SB409: Bill Text

LRB-3926/1

GMM:cjs:rs

2011 - 2012 LEGISLATURE

2011 Senate BILL 409

January 30, 2012 - Introduced by Senator Wanggaard, cosponsored by Representative Ballweg. Referred to Committee on Labor, Public Safety, and Urban Affairs.

SB409,1,8 An Act to renumber and amend 102.29 (1); to amend 16.865 (4), 20.445 (1) (t), 102.03 (4), 102.11 (1) (intro.), 102.13 (2) (c), 102.16 (2) (d), 102.17 (4), 102.35 (1), 102.43 (5), 102.43 (7) (b), 102.44 (1) (am), 102.44 (1) (b), 102.44 (1) (c), 102.49 (1), 102.56 (1), 102.56 (2), 102.59 (1), 102.61 (1), 102.61 (1g) (b), 102.61 (1m) (c), 102.61 (1m) (d), 102.61 (1r) (c), 102.64 (2), 102.66 (1) and 102.66 (2); and to create 102.43 (5) (c), 102.65 (3) and 102.65 (4) of the statutes; relating to: various changes to the worker's compensation law, granting rule-making authority, and making an appropriation.

Analysis by the Legislative Reference Bureau

This bill makes various changes to the worker's compensation law, as administered by the Department of Workforce Development (DWD).

Payment of benefits

Maximum weekly compensation for permanent partial disability. Under current law, permanent partial disability benefits are subject to maximum weekly compensation rates specified by statute. Currently, the maximum weekly compensation rate for permanent partial disability is $302. This bill increases that maximum weekly compensation rate to $312 for injuries occurring before January 1, 2013, and to $322 for injuries occurring on or after that date.

Vocational rehabilitation. Under current law, an injured employee is entitled to receive compensation for temporary disability while the employee is receiving vocational rehabilitation services under the federal Rehabilitation Act of 1973. If, however, the injury causes only partial disability, the employee's weekly indemnity is the proportion of the weekly indemnity rate for total disability that the actual wage loss of the injured employee bears to the injured employee's average weekly wage at the time of injury.

This bill provides that compensation for temporary disability on account of receiving vocational rehabilitation services shall not be reduced on account of any wages earned for the first 24 hours worked by an employee during a week in which the employee is receiving those services, but that if an employee performs more than 24 hours of work during a week in which the employee is receiving those services, all wages earned for hours worked in excess of 24 during that week shall be offset against the employee's average weekly wage in calculating compensation for temporary disability. This provision, however, does not apply after the last day of the 24th month beginning after publication of the bill.

Under current law, an injured employee who is receiving vocational rehabilitation services is entitled to payment for the expense of travel to receive those services and, if the employee receives those services elsewhere than his or her place of residence, payment for the expense of maintenance during his or her rehabilitation.

This bill provides that an injured employee who is receiving vocational rehabilitation services is entitled to payment for the cost of tuition, fees, and books required for the employee's vocational rehabilitation program.

Disfigurement benefits. Under current law, DWD may allow compensation for a permanent disfigurement that occasions potential wage loss, except that if an employee who claims compensation for permanent disfigurement returns to work for his or her employer at the time of the injury at the same or a higher wage, DWD may not allow that compensation unless the employee shows that he or she probably has lost or will lose wages due to the disfigurement.

This bill prohibits DWD from allowing compensation for permanent disfigurement for an employee who returns to work for his or her employer at the time of injury, or who is offered employment with that employer, unless the employee suffers an actual wage loss due to the disfigurement.

Work injury supplemental benefit fund

Introduction. This bill makes various changes relating to the work injury supplemental benefit (WISB) fund administered by DWD with the assistance of the Department of Justice (DOJ), which is a fund that is used to pay supplemental worker's compensation to employees with permanent total disability, additional death benefits to the children of a deceased employee, additional worker's compensation to an employee with permanent partial disability who incurs further permanent disability, and worker's compensation when an otherwise meritorious claim for occupational disease is barred by the statute of limitations, when the status or existence of the employer or worker's compensation insurer (insurer) cannot be determined, or when there is otherwise no adequate remedy.

Traumatic injuries. 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 for treatment or burial expenses, was last paid, whichever is later, is barred by the statute of limitations, except that in cases of occupational disease or in cases of 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 an artificial spinal disc or a total or partial knee or hip replacement (traumatic injury) there is no statute of limitations. In cases in which there is no statute of limitations, benefits or treatment expenses for occupational disease becoming due 12 years after the date of injury or after the date that compensation was last paid, whichever is later, are paid by DWD from the WISB fund and benefits or treatment expenses for traumatic injury becoming due 12 years after the date are paid by the employer or insurer.

The Wisconsin Supreme Court recently held, however, in Society Insurance v. LIRC, 2010 WI 68, 326 Wis. 2d 444, that retroactive application, that is, application to injuries occurring before April 1, 2006, of the provision holding employers or insurers liable for benefits or treatment expenses for a traumatic injury becoming due 12 years after the date of injury or after the date that compensation was last paid, whichever is later, constitutes an unconstitutional impairment of contract and violation of due process rights. Accordingly, this bill provides that the WISB fund, rather than the employer or insurer, is liable for such benefits or treatment expenses only if the date of injury or last payment of compensation, other than for treatment or burial expenses, whichever is later, is before April 1, 2006.

Third-party liability. Under current law, worker's compensation is the exclusive remedy for an employee who is injured while performing services growing out of and incidental to his or her employment, except that, subject to certain exceptions, an injured employee may claim worker's compensation from his or her employer and bring an action in tort against a third party for damages by reason of the injury. Current law also permits an employer or insurer that has paid or is obligated to pay worker's compensation for an injury to bring an action in tort against a third party and permits DWD to bring such an action, if DWD has paid or is obligated to pay a claim for an injury from the uninsured employer's fund. When a third party is found liable for damages by reason of an injury, the employer, insurer, or, if applicable, the uninsured employers fund is entitled to reimbursement from the proceeds collected from the third party for any worker's compensation paid to the injured employee.

This bill permits DWD to bring an action in tort against a third party for damages by reason of an injury for which DWD has paid or is obligated to pay a claim from the WISB fund and entitles the WISB fund to reimbursement from the proceeds collected from the third party for any payments made to an injured employee from that fund.

Reimbursement of supplemental benefits. Under current law, an injured employee who is receiving worker's compensation for permanent total disability or continuous temporary total disability resulting from an injury that occurred before January 1, 2001, is entitled to receive supplemental benefits that in the first instance are payable by the employer or insurer. The employer or insurer then is entitled to reimbursement from the WISB fund for the supplemental benefits paid. This bill requires an employer or insurer that has paid supplemental benefits to file a claim for reimbursement with DWD by no later than 12 months after the end of the year in which the supplemental benefits were paid in order to receive reimbursement from the WISB fund for the supplemental benefits paid.

Second injury. Under current law, if an employee who has permanent partial disability that would entitle the employee to 200 weeks of worker's compensation incurs further permanent disability that entitles the employee to 200 weeks of worker's compensation as a result of a second injury, the employee is entitled to additional compensation from the WISB fund after the end of the period for which compensation for permanent disability as a result of the second injury is payable by the employer or insurer. That additional compensation is equivalent to the amount that would be payable for the previous disability or the amount that is payable for the further disability resulting from the second injury, whichever is less.

This bill permits an employee with such permanent partial disability who incurs such further disability as a result of a second injury to receive that additional compensation from the WISB fund only if the employee has not already received compensation from the WISB fund as a result of a second injury.

Surcharges. Current law requires employers that are subject to the worker's compensation law to keep records of all accidents causing death or disability of an employee while performing services growing out of and incidental to the employee's employment, requires insurers and self-insured employers to keep records of all payments made under the worker's compensation law, and requires reports based on those records to be furnished to DWD at the times and in the manner as DWD may require by rule or general order. An employer or insurer that fails to keep those records or to make those reports is subject to a surcharge of not less than $10 nor more than $100 for each offense, which must be deposited in the WISB fund.

Current law provides that such a surcharge is due within 90 days after the date on which notice of the surcharge is mailed to the employer or insurer. This bill provides that such a surcharge is due within 30 days after that date.

Claims processing. Under current law, DOJ is required to defend claims against the WISB fund. This bill permits DWD to retain the Department of Administration (DOA) to process, investigate, and pay claims for payments from the WISB fund. If retained by DWD, DOA may compromise a claim that it processes, subject to review by DWD.

Adequacy of fund balance. Finally, with respect to the WISB fund, the bill provides that if the secretary of workforce development determines that the expected ultimate losses to the WISB fund on known claims exceed 85 percent of the cash balance in that fund and that there is a reasonable likelihood that the cash balance in that fund may become inadequate to fund all claims against the fund, the secretary must file with the secretary of administration a certificate attesting that the cash balance in that fund is likely to become inadequate to fund those claims and specifying: 1) that payment of those claims will be made as provided in a schedule that DWD must promulgate by rule; 2) a date after which payment of those claims will be reduced; or 3) a date after which no new claims will be paid.

Hearings and procedures

Final practitioner's report. Under current law, if an injured employee has a period of temporary disability of more than three weeks or a permanent disability or has undergone surgery to treat an injury, other than surgery to correct a hernia, the employer or insurer must submit to DWD a final treating practitioner's report. This bill also requires that report to be submitted when an injured employer sustains an eye injury requiring medical treatment on three or more occasions off the employer's premises. The bill, however, prohibits DWD from requiring submission of that report when the employer or insurer denies the employee's claim for compensation and the employee does not contest that denial.

Program administration

Health service fee disputes. Under current law, if a health service provider, injured employee, insurer, or employer submits to DWD a dispute over the reasonableness of a health service fee charged by the health service provider for services provided to the injured employee, DWD must determine the reasonableness of the disputed fee by comparing the disputed fee to the mean fee for the procedure for which the disputed fee was charged, as shown by data from a database certified by DWD. If the disputed fee is at or below the mean fee, plus 1.4 standard deviations from that mean, DWD must determine that the disputed fee is reasonable and order the fee to be paid. If the disputed fee is above the mean fee, plus 1.4 standard deviations from that mean, DWD must determine that the disputed fee is unreasonable and order that a reasonable fee be paid, unless the health service provider proves that a higher fee is justified. This bill lowers the standard deviations used to determine the reasonableness of a disputed health service fee to 1.2 standard deviations from the mean.

The bill also requires DWD to conduct an audit of the databases certified by the DWD. If the audit is not commenced by the first day of the seventh month beginning after the effective date of the bill: 1) the maximum weekly compensation rate for permanent partial disability is lowered from $322 to $317 for injuries occurring on or after January 1, 2013; and 2) the standard deviation used to determine the reasonableness of a disputed health service fee is increased from 1.2 standard deviations from the mean to 1.3 standard deviations from the mean beginning on January 1, 2013.

Study of funding for permanent total disability increases. Under current law, the amount of the weekly indemnity for permanent total disability that is payable to an injured employee is determined as of the date of injury. An injured employee who is receiving compensation for permanent total disability resulting from an injury that occurred before January 1, 2001, however, is also entitled to receive certain supplemental benefits from the employer or insurer or, in certain cases, from the WISB fund.

This bill requires the secretary of workforce development to create a committee to study methods of funding the cost of providing regular, periodic increases in the weekly indemnity for permanent total disability, if legislation providing for those increases were to be enacted. The study must include methods of funding the cost of providing those increases for injured employees receiving that indemnity on the day before the effective date of that legislation.

For further information see the state 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:

SB409, s. 1 Section 1. 16.865 (4) of the statutes is amended to read:

SB409,6,6 16.865 (4) Manage the state employees' worker's compensation program and the statewide self-funded programs to protect the state from losses of and damage to state property and liability and, if retained by the department of workforce development under s. 102.65 (3), process, investigate, and pay claims under ss. 102.44 (1), 102.49, 102.59, and 102.66 as provided in s. 102.65 (3).

SB409, s. 2 Section 2. 20.445 (1) (t) of the statutes is amended to read:

SB409,6,12 20.445 (1) (t) Work injury supplemental benefit fund. All moneys paid into the work injury supplemental benefit fund under ss. 102.35 (1), 102.47, 102.49, 102.59, 102.60, and 102.75 (2), to be used for the discharge of liabilities payable under ss. 102.44 (1), 102.49, 102.59, 102.63, 102.64 (2), and 102.66 and for the retention of services under s. 102.65 (3).

SB409, s. 3 Section 3 . 102.03 (4) of the statutes is amended to read:

SB409,7,2 102.03 (4) The right to compensation and the amount of the compensation shall in all cases be determined in accordance with the provisions of law in effect as of the date of the injury except as to employees whose rate of compensation is changed as provided in ss. 102.43 (7) and or 102.44 (1) and or (5) or, before the first day of the 25th month beginning after the effective date of this subsection .... [LRB inserts date], as provided in s. 102.43 (5) (c) and employees who are eligible to receive private rehabilitative counseling and rehabilitative training under s. 102.61 (1m) and except as provided in s. 102.555 (12) (b).

SB409, s. 4 Section 4. 102.11 (1) (intro.) of the statutes is amended to read:

SB409,7,20 102.11 (1) (intro.) The average weekly earnings for temporary disability, permanent total disability, or death benefits for injury in each calendar year on or after January 1, 1982, shall be not less than $30 nor more than the wage rate that results in a maximum compensation rate of 110 percent of the state's average weekly earnings as determined under s. 108.05 as of June 30 of the previous year. The average weekly earnings for permanent partial disability shall be not less than $30 and, for permanent partial disability for injuries occurring on or after May 6, 2010, and before January 1, 2011, not more than $438, resulting in a maximum compensation rate of $292, and, for permanent partial disability for injuries occurring on or after January 1, 2011, not more than $453, resulting in a maximum compensation rate of $302 the effective date of this subsection .... [LRB inserts date], and before January 1, 2013, not more than $468, resulting in a maximum compensation rate of $312, and, for permanent partial disability for injuries occurring on or after January 1, 2013, not more than $483, resulting in a maximum compensation rate of $322, except as provided in 2011 Wisconsin Act .... (this act), section 30 (2) (a ). Between such limits the average weekly earnings shall be determined as follows:

SB409, s. 5 Section 5. 102.13 (2) (c) of the statutes is amended to read:

SB409,8,11 102.13 (2) (c) If Except as provided in this paragraph, if an injured employee has a period of temporary disability that exceeds 3 weeks or a permanent disability or, if the injured employee has undergone surgery to treat his or her injury, other than surgery to correct a hernia, or if the injured employee sustained an eye injury requiring medical treatment on 3 or more occasions off the employer's premises, the department may by rule require the insurer or self-insured employer to submit to the department a final report of the employee's treating practitioner. The department may not require an insurer or self-insured employer to submit to the department a final report of an employee's treating practitioner when the insurer or self-insured employer denies the employee's claim for compensation and the employee does not contest that denial. A treating practitioner may charge a reasonable fee for the completion of the final report, but may not require prepayment of that fee. An insurer or self-insured employer that disputes the reasonableness of a fee charged for the completion of a treatment practitioner's final report may submit that dispute to the department for resolution under s. 102.16 (2).

SB409, s. 6 Section 6. 102.16 (2) (d) of the statutes is amended to read:

SB409,9,3 102.16 (2) (d) The department shall analyze the information provided to the department under par. (c) according to the criteria provided in this paragraph to determine the reasonableness of the disputed fee. The Except as provided in 2011 Wisconsin Act .... (this act), section 30 (2) (b ), the department shall determine that a disputed fee is reasonable and order that the disputed fee be paid if that fee is at or below the mean fee for the health service procedure for which the disputed fee was charged, plus 1.4 1.2 standard deviations from that mean, as shown by data from a database that is certified by the department under par. (h). The Except as provided in 2011 Wisconsin Act .... (this act), section 30 (2) (b ), the department shall determine that a disputed fee is unreasonable and order that a reasonable fee be paid if the disputed fee is above the mean fee for the health service procedure for which the disputed fee was charged, plus 1.4 1.2 standard deviations from that mean, as shown by data from a database that is certified by the department under par. (h), unless the health service provider proves to the satisfaction of the department that a higher fee is justified because the service provided in the disputed case was more difficult or more complicated to provide than in the usual case.

SB409, s. 7 Section 7. 102.17 (4) of the statutes is amended to read:

SB409,9,24 102.17 (4) Except as provided in this subsection and s. 102.555 (12) (b), the right of an employee, the employee's legal representative, or a dependent to proceed under this section shall not extend beyond 12 years after the date of the injury or death or after the date that compensation, other than for treatment or burial expenses, was last paid, or would have been last payable if no advancement were made, whichever date is latest. In the case of occupational disease; a traumatic injury resulting in the loss or total impairment of a hand or any part of the rest of the arm proximal to the hand or of a foot or any part of the rest of the leg proximal to the foot, any loss of vision, or any permanent brain injury; or a traumatic injury causing the need for an artificial spinal disc or a total or partial knee or hip replacement, there shall be no statute of limitations, except that benefits or treatment expense for an occupational disease becoming due 12 years after the date of injury or death or last payment of compensation, other than for treatment or burial expenses, shall be paid from the work injury supplemental benefit fund under s. 102.65 and in the manner provided in s. 102.66 and benefits or treatment expense for such a traumatic injury becoming due 12 years after that date shall be paid by the employer or insurer from that fund and in that manner if the date of injury or death or last payment of compensation, other than for treatment or burial expenses, is before April 1, 2006. Payment of wages by the employer during disability or absence from work to obtain treatment shall be considered payment of compensation for the purpose of this section if the employer knew of the employee's condition and its alleged relation to the employment.

SB409, s. 8 Section 8. 102.29 (1) of the statutes is renumbered 102.29 (1) (a) (intro.) and amended to read:

SB409,10,21 102.29 (1) (a) (intro.) The making of a claim for compensation against an employer or compensation insurer for the injury or death of an employee shall not affect the right of the employee, the employee's personal representative, or other person entitled to bring action, to make claim or maintain an action in tort against any other party for such injury or death, hereinafter referred to as a 3rd party; nor shall the making of a claim by any such person against a 3rd party for damages by reason of an injury to which ss. 102.03 to 102.64 102.66 are applicable, or the adjustment of any such claim, affect the right of the injured employee or the employee's dependents to recover compensation. The An employer or compensation insurer who shall have that has paid or is obligated to pay a lawful claim under this chapter shall have the same right to make claim or maintain an action in tort against any other party for such injury or death. If the department pays or is obligated to pay a claim under s. 102.66 (1) or 102.81 (1), the department shall also have the right to maintain an action in tort against any other party for the employee's injury or death. However, each shall give to the other reasonable notice and opportunity to join in the making of such claim or the instituting of an action and to be represented by counsel.

SB409,11,7 (b) If a party entitled to notice cannot be found, the department shall become the agent of such that party for the giving of a notice as required in this subsection par. (a) and the notice, when given to the department, shall include an affidavit setting forth the facts, including the steps taken to locate such that party. Each shall have an equal voice in the prosecution of said the claim, and any disputes arising shall be passed upon by the court before whom the case is pending, and if no action is pending, then by a court of record or by the department. If notice is given as provided in this subsection par. (a), the liability of the tort-feasor shall be determined as to all parties having a right to make claim, and, irrespective of whether or not all parties join in prosecuting such the claim, the proceeds of such the claim shall be divided as follows:

SB409,11,10 1. After deducting the reasonable cost of collection, one-third of the remainder shall in any event be paid to the injured employee or the employee's personal representative or other person entitled to bring action.

SB409,11,18 2. Out of the balance remaining after the deduction and payment specified in subd. 1., the employer, the insurance carrier, or, if applicable, the uninsured employers fund or the work injury supplemental benefit fund shall be reimbursed for all payments made by it the employer, insurance carrier, or department, or which it the employer, insurance carrier, or department may be obligated to make in the future, under this chapter, except that it the employer, insurance carrier, or department shall not be reimbursed for any payments made or to be made under s. 102.18 (1) (bp), 102.22, 102.35 (3), 102.57, or 102.60.

SB409,11,21 3. Any balance remaining after the reimbursement described in subd. 2. shall be paid to the employee or the employee's personal representative or other person entitled to bring action.

SB409,12,2 (c) If both the employee or the employee's personal representative or other person entitled to bring action, and the employer, compensation insurer, or department, join in the pressing of said claim and are represented by counsel, the attorney fees allowed as a part of the costs of collection shall be, unless otherwise agreed upon, divided between such the attorneys for those parties as directed by the court or by the department.

SB409,12,6 (d) A settlement of any a 3rd-party claim shall be void unless said the settlement and the distribution of the proceeds thereof is of the settlement are approved by the court before whom the action is pending and or, if no action is pending, then by a court of record or by the department.