443 Lafayette Road N. St. Paul, Minnesota 55155 www.doli.state.mn.

us

(651) 284-5005 1-800-DIAL-DLI TTY: (651) 297-4198

Workers' Compensation Insurers' Task Force May 17, 2006 minutes
Members present: Robert Farber; Berkley Risk Mike Johns; RTW Margaret Kasting; State Fund Mutual Claire McCoy; GAB Robins Rhonda Bosworth for David Oertli; Sedgwick Nancy Ross; City of Minneapolis Laurie Simonsen; St. Paul Travelers Jeff Sullivan for Rob Rangel; Broadspire Cindy Van Eyll; General Casualty Gary Westman; MN DOER Members absent: Mary Abraham; Westfield Group Dennis Ballinger; Western National Kathy Berg; Liberty Mutual Jodie Connor; Wausau Robert Johnson; Insurance Federation of MN Curt Pronk; Mayo Foundation Staff members: Debbie Caswell Penny Grev Phil Moosbrugger Patricia Todd Cindy Valentine Jana Williams

Assistant Commissioner Patricia Todd called the meeting to order at 9:08 a.m. Members and staff members introduced themselves. 5) Assistant commissioner's update Todd provided a legislative update. The Workers' Compensation Advisory Council bill contained two items. One would allow fax filing of a Notice of Appeal form to the Workers' Compensation Court of Appeals. The second one permits 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. Todd discussed the Workers' Compensation Division's Performance Plan. It is a five-year plan about the key activities it hopes to achieve in two years and then to go overall. The plan has three main components: • • • enforcement compliance to ensure the statutory requirements are met; training and education to external stakeholders to increase their understanding and adherence to rules and statutes; and review of the division's internal processes to determine how to make them more effective.

Workers' Compensation Insurers' Task Force

-2-

May 17, 2006

6) Form-driven to data-driven system Todd announced a new initiative to convert the workers' compensation system from a form-driven to a data-driven system. The department is hiring a contractor to facilitate the process to determine how the system can move away from requiring the filling out of the same information multiple times on forms. Instead, it is exploring having a data-driven system. It has not yet been determined whether this will be by electronic data interchange (EDI) or by Web input. Todd expects it to take about one year to determine the scope and costs for this endeavor. Five applications have come in, so far, and she hopes to identify the contractor by the end of this month or middle of next. Todd announced she has formed a steering committee that will work with the department to ensure the needs of the various parties in the workers' compensation system are met; she listed the representatives who will serve on the committee. Todd would like this to be a win-win situation on all sides. Insurers can look on the computer to find out if they need to submit a form, rather than automatically submitting it again to make sure it was done. The Department of Labor and Industry (DLI) has looked at Wisconsin's system and that is a good start. Members noted Washington and Pennsylvania both have Web-based electronic systems. The form-to-data computer changes will be incorporated into the department's present system. Meg Kasting asked what jurisdictions are EDI-based. Members said Iowa and Nebraska are, and Colorado will be July 1. They discussed their experiences and said they would prefer a Web-based system. EDI is problematic for some who only have one person who can enter and edit the information. Any adjuster can enter information on a Web-based system. 7) Denials Todd pointed out an article about the requirements for a denial from the department's August 2004 COMACT in the meeting folders. An additional handout showed the results of the department's review of denials from November 2005 to January 2006, and listed the most common denial errors. Kasting asked if insurers are getting better. Phil Moosbrugger reported insurers are rapidly improving and are responding to inquiries from the department quickly. Penny Grev announced the Benefit Management and Resolution (BMR) unit hired Marion Halverson to review denials. Halverson reported a lot of people are calling with questions and are being educated. Cindy Van Eyll, General Casualty, said they got a claim for lost time on the 14th day. They tried to talk to the employee, but were unable to reach him. The health care provider said the employee did not say it was a work-related injury, so it would not release any information. Therefore, General Casualty issued an NOPLD form to avoid a late penalty. Then, they received a penalty for a frivolous denial for not conducting an adequate investigation. Van Eyll repeatedly asked what constitutes an adequate investigation and asked for guidelines. She said someone at DLI said there are no firm guidelines for improper investigations and new guidelines should be set.

Workers' Compensation Insurers' Task Force

-3-

May 17, 2006

Todd said the penalty sends a difficult message, but the 14-day limit is there to respond to the needs of the employee and employer. General Casualty needs to go back to the employer to get them to provide the information sooner. DLI is not going to change the statute. Van Eyll agreed and noted that is their policy. In fact, they have a good record about penalties and the prompt first action report. Todd stressed the issue is that if General Casualty had the information sooner, they would have been able to do a more adequate investigation. Denying for “no medical information” is not adequate. Gary Westman challenged that point. If the Department of Employee Relations (DOER) were to contact the health care provider and it said the employee did not report the injury as work-related, it would be reasonable to deny the claim, because the health care provider said it was not work-related. It all depends on how aggressive individuals are to be able to make a decision within 14 days. Todd clarified the steps that were taken to get the information should be documented on the denial and made it clear that level of investigation needs to occur. The insurer must follow due diligence to get what is needed to get the information. The information the department needs was indicated in the article shared with task-force members and DLI needs that information at the time the denial occurs. The August 2004 COMPACT article advises insurers to choose to either commence payment and then deny liability later, if necessary, by filing another NOPLD form within 60 days, or to deny liability, making sure the reasons are legal, factual and specific. Johns suggested that if the health care provider says the claim was not reported as work-related, the insurer should file an NOPLD form and continue to try to get the information. It should clearly indicate the reason why the claim is being denied, which would be that the employee did not report it as being work-related. Jeff Sullivan from Broadspire said he gives all the details in similar situations and has never had a penalty. Todd clarified DLI is following the statute and rule when reviewing denials. 8) New business Potential subcommittees Johns opened discussions about employer/insurer penalties for instances where they are in a group and get a penalty for committing the 10th offense when it is that employer's/insurer's first offense. Johns asked if task-force members would be willing to form a subcommittee to explore changing some wording in the statute pertaining to those penalties. Kasting agreed it was a good idea, because the intent of a penalty is to change behavior. After several years experience, they now know the areas to tweak and it was the right time to form a subcommittee. The meetings would take place right after the regular task-force meeting. Robert Farber, Meg Kasting and Mike Johns volunteered to serve on the subcommittee. Someone from DLI will also be present.

Workers' Compensation Insurers' Task Force

-4-

May 17, 2006

Johns polled members to see if anyone was interested in forming a subcommittee about common topics insurers encounter such as: • • • • • • Medicare set-asides; catastrophic injuries; a recent trend to close out medicals at the time of settlement; anti-trust; tracking how disk replacement surgeries are doing; and medication management issues and ways to get a better handle.

Discussion followed and it was decided the task force would identify and prioritize common issues during the September meeting. The topics identified would be explored as a new business item at each subsequent meeting. Members preferred that idea, rather than forming a subcommittee, and were asked to be prepared to share ideas at the meeting. There were no other future agenda items. Johns pointed out the paper reports in the meeting packets. The meeting was adjourned at 9:48 a.m. Respectfully submitted, Debbie Caswell Executive Secretary dc/s