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Employment Blog

Unsigned Legislative Memo: Drastic Changes Planned for Worker’s Compensation?

Authored by Russell W. Wilson
Posted on January 27, 2015
Filed under Employment

Senator Jon Erpenbach’s (D-Madison) office released an unsigned memorandum addressed to “WC Stakeholders.” The memorandum is dated January 15, 2015, and its subject line reads “WC Reorganization.” While the memorandum is unsigned, it is clear that the author is an administrator within the Worker’s Compensation Division of the Department of Workforce Development (DWD). The author states that he or she “learned that the Governor will include a proposal in his 2015-17 budget bill to remove the Division of Worker’s Compensation from the Department of Workforce Development.” There is no doubt as to the point of the memorandum:

“In the final analysis, Wisconsin has a superior WC system. No credible explanation has been given as to why a Division that is wholly program revenue funded should be targeted for drastic changes that will clearly have a negative impact on our stakeholders.”

As one who has represented the employer’s side in worker’s compensation cases for thirty six years, I find some of the details listed in the memorandum alarming. For instance, under one reorganization scenario, the position of Duty Judge would be eliminated. Having a Duty Judge available to the lawyers for the employee and the employer to clarify a wide variety of practical issues and questions that arise in the hearing and settlement process is invaluable. In my experience those Administrative Law Judges serving the role of Duty Judge have been readily available, responsive, evenhanded, and immensely helpful to processing cases and settlements. To eliminate the position of Duty Judge seems to me to be an assault on the concept of institutional knowledge and memory.

Another service the memorandum says would be eliminated is computation of permanent and total disability (“PTD”) calculations. As Wisconsin’s workforce ages and claims for permanent and total disability increase, I think it is in the interest of employers and employees to have a measure of certainty and predictability as to how claims for PTD are valued. A number of variable factors must be taken into account, one of which in many cases is the calculation of the Social Security Disability “reverse offset.” The reverse offset is re-determined on a triennial basis. It is of great service to lawyers on both sides of a case to have the DWD’s reverse offset calculation. It is also beneficial to have the DWD’s standard present value discount rate in place. In my view, the elimination of the PTD calculation service may lead to widely divergent calculations, making it more difficult, if not impossible, to settle cases that are already difficult to settle. I suspect that wide divergence in case valuation will lead to more hearings on cases that ought to be settled.

I think the two concerns discussed above apply evenly to the employee side and the employer side. I find the next detail from the memorandum especially alarming for the employer side that I represent. According to the memorandum:

“Elimination of remote hearing locations. This will supposedly save money. It may result in hearings being held only in Milwaukee and Madison. This would require extensive travel for many of WC stakeholders.”

Holding our clients’ hearings in Milwaukee or Madison would disrupt their operations and impose an enormous additional cost. As I look out the window of our office building here in the quaint “remote location” known as Wausau, I can see the building not two blocks away where WC hearings are held. Even so, our clients must send their HR managers, worker’s compensation managers, production staff, safety personnel, and any number of other witnesses often from considerable distance from Wausau. There being no discovery in worker’s compensation, the employer that is well-prepared for hearing must typically bring everyone to the hearing who might need to testify. If “remote hearing locations” are eliminated, many employers are likely to be “held up” for settlement based on legal expense.

Those are the points in the memorandum that alarm me the most, but you can draw your own conclusion. Click here for the memorandum