees. The claimant may revoke his or her request at any time by providing appropriate written notice to the insurer or self-insured employer.

Current law requires worker's compensation for permanent disability to be paid to an injured employee on a monthly basis. This bill requires worker's compensation for permanent disability that results from an injury for which the employer or insurer concedes liability and that is based on a minimum disability rating promulgated by DWD by rule to begin within 30 days after the end of the employee's healing period or within 30 days after the employer or insurer receives a medical report that provides a permanent disability rating, whichever is later. The bill also requires worker's compensation for permanent disability that results from an injury for which the employer or insurer does not concede liability or that is based on a permanent disability rating that is above a minimum permanent disability rating promulgated by DWD by rule to begin within the later of those 30-day periods unless the employer or insurer requests the employee to undergo an independent medical examination, in which case that compensation must begin within 30 days after the employer or insurer receives a report of the examination or within 90 days after the date of the request, whichever is earlier. The bill also requires payments for permanent disability to continue on a monthly basis and to accrue and be payable between intermittent periods of temporary disability so long as the employer or insurer knows the nature of the permanent disability.

Program administration

Under current DWD administrative rules, when an employee provides to the employer or insurer a signed statement relating to a claim by the employee, the employer or insurer must provide a copy of the statement to the employee. When an employee's statement is taken by a recording device and not immediately reduced to writing, a copy of the entire statement must be given to the employee or to his attorney within a reasonable time after the employee files an application with DWD for a hearing on the claim. If a hearing is held, the employer or insurer must also make the actual recording of the statement available as an exhibit. Failure to comply with this rule precludes the employer or insurer from using the statement in any manner in connection with the claim. This bill codifies this rule in statute without change, except that the bill requires the employee's written statement to be provided in all cases to the employee within a reasonable time after the statement is made and the employee's recorded statement to be provided, on the request of the employee or the employee's attorney or other authorized agent, to the employee, attorney, or agent within a reasonable time after the statement is taken.

Under current law, if an insurer or self-insured employer has evidence that a worker's compensation claim is false or fraudulent and if the insurer or self-insurer is satisfied that reporting the claim will not impede its ability to defend the claim, the insurer or self-insured employer must report the claim to DWD. DWD may then require the insurer or self-insured employer to investigate the claim and report the results of the investigation to DWD. If based on the investigation, DWD has a reasonable basis to believe that criminal insurance fraud has occurred, DWD must refer the matter to the district attorney for prosecution. Current law also requires DWD to submit an annual report to the governor and to the appropriate standing committees of the legislature detailing for the previous year the number of reports of false or fraudulent claims received, the number of referrals for prosecution made, and the results of those referrals. This bill eliminates the requirement that DWD annually report that information to the governor and to the appropriate standing committees of the legislature.

Under current law, the Wisconsin compensation rating bureau (bureau), which is a rate service organization licensed by the commissioner of insurance to establish worker's compensation premium rates, must file certain information with DWD. That information includes information collected by the bureau from insurers writing worker's compensation insurance regarding employers insured for worker's compensation. Current law prohibits the bureau from making public any information reported to it by insurers except as required by law. Current law, however, provides that subject to certain exceptions, the records of DWD relating to the administration of workers compensation are subject to public inspection and copying. This bill prohibits DWD from making public any information obtained from the bureau except as authorized by the bureau.

Extension of expiring provisions

Under current law, a student of a public school or a private school who is performing services for an employer as part of a school work training, work experience, or work study program, who is not on the payroll of the employer or otherwise receiving compensation on which a worker's compensation premium could be assessed on the employer, and who is named as an employee of the school district or private school by an endorsement on the school district's or private school's worker's compensation policy is an employee of the school district or private school for purposes of worker's compensation coverage. A student who is named as an employee of a school district or private school for purposes of worker's compensation coverage and who makes a claim for worker's compensation against the school district or private school may not also make a claim for worker's compensation or maintain an action in tort against the employer that provided the work training or work experience from which the claim arose. Currently, these provisions do not apply to injuries occurring after December 31, 2001. This bill eliminates that expiration date, thereby applying these provision to a student who is injured after December 31, 2001.

Under current law, DWD has jurisdiction to determine the reasonableness of the fees charged for health services provided to an injured employee. Current law specifies the procedure that DWD must follow in analyzing a fee dispute submitted to DWD before July 1, 2002. Specifically, DWD must compare the disputed fee to the mean fee for the health service procedure for which the disputed fee was charged as shown by a database of health service fees certified by DWD. If the disputed fee is at or below the mean fee, plus 1.5 standard deviations from the mean fee, DWD must determine that the fee is reasonable. If the disputed fee is above the mean fee, plus 1.5 standard deviations from the mean fee, DWD must determine that the fee is unreasonable, unless the health services provider proves that a higher fee is justified. This bill eliminates the July 1, 2002, expiration date for this procedure, thereby applying this procedure to fee disputes submitted to DWD on or after July 1, 2002.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB251, s. 1 Section 1. 15.227 (4) of the statutes is amended to read:

SB251,8,9 15.227 (4) Council on worker's compensation. There is created in the department of workforce development a council on worker's compensation appointed by the secretary of workforce development to consist of a member or designated employee of the department of workforce development as chairperson, 5 representatives of employers, and 5 representatives of employees. The secretary of workforce development shall also appoint 3 representatives of insurers authorized to do worker's compensation insurance business in this state as nonvoting members of the council.

SB251, s. 2 Section 2. 102.01 (2) (k) of the statutes is created to read:

SB251,8,12 102.01 (2) (k) "Workweek" means a calendar week, starting on Sunday and ending on Saturday.

SB251, s. 3 Section 3. 102.04 (2) of the statutes is amended to read:

SB251,9,8 102.04 (2) Except with respect to a partner or member electing under s. 102.075, members of partnerships or limited liability companies shall not be counted as employees. Except as provided in s. 102.07 (5) (a), a person under contract of hire for the performance of any service for any employer subject to this section (1961) shall not constitute an is not the employer of any other person with respect to such that service, and such that other person shall, with respect to such that service, be deemed to be an employee only of such the employer for whom the service is being performed.

SB251, s. 4 Section 4. 102.07 (7m) of the statutes is created to read: