AB607: Bill Text

LRB-4021/4

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1995 - 1996 LEGISLATURE

1995 Assembly BILL 607

October 10, 1995 - Introduced by Representatives Vrakas and Vander Loop, cosponsored by Senators Zien and Breske. Referred to Committee on Labor and Employment.

AB607,1,13 An Act to repeal 102.65 (3) (a), 102.835 (1) (b), 102.835 (1) (c), 102.835 (16) and 102.835 (17); to renumber and amend 20.445 (1) (sp) and 102.65 (3) (b); to amend 20.445 (1) (ha), 20.445 (1) (sm), 102.06, 102.07 (1) (a), 102.07 (1) (b), 102.11 (1) (intro.), 102.16 (2) (d), 102.16 (5), 102.17 (1) (d), 102.17 (2), 102.17 (7) (a), 102.17 (7) (b), 102.17 (7) (c), 102.28 (2) (a), 102.28 (2) (b), 102.33 (2) (b) (intro.), 102.33 (2) (b) 2., 102.44 (1) (a), 102.44 (1) (b), 102.50, 102.75 (4), 102.80 (3) (a), 102.80 (3) (am), 102.80 (3) (b), 102.81 (1) (a), 102.81 (1) (b), 102.81 (2), 102.81 (7), 102.83 (1) (a) and 102.835 (12); to repeal and recreate 20.445 (1) (ha), 102.80 (3) (b) and 102.81 (2); and to create 102.01 (1) (em), 102.07 (4m), 102.07 (5) (d), 102.07 (11m), 102.07 (12m), 102.077, 102.28 (3), 102.29 (8), 102.29 (9), 102.33 (2) (b) 4., 102.80 (3) (ag), 102.80 (3) (c), 102.80 (4) and 626.125 of the statutes; relating to: various changes to the worker's compensation law, granting rule-making authority and making appropriations.

Analysis by the Legislative Reference Bureau

This bill makes various changes relating to worker's compensation, as administered by the department of industry, labor and human relations (DILHR) as follows:

General coverage

Under current law, subject to certain exceptions, every employer must pay worker's compensation to an employe who sustains an injury while performing services growing out of and incidental to his or her employment. Currently, unless exempted by DILHR, an employer must insure payment of that compensation by purchasing insurance from an insurer authorized to do business in this state. Currently, if an employer satisfies certain conditions, DILHR may exempt the employer from the insurance requirement, thereby permitting the employer to self-insure. This bill permits DILHR to exempt an employer from the duty to pay worker's compensation to certain employes who belong to a religious sect whose tenets or teachings oppose accepting the benefits of any public or private insurance that pays benefits in the event of death, disability, old age or retirement or that makes payments towards the cost of medical care, for example, the Amish. Under the bill, an employer applying for this exemption must submit to DILHR all of the following:

1. A written waiver by the employe of all worker's compensation benefits other than the financial and medical assistance provided by his or her religious sect.

2. An affidavit by the employe stating that the employe is a member of a recognized religious sect and that, as a result of the established tenets or teachings of the religious sect, the employe is conscientiously opposed to accepting the benefits of insurance as described above.

3. An affidavit by an authorized representative of the religious sect that the religious sect has a long-standing history of providing its members who become dependent on the religious sect as a result of work-related injuries with a standard of living and medical treatment that are reasonable when compared to the general standard of living and medical treatment for members of the religious sect.

4. An agreement signed by an authorized representative of the religious sect to provide financial and medical assistance to the employe if the employe sustains an injury which, but for the employe's waiver, would be compensable under the worker's compensation law; and proof of the financial ability of the religious sect to provide that assistance, which the religious sect may establish by maintaining, in an amount determined by DILHR, a surety bond, an irrevocable letter of credit or some other financial commitment approved by DILHR.

If DILHR finds that those conditions are satisfied with respect to an employe, DILHR may exempt the employer from paying worker's compensation to that employe. If that employe sustains a work-related injury and his or her religious sect is not providing reasonable financial or medical assistance, the employe may request DILHR to hold a hearing and, if after the hearing DILHR determines that the religious sect is not providing reasonable financial and medical assistance, DILHR may order the religious sect to provide benefits that are reasonable under the circumstances, but not in excess of what the employe could have received under the worker's compensation law. If the religious sect does not provide benefits as ordered by DILHR, DILHR may use the surety bond, letter of credit or other financial commitment maintained by the religious sect to pay the benefits ordered, plus any penalties that may be appropriate.

Current law defines certain persons as "employes" for purposes of coverage under the worker's compensation law. Currently, DILHR may, by rule, prescribe classes of volunteer workers who may, at the election of the person for whom the volunteer services are being performed, be considered to be employes for purposes of coverage under the worker's compensation law. This bill provides that a volunteer for a nonprofit organization that is exempt or eligible for exemption from federal income taxation under the federal internal revenue code who receives nominal payments of money or other things of value totaling not more than $10 per week is not considered to be an employe of the nonprofit organization for purposes of coverage under the worker's compensation law, unless the nonprofit organization elects to cover the volunteer under the worker's compensation law.

Currently, a student in a technical college district while, as part of a training program, he or she is engaged in performing services for which the technical college collects a fee or is engaged in producing a product that the technical college sells is an employe of the technical college for purposes of coverage under the worker's compensation law. This bill provides that a student of a public school or a private school while he or she is engaged in performing services as part of a school work training, work experience or work study program, and who is not on the payroll of an employer that is providing the work training or work experience or who is not otherwise receiving compensation on which a worker's compensation carrier could assess premiums, is an employe of a school district or private school that elects to name the student as an employe for purposes of worker's compensation coverage. The bill also provides that a student who is named as an employe of a school district or private school for purposes of worker's compensation coverage and who makes a claim for worker's compensation against his or her school district or private school may not also make a worker's compensation claim or maintain an action in tort against the employer who provided the work training or work experience from which the claim arose. This provision does not apply to injuries occurring after December 1, 1997.

Similarly, under the bill, a participant in a work experience component of a job opportunities and basic skills (JOBS) program under the aid to families with dependent children (AFDC) program who, under the JOBS program, is considered to be an employe of the agency administering the JOBS program or who, under the JOBS program, is provided worker's compensation coverage by the person administering the community work experience component, and who makes a claim for worker's compensation against that agency or person may not make a worker's compensation claim or maintain an action in tort against the employer who provided the work experience from which the claim arose. This provision does not apply to injuries occurring after December 1, 1997.

Program administration

Under current law, the records of DILHR relating to the administration of the worker's compensation laws are subject to inspection and copying under the open records law, except that records that reveal the identity of an employe who claims worker's compensation benefits, the nature of the employe's claimed injury, the employe's past or present medical condition, the extent of the employe's disability and the amount, type and duration of any benefits paid to the employe are confidential and may not be disclosed except to the employe who is the subject of the record or to the insurance carrier or employer who is a party to the employe's worker's compensation claim. This bill requires DILHR to disclose confidential information to an insurance carrier or employer that is a party to any claim involving the same employe, except that DILHR is not required to do random searches and DILHR may require the requester to provide the approximate date of the injury and any other relevant information that would assist DILHR in finding the record requested. The bill also permits DILHR to refuse to honor a subpoena issued by an attorney of record in a civil or criminal action or special proceeding, other than a worker's compensation claim, to inspect and copy a confidential worker's compensation record, unless a court of competent jurisdiction in this state orders DILHR to release the record.

Under current law, every employer who is subject to the worker's compensation law must carry worker's compensation insurance or, if permitted by DILHR, self-insure to cover the employer's worker's compensation liability. Currently, DILHR may promulgate rules establishing amounts to be charged as initial and renewal application fees to employers applying for self-insurer status. Under current DILHR rules, the renewal fee for a self-insured employer is $100 per year. This bill eliminates the initial application fee and renewal fee for self-insured employers and provides instead that DILHR may charge an amount to an initial applicant for self-insured employer status and an annual amount to self-insured employers.

Hearings and procedures

Under current law, verified medical reports and the verified reports of experts concerning loss of earning capacity presented by a party for compensation constitute prima facie evidence as to the matters contained in them. Current law permits a medical practitioner or an expert to certify, rather than verify, a report and provides that certification is equivalent to verification. A verified document is a document whose authenticity has been sworn to under oath. A certified document is a document that contains a written and signed, but not necessarily sworn to, assurance of authenticity. This bill eliminates the requirement that medical reports and the reports of experts be verified and provides that certified reports constitute prima facie evidence as to the matters contained in them.

Under current law, if DILHR has reason to believe that payment of compensation has not been made, DILHR may on its own motion schedule a hearing to determine the facts. This bill provides that when DILHR schedules a hearing on its own motion, DILHR does not become a party to the proceeding and is not required to appear at the hearing.

Under current law, DILHR may determine the reasonableness of the fees charged for health services that are provided for an injured employe for whom compensation is paid. Currently, DILHR's authority to determine the reasonableness of a health service fee expires on July 1, 1996. This bill extends that expiration date to July 1, 1998.

Qualified loss management program

Under current law, the Wisconsin compensation rating bureau (bureau), an organization to which every insurer writing worker's compensation insurance in this state belongs, determines for approval by the commissioner of insurance the premium rates that insurers may charge employers in this state. Currently, the bureau determines those rates based on past and prospective loss and expense experience, catastrophe hazards and contingencies, a reasonable margin for profits and dividends and other relevant factors. Currently, the bureau may classify risks according to variations in the hazards posed by those risks. This bill permits the bureau to file with the commissioner of insurance a qualified loss management program under which the bureau must grant prospective premium credits to employers that subscribe to a loss management action plan prepared by a loss management firm that has been approved by the bureau. Under the bill, the bureau must base the initial prospective premium credit granted to an employer on the qualifications of the loss management firm that prepared the employer's loss management action plan and on the anticipated improvement in loss experience as a result of the action plan, based on generally accepted actuarial principles. The bureau then bases subsequent premium credits on the aggregate loss experience of all employers served by a particular loss management firm. The bureau, however, must adjust the premium credit to reflect any credits granted under the ordinary rating process as a result of the same improved loss experience. The bureau may approve a loss management firm if the firm demonstrates an ability to reduce the loss experience of its clients and if the firm submits a loss management program that is approved by the bureau. This program expires on January 1, 1998.

Uninsured employers

Under current law, if an employer is not insured or self-insured as required by the worker's compensation law, the employer is liable to DILHR for certain payments which are deposited in an uninsured employers fund. DILHR uses the uninsured employers fund to administer the laws relating to uninsured employers and to pay worker's compensation benefits to the injured employes of uninsured employers. DILHR may pay those benefits, however, only if the cash balance in the fund equals or exceeds $4,000,000 before July 1, 1996, and, for the 6-month period immediately preceding the date on which the cash balance equals or exceeds $4,000,000 or for any 6-month period after that date, DILHR collected 55% or more of the payments assessed on uninsured employers during that 6-month period. This bill eliminates the July 1, 1996, deadline for reaching a cash balance of $4,000,000 and the 55% collection requirement and instead provides that DILHR may pay benefits from the uninsured employers fund beginning on the first day of the first July after the cash balance in the fund equals or exceeds $4,000,000. The bill also provides, however, that, if the secretary of industry, labor and human relations determines that expected losses on claims exceed 85% of the cash balance in the uninsured employers fund, the secretary of industry, labor and human relations must file a certificate with the secretary of administration attesting that the cash balance is likely to be inadequate to fund all claims against the fund and specifying a date after which no new claims will be paid. Further, the bill permits DILHR to obtain excess or stop-loss reinsurance in an amount that the secretary of industry, labor and human relations determines is necessary for the sound operation of the uninsured employer's fund and requires DILHR's reinsurer, if any, to pay benefits to the injured employes of uninsured employers according to the terms of the contract of reinsurance if DILHR is unable to make those payments from the uninsured employers fund.

Current law provides 2 procedures by which DILHR may collect payments owed to DILHR by uninsured employers. Under the first procedure, if an uninsured employer fails to pay an amount owed to DILHR and no appeal or other proceeding for review is pending and the time for taking an appeal has expired, DILHR may issue a warrant to the clerk of circuit court of any county in the state and the clerk of circuit court dockets the warrant, which gives the warrant the effect of a final judgment. Under the 2nd procedure, if no appeal or other proceeding for review is pending, and the time for taking an appeal has expired, DILHR may levy on any personal property of the uninsured employer, after demanding payment and giving 10 days' notice of its intent to pursue legal action to collect the debt. This bill eliminates the requirement that no appeal be pending and that the time for taking an appeal must have expired before DILHR may collect payment from an uninsured employer by either the warrant or levy procedure. The bill, however, does not eliminate the requirement that no proceeding for review be pending before DILHR may issue a warrant or impose a levy.

Under the current levy procedure for collecting payment from an uninsured employer, an uninsured employer is entitled to an exemption from levy of the greater of 75% of the uninsured employer's disposable earnings or 30 times the federal minimum hourly wage. Current law also exempts from levy the first $1,000 of an uninsured employer's account in a depository institution. This bill eliminates those exemptions.

Finally, with respect to uninsured employers, the bill provides that if an uninsured employer who owes a payment to DILHR transfers his or her business assets or activities, DILHR may collect the amount owed from the transferee of the business assets or activities if DILHR determines that all of the following conditions are satisfied:

1. At the time of the business transfer, the uninsured employer and the transferee are owned or controlled, in whole or in substantial part, either directly or indirectly, by the same interest or interests.

2. The transferee has continued or resumed the business of the uninsured employer or has employed substantially the same employes as those the uninsured employer had employed in connection with the business transferred.

Employes of contractors

Under current law, an employe of a contractor may recover compensation from the contractor's employer if the contractor does not have worker's compensation insurance or is not self-insured. Currently, however, an employe of a contractor would not be able to recover from the principal employer for an injury suffered on or after the first day of the calendar quarter beginning after the date that recovery from the uninsured employers fund is available. This bill changes that day to the first day of the first July beginning after the date that recovery from the uninsured employers fund is available. The bill also provides that an employe may recover from the principal employer for a claim made on or after the day that the secretary of industry, labor and human relations specifies in his or her certificate to the secretary of administration that the cash balance in the uninsured employers fund is likely to be inadequate to fund all claims against the fund.

Compensation amounts

The bill sets the average weekly earnings and maximum compensation rates for permanent partial disability for injuries occurring on or after January 1, 1996, and January 1, 1997. For injuries occurring during calendar year 1996, the average weekly earnings are not more than $253.50, resulting in a maximum compensation rate of $169. For injuries occurring during calendar year 1997, the average weekly earnings are not more than $261, resulting in a maximum compensation rate of $174.

The bill also sets the average weekly earnings and maximum compensation rates for temporary disability, permanent total disability and death benefits for injuries occurring on or after January 1, 1996, and January 1, 1997. For injuries occurring during calendar year 1996, the average weekly earnings are not more than $741, resulting in a maximum compensation rate of $494. For injuries occurring during calendar year 1997, the average weekly earnings are not more than $763.50, resulting in a maximum compensation rate of $509.

The bill also raises the amount of supplemental benefits that are payable to an employe who is receiving compensation for permanent total disability or continuous temporary total disability resulting from an injury that occurred before January 1, 1976. Currently, if that employe is receiving the maximum weekly benefit in effect at the time of the injury, the supplemental benefit is an amount that when added to the regular benefit, equals $125. This bill raises that amount to $150. If that employe is receiving less than the maximum weekly benefit in effect at the time of the injury, the supplemental benefit is an amount that is sufficient to bring the total weekly benefit to the same proportion of $150 as the employe's regular weekly benefit bears to the maximum weekly benefit in effect at the time of the injury.

Under current law, when the death of an employe results from an injury that is covered under the worker's compensation law, the employer or insurer must pay the reasonable cost of burial, not exceeding $4,000. The bill raises the burial expense limit to $6,000.

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:

AB607, s. 1 Section 1. 20.445 (1) (ha) of the statutes is amended to read:

AB607,8,2 20.445 (1) (ha) Worker's compensation operations. The amounts in the schedule for the administration of the worker's compensation program by the department. All moneys received under s. ss. 102.28 (2) (b) and 102.75 for the department's activities shall be credited to this appropriation. From this appropriation, an amount not to exceed $5,000 may be expended each fiscal year for payment of expenses for travel and research by the council on worker's compensation.

AB607, s. 2 Section 2. 20.445 (1) (ha) of the statutes, as affected by 1995 Wisconsin Act .... (this act), is repealed and recreated to read:

AB607,8,11 20.445 (1) (ha) Worker's compensation operations. The amounts in the schedule for the administration of the worker's compensation program by the department. All moneys received under ss. 102.28 (2) (b) and 102.75 for the department's activities and not appropriated under par. (hp) shall be credited to this appropriation. From this appropriation, an amount not to exceed $5,000 may be expended each fiscal year for payment of expenses for travel and research by the council on worker's compensation.

AB607, s. 3 Section 3. 20.445 (1) (sm) of the statutes is amended to read:

AB607,8,17 20.445 (1) (sm) Uninsured employers fund; payments. From the uninsured employers fund, a sum sufficient to make the payments under s. 102.81 (1). No moneys may be expended or encumbered under this paragraph until the first day of the calendar quarter first July beginning after the day that the secretary of industry, labor and human relations files the certificate under s. 102.80 (3) (a).