Minnesota Department of Labor and Industry

November 2004

CONTENTS
2 3 6 6 8 9 Rules amendment proposals pending; sign up to receive notice mailings Department advisory groups: 2005 meeting schedules, open positions Case-studies showcase mediation advantages IAIABC awards Keith Keesling Catch us in the act ... Minnesota workers' compensation costs increase in 2003

Department advisory groups: 2005 schedules, open positions

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Case-studies showcase mediation advantages

10 Workers' compensation family farm coverage where other insurance coverage requirements are met D-1 Court decisions: July through September 2004

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TABLES
9 Workers' compensation system cost per $100 of payroll, 1997-2003

Court decisions: July through September 2004

10 Family farm coverage

D-1

Rule amendment proposals pending; sign up to receive notice mailings
The Department of Labor and Industry (DLI), Workers' Compensation Division, is preparing to publish proposed amendments to the following rules in the Minnesota State Register during the next two months: • Litigation Rules of Practice with the Office of Administrative Hearings (OAH) Minnesota Rules, chapter 1415 (joint rules with DLI) and chapter 1420 (OAH rules); • Vocational Rehabilitation Rules Minnesota Rules, chapter 5220; • Pharmacy Reimbursement Rules Minnesota Rules, part 5221.4070; and • Certified Managed Care Rules Minnesota Rules, chapter 5218. Information about amendments to the Litigation Rules can be found on the Office of Administrative Hearings Web site at www.oah.state.mn.us/wc.html. The Notices of Intent to Adopt Rules will be published in the State Register on Mon., Nov. 22. Information about amendments to the Vocational Rehabilitation, Pharmacy Reimbursement and Certified Managed Care rules can be found on the DLI Web site at www.doli.state.mn.us/workcomp.html. Publication of a Notice of Intent to Adopt Rules (with or without a hearing) in the Minnesota State Register initiates an official 30-day public comment period. These notices are sent by U.S. mail to people who have registered to receive rule notices with DLI. If you would like to receive the notices by U.S. mail, send complete mailing information to DLI.Communications@state.mn.us or to Char Chilson, Department of Labor and Industry, 443 Lafayette Road N., St. Paul, MN 55155. The rule notices will also be sent by e-mail to those on the COMPACT e-mail notification list. If you do not want to receive rule notices by e-mail, send a message to DLI.Communications@state.mn.us with "No rule mailings" as the subject line and with your name and e-mail address in the body of the message.
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DEPARTMENT

2005 meeting schedules, open positions
Medical Services Review Board The Medical Services Review Board (MSRB) was created by Minnesota Statutes §176.103 in 1983. The MSRB is composed of two chiropractic representatives, one hospital administrator representative, one registered nurse, one physical therapist, six physicians of different specialties, one employee representative, one employer/insurer representative and one general public representative. Under M.S. §176.103, the MSRB advises the department about workers’ compensation medical issues; is the liaison between the department and the medical-provider community; and supports and engages in the education of the provider community about workers’ compensation. The MSRB also has the authority to sanction a provider if there has been a violation of any part of the workers’ compensation chapter or rules. In 2005, the MSRB is scheduled to meet Jan. 20, April 21, July 21 and Oct. 13. All meetings are from 4 to 6 p.m. in the Minnesota Room at the Department of Labor and Industry (443 Lafayette Road N., St. Paul).
• Open positions • 2005 meetings

ADVISORY GROUPS:

Currently, the MSRB has three openings beginning Jan. 1, 2005. One position represents chiropractors, one represents employers/insurers and one represents physicians. Each of these positions have four-year terms. There also is a labor representative position that is vacant and is scheduled to expire Jan. 1, 2006. In addition, all alternate positions are open as of Jan. 1, 2005. An alternate position is a one-year term; alternates representative categories are: chiropractor, employer/insurer, labor, hospital administrator, physical therapist, general public, registered nurse and physician. Individuals interested in applying for any of the open positions must submit an "Open Appointments Application Form" with the Secretary of State's office. The form is available online at www.sos.state.mn.us/ openapp/forms.html. Rehabilitation Review Panel The Rehabilitation Review Panel (RRP) was created in 1981, by Minnesota Statutes §176.102, to offer advice and recommendations to the commissioner of the Department of Labor and Industry about all aspects of vocational rehabilitation care impacting work-related injuries or illnesses. The RRP is composed of two
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members each representing employers, insurers, rehabilitation and medicine (for a total of eight), one member representing chiropractors and four members representing labor. Under M.S. §176.102, the RRP reviews and makes determinations with respect to appeals from orders of the commissioner regarding certification approval of rehabilitation consultants and vendors; advises the department about vocational rehabilitation issues; and assists in the education of the provider community about workers’ compensation. The RRP also has the authority to sanction a rehabilitation provider after a hearing at the Office of Administrative Hearings (OAH) if there has been a violation of the statutes or rules.
• 2005 meetings

In 2005, the RRP is scheduled to meet April 7, from 1 to 3 p.m. at the Department of Labor and Industry (443 Lafayette Road N., St. Paul). Additional meeting dates will be announced.
• Open positions

Currently, the RRP has three member positions open as of Jan. 1, 2005. One must represent labor; the other two must represent the rehabilitation provider community. There are also four vacant positions currently: an employer representative (term expires Jan. 1, 2006); a labor representative (term expires Jan. 1, 2007) and two medical practitioners (terms expire Jan. 1, 2007). Three one-year alternate positions are open Jan. 1, 2005. The alternate representative categories are: chiropractic/medical/rehabilitation; employer/insurer; and labor. Individuals interested in applying for any of the open positions must submit an "Open Appointments Application Form" with the Secretary of State's office. The form is available online at www.sos.state.mn.us/openapp/forms.html. Workers' Compensation Advisory Council The Workers’ Compensation Advisory Council (WCAC) was created by Minnesota Statutes §175.007, in 1992, as a permanent council on workers’ compensation. It consists of 12 voting members (six representing organized labor and six representing Minnesota businesses), 10 of which are appointed by the governor, the majority and minority leaders of the Senate, and by the speaker and minority leader of the House of Representatives. The other two members are the presidents of the largest statewide Minnesota business organization and the largest organized labor association. The WCAC advises the commissioner of the Department of Labor and Industry about workers’ compensation matters and submits its recommendations for
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proposed changes to the workers’ compensation statutes to the proper legislative committees. The WCAC’s recommendations must be supported by a majority of business and labor members.
• 2005 meetings

In 2005, the WCAC is scheduled to meet Feb. 9, April 13, June 8, Aug. 10, Oct. 12 and Dec. 14. All WCAC meetings are from 9:30 to 11:30 a.m., in the Minnesota Room at the Department of Labor and Industry (443 Lafayette Road N., St. Paul). Workers' Compensation Insurers' Task Force The Workers’ Compensation Insurers’ Task Force is an organized body of representatives of insurance companies that write workers’ compensation insurance within the state of Minnesota and those employers who self-insure for their workers’ compensation coverage. There is no statutory authority vested in this body; however, the department values the input from the Workers’ Compensation Insurers’ Task Force.
• 2005 meetings

In 2005, the Workers' Compensation Insurers' Task Force is scheduled to meet March 16, May 18, Aug. 17 and Nov. 16. All meetings are from 9 to 10:30 a.m., in the Minnesota Room at the Department of Labor and Industry (443 Lafayette Road N., St. Paul).

Keep your finger on the pulse
For more information about any of these advisory groups or to get up-to-the-minute meeting and schedule information, visit www.doli.state.mn.us/events.html.

Case-studies showcase mediation advantages
Editor's note: The following excerpt is from the IAIABC 2004 Mediation and Dispute Resolution Guidebook.
Historical perspective

IAIABC awards Keith Keesling

In the fall of 1995, the Minnesota [Department of Labor and Industry, Workers' Compensation Division] Customer Assistance unit was created, adding the responsibility for answering "hotline" calls to the already existing responsibilities for conducting administrative conferences on rehabilitation and medical disputes in the workers' compensation system, as well as mediation sessions. This strategic decision coincided with and was partially driven by the inauguration of the imaging system in Minnesota. The hypothesis was that if the department were to combine front-loading its expertise with "real-time" access to workers' compensation files, via image, many disputes could be prevented by the timely attention of department specialists. History has shown that many disputes are borne of misapprehension of information received by the injured worker from the insurer or some other miscommunication or lack of communication, combined with the time-lag inherent in a paperbased system. With a focus on "real-time" resolutions, afforded by instant access to the complete file, via image, the thinking was that many unnecessary disputes could be avoided. Thus was born a customer assistance approach to dispute prevention, coupled with a "med-arb" approach to dispute resolution. Since 1995, the Customer Assistance unit has prevented thousands of disputes with a simple phone call. Additionally, it has resolved with finality, thousands of other disputes, through the use of the administrative conference for rehab and medical disputes and through the use of mediation for virtually every other kind of dispute. The following mediation success stories are real.
Minnesota mediation success stories

DLI Customer Assistance Director Keith Keesling received the Committee Member Recognition Award from the International Association of Industrial Accident Boards and Commissions (IAIABC) Council of Committee Chairs during its annual convention in August, in New York City. Keesling was recognized as being "inspirational in the design and implementation of the Judicial Committee's work product, the 2004 Mediation and Dispute Resolution Guidebook, demonstrating his technical expertise." The IAIABC is a not-for-profit association representing most of the government agencies charged with the administration of workers' compensation systems throughout the United States, Canada, and other nations and territories.

Mediation can produce resolutions where parties' positions are seemingly far apart. Often, the distance between the parties is caused by lack of understanding by one or both of the parties.
Case 1

The unrepresented injured worker demanded $300,000 to settle his claim on a full, final and complete basis. The insurer made an initial counter of $25,000. The mediator asked the parties how they'd arrived at their respective positions. It was then that the mediator learned that the injured worker did not understand how to properly value the case.
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Case studies, continued ...

The plaintiff looked at what he had earned during the previous 18 years, projected that forward 18 years, then added $50,000 for a possible retraining plan. In a private caucus, the mediator educated this person about what the likely amount of exposure the insurer might have in a case such as his ($70,000) and suggested that he consider reducing his demand. The injured worker then demanded $70,000. The negotiation process ended, then, with a resolution and a settlement worth $50,000, leaving medical benefits open.
Case 2

Case 3

During the course of a lengthy mediation session, the parties were able to narrow a $170,000 gap to $45,000. The mediation then stalled, as neither party was willing to budge from its final position. This situation can spell the death of all hope for settlement, and often does, because the parties are now emotionally invested in their respective positions. The parties both fear that any further movement would show weakness to the other side and that this may be used to the other side's advantage in the future. A mediator's proposal is a good alternative to terminating the session. It allows the parties to continue forward toward resolution, without risking their current position. In this case, the mediator proposed what he thought the settlement terms should be, advising the parties to write "yes" or "no" on a sheet of paper and to then seal the paper in an envelope. The envelopes were then given to the mediator to privately open and review. If either party rejected the proposal, the mediator would then inform the parties that there was no settlement. Neither party would know how the other party responded to the proposal. If both parties said yes, which is what happened in this case, then the mediator would announce that the impasse was over, since agreement was now reached. Now, neither party would have to say that it gave in to the demands of the other party. But, most importantly, both parties were given the opportunity to successfully resolve the dispute.
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This matter began as an administrative conference under Minnesota Statutes §176.106. The dispute was over the need for a rehabilitation consultation. The arbitrator asked the parties if a mediator could speak to each party in a private caucus. They agreed. The mediator met with the unrepresented insurance adjuster first, reviewing, in detail, the law on this benefit claim and the exposure for substantial attorney's fees if he lost. He changed his position, reaching an agreement with the plaintiff's attorney, not only on the QRC who would perform the consultation, but also on the amount of fees to be awarded in the dispute. The two cases above illustrate how educating a party created the opportunity for the parties to resolve the dispute. Sometimes, however, the gap is caused not by a lack of education or information, but, instead, by emotional, ego-based positions. Nevertheless, a skilled mediator can provide a means to bridge this type of gap, turning an impasse into a resolution.
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Case studies, continued ...

Sometimes the dispute involved not only "what" should be paid, but "who" should pay it. The following is an example of how mediation can expeditiously resolve an apportionment dispute.
Case 4

An employee had two alleged injuries at successive employers. Each employer referred her to the other to collect workers' compensation benefits and neither would pay her claim, even though there was never really any dispute that she was owed benefits from someone. The mediator contacted the two insurers and pointed out that both may benefit from mediating this dispute to at least explore the possibility of resolving the dispute without litigation. The mediator reminded the insurers that they risked nothing but a couple of hours of their time; if an agreement could not be reached, they still had all of their rights and defenses. The insurers agreed to try mediation. The session, which was attended in person by the two insurers and the injured worker, was successful. The insurers not only agreed to pick up the injured worker's claim, but also agreed to an apportionment formula and who the paying

agent would be. The injured worker agreed to accept a small discount on some of the past due indemnity benefits, but in return, established an income stream for the future and payment of medical bills so she could continue to receive medical treatment for her condition. The insurers, through mediation, avoided a substantial litigation expense, which they would otherwise have incurred in order to get the liability, apportionment and paying agent issues resolved.

For more information about alternative disputeresolution services at the Minnesota Department of Labor and Industry, Customer Assistance, visit www.doli.state.mn.us/irdspres.html.

Catch us in the act ...
At the Minnesota Department of Labor and Industry we strive to provide a positive experience for everyone we interact with. We know we have some outstanding employees and want to learn how our assistance has helped you. If you've been a recipient of outstanding DLI service, please let us know. You can e-mail your comments to DLI.Communications@state.mn.us.
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Minnesota workers' compensation costs increase in 2003

By David Berry, Ph.D. Research and Statistics

Minnesota's workers' compensation costs increased 6 percent relative to payroll in 2003. The overall cost of the system came to $1.74 per $100 of payroll in 2003, up from $1.63 in 2002 (revised). The 2003 figure is 30 percent above its low-point of $1.34 in 2000. These figures reflect premiums paid by insured employers plus an estimate of costs for self-insured employers.
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Get the full report
The most recent Minnesota Workers’ Compensation System Report, published in July 2004, presents statistics about the state workers’ compensation system through 2002, with a focus on claims and costs, medical cost trends, vocational rehabilitation and dispute resolution. The report is online at www.doli.state.mn.us/pdf/ wcfact02.pdf.

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Workers’ compensation family farm coverage where other insurance coverage requirements are met
Farm operations are considered either family farms or employers for the purpose of workers’ compensation coverage. The chart below may be used in determining whether workers’ compensation coverage is mandatory for a farm operation where other coverage as provided in the law is underwritten (see Minnesota Statutes §176.011, subd. 11a).* The value of work performed (roughly payroll) during the previous year is compared to the average annual wage (AAW) for the year in which the policy is written. Farm operations with payrolls equal to or greater than the corresponding AAW are required to provide workers’ compensation coverage for their farm laborers. The AAW figure is received from the Department of Employment and Economic Development and is the number from which the statewide average weekly wage (SAWW) is derived.

Family farm coverage
M.S. § 176.011, subd. 11a (a)(2)

Average annual wage under Services rendered M.S. §176.011 subd. 20 (roughly payroll) year

Policy written year

$28,708 $30,086 $31,943 $33,366 $35,311 $36,457 $37,311 $38,441

Jan. 1-Dec. 31, 1997 Jan. 1-Dec. 31, 1998 Jan. 1-Dec. 31, 1999 Jan. 1-Dec. 31, 2000 Jan. 1-Dec. 31, 2001 Jan. 1-Dec. 31, 2002 Jan. 1-Dec. 31, 2003 Jan. 1-Dec. 31, 2004

Jan. 1-Dec. 31, 1998 Jan. 1-Dec. 31, 1999 Jan. 1-Dec. 31, 2000 Jan. 1-Dec. 31, 2001 Jan. 1-Dec. 31, 2002 Jan. 1-Dec. 31, 2003 Jan. 1-Dec. 31, 2004 Jan. 1-Dec. 31, 2005

* If other insurance coverage requirements are not met, any farm operation that has $8,000 or more of payroll for the previous calendar-year must provide workers’ compensation insurance for its employees.