Workers' Compensation Insurers' Task Force

Sept. 21, 2005

minutes

Members present: Staff members:

Dennis Ballinger; Western National Kate Berger

Robert Farber; Berkley Deb Caswell
Mike Johns; RTW Ralph Hapness
Bob Johnson; Insurance Federation of MN Keith Keesling
Meg Kasting; State Fund Mutual Karen Kask-Meinke
Robert Rangel; Broadspire Julie Marquardt
Nancy Ross for Mary Jo Wilson; City of Mpls Cindy Miner
Laurie Simonson; St. Paul Travelers Terry Mueller
Gary Westman; State of MN Patricia Todd
Tim Wiering for Cindy Van Eyll; General Jana Williams
Casualty
Visitors:
Members excused:
Tammy Lohmann; Commerce
Curt Pronk; Mayo Foundation

Members absent:

Mary Abraham; Westfield Group

Kathy Berg; Liberty Mutual
Jodie Connor; Wausau Insurance
Claire McCoy; GAB Robins
David Oertli; Sedgwick

The meeting was called to order at 9:08 a.m. by chairperson Rob Rangel.

Members, staff members and visitors introduced themselves. Rangel announced Mary
Jo Wilson would be retiring at the end of the month. We have worked with her for years and
she will be missed. We wish her well in the future.

3) Approval of the agenda

Robert Farber asked that the agenda be amended to include a penalty issue in general
and a second issue regarding some problems his company is having with the Special
Compensation Fund and the coordination of recovery of supplemental benefits. Rangel
agreed to add discussion of these items between agenda items 6 and 7.
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5) Assistant commissioner's update

Assistant Commissioner Patricia Todd provided her background information. She has
a bachelor of science degree in electrical engineering and a master's degree in business. She
has mainly worked in industry and joined the Department of Labor and Industry (DLI) five
years ago, as the MNOSHA Compliance director until she assumed the role of assistant
commissioner. Commissioner Brener approached her because he was looking for someone
who can facilitate change. That is her strong suit. During her tenure at MNOSHA, she
increased inspections by 60 percent and decreased the amount of time it took to issue the
citations while still providing the same quality and efficiency in the services MNOSHA was
providing for its stakeholders. She did the same type of thing when she was in industry.

Todd said Commissioner Brener would like her to spend more time on the
operational portion of the Workers' Compensation Division to figure out how they can assure,
in an equitable manner, the quick and efficient delivery of benefits to injured workers, at a
reasonable cost to the employers. Brener wants that to continue to be an operational focus
and for the division to continue to improve.

Todd suspected there could be a concern that she is coming from a compliance
standpoint, from Minnesota OSHA Compliance, and that they are all of a sudden going to
start penalizing everyone. They are going to continue to look at what the division is
statutorily required to do, but the focus is not going to be on penalties.

Todd reported there would be two major retirements that will be occurring. Terry
Mueller, the director of Compliance Services, is retiring Oct. 3, 2005. Keith Keesling, the
director of the Customer Assistance unit, is retiring Nov. 1, 2005. She acknowledged the
effort and the time Keesling and Mueller have put into the Workers’ Compensation Division
and into the activities and history of what has been developed. Keesling clearly has been
instrumental in developing the workers' compensation organization as it presently stands and
his experience and knowledge in alternative dispute-resolution is known on both state and
national levels. He will clearly be missed within the Workers’ Compensation Division, as
will Mueller and his experience and knowledge.

Todd is going to evaluate an organizational structure with those two major areas no
longer being staffed at the director level. She has already made some minor organizational
changes within the division. They are evaluating reducing the amount of compressed time
and flex time the staff has available, to provide better services to the stakeholders.

6) Updates

Forms
Jana Williams, from the department's Benefit Management and Resolution unit,
discussed a handout she printed from the department's Web site. She reported they have done
a lot of work and many of the department's forms are now available online. They are
organized into categories, with forms required by rule or statute, and also optional forms and
suggested formats that are not required by statute. The last page showed several of the
rehabilitation forms that are available in Spanish. The Spanish forms are not barcoded,
because DLI does not want them filed with the department. These forms are used by QRCs
for communication purposes. The miscellaneous section contains forms that are used by the
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Special Compensation Fund customers. All the forms are PDFs and you can type into them
online and then print, fax or mail them. At this time, DLI is not receiving any of these forms
electronically, except the First Report of Injury form by either EDI or E-FROI.

Williams pointed out the department does not send forms now, because they are
available online. She suggested insurers check the Web site at least once a month to look for
updated forms. The Disability Status Report (DSR) form is the only insurer form that was
affected by the new rehabilitation rules and was released in August 2005. Williams asked
task-force members to get word back to their staff that they should be using the new DSR
form. Waivers are no longer renewable, so it is important they use the correct form. Three
Statement of Attorney Fees forms were revised because of the new Joint Rules of Practice
with the Office of Administrative Hearings (OAH).

Williams noted they are currently working on the Medical Request and Response
forms, which are important because of conferences with the Benefit Management and
Resolution unit or at OAH. Those new forms should be on the Web by Oct. 1, 2005, with
some minor changes.

Williams pointed out that you now have 10 days instead of 20 days to respond, so the
Rehabilitation Response form has changed and should be on the Web early next week.

Call Williams at (651) 284-5304 or e-mail her at jana.williams@state.mn.us.

Rules

Kate Berger, from the department's Legal Services unit, reported amendments to the
rehabilitation rules went into effect June 7, 2005. The Workers’ Compensation Joint Rules of
Practice and the OAH Litigation Rules of Practice went into effect May 31, 2005. There were
also some minor changes in conjunction with the Litigation Rules to the Department Rules of
Practice in Chapter 5220. For instance, the rules about administrative conferences were all
moved to the Litigation Rules, so those have also been amended at the same time with an
effective date of May 31, 2005. These rules are all on the Web site.

Berger pointed out a Notice of Annual Adjustment to the Workers' Compensation

Vocational Rehabilitation Hourly Rates from the State Register. This is the annual
adjustment that is provided for in the rules. The final adopted exempt permanent rules related
to the IME fees and the medical fee schedule was published Monday. These were approved
by the Administrative Law Judge and the changes to the fee schedule implement the statutory
amendments this year, relating to the increase in the chiropractic fees. There are now four
conversion factors that track the categories in the fee schedules. The four groups are medical
surgical services, pathology and laboratory, physical and occupational medicine, and
chiropractic. They each have their own conversion factor now. The fees go into effect Oct. 1,
2005, but, based on the legislation, the maximum fees are exactly the same for all categories
except for chiropractic services, which are increased this year and again next year. To offset
the increase in the conversion in the maximum chiropractic fees, the Legislature authorized
the commissioner to adjust the annual adjustment of the conversion factor. For this year,
there is no annual adjustment to the conversion factors for any of the groups. So, as a result,
the chiropractic fees have been increased and all other maximum fees have stayed the same.
There has been no increase in the IME maximum fees this year.
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Bob Johnson asked how much the maximum chiropractic rate went up and what the
old number was compared to what is in the new rule. According to Berger, the maximum fees
for chiropractic services will increase this year from about 54 to 63 percent of the maximum
physician fees for the services. Next year they will increase to 72 percent of the maximum
physician fees.

Berger discussed the draft pharmacy rules at the most recent meeting. She pointed out
a Sept. 14, 2005, discussion draft, noted it was subject to change and highlighted the
significant changes in the draft since that time.

Meg Kasting asked what the anticipated time line was. Berger said the revisor will
have to put it in a revised format, it has to be approved by the governor’s office and then it
has to be submitted to the State Register for publication. They are hoping for publication for
the comment period by the end of the year. She invited members with questions to contact
her by e-mail at kate.berger@state.mn.us or by phone at (651) 284-5295. Anyone with
questions can call the department's HIPAA expert, Julie Marquardt, at (651) 284-5173 with
questions about the federal HIPAA standards.

Assessments and penalties

Farber asked the task-force members whether they experienced any problems with
the information they received from Social Security about benefit entitlement for the
reimbursement of supplementary benefits and said he would like to figure out how to
streamline that process. His company gets a print out and calculates what their
reimbursement would be. There are differences in what the employee is receiving.
Sometimes it is miniscule. They are not so concerned about the dollars; they are more
concerned about the time it takes to recalculate the employee's benefits every time they
provide a reimbursement. They set up their rates and an auto-pay schedule to issue checks to
employees, but when they get their reimbursements back from the Special Compensation
Fund, they find they have to go back and change them. He tried to establish a dialogue with
the fund, but they have not been effective in getting that information.

Karen Kask-Meinke, the claims supervisor in the Special Compensation Fund, noted
they have been dealing with this issue for quite a while. One of the problems they have
identified is minor calculation differences in the WCRA CompCalc program they use as a
tool to audit their claims. The fund does not maintain that is the final word about how the
claims should be paid or reimbursed. With another company, there was an issue with
programming their database to accept certain rates from Social Security. This was not the
case with Berkley. One of the other issues is she believes Social Security rounds either down
or up, and she did not know whether their program does that. She has also noticed that with
some of the Social Security benefit printouts that are attached to the general claims, what
some of the companies out there are receiving is different from what the fund receives from
Social Security. They used to have a direct link with a staff member in the St. Paul Social
Security office. The fund would fax a list of claimants whose benefit information they needed
and they would fax it back in a few days. It was a prescribed printout showing various
information, such as date of birth, dates of injury, retirement disability and benefit
information. The fund is now working to contract with the Department of Human Services
(DHS) to obtain that data electronically. DHS receives the information directly from Social
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Security and she hopes the exchange will begin soon. A meeting is scheduled for Monday, to
look at what DHS receives and what information the fund can get from them. Hopefully,
things will clear up a little bit. When they start this program, Kask-Meinke expects they will
be requesting Social Security information for all or most of their claims that have Social
Security as one issue, to make sure the benefit information they have on record is consistent
with Social Security. She pointed out they do not obtain Social Security information on a
regular basis for their claims. They generally do it either on a random basis or if they notice
there are discrepancies in the rates that have been reported to them by the insurer on the back
of the annual claim form.

Farber asked if they could request Social Security information from the fund prior to
submitting their request for reimbursements, to calculate the correct reimbursement. Their
concern was not so much the money. It was more to work through this issue, so it eliminates
what appears to have become a tenuous position between the fund and Berkley. Kask-Meinke
did not want to say no to that, but noted her problem is there is no prescribed time for
insurers to file their annual claims, so most of the claims they receive are either in October or
in January. They receive about 800 claims during those two months; during the rest of the
months, they may receive 100 to 200 claims a month. If someone were to call shortly before
that time, the fund would have to look up a huge list of claims. They have two employees
who audit their annual claims. That process might be streamlined by this link they are
establishing with DHS, so she did not want to say no to Farber's request. It might be easier
for them to provide that information. It was decided Kask-Meinke would do a follow-up at
the next task-force meeting.

Farber's second issue was about a penalty they received. He had a general practice
question. They received a claim via claim petition, which was their first notice of lost time on
a claim. If they were not going to accept that claim, they would refer it to the defense counsel
to file a timely answer to the claim petition. They received a penalty that was assessed by
DLI for not filing an NOPLD at day 14, when they received that claim petition. Farber asked
if any Workers' Compensation Insurers' Task Force (WCITF) members experienced that
same situation. In discussions with a broad range of adjusters in their company, as well as
receiving two or three different legal opinions, the consensus was that nobody from a general
practice standpoint is filing an NOPLD when a claim petition is your first notice of lost time.
He asked whether they should be filing an NOPLD and if everybody else has been doing this.
He pointed out it appeared to be somewhat of a conflict in that statute itself, in terms of if the
employee had chosen to simply call them or write and indicate they were losing time from
work or what have you, they certainly would have filed an NOPLD at that time, either paying
or denying the claim. Because the employee chose the litigation route to bring their claim,
Berkley felt the statute clearly instructed them the appropriate response was an answer to the
claim petition, which was the same thing as filing an NOPLD. He asked members if they are
filing an additional form that is not necessary. It may not happen to a lot of the task-force
members, but because of the different type of clients Berkley works with in the Assigned
Risk Plan, they get a lot of notices of claims by way of claim petition and it is going to
generate a change in their practice in terms of how to respond to that. Farber said Berkley
was somewhat dismayed by the decision when they objected to the penalty and went to a
conference with Judge Johnson. They basically had an open discussion to determine exactly
what the appropriate action is and whether the penalty was really an appropriate means to
drive home the point. Because there was a conflict in the statute in terms of what they should
have done, Berkley thought it seemed a little unfair from that standpoint and he asked to open
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it up to the group for discussion to see whether anybody else has had the same experience
and whether they are incorporating that into their daily practices.

Kasting, noted that question was raised to her in the past month. They checked with
an internal attorney and an outside attorney who both responded that filing an answer to the
claim petition is the only response that is needed, so that is the approach State Fund Mutual
has adopted. She instructed the claims staff they do not need to file an NOPLD.

Rangel noted he has never seen a penalty like that and asked if the department was
changing its position. Ralph Hapness clarified DLI has not changed its position, but this is
the first instance where they have actually issued this penalty. DLI's interpretation was that
the insurer has 14 days to file the NOPLD after the employer receives notice of the injury
with lost time. The answer to the claim petition needs to be filed within 20 days. They chose
to file the NOPLD and accept the claim without filing an answer.

Rangel asked if this was going to be DLI's standard policy going forward.
Hapness said DLI would discuss the best route to take. He acknowledged that with the
assigned risk claims, Berkley gets a lot of late notices or the first notice they get is the claim
petition.

Farber expressed concern that a claim petition limits Berkley in terms of the amount
of investigation time they get to contact the injured employee. It is very difficult to make
contact with them or to get the plaintiff counsel to allow them to talk to the employee so they
can do an investigation. They fear that if they are not completing an adequate investigation
and deny the claim, they are then setting themselves up for penalties for a frivolous denial.
They find themselves in a situation they cannot control.

Hapness clarified that Farber's question was what the proper form to file is. He
thought DLI would probably have to discuss this issue and come up with a policy about it to
say the answers are OK, or, within the 14 days you need to file the NOPLD, regardless.

Johns asked what the department's policy was going to be in the interim and whether
they should be filing NOPLDs or not. Hapness advised him to file the NOPLD just to be on
the safe side and note on it that your first contact was via the claim petition. If the insurer is
unable to speak with the employee or their attorney, note that on the NOPLD so DLI will
know you are at least trying to initiate some sort of investigation about it, and give as much
information from the health care providers as it can. If the insurer cannot get a hold of the
policyholder, Hapness instructed them to include information that they tried to contact
everybody or whatever information they have, because DLI looks for whether the insurer has
initiated some sort of action and tried to find an answer to whether is this a compensable
claim or not.

Dennis Ballinger asked how the department would handle an asbestosis case where it
is the first notice for 25 carriers. Is the department looking for 25 NOPLDs? Hapness said the
asbestosis claims are a unique situation.

Task-force members asked about other situations, such as a contribution claim where
the first notice is a Gillette injury with maybe nine carriers, a Petition for Joinder or any kind
of first notice of action. Ballinger noted he thought the reason and rationale for a penalty was
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to correct aberrant behavior. He did not see that happening in this particular situation with
formal acceptance. Hapness agreed these were good points and the department needs to
discuss it and clarify what constitutes real notice and whether it is the First Report of Injury
or one of these other forms where all of a sudden there is litigation. What do we need to do?

Johns asked if it would be appropriate for any additional penalties to be issued until a
policy is established. Hapness said this was something they can hold off on. They had a
penalty meeting scheduled for that afternoon and would discuss waiting until DLI establishes
some criteria.

Todd noted she has been attending the penalty meetings and has talked to DLI staff
members, asking what is statutorily required and whether the department is doing what is
statutorily required for filling in those forms and providing the notices. She said they would
continue to work to define DLI's policy. It is going to be based on what the statutory
language states and she will be giving clear notice and informing people as any changes
occur.

7) Mission statement and objectives

Rangel pointed out the mission statement and the Workers' Compensation Insurers
Task Force 2004 objectives and asked members if they had any changes in its objectives for
the coming year.

Todd said she asked for this to be added to the agenda because it is an opportunity for
her, as a new member, to be able to see what the mission was and whether we should have
different objectives now, compared to what was previously established.

Rangel noted some of the members have been involved in the task force for many
years. Looking back, the task force has taken on different roles, depending on what has gone
on with the Legislature, so there have been different times during the years where they have
played a more active role in working with the department. Some members were here in 1993,
when they worked with Leo Eide and the changes the department was going through. In
about 1996, the task force worked as a group with the arbitration rules. The task force has
served its different purposes during the years, and Rangel thought the 2004 objectives still
speak to the objectives of the group. There have been times where they have set up many
subcommittees of the task force to work on various assignments.

Kasting said the task-force purpose has been a reflection of activity on the statutory
and state policymaking level, which has been very quiet for the past 10 years. She suggested
putting in an objective that has a more operational focus and trying to find ways for insurers
and third-party administrators to work in conjunction with the department to improve
operations.

Johnson noted there has been considerable debate about the Worker's Compensation
Advisory Council as an ongoing viable process. He speculated that if the advisory council
changed or ceased to exist, the WCITF would change dramatically. In later 2006, the WCAC
may change dramatically, so “stay tuned.” Mikes agreed that if that changes, the WCITF
would have to change with it.
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Rangel said that during the past five years, the WCITF meetings have been more
informative, sharing information, trends, things that are happening with the advisory council
or going over legislative changes.

Johnson suggested it was appropriate to ask the question to only meet if there are
issues to deal with. If meetings are not conducted, as in the past, perhaps we should change to
fit the current situation.

Rangel noted there was a time, two or three years ago, when this group was almost
nonexistent and they fought to keep the group alive. It is not mandated by the Legislature
and, with budget cuts, there was concern about the time and efforts being put forth in these
meetings and how productive they were, especially if there really was not a lot of agenda to
go over. The assistant commissioner, the executive secretary and the two chairpersons take a
real hard look at what is going on and if there are any issues, concerns or new topics for the
agenda. If there are no issues, then they cancel the meeting. Rangel encouraged members to
look at the schedule for the year and call with agenda items.

Rangel recommended the WCITF leave the objectives as they are and just re-title
them as the 2005 through 2006 objectives. Kasting seconded the recommendation and other
members agreed.

8) Future agenda items

Rangel asked for discussion about the penalty assessments and an update about the
Social Security issue with the Special Compensation Fund.

Johns asked that the status of the Workers’ Compensation Advisory Council be on
the agenda and expressed an opinion that it would have a direct bearing on what the WCITF
can do. Discussion followed and Todd said she needed time to evaluate how the two relate,
because the WCITF is not a statutorily required task force. The WCITF objectives are to
provide information and an open discussion forum for the insurance industry to communicate
with the department in regard to what is happening from an insurer’s standpoint. She was not
ready to put the WCAC on the agenda at this point, and will wait until she has additional
information.

Johns rephrased his request and asked for a legislative update. Todd agreed to do a
legislative update, when appropriate, that would include any WCAC information.

Todd said there would be a discussion about penalties and the assessment at the next
meeting. She stressed her statement that DLI would not make a sudden change from a no-
penalty approach to a penalty approach. They are working with the stakeholders to meet the
mission of the Workers’ Compensation Division to make sure they comply with the statutory
language.

9) Paper reports

Rangel pointed out the case law summary in members' packets and noted the minutes
are now available online.
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The meeting was adjourned at 10:19 a.m.

Respectfully submitted,
Debbie Caswell
Executive Secretary

dc:s