Weld Riley, S.C. to host Labor Law CLE Luncheon

Weld Riley, S.C. to host  February 18 Labor Law CLE Luncheon regarding Impact of Proposed Worker’s Compensation Act Changes.

For more information or to sign up email news@wrpr.com

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Impact of Proposed Worker’s Compensation Act Changes on Employment Law Practice

By William R. Sachse, Jr.

Peterson, Johnson & Murray, S.C.

In February 2015, Wisconsin Gov. Scott Walker proposed to spin off the Worker’s

Compensation Division from the Dept. of Workforce Development (DWD) to two different state

agencies. The judicial functions would be conducted by the Division of Hearings and Appeals

(DHA) in the state Dept. of Administration and all other functions, including claims management

and insurance regulation, would be conducted by the Office ofthe Commissioner of Insurance

(OCl). In late May 2015, the Joint Finance Committee of the Wisconsin Legislature voted to

approve the governor’s request to remove the judicial functions from the DWD and reassign the

administrative law judges to the DHA. The committee rejected the governor’s request to spin off

the other functions and instead kept them in the DWD.

In early July 2015, the Legislature passed the Joint Finance Committee’s amendments to

the budget bill, including the provisions affecting worker’s compensation. On July 12, 2015,

Gov. Walker vetoed the legislation in part. He removed language that required the

administrative law judges who were transferred to the DHA to devote at least 80% of their work

time to worker’s compensation cases. The governor argued that his administration should be

free to assign the administrative law judges to whatever duties it saw fit. Gov. Walker objected

to being limited by the Legislature. The Legislature did not override the governor’s veto. The

amended version of the budget bill is 2015 Wisconsin Act 55. The changes in the worker’s

compensation system go into effect on January 1, 2016.

As of January 1, 2016, worker’s compensation matters will be handled by two separate

state agencies. Litigated claims will be resolved by the DHA. All other worker’s compensation

matters, including claims management and insurance policy regulation, will be administered by

the DWD, Worker’s Compensation Division. DHA created a separate subagency to handle

worker’s compensation hearings. It is called the Office of Worker’s Compensation Hearings

(OWCH, no kidding). The following DWD hearing judges will move to the OWCH: Donald

Doody, Roberta Arnold, Janine Smiley, Andy Roberts, Mark Shore, Nia Enemouh-Trammel,

Stanley Michelstetter, John Minix, Roy Sass, Ryan O’Connor, Cathy Lake, Hamdy Ezalarab,

Sherman Mitchell, William Phillips, Jr., Nancy Schneiders, Leonard Martin, Angela McKenzie,

Aaron Konkol, Edward W.J. Falkner, andThomas Landowski. These AUs will stay with the

DWD: James O’Malley, Mary Lynn Endter, Joseph Schaeve and Walter Thurow. The DHA

judges will have a new supervisor, Brian Hayes, Administrator of the DHA.

As of this writing, the DHAjudges may be contacted with their DWD email addresses

and phone numbers. Mail, including hearing applications, is to go to the current DWD address.

Once a hearing application is filed, then mail, including the answer and all evidentiary

submissions, go to a new OWCH mailing address: Office of Worker’s Compensation Hearings,

PO Box 7922, Madison, WI 53707-7922. OWCH’s fax number is 608-266-0018. Its general

email address DHAWCMail@wisconsin.gov. Avoid using the general OWCH mailbox for

specific cases or ALJ contacts.

OWCH is changing the manner in which settlement conferences are conducted. Under

DWD policy, it held three types of hearings: prehearings, formal hearings and settlement

conferences. The latter was like a mediation session. The parties appeared before an ALJ,

usually Walter Thurow or Mark Shore, and the ALJ mediated the dispute, often separating the

parties and conducting a series of ex parte communications. OWCH will apparently now call

those types of hearings “mediations.” They must be requested before the applicant files the

certification of readiness for hearing. ALJ Thurow will preside over them and they will be

conducted in the same manner as he conducted settlement conferences. There will not be any

more official settlement conferences. Parties may try to settle cases at hearings and with the

assistance of the presiding ALJ, but no ex parte communication will be allowed. If the case does

not settle, then the hearing will immediately follow.

Compromise agreements should be sent to the DWD prior to the filing of a hearing

application. After filing of the application, the agreement goes to the OWCH.

Hayes has told some practitioners that he will not assign OWCH judges to other matters

that are adjudicated by the DHA judges. DHA judges who are not OWCH judges will not

adjudicate worker’s compensation disputes. That means the “cross training” ofjudges that was

touted as an efficiency by the proponents of the worker’s compensation reorganization will not

happen.

The Worker’s Compensation Division of the DWD also has a new administrator. Earlier

this fall, the DWD Secretary Reggie Newson recently appointed Delora Newton as the Worker’s

Compensation Division Administrator. Newton resigned the position in Oct. 2015, only to be

appointed by Sec. Newson to administrator of the Division of Vocational Rehabilitation. On

Nov. 2, 2015, Sec. Newson appointed BJ Dembach, a long-time aide to Republicans in the state

Legislature, as the new administrator of the Worker’s Compensation Division. Here is his

biography from the secretary’s announcement: “Before joining DWD, BJ worked in the

Legislature for nearly eight years, including for State Rep. Dan Knodl, where he worked closely

on a host of workforce development and labor issues, including worker’s compensation. BJ also

was an aide to fonner state Rep. J.A. ‘Doc’ Hines from 2006-2010. BJ earned his Bachelor of

Arts in Politics and Government with a minor in Communication from Ripon College and holds

a Masters of Public Affairs degree from the UW-Madison La Follette School of Public Affairs.”

The act of the Legislature that changed the law is 2015 Wis. Act 55. It is more than 600

pages long. Here is a link to the Act:

http://docs.legis.wisconsin.gov/raw/path/PublisherIWSUFrontPage/Special/1 00%20%

20Act%2055%20-%20Executive%20Budget%20with%20Partial%2OVeto

Analysis of20l5 Assembly Bill 501 to Amend the Worker’s Compensation Act of

Wisconsin

By

William R. Sachse, Jr.

On Nov. 10,2015, several state legislators, all Republicans, sponsored a bill to amend the

Wisconsin Worker’s Compensation Act. It was subsequently amended on Dec. 18,2015.

The bill, which is called 2015 Assembly Bill 501 (AB 501), is pending before the

Assembly’s committee on insurance. Among other things, it would change longstanding

worker’s compensation law in Wisconsin by:

  • Allowing employers to deny compensation (not medical expenses) by asserting

that an employee’s violation of its alcohol or drug policy caused the injury.

  • Allowing employers to select the medical practitioners who treat an injured

worker and, in cases where the employer had a directed-care health insurance

plan, the employer is allowed to direct the treatment received by the employee.

  • Allowing employers to deny claims where the employee willfully concealed

preinjury physical conditions.

  • Shortens the statute of limitations for traumatic injuries from 12 to two years.
  • Ending the increases in temporary disability compensation payment rates for

disability occurring more than two years after the injury date.

  • Creates a procedure that may lead to the reduction in minimum permanent

disability awards in cases involving joint and back surgery under Wis. Adm. Code

Sec. DWD 80.32.

Unlike prior substantive changes to the WC Act, this proposal did not originate in the

Worker’s Compensation Advisory Council (WCAC). Knodl, Spiros and Stroebel are

Republican legislators and they drafted the proposal. If enacted without WCAC support,

the political comity that exists between Republicans and Democrats over amending the

WC Act may end. In the past, neither party has pressed a partisan advantage to amend

the WC Act to favor its constituents.

Below is a summary of the key changes proposed in AB 501. The references are to the

statute numbers of the affected sections. In some cases, new sections are created. They

are listed nearest to the existing sections. Any comments are from the perspective of an

attorney who represents employers and insurers and who assumes that the framers of this

proposal intended it to favor the interests of employers and insurers. My personal bias is

to oppose this proposal because it did not start in and is not supported by the WCAC. I

believe that the interests of employers, insurers, employees and the citizens of Wisconsin

are best served when worker’s compensation legislation is supported by the WCAC.

Wis. Stat. Sec. 102.03(I)(c)3: Adds “… and the program, event, or activity is outside

the scope of the employee’s employment” to the tests that must be met for a “wellness

activity” not to be considered services growing out of and incidental to employment.

Currently to avoid liability for an injury to an employee engaged in an activity designed

to improve the employee’s physical well-being, the employer must prove that the

employee is doing so voluntarily and without “compensation for participation.” The

proposed amendment likely makes it more difficult to defend claims because the

employer has to meet three tests, not two. Plus, the new provision is confusing and could

potentially lead to interpretation not intended by its framers. “Scope of employment” is

often used as a shorthand phrase for “performing services growing out of and incidental

to employment,” the official Wisconsin term for being at work when injured. Judges and

commissioners who have to interpret the meaning of this new phrase may consider it

confusing as the first clause of the section starts, “An employee is not performing service

growing out of and incidental to employment …” If the activity is “outside the scope of

employment,” then one is not performing services growing out of and incidental to

employment under Wisconsin law. If the desire is to reduce wellness-related injuries,

then the most effective amendment would be to rewrite the clause “receives no

compensation for participation” with “receives no compensation specifically attributable

to participation.” That would signal intent to depart from the judicial rule that a person is

being paid to participate in the wellness activity if earning a normal salary or wage at the

time the event takes place. See, City ofKenosha v. LIRC, 2011 WI App 51,332 Wis. 2d

448,797 N.W.2d 885.

Wis. Stat. Sec. 102.03(6): A new provision: Where an employee’s worker’s

compensation claim was denied “under the laws of another jurisdiction” that bars any

claim in Wisconsin “for the same injury.” Current law allows such a claim to be made,

even if dismissed in another state. If payments are made in another state, those payments

are a credit against any Wisconsin compensation award. There is no requirement in this

proposal that the law in the other jurisdiction be similar to Wisconsin law. (See

discussion of Wis. Stat. Sec. 102.44(5m)(a) below.)

Wis. Stat. Sec. 102.12: Adds “whichever is later” to the 30-day notice rule, requiring an

employee to notify the person designated by the employer within 30 days after an injury’s

occurrence or after the employee knew or should have known of a connection between

the employment and the disability. Shortens the two-year “laches” provision of the

statute to one year. Under the proposal, an employee could not file a hearing application

more than one year after the injury date, if no compensation was paid by the employer.

The huge exceptions for notices to lower-level supervisors, actual or “should have

known” notice from non-employee sources, and the employer not being misled by lack of

notice remain. Because of those exceptions, this amendment will not affect the way

claims are defended or denied, nor will it provide employers with a significant new

defense on notice grounds.

Wis. Stat. Sec. 102.125(3): Instructs the Dept. of Workforce Development to refer some

fraud cases to the Dept. of Justice for prosecution. The specific criminal statutes added

are for theft, forgery, fraudulent writings, fraudulent data writing, fraudulent insurance

2

claims and fraudulent destruction of certain writings. Plus, it adds “any other criminal

law” violation to the list. The current version refers just to fraudulent insurance claims.

The proposals broader language means that employees, employers, insurers and their

agents could be prosecuted. Another provision creates and funds a position in the Dept.

of Justice for prosecuting worker’s compensation fraud by any party.

Wis. Stat. Sec. 102.127: Creates a complete defense to an injury claim where an

employee “knowingly and willfully” falsely represents his or her “physical condition” to

an employer prior to the commencement of employment. The employer’s reliance on the

false representation must have been a “substantial factor” in hiring the employee. There

must also be a “causal connection” between the false representation and the injury.

Finally, the condition about which the employee lied must be “reasonably related to the

employee’s ability to adequately undertake the job-related responsibilities of the

employee’s employment.” There are several “escape hatches” for employees in the

language. First, limiting it to misrepresentations on “physical condition” means that any

lies about pre-hire mental problems will not bar a claim. Second, is an employee’s

medical condition ever a substantial factor in a hiring decision? The “substantial factors”

in the hiring decision usually tum on economic factors, such as whether the employer

needs more workers and whether the job candidate has the skills to fit the job description.

Third, causal connection to the injury is an awkward phrase. Does it mean that the prehire

condition has to be a cause of the injury itself, or simply render the employee more

susceptible to a disability because he or she was allowed to work a job that they had been

previously prohibited from performing? Employee-oriented judges are likely to adopt the

former interpretation and greatly limit the application of this provision. Same goes for

the fourth requirement that the “falsely represented condition” must be reasonably related

to the proposed job duties. All four of these requirements have to be met before the

section bars a claim. The intent seems to be to bar claims when the employee fails to

disclose a known physical condition that, if disclosed, would have caused an employer

not to hire the employee and expose him or her to injury risk, or to assign the employee

to a position that is unlikely to expose the employee to injury risk. But the four qualifiers

go beyond that to be more like a fair employment discrimination statute. Proving a fourpronged

test is tough in any situation. This statute is not likely to have a major impact on

claims.

Wis. Stat. Sec. 102.13(2)(b): Allows medical providers to provide records in digital

format for $26 per request.

Wis. Stat. Sec. 102.13(2)(c): Adds “in its entirety” as a modifier to “claim denial” in the

rule requiring final medical reports in all cases involving surgery (other than hernias) or

disability of more than three weeks. The new phrase means that final treating doctor

reports will be required in all applicable cases, except where the entire claim was denied.

Apparently, some employers or insurers refused to provide the reports when only certain

elements of a claim were denied. This was probably inserted at the Worker’s

Compensation Division’s request. The Legislature did not propose to further limit the

amount that a provider can charge for the final medical report. The current limit is “a

reasonable fee.”

3

Wis. Stat. Sec. 102.16(2)(dm): This new section appears intended to allow employers

and insurers to negotiate fees for medical treatment expense with health-care providers

and mandates that the government enforce that agreement by declaring any charges above

the negotiated amount to be “unreasonable.” Such a provision seems unnecessary unless

one of the parties to the contract violates it, in which case one would think that the

contract could be enforced in another forum. (See also the discussion of Wis. Stat. Sec.

102.42 changes below.)

Wis. Stat. Sec. 102.17(4): Shortens the statute of limitations (SOL) for certain traumatic

injuries to two years, from the current 12. All other exceptions are not changed. What

will happen is that a large number of hearing applications will be filed the minute this

statute is enacted to toll the running of the limitation period in all affected cases. The

Worker’s Compensation Division’s current policy is to hold those applications

indefinitely in order to prevent the SOL from barring claims. Thus, this provision will

not have its intended effect, unless the Division changes its policy or other statutory

language makes it clear that hearing applications filed solely to toll the running of the

limitation period are to be rejected, in the absence of an actual dispute between the

parties.

Wis. Stat. Sec. 102.18(1)(b)2: Allows for ALJs to order the payment of vocational

retraining compensation before the employee actually commences a course of instruction.

This pro-employee provision will likely lead to increased litigation because workers will

want to use the threat of impending retraining to obtain settlement money from

employers and insurers. Currently, these cases are litigated after the worker actually

starts school, so there is some proof that the worker intends to be retrained. There is also

some evidence that the worker can actually manage school and complete classes. This

provision could result in workers starting school but later quitting, thereby requiring the

respondent to pay start-up costs like tuition, books, fees and some temporary disability

compensation. It has no provision for the worker to repay the respondent if he or she

quits school and does not obtain successful retraining, nor does it give the respondent any

credit against a subsequent lost earning capacity claim that can be made for those workers

who failed to complete school. This provision was in the most recent “agreed bills” from

the Worker’s Compensation Advisory Council.

Wis. Stat. Sec. 102.18(3): Requires petitions for review to be filed at the Labor and

Industry Review Comm., not the Worker’s Compensation Division. No changes in time

deadlines.

Wis. Stat. Sec. 102.18(7): New provision that allows a respondent to request that the

worker submit to a respondent medical exam every three years after “a final award of

compensation” for “permanent partial disability” and a redetermination of disability after

a subsequent hearing. What is a “final award”? Seems to omit interlocutory orders,

which are almost all permanent disability orders. It is also limited to PPD, so permanent

total disability decisions, which are for life, are not affected, yet that is where the money

is.

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Wis. Stat. Sec. 102.42: Major change in how medical treatment is provided to injured

workers. The employee no longer chooses the treating medical provider, the employer

does. The proposal sets up two ways that this is done. The first way, which is primary,

applies when the employer has a defined benefit health plan under Wis. Stat. Sec.

609.01(lg). In that case, the worker has to see a medical provider available under the

health plan and have treatment “as provided under the health care plan.” That appears to

be authority for the employer to control the provider and the treatment. Emergencies are

excluded, but once ended, the treatment is with the defined-benefit plan’s provider. If

there is no such plan, then the second option applies. In that scenario, the employer picks

the provider, but cannot direct the treatment. An employer that fails to “tender treatment”

loses the right to select the provider. Moreover, the employee’s practitioner choice in

that scenario is “without restriction,” which appears to eliminate the two-practitioner

choice in current law.

Large employers will benefit most from this provision because they have directed-care

health plans. Smaller employers may not have those types of plans and many are

exempted from having to provide health insurance under the federal Affordable Care Act.

Injured employees of small employers are more likely to have unlimited physician choice

than those of large employers. Thus, small business costs will increase at a higher rate

relative to large employers doing the same type of work.

This should be good news for nurse case managers, but perhaps not for the independent

companies that currently provide those services to employers. The section seems to put

responsibility for treatment decisions in the hands of the health plan’s preferred medical

providers. Thus, nurses with expertise in managing worker’s compensation treatment

may become employees of large health-care provider organizations. The independent

case management providers will be relegated to a smaller unrestricted practitioner choice

market.

Wis. Stat. Sec. 102.43(S)(c): Extends the “sunset” on the provision that requires an

employee work more than 24 hours in a week for a respondent to credit wages earned

against vocational retraining temporary total disability compensation. The new sunset

date is April 30, 2018. After several of these extensions, the provision usually is made

pennanent. This one has been extended at least twice. It is currently not the law.

Wis. Stat. Sec. 102.43(7)(c): Ends the escalation of temporary disability compensation

rates for workers in healing periods or in vocational rehabilitation retraining programs

that start more than two years after the injury. Current law escalates the weekly

temporary disability rate by multiplying the proportion that the time-of-injury average

weekly wage relates to the maximum average weekly wage on the injury date by the

maximum temporary total disability rate in effect at the commencement of the renewed

healing period or course of instruction. For instance, if the worker earned 90% of the

maximum wage on the injury date, the escalated temporary disability compensation was

90% of the maximum TID rate in effect at the start of renewed healing or school classes,

provided that was more than two years after the injury date. Under this proposal, there is

5

no escalation. In the example, the employee’s TID for all time would be 90% ofthe

maximum TID rate on the injury date. This seems like an awkward way of eliminating

this worker benefit. It might be simpler to repeal sec. 102.43(7) in its entirety. A nonstatutory

provision at the end of the bill indicates that this applies to “a week of disability

[compensation] beginning after the effective date of this subsection.” It is to be applied

retroactively to injuries occurring prior to the effective date of the subsection.

Wis. Stat. Sec. 102.44(I)(ag): Extends eligibility injury date for supplemental

permanent total disability compensation from Jan. 1,2001, to Jan. 1,2003. A companion

provision, Wis. Stat. Sec. 102.44(1 )(b), increases the maximum weekly payment from

$582 to $669.

Wis. Stat. Sec. 102.44(4m): Requires the Dept. of Workforce Development to write

rules for minimum permanent disability ratings in cases of “amputation levels, losses of

motion, sensory losses, and surgical procedures … Those rules shall provide that those

minimum ratings for a surgical procedure … do not apply ifit is shown that after the

procedure the injured employee suffers form no actual impairment as a result of the

employee’s injury.” This is designed to avoid payment of permanent disability

compensation under Wis. Adm. Code Sec. DWD 80.32 where an employee has surgery

that mandates a minimum permanent disability but seems to be “better” physically than

before the surgery. For instance, the minimum permanent disability for a successful total

knee replacement is 50% loss of use of the leg at the knee. This provision seems to say

that the 50% would not be awarded if, for instance, the employee were allowed to return

to work without physical limitation. But is someone who has a prosthetic knee joint

unimpaired as compared to a person with a healthy knee joint? This provision may not

save employers that much money because “unimpaired” was not defined.

Wis. Stat. Sec. 102.44(5): Extends the reverse social security offset rate recalculation to

“old age” social security benefit payments. Under current law, the offset applies only to

social security disability payments, which expire when the beneficiary reaches the age at

which he or she is entitled to old-age social security. The old-age reduction does not

apply if the “employee is available for work.” Does that mean that the employee has to

have been injured while eligible for old-age social security, or simply declare that he or

she is interested in working? The same formula applies to each benefit. It says that

reductions in rates apply only to payments after Jan. 1,2016.

Wis. Stat. Sec. 102.44(5m)(a): Allows respondents to require an employee to disclose

worker’s compensation payments, including compromise payments, under the worker’s

compensation law of another state for the same injury. Any such payments are a credit

against Wisconsin worker’s compensation. The statute specifically excludes from the

credit vocational retraining benefits and payments to dependents. The proposal requires

reductions to be reported to the WC Division. The statute is not retroactive to injuries

prior to its effective date. The proposal says that Wisconsin compromise payments may

be credited, but how that would happen is unclear. There is no provision for repayment

orders in our law. And what if some of the Wisconsin settlement funds were for a

vocational retraining claim? How would they be segregated from the other payments?

6

Wis. Stat. Sec. 102.58: Preserves the current rule for injuries caused by the employee’s

failure to use safety devices or follow employer safety rules. In those cases, with certain

qualifiers, compensation (not medical expenses) can be reduced by 15% to a maximum of

$15,000 per injury date. Expands the statute to a total compensation bar where the injury

is caused by the employee’s violation of”the employer’s policy concerning drug or

alcohol use.” It does not say that the policy has to exist prior to the injury, that it has to

be written, or that it has to be “reasonably enforced,” as is set forth in the 15% part of the

statute. It does not bar the payment of medical expenses. This provision will cause

litigation to increase because it is broader than the previous version. The earlier version

essentially required proof of legal intoxication. Under the proposal, if an employer

prohibits any alcohol use, it would apply because the employer’s policy defines the level

of prohibited intoxication. More cases will potentially apply. However, the causation

requirement will limit the increase. Litigation costs may also increase, however, as

parties seek expert opinions to prove that a certain level of intoxication caused the injury.

Here is a link to the original version ofAS 501:

http://docs.legis.wisconsin.gov/2015/related/proposals/ab501

It was then amended by its sponsor, Rep. Spiros, and here is a link to the amendments:

http://docs.legis.wisconsin.govf20 15frelatedlamendmentsfab50 lfaa I ab501

William R. Sachse, Jr.

Jan. 14,2016

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Analysis of the “Agreed Bill” (2015 Senate Bill 536) to Amend the Worker’s

Compensation Act of Wisconsin

By

William R. Sachse, Jr.

In Dec. 2015, the Wisconsin Worker’s Compensation Advisory Council (WCAC)

released its “agreed bill” to amend the Wisconsin Worker’s Compensation Act. On Jan.

8,2016, it was introduced into the Legislature as 2015 Senate Bill 536. Its main

provisions are assessed below:

Wis. Stat. Sec. 102.11(1): Increases the maximum permanent partial disability

compensation weekly rate to $342 for injuries after its effective date in 2016 and to $362

for 2017 injuries. The current maximum is $322 per week and has been since Jan. I,

  1. Assuming this provision is passed, the 2017 rate will be $80 per week greater than

it was for 2007 injuries ($262 per week), a 30.5% increase. From 2007 to Oct. 2015, the

Consumer Price Index, a measure of price inflation used by the U.S. Dept. of Labor,

increased by 14.7%.

Wis. Stat. Sec. 102.125(3): Requires the Worker’s Compensation Division to notify the

state Dept. of Justice when its investigation shows a possible criminal law violation. This

is similar to the provision in 2015 Assembly Bill SOl (AB SOl). Both proposals expand

the types of “crimes” that can cause prosecution. The specific criminal statutes added are

for theft, forgery, fraudulent writings, fraudulent data writing, fraudulent insurance

claims and fraudulent destruction of certain writings. They also add an “any other

criminal law” violation to the list. The current statute is limited to fraudulent insurance

claims. The proposals’ broader language means that employees, employers, insurers and

their agents could be prosecuted. Another provision creates and funds a position in the

Dept. of Justice for prosecuting worker’s compensation fraud by any party.

Wis. Stat. Sec. 102.13(2)(b): Allows medical providers to send records electronically

for $26 per request. This same proposal is in AB SOl.

Wis. Stat. Sec. 102.13(2)(c): Caps the amount a medical practitioner can charge for a

“final medical report” at $100 per injury date. This is half-a-Ioaf for overburdened

worker’s compensation claims adjusters. Employers should not be legally required to

prove the employee’s claim for any compensation. The WCAC should end this mandate

altogether.

Wis. Stat. Sec. 102.17(4): Shortens the statute oflimitations (SOL) for traumatic

injuries from 12 to six years. No change in existing law regarding the “clock” starting

after the final payment of compensation or exceptions for certain types of injuries,

including amputations, loss of vision, permanent brain injuries, and hip and knee

prostheses. What will happen is that a large number of hearing applications will be filed

the minute this statute is enacted to toll the running of the limitation period in all affected

cases. The Worker’s Compensation Division’s current policy is to hold those

applications indefinitely in order to prevent the SOL from barring claims. Thus, this

provision will not have its intended effect, unless the Division changes its policy or other

statutory language makes it clear that hearing applications filed solely to toll the running

of the limitation period are to be rejected, in the absence of an actual dispute between the

parties. AB 50 I shortens the limitation period for traumatic injuries to two years.

Wis. Stat. Sec. 102.175(3): Requires an injured worker who claims permanent disability

compensation for an injury to disclose “all previous findings of permanent disability or

other impainnents that are relevant to that injury.” Further provides for apportionment of

permanent disability between disability caused by a traumatic work injury and that

caused by “other factors, including occupational exposure with the same employer,

whether occurring before or after the time of injury.” The employer is liable only for

permanent disability caused by the work injury and also any permanent disability caused

by occupational disease. The evidence of the other disability can come from medical

reports, medical records or other competent evidence. Medical practitioners who rate

PPD “shall address in the report the issue of causation of the disability and shall include

in the report an opinion as to the percentage of permanent disability that was caused by

the injury and the percentage ofpermanent disability that was caused by other factors,

whether occurring before or after the injury.” It is unclear whether the preinjury

disability had to be established by the rating of a qualified medical expert prior to the

subject work injury. What if the worker had, prior to the work injury, a surgery for which

a minimum permanent disability is mandated by Wis. Adm. Code Sec. DWD 80.32?

Will an operative report be sufficient to prove pre-injury PPD? Or will a medical expert

have to apportion PPD between the pre-injury operation and any post-injury permanent

disability? It is also unclear what the “occupational disease” language will have on this

rule. An applicant might try to create a preinjury occupational disease-type injury to

explain away a preinjury disability, such as one arising out of what was originally

considered surgery for a personal medical condition. Will that result in additional

litigation against the employer or insurer that is liable for the pre-existing disability?

This will also likely compel the Worker’s Compensation Division to redo the WKC-16

and WKC-16-B medical practitioner reports to include specific questions about noninjury-

related permanent disability. It will not be a simple task.

Wis. Stat. Sec. 102.18(1)(b)2: Allows administrative law judges to order the payment of

vocational retraining compensation before the employee actually commences a course of

instruction. This pro-employee provision will likely lead to increased litigation because

workers will want to use the threat of impending retraining to obtain settlement money

from employers and insurers. Currently, these cases are litigated after the worker

actually starts school, so there is some proof that the worker intends to be retrained.

There is also some evidence that the worker can actually manage school and complete

classes. This provision could result in workers starting school but later quitting, thereby

requiring the respondent to pay start-up costs like tuition, books, fees and some

temporary disability compensation. It has no provision for the worker to repay the

respondent ifhe or she quits school and does not obtain successful retraining, nor does it

give the respondent any credit against a subsequent lost earning capacity claim that can

be made for those workers who failed to complete school. This same provision is in AB

501.

Wis. Stat. Sec. 102.23(1)(a): This provision should make it easier for parties to

determine who to name in circuit court complaints for review of decisions from the Labor

and Industry Review Commission. It is intended to avoid pleading problems that

occurred inXcel Energy Services, Inc. v. LIRe, 2013 WI 64, 349 Wis. 2d 234,833

N.W.2d 665 (2013). It requires the LlRC orders to identify the parties that must be

named in judicial review complaints. It mandates that complaints list as the plaintiff the

party commencing the action, the loser at the LIRe. All others named by the LIRC are

defendants. The circuit court is allowed to add a missing party, unless doing so will

unduly delay resolution. That should put to an end litigation over improper pleadings.

Wis. Stat. Sec. 102.43(S)(c): Makes permanent the provision that requires an employee

work more than 24 hours in a week for a respondent to credit wages earned against

vocational retraining temporary total disability compensation. It is currently not the law.

It had been the law until 2014, but was allowed to expire. There is a similar provision in

AB 501, but that bill preserves the “sunset” provision and makes the date April 30,2018.

Wis. Stat. Sec. 102.43(9)(e): Adds a defense to claims for temporary disability

compensation for employers that refuse to provide light work to a disabled employee

because of the employee’s misconduct. The definition of misconduct is imported from

the Unemployment Insurance Act, specifically, Wis. Stat. Sec. 108.04(5), which

provides:

“… For purposes of this subsection, ‘misconduct’ means one or more actions or

conduct evincing such willful or wanton disregard of an employer’s interests as is

found in deliberate violations or disregard of standards of behavior which an

employer has a right to expect of his or her employees, or in carelessness or

negligence of such degree or recurrence as to manifest culpability, wrongful

intent, or evil design of equal severity to such disregard, or to show an intentional

and substantial disregard of an employer’s interests, or of an employee’s duties

and obligations to his or her employer. In addition, ‘misconduct’ includes:

(a) A violation by an employee of an employer’s reasonable written policy

concerning the use of alcohol beverages, or use of a controlled substance or a

controlled substance analog, if the employee:

  1. Had knowledge of the alcohol beverage or controlled substance policy;

and

  1. Admitted to the use of alcohol beverages or a controlled substance or

controlled substance analog or refused to take a test or tested positive for

the use of alcohol beverages or a controlled substance or controlled

substance analog in a test used by the employer in accordance with a

testing methodology approved by the department.

(b) Theft of an employer’s property or services with intent to deprive the

employer of the property or services permanently, theft of currency of any value,

felonious conduct connected with an employee’s employment with his or her

employer, or intentional or negligent conduct by an employee that causes

substantial damage to his or her employer’s property.

(c) Conviction of an employee of a crime or other offense subject to civil

forfeiture, while on or off duty, if the conviction makes it impossible for the

employee to perform the duties that the employee performs for his or her

employer.

(d) One or more threats or acts of harassment, assault, or other physical

violence instigated by an employee at the workplace of his or her employer.

(e) Absenteeism by an employee on more than 2 occasions within the 120-day

period before the date of the employee’s termination, unless otherwise specified

by his or her employer in an employment manual of which the employee has

acknowledged receipt with his or her signature, or excessive tardiness by an

employee in violation of a policy of the employer that has been communicated to

the employee, if the employee does not provide to his or her employer both

notice and one or more valid reasons for the absenteeism or tardiness.

(f) Unless directed by an employee’s employer, falsifying business records of the

employer.

(g) Unless directed by the employer, a willful and deliberate violation of a written

and uniformly applied standard or regulation of the federal government or a state

or tribal government by an employee of an employer that is licensed or certified

by a governmental agency, which standard or regulation has been

communicated by the employer to the employee and which violation would cause

the employer to be sanctioned or to have its license or certification suspended by

the agency.

This new section also refers to Wis. Stat. Sec. 108.04(Sg)(a) as an appropriate reason to

tenninate an employee and refuse payment of temporary disability compensation. That

section uses the tenn “substantial fault” as a legitimate basis for an employer to tenninate

an employee’s employment and deny the payment of unemployment insurance. Here is

the definition from that statute:

“… For purposes of this paragraph, ‘substantial fault’ includes those acts or

omissions of an employee over which the employee exercised reasonable control

and which violate reasonable requirements of the employee’s employer but does

not include any of the following:

  1. One or more minor infractions of rules unless an infraction is repeated after

the employer warns the employee about the infraction.

  1. One or more inadvertent errors made by the employee.
  2. Any failure of the employee to perform work because of insufficient skill,

ability, or equipment.

The provisions of Wis. Stat. Secs. 108.04(5)(a) conflict with existing provisions of Wis.

Stat. Sec. 102.43(9)(c), which requires that an employee violate an existing drug or

alcohol policy and that the violation occur during the healing period. This current

provision frustrates employers because it requires a positive drug test occur “during the

period when the employee could return to a restricted type of work during the healing

period.” Most employers test for drugs and alcohol immediately after an injury occurs

and before, in most cases, the employee has not yet been allowed by a medical

practitioner to return to light work. Most employers’ drug policies mandate immediate

employment termination for drug violations, so employers are not able to run a second

drug test after the employee’s doctor allows light work. Thus, the defense is unavailable.

Under Wis. Stat. Sec. I08.04(5)(a), no such healing period or light work limitation exists.

Employers will be able to use this defense more often than under the current statute.

However, the conflict raises a question as to which provision will apply. There could be

litigation over that question. A better bill would repeal Wis. Stat. Sec. 102.43(9)(c) and

eliminate the conflict.

Wis. Stat. Secs. 108.04(5)(b) and 108.04(5)(c) conflict with existing sec. 102.43(9)(b).

The existing statute requires “commission of a crime, the circumstances of which are

substantially related to that employment, and the employee has been charged with the

commission of that crime.” It also reinstates temporary disability compensation if the

employee is acquitted. The unemployment statute does not require that the crime be

“substantially related to the employment.” Termination for “theft” is allowed without a

requirement that there be a conviction. It also seems to broaden the definition of”crime”

by including any offense that results in a civil forfeiture. Does that include a traffic

violation? Again, there is a conflict with the existing statute and failure to repeal or

rewrite the existing statute is going to cause litigation over which to apply.

Wis. Stat. Sec. 108.04(5)(e) allows termination for absenteeism. It does not say that

absences for work injuries are excluded from those that qualify an employee for

termination. It excludes absences where the employee shows “valid reasons” for missing

work. In Great Northern COfp. v. LIRC, 189 Wis. 2d 313, 525 N.W.2d 361 (et. App.

1994), the appeals court held that absences for a compensable work injury could not be

included in an employer’s no-fault attendance policy to justify as “reasonable cause” an

employment termination under Wis. Stat. Sec. 102.35(3). Perhaps that holding will be

extended to absences under this provision. But expect some litigation to resolve the

Issue.

If enacted, this provision is the death knell for Brakebush Bros. v. LIRe, 210 Wis. 2d

623,563 N.W.2d 512 (1997).

Wis. Stat. Sec. 102.44(1)(ag): Extends eligibility injury date for supplemental

permanent total disability compensation from Jan. 1,2001, to Jan. 1,2003. A companion

provision, Wis. Stat. Sec. 102.44(1)(b), increases the maximum weekly payment from

$582 to $669. These provisions are also in AB SOl, but the maximum weekly rate is

$615.

Wis. Stat. Sec. 102.44(4m)(a): Creates a provision that requires the Dept. of Workforce

Development to write rules on minimum permanent disability ratings for amputations,

motion loss, reduced sensation and surgery. It directs the department to convene a

“medical advisory committee” to “review and recommend revision of those ratings to the

department and the council on worker’s compensation.” This relates to Wis. Adm. Code

Sec. DWD 80.32 and codifies the method by which the rule has previously been

amended. Much mischief is occurring these days over minimum ratings that apply to

motion loss. The Worker’s Compensation Division has quietly implemented a program

to raise permanent partial disability ratings through a dubious process of comparing

motion allegedly lost due to injury to alleged normal motion in a similar but uninjured

limb. The Division staffers who demand compliance with their “ratings” under penalty

of fine improperly assume that any apparent motion loss is due to the injury, without

relying on any expert medical proof. The WCAC could end this practice by removing

reference to motion loss from the statute. As for the medical advisory committee, that is

what gave us the nonsensical rule 80.32 that we have today, which grossly overstates

disability in cases ofsurgically-implanted prostheses. It would be better if the WCAC

simply negotiated the percentages.

Wis. Stat. Sec. 102.58: This identical provision is in AB SOl. Preserves the current rule

for injuries caused by the employee’s failure to use safety devices or follow employer

safety rules. In those cases, with certain qualifiers, compensation (not medical expenses)

can be reduced by 15% to a maximum of $15,000 per injury date. Expands the statute to

a total compensation bar where the injury is caused by the employee’s violation of”the

employer’s policy concerning drug or alcohol use.” It does not say that the drug and

alcohol policy has to exist prior to the injury, that it has to be written, or that it has to be

“reasonably enforced,” as is set forth in the 15% part of the statute. It does not bar the

payment of medical expenses. This provision will cause litigation to increase because it

is broader than the previous version. The earlier version essentially required proof of

legal intoxication. Under the proposal, if an employer prohibits any alcohol use, it would

apply because the employer’s policy defines the level of prohibited intoxication. More

cases will potentially apply. However, the causation requirement will limit the increase.

Litigation costs may also increase, however, as parties seek expert opinions to prove that

a certain level of intoxication caused the injury.

Here is a link to the entire agreed bill:

http://docs.legis.wisconsin. gov/20 15/related/proposals/sb536

William R. Sachse, Jr.

Jan. 13,2016