Workers’ Compensation Insurers’ Task Force September 17, 2003 Minutes

Members: Kris Andrus; The Travelers Indemnity Company Dennis Ballinger; Western National Greg Coon for Roxy Braband; Grinnell Mutual Robert Farber; Berkley Administrators Greg Jeans; Liberty Mutual Mike Johns; RTW Meg Kasting; State Fund Mutual Claire McCoy; GAB Robbins David Oertli; Sedgwick Claims Curt Pronk; Mayo Foundation Rob Rangel; CAN/Risko Claim Services Laurie Simonsen; The St. Paul Companies Debra Driver for Cindy Van Eyll; General Casualty Gary Westman; State of Minnesota Members Excused: Susan Herboldt; Itasca County Mary Jo Wilson; City of Minneapolis Members Absent: Mary Abraham; Westfield Group Jodie Connor; Wausau Insurance Company Robert D. Johnson; Insurance Federation of MN

Staff: Scott Brener Beth Hargarten Debbie Caswell Jim Feckey Keith Keesling Mary Miller Cindy Miner Phil Moosbrugger Bryan Priem Marybeth Stoltz Cindy Valentine Teri Van Hoomissen Jim Vogel Jana Williams Visitors: Chuck Allen; Liberty Mutual, Schaumburg Doug Anderson; Liberty Mutual, Schaumburg Tammy Lohman; Commerce Brandon Miller; Hays Company

The meeting was called to order at 9:06 a.m. by co-chair Rob Rangel. Members and staff introduced themselves. The agenda was amended to introduce the commissioner, the assistant commissioner’s update and then the Case Law Update in that order. 5) Introduction of Commissioner Scott Brener Commissioner Scott Brener was introduced and gave some background. He stated he has been the commissioner since May 1, 2003. Brener served at the Department of Labor and Industry (DLI) from mid-1994 to early 1998 as the department’s Assistant Commissioner and General Counsel and has a good understanding of the department, the Workers’ Compensation Insurers’ Task Force (WCITF) and the role of the insurance community in DLI’s Workers’

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Compensation Division. He stated it is good to be back and to have the WCITF back at the table. He noted it has been a while since the WCITF met and said he made a conscious effort to reconvene all DLI’s boards and councils. It is very important for him as a commissioner, and he believed he spoke for his staff, as well, to seek input from relevant stakeholder groups. DLI is a public sector entity and it is important to reach out and communicate with the folks who are most impacted. Brener said there is a lot happening on the workers’ compensation side. The most focused activity is the development of a medical costs containment program and the formation of the Medical Costs Task Force (MCTF). Brener noted that Curt Pronk is a member as an employer’s representative on that Task Force. It has met twice and will meet again on Tuesday. The MCTF will put together a package to present to the Workers’ Compensation Advisory Council (WCAC) and then to the legislature in February. Brener stated it was announced yesterday that the Workers’ Compensation Division (WCD) is restructuring and will merge the Special Compensation Fund unit with the Investigative Services unit. The merger should be completed in about three weeks. 7) Assistant Commissioner’s Update Assistant Commissioner Beth Hargarten introduced herself and noted she knows some of the Task Force members from her previous role as the legislative liaison for DLI. She has been with DLI since the fall of 1994. She thanked members for coming and said she is pleased that the group will have input into what the insurers' needs are, what is going on at DLI and is looking forward to starting an open dialogue. Hargarten reviewed new security measures at DLI. Members were asked to review the information on the membership list and fill out the form in their packets if any changes were needed. Hargarten stated the transfer of the fraud portion of the Investigative Services unit to the Department of Commerce has been delayed by a full year and will not take effect until July of 2004. Hargarten noted the WCD’s Rehabilitation and Medical Affairs unit was eliminated as a separate unit and was merged in the Compliance Services unit about two years ago with Terry Mueller in charged of the unit and Jana Williams as a supervisor. If Task Force members have rehabilitation and medical issues they should contact Compliance Services. Updated organization charts will be provided at the next meeting. 6) Case Law Update Mary Miller from the department’s Legal Services unit provided a case law update of two Supreme Court cases and reviewed the Workers’ Compensation Court of Appeals cases of note.

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8) Review the WCITF Mission Statement and Objectives Hargarten pointed out the WCITF’s Mission Statement the Task Force previously operated under and the list of Objectives formulated by the Task Force in 2001 in member’s folders. She noted Rangel asked to revisit these documents since it has been such a long time since the group met and asked if members have any comments, changes or suggestions. Rangel noted that, for members who have been involved with the Task Force over a number of years, they have seen the Task Force take on a different position over the years. Back in the early 1990’s, the Task Force was involved in some of the workers’ compensation changes and was able to provide some input. They were also involved in the process of creating the arbitration guidelines. The Task Force has also been a group that has conducted informative meetings where members can come and exchange information or talk about problems or trends. Rangel thinks this Mission Statement “hits it on the head”. He piggybacked on what Brener said regarding the Task Force being a group to facilitate communication between the department and insurers. Meg Kasting agreed the Mission Statement is still a good document for the questions and issues she has on her mind. She also agreed the nature of this Task Force has changed and suggested members come prepared to share information and do not just absorb information. Kasting suggested some responsibility amongst members to “step to the plate” and say something. She asked for discussion about how often the Task Force needs to meet. Hargarten stated she envisioned this group meeting on a quarterly basis. They can meet more often or less often as things progress. She agreed with Kasting and said she does not see the department coming to this group with an awful lot of papers and “talking at them”. Instead, she hopes members will share ideas and concerns with DLI, come forward with agenda ideas and topics they want to discuss or have a debate about. That is how she and the commissioner envision this group operating. Rangel asked members to review the objectives and mission statement and give him or Mary Jo Wilson a call with any additions or changes and they will be discussed at the next meeting. Members discussed the future meeting schedule and decided to set up a quarterly meeting schedule for 2004 and see how that works out. It was decided the next meeting would be held on December 17, 2003, from 9:00 a.m. to 10:30 a.m. in the Minnesota Room at DLI. Mike Johns suggested the Task Force set a 2004 meeting date to be able to discuss workers’ compensation legislative bills put forward for the next session, if needed, so that members can give their input. Curt Pronk asked whether a bill would be proposed to the legislature in February. Brener responded that the 2004 session would commence in early February. The department’s initiatives go through an executive branch process where it generates its initial legislative concepts in late September or early October. He believed they are due to the Governor’s Office on October 1, 2003. Following that process, there is a final proposal process where a little more “meat” for the earlier concepts is provided. That is due November 1, 2003, so DLI is usually in a pretty good position by that date, and know where the department is going to be. The only issue which somewhat complicates that is the workers’ compensation side of the department where almost the entire legislative proposal goes through the WCAC process. He noted the WCAC

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would begin discussions about a legislative bill starting in October, and continuing through December and February before something comes out of that body. He will have a “pretty good clue” about legislative proposals to pass on to the WCITF at the December 17, 2003, meeting, but it will not be a final product. He noted a lot of the WCAC’s work will be generated through the MCTF the agency is putting together. There will probably be some other small initiatives, but for the most part, the legislative focus will be on the cost containment program. The MCTF meetings end in November. This product will be packaged and presented to the to WCAC at its December meeting. Hargarten noted that the WCAC’s bill for the 2003 session did not pass through the legislature. The WCAC will have to discuss what, if anything, from that bill will go forward this year. Greg Coon expressed concern that the December meeting date may be too late to have input about legislation. Brener said the Task Force will end by then, but the best way to impact that legislation is by working with Bob Lund at State Fund Mutual, the insurer representative on that committee or Curt Pronk who is an employer representative. Brener directed Task Force members to Pronk, Lund or Kasting at State Fund Mutual to focus on any lobbying efforts at the MCTF. He also invited members to attend the meetings to testify, if they want to. Brener does not want to duplicate the process that is going on at the MCTF at the WCITF because it is not a business-like approach to time. Information about the MCTF is available on the department’s Web site at http://www.doli.state.mn.us/medcost.html including meeting information, minutes and presentations. Brener invited member to call him or Hargarten to discuss relevant issues prior to the December 17, 2003, meeting. 9) Presentation on E-FROI Bryan Priem, the Web Master at DLI, presented information about the most frequently asked questions about e-FROIs. An e-FROI is a Web application that collects new First Reports of Injury (FROI) on line. It is a web application that was developed at DLI to collect the FROIs via the Internet using Internet Explorer or Netscape Browser. The department’s e-FROI program was launched a year ago. Some people are using it now and DLI would like to see more people use it in the future. The benefits to using an FROI online can be found at http://www.doli.state.mn.us/apply. Priem noted that some companies have their own database and they are already doing data entry into that database. They are wondering if the e-FROI is right for them and whether they will have to reenter this data into the Web application. The answer is, yes, it does have to be reentered. That is not within the scope of what the e-FROI is for. He highly recommended looking into the EDI process, which will be discussed next. Priem is sometimes asked what the difference is between the e-FROI and an Adobe Acrobat fill-in form such as the ones on DLI’s Web site. He clarified that the e-FROI is an interactive Web application and it is completely electronic. You submit the data through a Web

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page and it arrives at DLI in a data file and there is no paper. The Adobe PDF is filled in on a computer and is then printed and faxed to DLI, so there is a big difference. Priem reported on the security of the information. The department is dealing with private data so it has installed the industry standard SSL certificate to encrypt the data between the user, the Web server and back again to make sure that no one is eavesdropping. The data is stored on DLI’s Web server and is removed at the end of the five days so the private information that hackers might want to go in and get will not accumulate. Priem noted the e-FROI is free of charge and asked members to sign up and give it a try. To get started you need a computer with an Internet connection that can get to DLI’s Web site and is not blocked by a firewall and either Internet Explorer or Netscape as a browser. There is a short application to fill out on-line before you get started. Anyone wishing to print a FROI after it has been submitted for his or her records would need to install the Adobe Acrobat Reader, which is a free program. Pronk noted Priem said there is no delay in filing when the e-FROI is submitted but the data is collected the next morning. Pronk asked whether the date received is the date the e-FROI is sent or the date DLI collects the information. Priem said it would be the date DLI collects it, so that would be the next morning. Kasting asked if that was a policy decision and whether it could be changed to the date sent. Priem acknowledged it was a policy decision and it could be changed. Kasting noted stamping it for the next day is a bit of a disincentive at this juncture. Cindy Miner distributed a handout with information about e-FROI submissions. To date, DLI has only received 53 e-FROI submissions last year from three different insurers and would like to see this number grow. This was not a full year because the program was just implemented. Claire McCoy asked what the difference is between the e-FROI and the EDI and why the department would promote e-FROI versus EDI. Priem clarified the e-FROIs as another option for those who do not have the infrastructure set up to export a file for the EDI process. They can submit the e-FROI online instead of using EDI. They are separate options that are available. Rangel asked what happens if you make an error on an e-FROI. He asked whether they would get a rejection that same day and whether it would be via the Internet or on paper. Priem said there have not been any of those types of errors yet. He monitors all of the error reports that come in and at this time DLI does not have an automated way to notify the person sending the form that there is an error. Priem has been watching how things would play out and a lot of their error checking is taken care of. With only 53 so far, it is not a large sample. If an error is detected, Priem is planning on notifying the person to indicate an error has occurred because DLI will have their e-mail address and their contact information. He noted that only new FROIs are allowed on line and they cannot accommodate amendments or corrections at this time. DLI will make a notification by e-mail or call a company with an error and the amendment to a FROI will have to be submitted on paper. Priem noted this process is still in an “infancy stage” and DLI hopes to make this process better as time goes on.

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Rangel asked for clarification about whether someone with an error on an e-FROI would have 10 days to make that correction before a penalty is issued. Priem responded that was correct and everything is the same as if it were coming in on paper. Miner distributed a handout with information about the percentage of EDI FROIs and noted it includes the 53 e-FROIs. To learn more about the e-FROI, members were invited to visit http://workplace.doli.state.mn.us/apply, contact DLI by e-mail at dli.eforms@state.mn.us or call Priem at (651) 284-5638. 10) EDI Discussion Rangel added Miner to the agenda to address the EDI issue. Hargarten referred members to the EDI information from Miner and noted DLI has not had a significant increase in the use of EDI. The purpose of the discussion was to touch base with Task Force members about the way EDI works. DLI would like to increase the use of EDI FROIs and she asked what the issues are that are preventing the use of this option. She asked what the department could do to increase the use of EDI. Marybeth Stoltz, from Information Technology Services introduced herself as the EDI Technical Coordinator. EDI stands for “electronic data interchange” and is a standardized business practice that allows for the flow of information without human intervention. It is widely used in the banking, medical, retail and insurance industries. A brief background was presented to explain how members of the International Association of Industrial Accident Boards and Commissions (IAIABC) established Workers’ Compensation EDI standards, along with DLI EDI statistics. Anyone wishing to learn more about EDI can visit the section the department’s Website where there is an implementation guide. Hardcopies of that guide were available at the meeting too. Stoltz asked what the issues or roadblocks might be for those companies who are contemplating using EDI. She also asked if there is anything members wanted to learn more about in order to pursue EDI. Kasting, Pronk and Ballinger expressed concerns regarding timing, penalties, training and costs. DLI will consider adding another pick-up time at 4:30 p.m. Jim Vogel from Compliance Services will try to get statistics on the number of EDI FROIs that are penalized. Stoltz will try to obtain cost information from Advantis. Advantis is the value added network where EDI FROIs are transferred to a mailbox from the trading partners. Training concerns can be addressed by the IAIABC. Kasting asked how EDI is working for anyone who has been using it for some time.

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Greg Jeans from Liberty stated they are not having any problems. He agreed that the penalties and fines are a fear. Miner invited Task Force members to send their technical staff to DLI for a demonstration if that would be useful. Pronk and Ballinger said that would be helpful because they are the ones that know it. For information about how to get started on EDI members may contact Stoltz at (651) 284-5613 and Miner about training issues at (651) 284-5467. Robert Farber asked when EDI might become mandatory within Minnesota from a reporting standpoint. Stoltz responded there has been discussion about mandating EDI but it has been from the standpoint of what DLI would need in place in order to support something like that. She does not think it would happen in the near future. They are discussing what DLI would do next. Brener said he thinks DLI needs to push forward with EDI usage in the next couple of years. He will meet with Cindy Valentine, the Chief Information Officer, at DLI soon. At this point he has no answers and does not see a legislative mandate in the near future. He will work with the IAIABC to move this process along. There has been some level of discussion at the legislature on a cost savings perspective. 11) Update on Medical Costs Task Force Hargarten reported that at the first meeting of the Medical Costs Task Force the department presented a general overview of medical costs and suggested law changes, with information about where the costs are that are having an impact on the workers’ compensation system. They discussed pharmaceutical costs and certified managed care. Hospital cost issues for both large and small hospitals will be discussed at the next meeting. Information about the meeting dates and discussion issues is available on the Web site at http://www.doli.state.mn.us/mctfissues.html. Curt Pronk and Bob Lund are members of the MCTF and WCITF members may contact them or either Hargarten or Brener with questions or issues. 12) Future Meeting Schedule HIPPA Issues Hargarten asked members if they would like a discussion about HIPPA issues at a future meeting. They could have a member of the Legal Services unit do an overview of how things are going for insurers. She asked members if they would like training, or information about what HIPPA is and how to deal with it. There was no interest in having HIPPA as a future agenda item. The issues have been ironed out now.

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13) Future Agenda Items Kasting asked how the timeline for court cases has been impacted by the reduction in judges at the Office of Administrative Hearings (OAH). She is beginning to get some hint that this is starting to occur. She asked about whether the Chief Administrative Law Judge was reappointed to another department. Kasting also asked for some statistics about whether the number of PTD claims is increasing. Mike Johns asked to talk about the QRC issue that continues to be a problem and whether there is a better system. It is very difficult to work with some of the QRCs and they are assigned by the same plaintiff attorneys. It is difficult to get a phone call returned much less any direction on return to work. There are also certain plaintiff attorneys that always slow down the process and everybody knows them but you do not see fines too often on those even though they are in the statute. They do not see the judges or anybody leading that and there is delay after delay and it is always the same attorneys. Brener noted Ken Nicholai, the Chief Administrative Law Judge at OAH, accepted a position at the Public Utilities Commission and he will transfer over there on Monday, or perhaps the week after. No successor has been named yet and OAH is currently determining its needs. When this initially occurred, Nicholai seemed to indicate to Brener that OAH was moving along as fast as the bar found appropriate. He cannot speak to whether that has changed in the last month or so. Brener is meeting with Nickolai tomorrow and will get some indication of whether the layoffs are affecting the litigation timelines at OAH and Brener will have better indications shortly. 14) Paper reports consisted of: ! Assigned Risk Plan Numbers ! Advanced Level Training Information ! Membership List The meeting was adjourned at 10:30 a.m. Respectfully submitted, Paper Reports

Debbie Caswell Executive Secretary dc/s