March 16, 2016 – For virtually the entire century-old history of Wisconsin’s worker’s compensation law, the legislature has accepted, and the governor has signed, a series of changes approved by the Worker’s Compensation Advisory Committee.

That committee, composed of labor and management representatives, recently made changes that present new opportunities and new hazards in the practice of worker’s compensation law in Wisconsin. For instance, the legislature has restructured Wisconsin’s Department of Workforce Development (DWD), moving hearing judges to the Office of Hearings and Appeals in the Department of Administration (DOA).

2015 Wis. Act 180 applies as of March 2, 2016. What follows is a description of the salient features of the Act 180 changes. The article then provides a brief analysis of the problems facing the worker’s compensation practitioner as the result of the changes.

Increased Rates for Disability

Worker’s compensation provides temporary disability and permanent partial disability up to maximum rates set by the statute. In the new law, Wis. Stat. section 102.11(1), the maximum rate increases from $322 per week to $342 per week. This law increases this rate to $362 beginning Jan. 1, 2017. These rates apply to injuries occurring in the year indicated, regardless of when that permanent partial disability is paid.

Section 102.125(1) requires insurers or self-insured employers to report evidence of a false or fraudulent claim to the department, and requires the department, if it sees sufficient evidence to do so, to refer that evidence to the department of justice or to the district attorney of the county in which the violation is alleged to have taken place.

Statutes of Limitations, Medical Experts, Vocational Rehabilitation

Since 1980, the statute of limitations for filing an application for worker’s compensation for a traumatic injury has been 12 years from the date of injury or the date of the last payment of indemnity benefits. The new law, section 102.17(4), reduces that time from twelve years to six years. The provisions regarding occupational disease remain the same: 12 years from the date of injury, with the barred claims fund providing coverage thereafter.

Functional permanent partial disability has always been assessed by medical experts. Section 102.175(3)(a) changes how it is done, and may change who may do it. This provision, which may be the most controversial and difficult change, reads as follows:

If it is established by the certified report of a physician, podiatrist, surgeon, psychologist, or chiropractor under s. 102.17(1)(d) 1., a record of a hospital or sanitorium under s. 102.17(1)(d) 2., or other competent evidence that an injured employee has incurred permanent disability, but that a percentage of that disability was caused by an accidental injury sustained in the course of employment with the employer against whom compensation is claimed and a percentage of that disability was caused by other factors, whether occurring before or after the time of the accidental injury, the employer shall be liable only for the percentage of permanent disability that was caused by the accidental injury. If, however, previous permanent disability is attributable to occupations exposure with the same employer, the employer is also liable for that previous permanent disability so established.

It has, in the past, not been clear whether the department had the authority to issue an order awarding benefits for vocational training under sections 102.61 and 102.43 unless the applicant was already undergoing that retraining. Section 102.18 (1)(b)1. now grants judges the authority to include in any award an order requiring the employer or insurer to pay for a future course of instruction provided under these rehabilitation statutes.

It has also been the practice of the department to reduce weekly indemnity benefits paid for vocational rehabilitation by any amounts earned as wages by the injured worker while she or he was getting those benefits. Under section 102.43(5)(c), the employee may now keep all wages earned for up to 24 hours of work during the time she or he is receiving retraining benefits. Any wages earned beyond those 24 hours will be subtracted from the scheduled indemnity benefits.

Drugs and Alcohol

There was a provision in the law requiring a reduction of 15 percent of all indemnity benefits paid to a worker if the injury resulted from the employee’s intoxication by alcohol or controlled substances. The reduction was limited to a maximum of $15,000.

Under the revision to section 102.58, if an employee violates the employer’s policy concerning employee drug or alcohol use and is injured, and if the violation is causal to the employee’s injury, then no compensation or death benefit is to be paid. Incidental compensation, including all medical expense, is still to be paid.

Temporary and Permanent Disability Schedules

It was also the case in Wisconsin that a worker who has been returned to work with restrictions and is subsequently terminated must be paid temporary disability unless his conduct was so egregious as to amount to a constructive quitting of his or her job.

Under a new provision, section 102.43 (9)(c), if that employee is fired for misconduct or substantial fault, no temporary total disability is payable. Presumably, this applies only if the employee remains under temporary restrictions.

Wisconsin has a schedule of permanent partial disability for injuries to a worker’s arms, legs, hearing, or eyesight. That schedule sets maximum recoveries (for instance, 500 weeks of payment at the permanent partial disability rate for total loss of use of an arm at the shoulder), and mandates certain minimum payments (for instance, 10 percent for an anterior cruciate ligament repair).

Section 102.44 (4m) requires the Department of Workforce Development to create a medical advisory committee to review and revise the schedule of minimum permanent partial disability ratings. The statute mandates the department to review and revise these minimums every eight years “as necessary to reflect advances in the science of medicine.”

The bill also makes other changes, such as setting the cost for final reports and electronic delivery of medical records and clarifying the appropriate parties for an appeal for judicial review. The changes listed above, however, are the ones that will most likely present certain problems, and perhaps opportunities, for the practitioner of worker’s compensation. What follows is a brief description of some of those problems.

Analysis: Statute of Limitations

The change in the statute of limitations makes it important for an applicant’s attorney to consider, in the appropriate case, filing an application with the department merely to toll the statute. For instance, it is today quite common for people who have had shoulder injuries to be told by their doctors that they will eventually need a shoulder replacement.

Typically, these doctors want the injured worker to wait as long as possible before undergoing such surgery. In such cases, the practitioner will need to advise the client to have an application filed before the statute of limitations runs out in order to preserve his or her rights to coverage for such further treatment.

The department has allowed such a filing to remain on file for at least five years. If, however, the department should rescind that policy, the practitioner will likely be required to obtain medical support for such further treatment and ask for a hearing to obtain an interlocutory order covering such future treatment.

Analysis: Apportionment of Permanent Partial Disability

The new law allows apportionment of permanent partial disability in cases of traumatic injuries between that caused by the work injury and that “caused by other factors.”

It allows such apportionment when established by a medical report, a medical record “or other competent evidence.” The statute is silent as to the meaning of the term “disability” or “other factors,” and gives no guidance as to what “other competent evidence” might be other than an expert’s report.

The problems raised by the possible interpretations of these terms will likely be left for appellate courts to resolve. In the meantime, it is quite likely that employers and insurers will urge the medical experts they hire to evaluate such cases to look into apportioning permanent disability in every case.

Applicant’s attorneys will then likely respond by having the treating physician deny or modify any resulting apportionment. Resolving the resultant disputes will require filing more applications and will, therefore, likely result in more litigation, which will raise the cost of worker’s compensation for employers and insurers.

Analysis: Violation of Drug or Alcohol Policy

Worker’s compensation is often referred to as “the Grand Bargain.” That name refers to the legislative deal made at the birth of worker’s compensation to have workers surrender all rights to sue their employers for negligence, in return for which the employer was to pay for all work-related injuries regardless of fault. The purpose of that bargain was to put the cost of industrial injuries on employers and to repay employers by insulating them from lawsuits.

This statute breaks that bargain, and it throws the burden of the worker’s injury onto the worker and whatever public safety net is applicable.

Because of the severity of the penalty here, it is likely that such cases will be tried aggressively and appealed at length. The main issue in such cases will be whether the drug or alcohol usage was “causal to the injury.”

One must assume that the respondent has the burden of proving that causality and that, to do so, the respondent will be required to produce both medical and toxicological experts and perhaps even accident reconstruction experts. The result will likely be more cost for the respondents. Applicants will incur a like increase in expense, and the department will see an increase in litigation. Finally, the cost of these injuries will fall on the worker and on society at large rather than on employers as the law was originally intended. That may lead eventually to abandoning the Grand Bargain altogether, and to a storm of litigation in an area that has served Wisconsin well for over a hundred years.

Analysis: Termination of Benefits for Misconduct

This statute, while again introducing fault into a no-fault system, is not as draconian as the change in section 102.58. It narrowly denies temporary total disability to a worker who has returned to work under temporary restrictions and is then terminated for misconduct or substantial fault. It is, however, open to abuse by those employers who are tempted to rid themselves of any workers who suffer a work-related injury. If there is a significant increase in such terminations, it will once again mean a substantial increase in litigation.

Conclusion

Wisconsin’s worker’s compensation system has been lauded across the land as a reasonable and efficient program. This is due, in large part, to the tradition of relying on the labor/management advisory council to agree to changes.

Act 180 follows that tradition. There are, however, those who would reject the advisory council and radically redesign worker’s compensation, almost exclusively to the detriment of the injured worker. Time will tell if such attacks will be allowed to succeed. In the meantime, the tradition continues, and the law remains essentially the fine program of compensation that it has always been.