COMPACT

CONTENTS
2 Steve Sviggum named new DLI Commissioner 3 New benefit and provider fee levels effective October 2007 5 Training opportunities: Chicago, Kansas City 6 New state law: Electronic exchange of workers' compensation medical billing and payment transactions required 7 Results of 2007 Special Compensation Fund assessment 8 Division's performance plan sets path toward excellence 9 Data-driven-system study findings, first steps 10 Survey results: administrative conference and mediation 11 Office of Administrative Hearings on the move 12 Workers' compensation dispute and disputeresolution trends 18 2007 legislative update D-1 Court decisions: April through June 2007

for workers' compensation professionals

Minnesota Department of Labor and Industry

August 2007
3 4 Statewide average weekly wage Compensation rates as of Oct. 1, 2007

TABLES

10 Distribution of survey responses 11 Overall experience rating by type of respondent 12 Disputes filed, calendar-years 1997-2005 13 Dispute certification activity at DLI BMR, calendar-years 1999-2005 Mediations and administrative conferences at DLI BMR, calendar-years 1999-2005 14 Resolutions by agreement at DLI BMR, calendar-years 1999-2005 Total resolutions at DLI BMR, calendar-years 1999-2005 15 Dispute resolution activity at OAH, fiscalyears 1997-2006 Hearings at OAH and cases received at the WCCA, fiscal-years 1997-2006

Court decisions: April through June 2007 Steve Sviggum named new DLI Commissioner

2
2007 legislative update

18

Decisions

Summaries of

D-1

Steve Sviggum named new DLI commissioner
Steve Sviggum was appointed commissioner of the Minnesota Department of Labor and Industry (DLI) by Governor Tim Pawlenty on July 17, 2007. In this role, Sviggum – a fifteen-term Minnesota House of Representatives member and former Speaker – leads Minnesota's effort to protect the health and safety of workers and employers in all parts of the state. In addition, Sviggum continues his public service commitment to enhance job opportunities and make Minnesota a better place to live, work and raise a family. “Minnesota’s workers and businesses rely on the Department of Labor and Industry as a trusted resource and regulator,” Governor Pawlenty said. “Steve is known for his ability to work with and listen to people on all sides of an issue. His philosophy has always revolved around balance and I know he’ll bring that to DLI.”
DLI Commissioner Steve Sviggum

The Minnesota Department of Labor and Industry performs a variety of functions: overseeing the workers’ compensation system for the state; preventing workplace accidents and illness through OSHA consultation and compliance efforts; certifying and monitoring the state registered apprenticeship program; monitoring compliance with labor laws; and regulating the state’s construction codes and licensing activities. The department employs approximately 500 workers throughout the state. Sviggum's goal for the agency is simple: That every worker goes home at the end of the day the same way he or she began the workday. Sviggum was first elected to the Minnesota House of Representatives in 1978. He served four terms as Speaker of the House and three terms as House Minority Leader. In 1985-86, he chaired the Unemployment Insurance and Workers’ Compensation Division of the House Labor-Management Relations Committee. Sviggum has been honored by many business organizations, advocacy groups for the mentally disabled and taxpayer watchdog groups. Sviggum has served as a Sunday school superintendent and teacher, and as a board member for River View Manor – a developmentally disabled group home, the Goodhue County Historical Society, the Kenyon Sunset Home – a long-term-care facility and the Northern Chapter of the American Red Cross. Sviggum and his family are beef and grain farmers in the Kenyon area and he is also a senior fellow in the Center for the Study of Politics and Governance at the Humphrey Institute of Public Affairs. He and his wife, Debra, have three children. “I’m looking forward to this next challenge in my public service career,” Sviggum said. “Enhancing jobs and furthering the health, safety and protection of Minnesota’s workers and employers is an important task and I’ll tackle it with energy and fairness.”
2
• COMPACT • August 2007

New benefit and provider fee levels effective October 2007
By Brian Zaidman, Research Analyst, Research and Statistics, and Kate Berger, Legal Services

The statewide average weekly wage (SAWW) effective Oct. 1, 2007, is $808, a 3.32 percent increase over the current SAWW of $782, which has been in effect since Oct. 1, 2006. [See the table on this page.] The levels for minimum and maximum weekly benefit payments are presented in the table on the page 4. The statewide annual average wage will change to $41,996 on Jan. 1, 2008. The new SAWW is based on 2006 payroll and employment figures supplied by the Department of Employment and Economic Development and the calculation procedure in Minnesota Statutes §176.011, subd. 20. The increase in the SAWW is the basis for the M.S. §176.645 annual benefit increases. Only injured workers meeting the eligibility requirements of M.S. §176.645 will receive adjusted benefits. Benefit increases for workers injured prior to Oct. 1, 1992, are limited to 6 percent. Benefit increases for workers injured between Oct. 1, 1992, and Sept. 30, 1995, are limited to 4 percent. For workers injured on or after Oct. 1, 1995, the initial annual adjustment is made on the fourth anniversary of the date of injury and is limited to 2 percent. The vocational rehabilitation annual adjustment of hourly fees is limited to the 2 percent maximum increase (Minnesota Rules 5220.1900 subp. 1b, 1c and 1e.) On Oct. 1, 2007, the maximum qualified rehabilitation consultant (QRC) hourly fee will increase to $88.06 and the maximum hourly rate for rehabilitation job development and placement services will increase to $67.73.
Statewide average weekly wage
Effective Oct. 1 of the indicated year Statewide average weekly wage Percentage change from previous year

Year

1994 ..................... 1995 ..................... 1996 ..................... 1997 ..................... 1998 ..................... 1999 ..................... 2000 ..................... 2001 ..................... 2002 ..................... 2003 ..................... 2004 ..................... 2005 ..................... 2006 ..................... 2007 .....................

$492 .................... 1.65% $505 .................... 2.64% $524 .................... 3.76% $553 .................... 5.53% $579 .................... 4.70% $615 .................... 6.22% $642 .................... 4.39% $680 .................... 5.92% $702 .................... 3.24% $718 .................... 2.28% $740 .................... 3.06% $774 .................... 4.59% $782 .................... 1.03% $808 .................... 3.32%

Pursuant to M.S. §176.136, subd. 1a, which provides for annual adjustments of the medical fee schedule conversion factor by no more than the change in the statewide average weekly wage, the commissioner is adjusting the 2006 conversion factors by 0.9 percent, which is the percent change in the producer price index for offices of physicians (PPI-P) developed by the U.S. Department of Labor, Bureau of Labor Statistics. Subject to the approval of an administrative law judge at the Office of Administrative Hearings, effective Oct. 1, 2007, the new conversion factors will be: • medical/surgical services in part 5221.4030 ...................................................................................$77.56 • pathology/laboratory services in part 5221.4040 ............................................................................$64.77 • physical medicine/rehabilitation services in part 5221.4050 ..........................................................$67.24 • chiropractic services in part 5221.4060...........................................................................................$55.85 Minnesota Rules, part 5219.0500, subp. 4, provides for adjustment of the maximum fees for independent medical examinations in the same manner as the adjustment of the conversion factor. Therefore, the independent medical examination fees will be increased by 0.9 percent for services provided on or after Oct. 1, 2007, subject to approval by an administrative law judge. An official notice of the medical fee schedule conversion factors and independent medical examination fees as approved by the administrative law judge will be published in the State Register in September.
3
• COMPACT • August 2007

Compensation rates as of Oct. 1, 2007 Statewide average weekly wage (SAWW) = $808 Percentage change in SAWW from previous year = 3.32%
(Apply Minnesota Statutes §176.645 adjustment as necessary based on date of injury.) Minimum under M.S. 176.101, subd. 1(2) Supplementary benefits under M.S. 176.132
(Minnesota Statutes 1994)

Maximum under M.S. 176.101 and 176.111

100% of SAWW 50% of the SAWW or gross wage, whichever is less, but in no case less than 20% of the SAWW
50% 20%

10-01-80 .............$244.00 10-01-81 .............$267.00 10-01-82 .............$290.00 10-01-83 .............$313.00 10-01-84 .............$329.00 10-01-85 .............$342.00 10-01-86 .............$360.00 10-01-87 .............$376.00 10-01-88 .............$391.00 10-01-89 .............$413.00 10-01-90 .............$428.00 10-01-91 .............$443.00 10-01-80 ....$122.00 (gross wage - $183.00) ... $ 48.80 10-01-81 ....$133.50 (gross wage - $200.25) ... $ 53.40 10-01-82 ....$145.00 (gross wage - $217.50) ... $ 58.00 10-01-83 ....$156.50 (gross wage - $234.75) ... $ 62.60 10-01-84 ....$164.50 (gross wage - $246.75) ... $ 65.80 10-01-85 ....$171.00 (gross wage - $256.50) ... $ 68.40 10-01-86 ....$180.00 (gross wage - $270.00) ... $ 72.00 10-01-87 ....$188.00 (gross wage - $282.00) ... $ 75.20 10-01-88 ....$195.50 (gross wage - $293.25) ... $ 78.20 10-01-89 ....$206.50 (gross wage - $309.75) ... $ 82.60 10-01-90 ....$214.00 (gross wage - $321.00) ... $ 85.60 10-01-91 ....$221.50 (gross wage - $332.25) ... $ 88.60

and permanent total minimum under M.S. 176.101, subd. 4 (for injuries 10-1-95 and later)

105% of SAWW

10-01-92 ........... $481.95 10-01-93 ........... $508.20 10-01-94 ........... $516.60

Set by Statute

10-01-95 ............ $615.00 10-01-00 .............$750.00

20% of the SAWW or the employee's actual weekly wage, whichever is less 10-01-92 ........... $91.80 10-01-93 ........... $96.80 10-01-94 ........... $98.40
Set by statute, the listed amount or the employee's actual weekly wage, whichever is less

10-01-90 ...............$278.20 10-01-91 ...............$287.95 10-01-92 ...............$298.35 10-01-93 ...............$314.60 10-01-94...............$319.80 10-01-95............. $328.25 10-01-96 ...............$340.60 10-01-97 ...............$359.45 10-01-98 ...............$376.35 10-01-99 ...............$399.75 10-01-00 ...............$417.30 10-01-01 ...............$442.00 10-01-02 ...............$456.30 10-01-03 ...............$466.70 10-01-04 ...............$481.00 10-01-05 ................ $503.10 10-01-06 ................ $508.30 10-01-07 ................ $525.20

(rounded to $279) (rounded to $288) (rounded to $299) (rounded to $315) (rounded to $320) (rounded to $329)* (rounded to $341)* (rounded to $360)* (rounded to $377)* (rounded to $400)* (rounded to $418)* (round) (rounded to $457)* (rounded to $467)* (round) (rounded to $504)* (rounded to $509)* (rounded to $526)*
*Rounding applies to supplementary benefits.

10-01-95 ........... $104.00 10-01-00 ........... $130.00

Training opportunities:

Chicago, Kansas City

Coming soon: Minnesota Workers' Compensation Adjuster Training The Minnesota Department of Labor and Industry will be offering adjuster training in the Chicago and Kansas City areas in Fall 2007. Dates and specific locations are being determined now. The following sessions are planned to be offered at each location.
Full day: Condensed Basic Adjuster Training

This session is recommended for adjusters with less than one year of Minnesota workers' compensation experience.
Topics include:

• • • • •

waiting period; liability determination; indemnity benefits; how to file forms; and penalties.

The estimated cost for this session is $75.
Half day: Question and Answer Session

This session is open to and encouraged for all adjusters.
Topics include:

• • •

• •

forms and filing refresher; denials of liability; communication with the Minnesota Department of Labor and Industry; resolving disputes; and other questions and answers.

The estimated cost for this session is $35.

Final details will soon be available online at www.doli.state.mn.us/wctrain.html.
5
• COMPACT • August 2007

NEW STATE LAW
Electronic exchange of workers’ compensation medical billing and payment transactions required

The 2007 Minnesota Legislature enacted a law that will impact medical billing and payment in the workers’ compensation system.* This law requires all health care providers and all group purchasers, including workers’ compensation plans, to electronically exchange health care eligibility, claims (billing), and payment and remittance advice transactions beginning in 2009. The Minnesota Department of Health (MDH), in consultation with the Minnesota Administrative Uniformity Committee (AUC), is developing transaction standards to implement this law. The AUC is convening work groups to develop recommendations for these standards. Workers’ compensation payers and health care providers are encouraged to participate. For more information about the meetings, contact AUC at (651) 201-3570 or auc@health.state.mn.us. The MDH/AUC Web site is at www.health.state.mn.us/auc. The site includes a fact sheet about the new law at www.health.state.mn.us/auc/factsheet62j536.pdf and timelines for the promulgation of rules for the electronic transaction standards at www.health.state.mn.us/auc/ rulespromtimeline.pdf.
*2007 Laws of Minnesota, chapter 147, art. 15, sec. 4 (to be codified as Minn. Stat. 62J.536). View this law online at www.doli.state.mn.us/pdf/chap147_art15_sec4.pdf.

6

• COMPACT • August 2007

Results of 2007 Special Compensation Fund assessment
By John Kufus, Accounting Officer Financial Services The Special Compensation Fund (SCF) assessment funds Minnesota's workers' compensation programs. Seventy percent of the assessment dollars go to funding the supplementary and second-injury benefit programs. The assessment also pays the operating expenses of the Workers' Compensation Division of the Department of Labor and Industry, the Office of Administrative Hearings and the Workers' Compensation Court of Appeals. As a result of legislation enacted in 2002, the assessment process has changed. Companies are no longer required to report on a semi-annual basis. The reporting is now done on an annual basis and the reports are mailed at least 45 days before the due date of April 1. The Special Compensation Fund assessment is now directly invoiced by the Minnesota Department of Labor and Industry. The first half of the assessment is invoiced by June 30 of each year, and is due Aug. 1 of that year. The second half of the assessment is invoiced by Dec. 31, and is due Feb. 1 of the following year. The estimated state-fiscal-year 2008 funding requirement for SCF was determined to be $92 million. The liability was divided between the insurers and self-insurers by the ratio of their 2006 indemnity payments to the total indemnity reported by both groups.
2006 indemnity Insurers Self-insurers Total $287,085,281 $ 95,616,117 $382,701,398 Ratio 75.02% 24.98% 100.00% Estimated liabilities $69,014,268 $22,985,732 $92,000,000 $791,663,214 DSR pure premium $791,663,214

Insurer premium surcharge rate

The insurer premium surcharge rate applied for the purpose of determining the Special Compensation Fund assessment was 8.7176 percent. The rate was determined by dividing the insurer portion of the SCF state-fiscal-year 2008 liability ($69,014,268) by the 2006 designated statistical reporting pure premium reported by all insurers to the Minnesota Workers' Compensation Insurers Association ($791,663,214).
Self-insured assessment rate

The imputed self-insured assessment rate was 24.0396 percent. It was determined by dividing the self-insured portion of the Special Compensation Fund state-fiscal-year 2008 liability ($22,985,732) by the total 2006 indemnity reported by the self-insured employers ($95,616,117). If you need further information, call John Kufus at (651) 284-5179.

Division's performance plan sets path toward excellence
By Patricia Todd, Assistant Commissioner Workers' Compensation Division

To focus on continual improvement, the Minnesota Department of Labor and Industry's Workers' Compensation Division (WCD) developed a performance plan with a mission, core beliefs, futurestatements and yearly goals. The WCD mission is to assure, in an equitable and impartial manner, the quick and efficient delivery of benefits to injured workers at a reasonable cost to employers. To accomplish the mission, core beliefs were established: • exceptional customer service; • employee teamwork and performance; • data and process integrity; • accurate and efficient results; and • asking the question, "Are we doing the right things the right way?" WCD's future-statements set five-year goals for the division: • a top-notch regulatory system; • state-of-the-art technology; • a consultative approach; • a culture of mutual respect; and • well-respected staff members who are valued and sought by stakeholders. The performance plan also identified WCD's goals for state-fiscal-years 2007 and 2008. The 2007 goals have been accomplished and the division is working toward completing the 2008 goals. The identified goals are:

WCD motto
Where the solutions are, DLI-WC

2007 • survey Benefit Management and Resolution unit stakeholders involved in the alternative dispute-resolution process; • complete the data-driven workers’ compensation (DDWC) feasibility study; • combine stand-alone tracking systems; • strengthen the alternative dispute-resolution process; • develop a consultative business plan; and • develop performance indicators. 2008 • develop interactive, online outreach; • begin implementation of DDWC; and • improve on defined performance indicators. For more information about WCD, visit www.doli.state.mn.us/workcomp.html.
8
• COMPACT • August 2007

Data-driven-system study findings, first steps
By Patricia Todd, Assistant Commissioner Workers' Compensation Division

For the past 10 months, the Department of Labor and Industry (DLI) has been developing a project plan to move from a forms-based to a data-driven system within the Workers’ Compensation Division (WCD). During the development of the project plan a few major findings were identified. 1. Insurers print forms using information from their computer database and send a paper form to DLI; at DLI, the form is scanned, the data is entered and the form is destroyed. 2. A great deal of time is spent reiterating and reviewing information that was previously submitted. 3. Multiple systems within WCD have been developed external to the WCD computer system to track and generate documents. 4. The WCD uses unit-specific data review systems. 5. The Vocational Rehabilitation unit (VRU) and Claims Services and Investigations (CSI) unit have significant data systems external to the WCD computer system. 6. There is a great deal of concern about using the Social Security number (SSN) as the main identifier for claims. The transition of moving the workers’ compensation system from form- to data-driven will be incremental and incorporated within DLI’s present system. A budget initiative was approved to enable DLI to hire a staff member to focus on the project. It is DLI’s intent to accomplish the following activities in fiscal-year 2008: • incorporate a workers’ compensation identification number that is individualspecific, similar to an SSN; • develop a secure Web site to enable submission of documents electronically; • consolidate and generate correspondence within the WCD computer system; • obtain relevant vocational rehabilitation information electronically, instead of on forms; and • incorporate the VRU external Access system within the WCD computer system.

9

• COMPACT • August 2007

Survey results:

administrative conference and mediation
By Brian Zaidman, Senior Research Analyst Research and Statistics

People attending workers’ compensation administrative conferences and mediation sessions at the Department of Labor and Industry (DLI) office in St. Paul – including injured workers, attorneys, insurers, employers and service providers – were asked to evaluate their experiences. Information from attendees of the alternative dispute-resolution sessions was sought to assess whether the current program is providing adequate services, to identify whether the parties are comfortable with the system and to identify areas for additional dispute-resolution specialist training. Nine questions addressed the dispute-resolution specialist’s skills in handling the session, whether the respondent understood what was happening and had the opportunity to express his or her position, perceived fairness and overall satisfaction with the dispute-resolution session.
Figure 1: Distribution of survey responses
Yes Somewhat Not enough No Don't know

Was the mediator/arbitrator courteous and professional? Was the mediator/arbitrator familiar with your case? Was the mediator/arbitrator familiar with applicable law? Did you understand what was happening? Did you have enough opportunity to express your position? Did the mediator/arbitrator handle the session impartially? Did the mediator/arbitrator manage the session time appropriately? If this was a mediation session, would you use the mediation service again?

98.1% 76.7% 79.1% 95.0% 92.3% 91.3% 95.8%
Yes

1.4% 17.7% 5.6% 3.6% 5.2% 3.4% 2.0%
No

0.5% 2.3% 2.0% 1.0% 1.2% 1.5% 0.5%

0.0% 0.0% 0.0% 0.0% 0.7% 1.5% 0.5%

0.0% 3.3% 13.2% 0.5% 0.5% 2.4% 1.2%

95.2%
Excellent

4.8%
Good Fair Poor Very poor

Overall, how would you rate your experience here today?

56.7%

35.4%

6.8%

1.0%

0.2%

The survey took place between Jan. 29 and April 9, 2007. Responses were collected from 420 of the 603 conference and mediation session attendees, a 70 percent response rate. Respondents were very positive about the conduct of the dispute-resolution specialists and the fairness of the sessions. The great majority of the attendees of alternative dispute-resolution sessions were impressed with the professionalism and conference management skills of the dispute-resolution specialists. The percentage of attendees responding “Yes” to each item ranged from 77 percent to 98 percent.
10
• COMPACT • August 2007

A more-detailed analysis by respondent type shows injured workers need more information to help them prepare for the alternative dispute-resolution process so they can understand what is happening and feel confident about their participation.
Figure 2: Overall experience rating by type of respondent

80%

60%

40%

20%

0% worker worker's attorney
excellent

employer

insurer

QRC

good

fair, poor, or very poor

The DLI Workers' Compensation Division will use the information obtained in the survey to continue to improve its alternative dispute-resolution process.

Office of Administrative Hearings on the move

The Office of Administrative Hearings (OAH) will be moving from its Minneapolis location to the Harold Stassen Office Building, 600 North Robert Street, St. Paul, Minn., on Sept. 20 and 21. The move should be completed by Mon., Sept. 24. During the move, workers' compensation status calls (only) are being referred to the Department of Labor and Industry at (651) 284-5005. Mail will be continue to be processed. Visit www.oah.state.mn.us/reloc/relocation.html for a map to the new location and updates about the move.

11

• COMPACT • August 2007

Workers' compensation dispute and dispute-resolution trends
By David Berry Research and Statistics

The annual Workers’ Compensation System Report1 includes trend statistics about dispute rates, the numbers of disputes and dispute-resolution activities. Dispute rates are of interest because they indicate the propensity of claims to have disputes. This article presents system report data about the numbers of disputes, which are of interest because they indicate the overall demand for dispute-resolution services at the Department of Labor and Industry (DLI), the Office of Administrative Hearings (OAH) and the Workers’ Compensation Court of Appeals (WCCA). The article also presents data about the levels of dispute-resolution activities at DLI, OAH and WCCA. A glossary at the end of the article offers term definitions.
Numbers of disputes

Figure 1
Disputes filed, calendar-years 1997-2005 [1]
10 15 12

Individual dispute types (1,000s)

8 6 4 2 0 '97 '98 '99 '00 '01 '02 '03 '04 '05

Total (1,000s)

9 6 3 0

Claim petitions Discontinuance disputes Medical Requests Rehabilitation Requests Total Calender year Claim filed petitions 1997 6,650 2001 6,440 2002 6,460 2003 6,140 2004 6,070 2005 6,030 DisconRehabilitinuance Medical tation disputes Requests Requests 3,430 2,580 1,940 3,250 2,410 2,250 3,190 2,690 2,240 2,980 2,880 2,330 2,890 2,900 2,400 2,680 2,890 2,230

Figure 1 shows trends in the numbers of disputes received at DLI, featuring four major dispute types. Between calendar-years 1997 and 2005, the number of claim petitions fell from 6,650 to 6,030, while discontinuance disputes fell by 3,430 to 2,680. In contrast, medical and rehabilitation requests each rose by roughly 300 to 2,890 and 2,230, respectively. During the same period, total disputes fell from 14,590 to 13,830.2

Total [2] 14,590 14,350 14,580 14,320 14,250 13,830

1. Data from DLI. Numbers rounded to nearest 10. 2. Total of the four dispute types shown here.

In contrast to these numbers, the system report shows dispute rates increasing between 1997 and 2004 (and leveling off in 2005).3 The difference occurs because the number of claims has been falling. The number of disputes is the product of the number of claims and the dispute rate (disputes per claim). From injury-year 1999 to 2005, the number of filed indemnity claims fell from 39,300 to 30,900.4 The combination of a falling number of claims and increasing dispute rates produced the trends in Figure 1.
Dispute certification at BMR

Figure 2 shows trends in dispute-certification activity at DLI Benefit Management and Resolution (BMR). From 1997 to 2005, total certification decisions rose from 3,420 to 5,280. This partly reflects an increase in certification requests during the same period, from 1,260 to 3,230 (not shown in figure). It also reflects the increases in medical and rehabilitation requests (Figure 1), since these are treated as requests for certification if not accompanied by a certification request. Figure 2 also shows that the numbers of disputes certified and not certified increased along with the total number of certification decisions. The percentage of cases in which a dispute was certified fell from 66 to 58
12
• COMPACT • August 2007

Figure 2
Dispute certification activity at DLI Benefit Management and Resolution, Alternative Dispute Resolution, calendar-years 1999-2005 [1]
6,000 5,000 4,000 3,000 2,000 1,000 0 '99 '00 '01 '02 '03 '04 '05

Figure 3
Mediations and administrative conferences Benefit Management and Resolution, at DLI Alternative Dispute Resolution, calendar-years 1999-2005 [1]
1,400 1,200 1,000 800 600 400 200 0 '99 '00 '01 '02 '03 '04 '05

Disputes certified Disputes not certified – resolved Disputes not certified – other Total disputes not certified Total certification decisions Disputes not certified Total Other not Resolved reasons certified 590 570 1,150 950 770 1,720 1,080 900 1,980 1,300 910 2,200 1,320 1,070 2,390 1,220 1,020 2,240 Calendar year 1999 2001 2002 2003 2004 2005

Mediations Administrative conferences [2] Total Administrative conferences [2] 820 680 840 760 950 1,040

Calendar Disputes year certified 1999 2,270 2001 2,370 2002 2,920 2003 2,930 2004 3,080 2005 3,040

Total cerfication decisions 3,420 4,090 4,890 5,130 5,470 5,280

Mediations 300 280 360 340 250 250

Total 1,130 960 1,200 1,100 1,200 1,290

1. Data from DLI. Data not available before 1999. Numbers rounded to nearest 10. 2. Includes conferences where agreement was reached.

1. Data from DLI. Data not available before 1999. Numbers rounded to nearest 10.

percent over the period shown. For the entire period, in a majority of the cases where a dispute was not certified, the noncertification occurred because the dispute was resolved.
Mediations and administrative conferences at BMR

As shown in Figure 3, administrative conferences are more common than mediations at BMR. (At administrative conferences, the BMR specialist usually tries to achieve agreement between the parties.) Also, the number of administrative conferences increased from 820 in 1999 to 1,040 in 2005, while the number of mediations declined. A total of 1,290 conferences and mediations occurred in 2005. DLI has recently been increasing its efforts to encourage dispute parties to use mediation.
Resolutions at BMR

As shown in Figure 4, BMR achieved more than 3,000 resolutions by agreement each year from 1999 through 2005, although this number declined during the period shown. Most of these were resolutions by intervention (see note in figure). The remainder were agreements via mediation or conference.
13
• COMPACT • August 2007

Figure 4
Resolutions by agreement at DLI Benefit Management and Resolution, Alternative Dispute Resolution, calendar-years 1999-2005 [1]
4,000

Figure 5
Total resolutions at DLI Alternative Dispute Resolution, Benefit Management and Resolution, calendar-years 1999-2005 [1]
5,000 4,000 3,000

3,000

2,000 2,000 1,000 1,000 0 '99 '00 '01 '02 '03 '04 '05 '99 '00 '01 '02 '03 '04 '05

0

Resolutions by intervention [2] Agreements via conference or mediation [3] Total Resolutions by intervention [2] 2,860 2,860 3,070 2,810 2,900 2,590 Agreements via mediation or conference [3] 570 470 550 490 410 450

Resolutions by agreement [2] Resolutions by decision and order Total Resolutions by decision and order Number Pctg. 550 14% 470 12 670 16 640 16 760 19 800 21

Calendar year 1999 2001 2002 2003 2004 2005

Total 3,440 3,330 3,620 3,300 3,310 3,040

Resolutions Calendar by agreement [2] year Number Pctg. 1999 3,440 86% 2001 3,330 88 2002 3,620 84 2003 3,300 84 2004 3,310 81 2005 3,040 79

Total 3,990 3,800 4,290 3,940 4,070 3,840

1. Data from DLI. Data not available before 1999. Numbers rounded to nearest 10. 2. These are instances in which a BMR specialist, through phone or walk-in contact or correspondence, resolved a dispute prior to a mediation or conference. Many of these resolutions occur through the dispute certification process. 3. These include mediation awards and other agreements.

1. Data from DLI. Data not available before 1999. Numbers rounded to nearest 10. 2. From Figure 4.

Figure 5 shows BMR achieved about 4,000 resolutions each year from 1999 through 2005. Most of these were resolutions by agreement (from Figure 4). The remainder were decision-and-orders. In contrast with resolutions by agreement, decision-and-orders increased during the period shown, from 550 in 1999 to 800 in 2005. Most decision-and-orders stem from conferences where the parties did not reach agreement. A small number are “nonconference decision-and-orders,” written by a BMR specialist where a conference was deemed unnecessary.
Resolutions at OAH and WCCA

As shown in Figure 6, OAH hearings declined from 1997 through 2001, but then increased through 2003 and held steady thereafter. By contrast, settlement conferences, discontinuance conferences, and medical and rehabilitation conferences at OAH all declined between 2001 and 2006 (although medical and rehabilitation conferences had increased through 2004). As shown in Figure 7, the number of cases received at WCCA fell from 386 in 1997 to 196 in 2006. During the same period, these cases also fell from 31 percent of OAH hearings to 22 percent.
14
• COMPACT • August 2007

Figure 6
Dispute resolution activity at the Office of Administrative Hearings, fiscal-years 1997-2006 [1]
4,000

Figure 7
Hearings at the Office of Administrative Hearings and cases received at the Workers' Compensation Court of Appeals, fiscal-years 1997-2006 [1]
1,250

3,000

1,000 750 500

2,000

1,000 250 0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 OAH hearings [2] WCCA cases received WCCA cases as percentage of OAH hearings 31% 33 35 30 26 29 22

Settlement conferences [2] Discontinuance conferences [2] Medical and rehabitation conferences [2] Hearings Settlement conferences [2] 3,254 3,537 3,143 2,661 2,784 2,687 Discontinuance conferences [2] 1,415 1,726 1,551 1,506 1,328 1,211 Medical and rehab conferences [2] 516 544 601 633 595 356

Fiscal year 1997 2001 2002 2003 2004 2005 2006

Hearings 1,240 753 795 895 914 860 910

Fiscal year 1997 2001 2002 2003 2004 2005 2006

OAH hearings [2] 1,240 753 795 895 914 860 910

WCCA cases received [3] 386 245 282 271 236 247 196

1. Data from OAH. 2. Not available before 2001.

1. Data from OAH and WCCA. 2. From Figure 6. 3. Includes cases with and without hearings. Both types of cases are usually disposed of by decisions but sometimes by settlement. Statistics are unavailable on the number of hearings at WCCA. Currently, about 75 percent of cases received have hearings. This percentage has risen over time.

Conclusion

DLI is using this and other data to reduce disputes, align resources, improve performance and shorten the dispute-resolution process.

The Minnesota Workers’ Compensation System Report, 2004 is available at www.doli.state.mn.us/pdf/wcfact04.pdf or by calling the Department of Labor and Industry at (651) 284-5025. 2 By contrast, the System Report shows increasing dispute rates since 1997 because of the falling number of claims (the denominator of the dispute rate). 3 The 2005 Minnesota Workers' Compensation System Report will be published shortly. 4 These are projected to full claim maturity.

1

15

• COMPACT • August 2007

Glossary of terms used in preceding information
Administrative conference – An expedited, informal proceeding where parties present and discuss viewpoints in a dispute. If agreement is not achieved, a “decision and order” is issued that is binding unless a request for formal hearing is filed. There are administrative conferences for medical issues presented on a Medical Request form, vocational rehabilitation issues presented on a Rehabilitation Request form and for discontinuance disputes presented by a claimant’s request for an administrative conference. Currently, medical conferences are conducted at DLI Benefit Management and Resolution (BMR) if the disputed amount is $7,500 or less. However, some medical disputes involving $7,500 or less may be referred to the Office of Administrative Hearings (OAH) if other litigation on the claim is already pending there or if they involve surgery or a highly complicated issue. Rehabilitation conferences are usually conducted at BMR, though sometimes at OAH. Discontinuance conferences are conducted at OAH. Benefit Management and Resolution (BMR) – A unit in DLI that (among other activities) provides information and clarification about workers’ compensation statutes, rules and procedures; carries out a variety of dispute-prevention activities; conducts informal dispute-resolution activities, including mediations; and holds administrative conferences about some issues. Claim petition – A form by which the injured worker contests a denial of primary liability or requests an award of indemnity, medical or rehabilitation benefits. In response to a claim petition, the Office of Administrative Hearings generally schedules a settlement conference or formal hearing. Discontinuance dispute – A dispute about the discontinuance of wage-loss benefits, most often initiated when the claimant (usually by phone) requests an administrative conference in response to the insurer’s declared intention to discontinue temporary total or temporary partial benefits. The conference is held at the Office of Administrative Hearings (OAH). A discontinuance dispute may also be presented on the claimant’s Objection to Discontinuance form or the insurer’s petition to discontinue benefits, either of which triggers a hearing at OAH. Discontinuance of wage-loss benefits – The insurer may propose to discontinue wage-loss benefits (temporary total, temporary partial or permanent total disability) if it believes one of the legal conditions for discontinuance have been met. See “Notice of Intention to Discontinue,” “Request for Administrative Conference,” “Objection to Discontinuance” and “petition to discontinue benefits.” Dispute certification – A process required by statute in which, in a medical or rehabilitation dispute, DLI Benefit Management and Resolution (BMR) must certify a dispute exists and informal intervention did not resolve the dispute before an attorney may charge for services. BMR specialists attempt to resolve the dispute informally during the certification process. Filed indemnity claim – A claim for indemnity benefits, whether ultimately paid or not. Indemnity benefits are paid to the injured or ill worker or survivors to compensate for wage loss, functional impairment or death. These benefits include temporary total disability, temporary partial disability, permanent partial disability and permanent total disability benefits; supplementary benefits; dependents’ benefits; and, in insurance industry accounting, vocational rehabilitation benefits. Hearing – A formal proceeding about a disputed issue or issues in a workers’ compensation claim, held at the Office of Administrative Hearings (OAH), after which the judge issues a decision that is binding unless appealed. OAH conducts formal hearings about disputes presented on claim petitions and other petitions where resolution through a settlement conference is not possible. OAH also conducts hearings about some discontinuance disputes (those where there is an Objection to Discontinuance form or a petition to discontinue benefits), disputes referred by DLI Benefit Management and Resolution (BMR) because they do not seem amenable to less formal resolution, and disputes about miscellaneous issues such as attorney fees. OAH also conducts hearings de novo when a party disagrees with an administrativeconference or nonconference decision and order from either BMR or OAH. Intervention – An instance in which DLI Benefit Management and Resolution (BMR) provides information or assistance to prevent a potential dispute, or communicates with the parties to resolve a dispute and/or determine whether a dispute should be certified. A dispute resolution through intervention may occur either during or after the dispute certification process. (This is distinct from the process of intervention under Minnesota Statutes § 176.361 where an interested person intervenes to become a party in a case.) 16
• COMPACT • August 2007

Mediation – A voluntary, informal proceeding conducted by DLI Benefit Management and Resolution to facilitate agreement among the parties in a dispute. If agreement is reached, its terms are formally recorded. A mediation occurs when one party requests it and the others agree to participate. This often takes place after attempts at resolution by phone and correspondence have failed. Medical dispute – A dispute about a medical issue, such as choice of providers, nature and timing of treatments or appropriate payments to providers. Medical Request – A form by which a party to a medical dispute requests assistance from DLI in resolving the dispute. The request may lead to mediation or other efforts toward informal resolution by DLI Benefit Management and Resolution (BMR) or to an administrative conference at BMR or the Office of Administrative Hearings (see administrative conference). Nonconference decision and order – A decision issued by DLI Benefit Management and Resolution, without an administrative conference, about a dispute for which it has administrative conference authority (see “administrative conference”), when it has sufficient information without conducting a conference. The decision is binding unless a request for formal hearing is filed, after which a hearing is held at the Office of Administrative Hearings. Notice of Intention to Discontinue (NOID) – A form by which the insurer informs the worker of its intention to discontinue temporary total disability or temporary partial disability benefits. In contrast with a petition to discontinue benefits, the NOID brings about benefit termination if the worker does not contest it. Objection to Discontinuance – A form by which the injured worker requests a formal hearing to contest a discontinuance of wage-loss benefits (temporary total, temporary partial or permanent total disability) proposed by the insurer by means of a Notice of Intention to Discontinue or a petition to discontinue benefits. The hearing is at the Office of Administrative Hearings. Office of Administrative Hearings (OAH) – An executive branch body that conducts hearings about administrative law cases. One section is responsible for workers’ compensation cases; it conducts administrative conferences, settlement conferences and hearings. Petition to discontinue benefits – A document by which the insurer requests a formal hearing at the Office of Administrative Hearings to allow a discontinuance of wage-loss benefits (temporary total disability (TTD), temporary partial disability (TPD) or permanent total disability (PTD)). However, if PTD has been previously adjudicated or administratively determined by department rules, the Workers’ Compensation Court of Appeals hears the case. Primary liability – The overall liability of the insurer for any costs associated with a claim after the injury is determined to be compensable. An insurer may deny primary liability (deny the injury is compensable) if it has reason to believe the injury did not arise out of and in the course of employment or is not covered by the Minnesota workers' compensation law. Rehabilitation Request – A form by which a party to a vocational rehabilitation dispute requests assistance from the Department of Labor and Industry (DLI) in resolving the dispute. The request may lead to mediation or other efforts toward informal resolution by DLI Benefit Management and Resolution (BMR) or to an administrative conference, usually at BMR but occasionally at the Office of Administrative Hearings. Request for Administrative Conference – A form by which the injured worker requests an administrative conference to contest a discontinuance of wage-loss benefits (temporary total, temporary partial or permanent total disability) proposed by the insurer on the Notice of Intention to Discontinue form. Requests for a discontinuance conference are usually done by phone. Settlement conference – A proceeding at the Office of Administrative Hearings to resolve issues when it appears possible to do so without a formal hearing. If a settlement is reached, it typically includes an agreement by the claimant to release the employer and insurer from future liability for the claim other than for medical treatment. Vocational rehabilitation (VR) dispute – A dispute about a VR issue, such as whether the employee should be evaluated for VR eligibility, whether he or she is eligible, whether certain VR plan provisions are appropriate or whether the employee is cooperating with the plan. Workers’ Compensation Court of Appeals (WCCA) – An executive branch body that hears appeals of workers’ compensation decisions from the Office of Administrative Hearings. Decisions of the WCCA may be appealed to the Minnesota Supreme Court. 17
• COMPACT • August 2007

2007 legislative update
By Kate Berger, Legal Services

Editor's note: The following is a summary of laws enacted in 2007 that may be of interest to workers’ compensation stakeholders.
Independent contractor certification

Minnesota Statutes § 181.723; 2007 Minnesota Laws, chapter 135, article 3, section 15 Effective Jan. 1, 2009, this law provides that for purposes of the workers’ compensation laws (Minn. Stat. chapter 176), labor standards laws (Minn. Stat. ch. 177), child labor laws (Minn. Stat. ch. 181A), OSHA laws (Minn. Stat. ch. 182) and unemployment insurance laws (Minn. Stat. ch. 268), an individual who performs public- or private-sector commercial or residential building construction or improvement services for a person in the course of the person’s trade, business, profession or occupation is an employee of that person and that person is an employer of the individual unless: (1) the individual has a current independent contractor exemption certificate issued by the commissioner of the Department of Labor and Industry (DLI); and (2) the individual is performing services for the person under the independent contractor exemption certificate. The law describes what it means to perform services under the certificate. To obtain an independent contractor exemption certificate, the individual must submit a complete application as prescribed by the commissioner and a fee of $150. The applicant must provide the information and documentation required by the statute and rules to be adopted by the commissioner, identify the services for which the individual is seeking an independent contractor exemption certificate and provide a sworn statement that the individual: (i) maintains a separate business with the individual’s own office, equipment, materials and other facilities; (ii) has or has applied for a federal employer identification number or has filed business or selfemployment income tax returns with the federal Internal Revenue Service if the person has performed services in the previous year for which the individual is seeking the independent contractor exemption certificate; (iii) operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means of performing the services; (iv) incurs the main expenses related to the service that the individual performs under contract; (v) is responsible for the satisfactory completion of services that the individual contracts to perform and is liable for a failure to complete the service; (vi) receives compensation for service performed under a contract on a commission or per-job or competitive bid basis and not on any other basis; (vii) may realize a profit or suffer a loss under contracts to perform service; (viii) has continuing or recurring business liabilities or obligations; and (ix) the success or failure of the individual’s business depends on the relationship of business receipts to expenditures. Within 30 days of receiving a complete application and the certificate fee, the commissioner must either grant or deny the application. The commissioner may revoke an independent contractor
18 18
• COMPACT • August 2007 • COMPACT • August 2007

2007 legislative update

exemption certificate if the commissioner determines the individual no longer meets all of the conditions for the exemption certificate, commits any specified prohibited actions or fails to cooperate with a department investigation into the continued validity of the individual’s certificate. Once issued, an independent contractor exemption certificate remains in effect for two years unless: (1) revoked by the commissioner; or (2) canceled by the individual.

An individual is subject to a penalty to be assessed by the department of up to $5,000 if the individual: performs work as an independent contractor without first obtaining from the department an independent contractor exemption certificate or if the certificate has been revoked; transfers to another individual or alters or falsifies an independent contractor exemption certificate, or misrepresents the individual’s status as an independent contractor; makes a false material statement, representation or certification; or alters, conceals or fails to file a required document. A person is subject to a penalty of up to $5,000 if the person: requires an individual – through coercion, misrepresentation or fraudulent means – to adopt independent contractor status; knowingly misrepresents that an individual who has not been issued an independent contractor exemption certificate or is not performing services for the person under an independent contractor exemption certificate is an independent contractor; makes a false material statement, representation or certification; or alters, conceals or fails to file a required document. When the commissioner has reason to believe that an individual who has a certificate is not performing services for a person according to the exemption certificate and this law, the commissioner must notify the commissioner of the Department of Revenue and the commissioner of the Department of Employment and Economic Development. The commissioner is authorized to adopt rules related to the commissioner’s responsibilities under this law. A Request for Comments about possible rules governing independent contractor exemption certificates was published in the State Register on Aug. 13, 2007; it is available on the State Register Web site at www.comm.media.state.mn.us/bookstore/stateregister/32_07.pdf (page 325). Minnesota Statutes §§ 176.042 and 268.035, subdivision 9, are repealed effective Jan. 1, 2009.
Electronic exchange of medical billing and payment transactions

Minnesota Statutes § 62J.536; 2007 Minnesota Laws, chapter 147, art. 15, sec. 4 This law will require all health care providers and all group purchasers, including workers’ compensation plans, to electronically exchange health care eligibility, claims (billing), and payment and remittance advice transactions beginning in 2009. The Minnesota Department of Health (MDH), in consultation with the Minnesota Administrative Uniformity Committee (AUC), is developing transaction standards to implement this law. The AUC is convening work groups to develop recommendations for these standards. More information about this law is on page 6.
19 19
• COMPACT • August 2007 • COMPACT • August 2007

The Safe Patient Handling Act

2007 legislative update

Minnesota Statutes §§ 182.6551 to 182.6553; 2007 Minnesota Laws, chapter 135, article 2, sections 23 to 25

This law requires that by Jan. 1, 2008, all licensed health care facilities must adopt a safe patient-handling policy to minimize manual lifting by using safe patient-handling equipment. The program must include an assessment of hazards, an adequate supply of safe patient-handling equipment, training for direct patient care workers, procedures to ensure construction plans are consistent with program goals and periodic evaluations. Facilities must also establish a safe patient-handling committee. The committee must complete a patient-handling hazard assessment to: identify problems, risks of injury and injury trends; make recommendations about the purchase, use and maintenance of an adequate supply of appropriate safe patient-handling equipment; make recommendations about training of direct patient care workers about the use of the equipment; conduct annual evaluations of the safe patient-handling implementation plan and progress toward goals established in the safe patient-handling policy; and recommend procedures to ensure when patient care areas are remodeled, the plans incorporate safe patient-handling equipment or the space and design to accommodate the equipment. The commissioner of the Department of Labor and Industry must make training materials about implementation of this law available to all health care facilities. The law is enforced by the commissioner under Minn. Stat. § 182.661 of the OSHA law; a violation of the law is subject to the penalties provided under Minn. Stat. § 182.666 of the OSHA law. The commissioner may make grants to health care facilities to acquire safe patient-handling equipment and for training about safe patient-handling and safe patient-handling equipment. Grants to any one facility may not exceed $40,000. Grants must be matched by the grantee on a dollar-fordollar basis. However, if a facility demonstrates that acquiring the equipment will impose a financial hardship, the commissioner may grant more than $40,000 and may waive the matching requirement. Facilities that demonstrate hardship are not required to meet the safe patient-handling requirements until July 1, 2012.
Workers’ compensation federal exclusion information

2007 Minnesota Laws, chapter 39 This law requires the commissioner of the Department of Labor and Industry to provide information to medical care providers, employers, employees, insurers, and other individuals and organizations involved in the workers’ compensation system in Minnesota regarding federal exclusions from state workers’ compensation coverage under Minn. Stat., section 176.041, subdivision 1. The commissioner of the Department of Labor and Industry must submit a report by March 1, 2008, to the committees of the House of Representatives and Senate with jurisdiction over workers’ compensation issues detailing the department’s dissemination of information required under section 1. A notice regarding federal exclusions from workers’ compensation was initially published in the May 2007 edition of COMPACT. This notice, which has been updated to reflect 2007 statutory changes to the Minnesota Health Records Act, is at www.doli.state.mn.us/pdf/medical_records_release0407.pdf.
20 20
• COMPACT • August 2007 • COMPACT • August 2007