In worker’s compensation case, agency cannot decide where incapacitated individual lives 

By Joe Forward, Legal Writer, State Bar of Wisconsin

Oct. 7, 2010 – The Department of Workforce Development (DWD) does not have authority, for worker’s compensation purposes, to determine an incapacitated individual’s living arrangement, a Wisconsin Appeals Court recently held.

In 1979, Paul LaBeree sustained severe brain injuries, causing quadriplegia, while working as an employee of Bowman Plumbing Co. Bowman conceded liability and paid and continues to pay medical treatment expenses under the workers compensation statutes.

Because of the injuries, LaBeree requires protective placement under Wis. Stat. ch. 55, which is designed to place individuals with “mental illness, degenerative brain disorder, developmental disabilities, or other like incapacities” under protective care.

In placing an individual, chapter 55 is designed “to place the least possible restriction on personal liberty and exercise of constitutional rights consistent with due process and protection from abuse, financial exploitation, neglect, and self-neglect.” Wis. Stat. section 55.001.

Through 2004, LaBeree received institutional care at the Dunn County Health Care Center, costing Bowman $174 per day. In 2005, LaBeree’s guardian ad litem proposed a “community integration plan,” costing $549 per day, so LaBeree could live in a specially equipped duplex next to his father. The circuit court approved the plan as “the least restrictive.”

In 2006, LaBeree filed a worker’s compensation claim, alleging Bowman refused to pay the additional expense associated with LaBeree’s home-based care.

An administrative law judge for the DWD denied LaBeree’s claim, finding that LaBeree failed to prove his “transfer from institutional to home care was reasonable and necessary” under Wis. Stat. section 102.42(1), which requires an employer to pay an injured worker’s reasonable and necessary medical treatment expenses.

LaBeree petitioned the Labor and Industry Review Commission (LIRC), which concluded that DWD “possesses authority to determine the medical necessity of an injured worker’s Wis. Stat. ch. 55 placement,” and agreed that LaBeree “failed to prove the more expensive home-based care was required.” LaBeree petitioned the circuit court for review.

The circuit court rejected Bowman’s motion to dismiss, concluding LIRC “exceeded its authority when it reviewed the reasonableness and medical necessity of LaBeree’s placement.”

The circuit court held DWD cannot determine the medical necessity of placement, only the reasonableness and necessity of medical expenses associated with the placement.

The circuit court remanded the case for further fact-finding on the reasonableness of medical expenses associated with home care. Bowman Plumbing appealed the circuit court decision.

Regardless of an individual’s right to be placed in the “least restrictive environment” under ch. 55, Bowman argued that “when an individual’s needs are being met in an institutional setting and he or she cannot show that transfer to a residential setting is medically necessary, the individual–not the employer–should be on the hook for the additional cost of care.”

But in LaBeree v. Labor and Industry Review Commission, 2009AP1628 (Oct. 5, 2010), the district III appeals court upheld the circuit court’s decision, concluding that DWD’s authority is “limited to resolving disputes regarding the reasonableness or necessity of treatment” an employee receives “within a placement, but not the placement itself.”

“A protectively placed individual whose employer has conceded liability for worker’s compensation purposes should not have liberty conditioned on his or her ability to pay for medical treatment,” the appeals court wrote.

However, the court noted that despite the circuit court’s decision that home based care was the “least restrictive care environment under ch. 55” and was “medically necessary,” the decision “does not relieve LaBeree of his obligation to show that the expenses associated with his home placement are medically necessary under Wis. Stat. 102.42(1).”

“On remand, [DWD] may exercise its authority to determine which expenses associated with LaBeree’s placement are reasonable and medically necessary, but may not determine the necessity of the placement itself,” the court explained.

The appeals court also rejected Bowman’s claim that LIRC and the circuit court lacked jurisdiction to hear LaBeree’s petitions because the DWD’s administrative law judge dismissed LaBeree’s claim without prejudice, and the decision did not deny compensation.

Under Wis. Stat. section 102.18(3) and 102.23(1)(a), Bowman argued, a party may only petition [LIRC] or a circuit court for review of decisions awarding or denying compensation. But the appeals court held that LIRC’s decision did deny compensation.

Finally, Bowman argued that it was denied procedural due process of law because the circuit court did not invite Bowman to file a pleading responsive to LaBeree’s review petition.

“[P]rocedural irregularities in the circuit court do not provide grounds for reversal, as our primary concern is the agency decision,” the appeals court concluded.

LaBeree cross-appealed for an appeals court order requiring Bowman to pay all expenses in the community integration plan approved by the circuit court.

But the appeals court remanded the case to DWD to “determine whether the medical expenses associated with LaBeree’s residential placement are compensable under Wis. Stat. ch. 102.”