Workers' Compensation Advisory Council March 1, 2006 minutes

Voting members: Sue Olson for James Cavanaugh Wayne Ellefson Diane Edwards for Julie Schnell Don Gerdesmeier Mike Hickey Glen Johnson David Olson Reed Pollack Gary Thaden Brad Lehto for Ray Waldron Voting members absent: Stan Daniels Brad Robinson Nonvoting members: Rep. Denny McNamara Nonvoting members absent: Sen. Tom Bakk Sen. Geoff Michel Rep. Mike Nelson Staff members: Debbie Caswell Scott Brener James Feckey Penny Grev Phil Moosbrugger Patricia Todd Cindy Valentine Jana Williams Visitors: Ray Bohn; WCRA Paul Cassidy; Leonard, Street Kevin Gregerson; Wilson, McShane Tom Hesse; MN Chamber Brian Hicks; MAPS Cleo Issendorf; North Memorial Todd Johnson; WCRA David Kunz; MN Chiro Assn Tammy Lohman; Commerce Elizabeth Long; House Research Bob Lund; State Fund Andy Morrison; Koll, Morrison Steve Novak; Wachovia Insurance Services Sandy Olevitch; PNOM Mark Pixler; MAPS Dorothy Quick; Columbia Park Medica Linda Sandvig; Allina Scott Sexton; CorVel Anne Symington; Metro Hand Surgery Mark Skubic; Park Nicollet Sue Stout; MN Hospital Assn Dan Wolfe; MN APTA

Commissioner Scott Brener called the meeting to order at 9:40 a.m. Roll was called. A quorum was present on both sides. II. Approval of the minutes from the Feb. 8, 2006 meeting Gary Thaden made a motion to approve the minutes from the Feb. 8, 2006 meeting. Susan Olson seconded the motion. All voted in favor of the motion and it passed.

Workers' Compensation Advisory Council Minutes

-2-

March 1, 2006

Brener did not have any new information for an update. IV. B. WCAC bill discussion Brener pointed out a summary of the 2006 Workers' Compensation Advisory Council (WCAC) legislative proposals in the meeting folders and said it was based on discussions at the last meeting. The proposals and Brener's comments are listed below. 1. Amend Minnesota Statutes §176.136, subd. 1a, to permit the fee schedule to be updated by reference to the Medicare fee schedule, maintaining cost neutrality if the cost increases due to changes in the Medicare fee schedule. Apply the fee schedule to providers in states that border Minnesota.

Brener noted that since 1993, the state of Minnesota has adopted the Medicare fee schedule, including the relative value unit (RVU) system. The health care providers in the state of Minnesota are typically paid one-and-a-half to two times the Medicare rate as defined in other parts of the workers' compensation statute. Due to Minnesota's rulemaking process, it can take as much as two years to update or modify a rule. The federal government updates the Medicare fee schedule annually. This proposal would adopt the Medicare fee schedule by reference and is cost neutral. The department has received general support for the proposal from the medical community. 2. Repeal Minnesota Statutes §176.155, subd. 2, which permits the commissioner, a compensation judge or the Workers’ Compensation Court of Appeals to appoint a neutral physician to examine the employee.

Brener said the Office of Administrative Hearings (OAH) would like to repeal this provision because it is not used and there is no neutral physician list available. 3. Amend Minnesota Statutes §176.185, subd. 1, to permit insurers to give 30 days advance notice of cancellation of a policy for nonpayment of premium, instead of the 60-day notice required for all other cancellations.

Brener noted this change would revert to the language prior to last year's changes. 4. Amend Minnesota Statutes §176.185, subd. 2, to allow the Special Compensation Fund to recover certain costs and Roraff and Heaton attorney fees from uninsured employers. Amend Minnesota Statutes §176.185, subd. 8a, to ensure employee benefit continuation by MIGA when an employer with a $25 million net worth does not pay the claims of its insolvent insurer as required by law. Permit MIGA to recover costs and penalties from an employer that violates this law.

5.

Brener noted the Minnesota Insurer’s Guaranty Association (MIGA) language in item five would amend subpart 8a, which was enacted last year. Under last year’s amendment, certain employers (such as those with a net worth of $25 million) are liable for payment of workers’ compensation benefits that were the obligation of the employer’s insolvent insurer. After consulting with MIGA and the Department of Commerce, the Department of Labor and

Workers' Compensation Advisory Council Minutes

-3-

March 1, 2006

Industry (DLI) is proposing language that would require MIGA to provide coverage for a company’s injured employees if the employer fails to pay claims as required by law. MIGA would then be entitled to recover from the employer MIGA’s costs and attorney fees, plus three times the amount MIGA pays to the employee. This language would ensure continuous employee benefit payments. 6. Amend Minnesota Statutes §176.421, subd. 4, to allow fax filing of a Notice of Appeal form to the Workers’ Compensation Court of Appeals. Amend the attorney fee formula in Minnesota Statutes § 176.081, as follows: • amend the formula for payment of contingent attorney fees from employee’s benefits (or from the insurer when the attorney recovers only medical or rehabilitation benefits) to 20 percent of the first $5,000 of compensation awarded to the employee and 15 percent of the next $60,000 of compensation. when the attorney fees are paid out of the employee’s monetary benefits, permit only a Minnesota district court or the Minnesota Supreme Court to award fees that exceed the formula amount.

7.

Brener pointed out the attorney fees issue was raised at a past meeting by Rep. Bruce Anderson's constituent. DLI presented draft language to amend the attorney fee laws. Brener suggested this was a good starting point for the WCAC to consider. Ellefson, in regard to item six, inquired why e-filings were not included in the language changes. Brener said DLI is putting together a business plan and will work with OAH as it moves the electronic process forward. He said it was premature to mandate anything at this time. Members agreed. David Olson said he has spent time talking to Ray Waldron and is convinced the WCAC is not going to do anything of substance this year. He moved that the WCAC put together a technical bill with items three and six in it because members agree about those issues. A letter will be sent to the Legislature from the co-chairpersons and/or the whole council, endorsing the technical bill for 2006. Most importantly, the letter will let them know the WCAC's plan is to put together a more comprehensive package for 2007. It would include hearings as suggested by Stan Daniels: maybe one in northern Minnesota, one in southern Minnesota and one in the metro area. In addition, it would confirm the WCAC's commitment to this process and urge the Legislature to adhere to the commitment they have had over the years. Based on what Olson has seen in the last 15 years, the WCAC should acknowledge they will probably be sending them comprehensive packages in the odd-numbered years and using the short session, even-numbered years to develop a more technical package. Thaden seconded the motion. Discussion followed. Lehto spoke for Waldron and said they would be willing to work with that and agreed to putting items three and six in the bill. Brener noted an employee is not being paid benefits because of proposal number five not being in place. Olson supported a bigger bill this year, but believed it was not possible. Mike

Workers' Compensation Advisory Council Minutes

-4-

March 1, 2006

Hickey supported Olson's motion to continue to work on the remaining proposals for next year's bill and not take up the debate at the Capitol at the last minute. Pollack expressed frustration and noted they have talked about these issues for five years and nothing has changed. This is not a benefit to Minnesota or employees. Waldron submitted negotiable recommendations. Lehto agreed and requested the WCAC commit to working on a more comprehensive bill for next year. Rep. Denny McNamara said the Legislature does listen to this group at the Capitol and it means something. If the WCAC does something for the betterment of employers and employees and sends it to the Legislature, it will listen to this body. Olson noted that was not his first choice. If the WCAC cannot reach an agreement about a comprehensive bill in 2007, they should look at the purpose the WCAC serves. All voted in favor of the motion and it passed. Mike Hickey made a motion to adjourn at 10:21 a.m. Thaden seconded the motion. All voted in favor of the motion and it passed. Respectfully submitted, Debbie Caswell Executive Secretary dc/s