COMPACT

CONTENTS
2 'Road trip': WCAC travels to hear challenges, suggestions 2 Data-driven project underway, preliminary vision defined 3 Don't let winter hazards trip you up 4 International acclaim! Research and Statistics unit, director awarded 5 Dispute resolution practices reviewed, standards adopted 5 New dispute resolution staff members 6 Project update: review of denied primary liability forms 8 Workers' compensation coverage for farms 9 Comp cost stable from 2003 to 2005 10 Request for comments: Possible treatment parameter rule amendments D-1 Court decisions: July through September 2006

for workers' compensation professionals

November 2006
Minnesota Department of Labor and Industry

TABLES
3 3 6 7 8 9 Slips, trips and falls: nature of injury Slips, trips and falls: part of body injured Total denials reviewed Denial review process activity Family farm coverage Workers' compensation system cost per $100 of payroll, 1997-2005

11 Workers' compensation hearings at the Office of Administrative Hearings and cases received at the Workers' Compensation Court of Appeals, fiscal years 1999-2006

Don't let winter hazards trip you up

DLI's R&S unit, director awarded

Court decisions: July through September 2006

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4

Decisions

Summaries of

D-1

'Road trip!'

WCAC travels to hear challenges, suggestions
By Patricia Todd, Assistant Commissioner Workers' Compensation Division

In September, members of the Workers' Compensation Advisory Council (WCAC) conducted meetings in Brainerd, Mankato and St. Paul, Minn., to identify challenges and gather suggestions for improvements to the workers’ compensation system. The meetings were informal to allow for an open sharing of ideas. Challenges that were identified focused on three main areas: • benefits; • litigation; • and medical costs. WCAC will use this information to develop improvements to the system. For more information about WCAC, visit www.doli.state.mn.us/wcac.html.

Data-driven project underway, preliminary vision defined
By Patricia Todd, Assistant Commissioner Workers' Compensation Division

The first phase of the Department of Labor and Industry's examination of creating a data-driven system to replace the current forms-based system is underway. A clear objective of the project is to improve delivery, quality and efficiency within the workers' compensation system. The project's preliminary vision has been defined: "We will transform the workers’ compensation business process from a forms-based to a data-driven system." A group of external stakeholders has been identified (see August 2006 COMPACT, page 3) and monthly meetings to discuss the issues have been scheduled. In addition, a group of internal stakeholders have been identified to determine process changes and challenges. The project is still in the concept phase. DLI's Workers' Compensation Division will continue to provide information about the overall progress of the project.
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• COMPACT • November 2006

Don't let winter hazards trip you up
By Brian Zaidman, Research Analyst, Research and Statistics

Four winter months — December through March — account for 68 percent of all workers’ compensation indemnity claims resulting from outdoor slips, trips and falls on the same level or from steps. Data for the past four years shows an average of 615 such injuries each winter, compared to 290 of these injuries during the remaining eight months. These injuries occurred most often on parking lots, sidewalks, stairs or steps, streets and the ground (unspecified).

Nature of injury, 2002-2005
Sprains, strains Fractures Pain Contusions Multiple injuries Cuts 0% 10% 20% 30% 40% 50%

Winter outdoors slips, trips, falls

All indemnity claims

These injuries have a very different profile than indemnity claims in general. Among the outdoor winter injuries, fractures are much more common, and sprains and strains are less common. Such incidents are also more likely to result in injuries to the lower extremities and to multiple body parts, and are much less likely to result in back injuries.

Part of body injured, 2003-2004
Lower extremities Multiple parts Trunk/body systems Upper extremities Back/spine Head/neck 0% 5% 10% 15% 20% 25% 30%

Winter outdoors slips, trips, falls

All indemnity claims

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• COMPACT • November 2006

INTERNATIONAL ACCLAIM! Research and Statistics unit, director awarded
The Department of Labor and Industry’s (DLI's) annual Workers’ Compensation System Report and Research and Statistics Director Teri Van Hoomissen received international recognition at the 92nd Annual Convention of the International Association of Industrial Accident Boards and Commissions (IAIABC) in Little Rock, Ark., in September. The report, prepared by the DLI Research and Statistics unit, about Department of Labor and Industry's awardwinning Research and Statistics unit (l to r): Teri Van Hoomissen, director; David Berry, research analyst; Brian the Minnesota workers’ Zaidman, research analyst. compensation system won two awards in the Public Information category of the Information Products Awards for both 2005 and 2006. The Public Information category recognizes products that educate, report, display, and comment on policy and process to one or more audience groups. The 2004 report is available online at www. doli.state.mn.us/pdf/wcfact04.pdf. The 2005 report will be available in early 2007. Van Hoomissen received the Continuing Contribution Award at the convention. She was recruited as IAIABC co-chair after becoming a member and has continued to participate in and contribute to a range of projects within the IAIABC environment. She has had positions as committee co-chair, committee and task-force chair, IAIABC Journal author and review contributor, and IAIABC Workers' Compensation College faculty member. Van Hoomissen has worked for the Minnesota Department of Labor and Industry for nearly seven years. 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. Its mission is to advance the administration of workers' compensation systems throughout the world through education, research and information sharing. More information about the organization is online at www.iaiabc.org.

IAIABC 2006 Continuing Contribution Award, Teri Van Hoomissen – For a long and productive record of service to the IAIABC.

Dispute resolution practices reviewed, standards adopted
By Mark McCrea, Supervisor Benefit Management and Resolution

The Workers' Compensation Division’s Alternative Dispute Resolution (ADR) section recently completed an extensive review of its dispute resolution practices, prompted by the implementation of the division's performance plan for state-fiscal-years 2006 through 2010. One of the primary goals of the performance plan is to develop a culture of quick and effective benefit resolution in Minnesota’s workers’ compensation system. Providing more effective alternative dispute resolution services is a key strategy in the Department of Labor and Industry’s efforts to accomplish this goal. As a result of the comprehensive review, ADR has adopted a number of standards governing dispute resolution activities. The standards are designed to increase the quality and quantity of resolved disputes achieved by agency staff members. The standards establish new requirements for producing agreements, managing dispute resolution processes, conducting negotiations, drafting legal documents and other activities. As a component of this process improvement initiative, ADR will regularly obtain written feedback from customers participating in administrative conferences and mediation sessions conducted by DLI staff members. ADR is also creating Web-based resources for customers' use in mediating and negotiating workers’ compensation disputes.

New dispute resolution staff members
By Mark McCrea, Supervisor Benefit Management and Resolution

The Department of Labor and Industry, Workers' Compensation Division, is pleased to announce the recent appointments of Jessica M. Stimac and Francisco J. Gonzalez to its dispute prevention and resolution staff. Stimac is a graduate of the University of St. Thomas Law School, Minneapolis, Minn., and most recently was employed as an attorney defending employers, insurers and health care providers in workers’ compensation matters. Gonzalez earned his law degree from the Hamline Francisco Gonzalez and Jessica Stimac University School of Law, St. Paul, Minn., and has experience administering civil rights laws and representing injured employees in workers’ compensation matters. In addition, Gonzalez is bilingual (Spanish/English) and will enhance the division's capacity to address the needs of Spanish-speaking customers.
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• COMPACT • November 2006

Project update: review of denied primary liability forms
By Philip B. Moosbrugger, Compliance Supervisor Benefit Management and Resolution

Background

A story in the most recent edition of COMPACT, "DLI primary liability determination review process," highlighted the Department of Labor and Industry's (DLI's) effort to systematically review Notice of Insurer's Primary Liability Determination (NOPLD) forms when primary liability is denied (August 2006, page 15). The following is an update of the project results to date. In recognition of the importance of keeping the insurance and claims-adjusting community aware of this review effort as it is being implemented, the department took these steps to educate and assist claims handlers. • The November 2005 edition of COMPACT included a story notifying the claim-handling community of the agency’s plan to implement the denials review process. • A presentation was given to the Workers' Compensation Insurers Task Force at its November 2005 meeting; subsequent updates were presented to the task-force members at its May and September 2006 meetings. • DLI has made staff members available to insurers and third-party administrators to present and discuss this effort, to further disseminate knowledge of the agency's enforcement efforts. • The department's ongoing adjuster training program continues to educate adjusters about the statutory and rule requirements surrounding proper denials. Since the inception of this process in November 2005, the compliance team of DLI's Benefit Management and Resolution (BMR) unit has reviewed lost-time NOPLD forms to ensure denials are being appropriately documented in accordance with the statutes and rules. Penalties are issued, if appropriate, when NOPLD forms are found to be deficient.
Process outcomes

BMR reviewed a sampling of lost-time denials filed during November 2005 and all lost-time denials filed with DLI from December 2005 through July 2006.
Total denials reviewed – 2,430
(denials filed November 2005 through June 2006)

Correct as submitted (1,846)

Additional information requested (412)

Penalty issued (172)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Form review, continues ...

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• COMPACT • November 2006

Form review, continued ...

Of the initial 2,430 denials reviewed (covering denials filed through the end of June 2006), 76 percent had no deficiencies. Another 17 percent were corrected after a letter from the Workers' Compensation Division was sent requesting clarification or missing information. Penalties were issued for 7 percent of the denials filed within the time period.
Denial review process activity
(denials filed December 2005 through June 2006)

120 100 80 60 40 20 0 Dec. '05 Jan. '06 Feb. '06 Mar. '06 Apr. '06 May. '06 Jun. '06

Letters written Frivolous denial Nonspecific/other

Since the inception of the denial review process, the amount of frivolous denials has steadily decreased. Benefit Management and Resolution will continue the denial review process.

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• COMPACT • November 2006

Workers’ compensation coverage for farms
By Brian Zaidman, Research Analyst Research and Statistics

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 under a farm liability insurance policy as provided in the law is underwritten (see Minnesota Statutes §176.011, subd. 11a). If the farm liability 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. 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

$33,366 $35,311 $36,457 $37,311 $38,441 $40,203 $40,636

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 Jan. 1-Dec. 31, 2006

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 Jan. 1-Dec. 31, 2006 Jan. 1-Dec. 31, 2007

Comp cost stable from 2003 to 2005
By David Berry, Research Analyst Research and Statistics

Each year, the Department of Labor and Industry estimates the overall cost of the workers' compensation system. The system cost reflects benefits (indemnity, medical and vocational rehabilitation), plus other costs, such as claim adjustment, litigation, taxes and assessments. The system cost is computed primarily from actual premium for insured employers (adjusted for costs under deductible limits) and a cost estimate for self-insured employers. System cost per $100 of payroll increased slightly from 2000 through 2003. However, it has remained relatively stable since 2003. The estimated total system cost was about $1.6 billion for 2005.

Workers' compensation system cost
per $100 of payroll, 1997-2005 [1]
$2.00 $1.50 $1.00 $ .50 $ .00 '97 '98 '99 '00 '01 '02 '03 '04 '05

1997 2000 2001 2002 2003 2004 [2] 2005 [2]

Cost per $100 of payroll $1.61 1.31 1.45 1.59 1.67 1.68 1.70

1. Data from the National Association of Insurance Commissioners, Minnesota Workers' Compensation Insurers Association, Inc., Minnesota Assigned Risk Plan, Minnesota Workers' Compensation Reinsurance Association, Minnesota Department of Labor and Industry and Minnesota Department of Employment and Economic Development. Includes insured and self-insured employers. 2. Preliminary.

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• COMPACT • November 2006

REQUEST FOR COMMENTS:

Possible treatment parameter rule amendments

The following Request for Comments was published in the State Register, Aug. 28. The Department of Labor and Industry (DLI) is considering amendments to treatment parameter rules, including rules governing acute and long-term use of drugs commonly prescribed in the treatment of patients with workers' compensation injuries; rules that define traction technologies, electrical muscle stimulation and manual therapy modalities; rules governing reflex sympathetic dystrophy; and other updates and technical amendments. Drafts of the rules are available on the DLI Web site at www.doli.state.mn.us/rulemaking_activity.html. Drafts of possible amendments will be discussed at the next Medical Services Review Board meeting, on Nov. 9, from 4 to 6 p.m., at the Department of Labor and Industry, 443 Lafayette Road N., St. Paul, Minn.

Minnesota Department of Labor and Industry — Workers’ Compensation Division Request for Comments
Possible Amendment to Rules Governing Workers’ Compensation Treatment Parameters, Minnesota Rules, part 5221.6010 to 5221.8900

— The Minnesota Department of Labor and Industry requests comments on its possible amendment to rules governing workers’ compensation treatment parameters. The Department is considering rule amendments to adopt parameters for drugs commonly used in the treatment of patients with workers’ compensation injuries, including parameters for use of nonsteroidal anti-inflammatory drugs, muscle relaxants, and acute and long-term use of narcotic analgesics for enduring, intractable pain. The department is also considering amendments to define traction technologies, electrical muscle stimulation and manual therapy modalities. Other updates and technical corrections to existing parameters will also be considered.
Subject of rules Persons affected — The

amendments to the rules would likely affect injured workers and health care providers who treat patients with workers’ compensation injuries, including physicians, chiropractors, physical therapists, hospitals and pharmacies. The amendments would also affect workers’ compensation insurers, self-insured employers and other workers’ compensation payers; certified managed care plans; and others involved in the workers’ compensation system. Minnesota Statutes, section 176.82, subd. 5 authorizes the department to adopt by rule standards for health care provider treatment to be used to determine whether treatment provided to injured workers is excessive, unnecessary or inappropriate based upon accepted medical standards.

Statutory authority —

Public comment — Interested persons or groups may submit comments or information on these possible rules in writing or orally until further notice is

published in the State Register. Any rule amendments the commissioner intends to propose will be reviewed by the Medical Services Review Board established pursuant to Minn. Stat. §176.103, which may make recommendations to the commissioner of the Department of Labor and Industry. The schedule, agenda and minutes of Medical Services Review Board meetings are posted on the department’s Web site at www.doli.state.mn.us/msrb. html. department anticipates that a draft of the rule amendments will be available before the publication of proposed rules in the State Register. A link to drafts of the rules, when they become available, will be posted on the department rule docket Web page at www.doli.state.mn.us/rulemaking_activity.html. You may also contact the contact person listed below to be placed on a list to receive e-mail notice of the drafts as they become available.
Agency contact persons — Written or oral comments and questions, requests to receive e-mail notice when drafts of the rules become available and requests for more information on these possible rules should be directed to the following people. Rules drafts — The

Written comments, written questions, and written or telephone requests to receive notice when drafts of the rules become available should be directed to Carrie Rohling at the Department of Labor and Industry in one of the following ways: by mail at 443 Lafayette Road N., St. Paul, MN 55155; by phone at (651) 284-5217; by fax at (651) 284-5725; or by e-mail at carrie.rohling@state.mn.us. Telephone questions and comments about the substance of the possible amendments should be directed to Dr. William Lohman at (651) 284-5275 or Julie Marquardt at (651) 284-5173. TTY users may call the department at (651) 297-4198.
Alternative format

— Upon request, this Request for Comments can be made available in an alternative format, such as large print, Braille or audiotape. To make such a request, contact Carrie Rohling at the address, fax number, e-mail address or telephone number listed above. Note: This Request for Comments replaces the Request for Comments published on May 29, 2001. Comments received in response to this notice or the previous notice will not necessarily be included in the formal rulemaking record submitted to the administrative law judge if and when a proceeding to adopt rules is started. The agency is required to submit to the judge only those written comments received in response to the rules after they are proposed. If you submit or have submitted comments during the development of the rules and you want to ensure that the administrative law judge reviews the comments, you should resubmit the comments after the rules are formally proposed.