Workers' Compensation Insurers' Task Force Nov.

16, 2006 minutes
Members present: David Clark for Dennis Ballinger; Western National Kathy Berg; Liberty Mutual Robert Farber; Berkley Risk Mike Johns; RTW Diane Miller for Claire McCoy; GAB Robins David Oertli; Sedgwick Jeff Sullivan for Robert Rangel; Broadspire Nancy Ross; City of Minneapolis Laurie Simonson; St. Paul Travelers Gary Westman; State of MN Cindy Van Eyll; General Casualty Members absent: Mary Abraham; Westfield Group Jody Connor; Wausau Insurance Bob Johnson; Insurance Federation of MN Meg Kasting; State Fund Mutual Curt Pronk; Mayo Foundation Staff members: Debbie Caswell Jim Feckey Karen Kask-Meinke Cindy Miner Phil Moosbrugger Patricia Todd Jana Williams

The meeting was called to order at 9:10 a.m. by co-chairperson Mike Johns. 5) Assistant commissioner's update Patricia Todd noted the Rehabilitation Review Panel (RRP) met Oct. 6. There was a QRC update about the number of complaints that have been filed and their status. The main concern in the QRC complaints is the timely filing of documentation and sharing it with the parties involved. The Medical Services Review Board (MSRB) met Oct. 13. Its task force completed a report about nonsteroidal anti-inflammatory drugs. The MSRB evaluated medical reports and journals to provide a list of drug options available. The next reports will be about muscle relaxants and narcotics. It hopes to eventually incorporate some of those recommendations into pharmaceutical drug rules, similar to the treatment parameters. The Workers' Compensation Advisory Council (WCAC) met Nov. 9, and discussed potential legislation. The proposals include one from the Office of Administrative Hearings (OAH) to allow for the fax filing of appeals and the removal of the neutral physician list in Minnesota Statues §176.155, subd. 2. The Department of Labor and Industry (DLI) proposals included clarification of the data privacy requirement for workers' compensation. A discussion about the challenges with workers' compensation claims in the present system is scheduled with interveners in November. The next WCAC meeting is set for Dec. 14.

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Todd reported the Workers' Compensation Division was reorganized due to two retirements. The Customer Assistance and Compliance Services units no longer exist. A new Benefit Management and Resolution unit has been formed that includes Assistance and Education, Alternative Dispute Resolution and Compliance. She is conducting interviews for a director of the new unit. Todd alerted task-force members that DLI is changing quite a few of its forms due to the new unit names. The Rehabilitation Request and Response forms are also changing slightly, due to the new rehabilitation rules. She cautioned members to check the forms frequently online at www.doli.state.mn.us by clicking on “Workers' compensation,” “Forms” and then “Last update,” to verify they have the most up-to-date form. Todd announced the task-force minutes will be available online at www.doli.state.mn.us/wcitf.html. The department is changing the format for meeting minutes. It will continue to provide notes, but with more generic information rather than the detailed minutes done in the past. Mike Johns suggested task-force members review the treatment parameters for prescriptions and contact Dr. Bill Lohman, at the department, with any comments or advice. He also referred to the OAH request to abolish the neutral physicians' list and the neutral examination and encouraged members to contact the department with comments. Some insurance companies and TPAs like this list, but some do not use it, so OAH wishes to eliminate it. Todd clarified that the section referred to has to do with a judge requesting an independent medical exam above and beyond what the insurer, employer and employee have already requested, to make a determination at a hearing. In John's opinion, it is cumbersome and delays the process. He supported the removal of the list. 6) Updates Social Security data exchange project Karen Kask-Meinke supervises the second-injury and supplementary benefits programs, which include the annual claims that are submitted for reimbursement of those programs and also the litigation of permanent total disability claims. At the most recent meeting, there were questions about the Special Compensation Fund's (SCF) processing of supplementary benefits claims and how the offset affects the receipt of those benefits. Kask-Meinke reported about a project the fund has been working on for some time, to establish a link with Social Security to obtain benefit information from them electronically. The SCF entered into a “B” agreement with the Social Security Administration (SSA) in June 2005, to establish an electronic data exchange program between the two agencies. A “B” agreement is the receipt of information via another state agency designated as an “A” agreement. In this case, the Minnesota Department of Human Services (DHS) is the primary receptacle for receipt of SSA benefit data, via an overnight electronic request. The SCF has not yet begun this exchange of information, due to a limitation in the amount of data the SSA can provide to DHS. The standard SSA format only provides benefit data going back eight benefit rate changes, retroactively. In those cases where benefits changed only once a year, it would result in eight years of benefits being reported to DHS. The SCF has a need for benefit data going back 10, 20, 30 or more years when conducting audits of its annual claims for reimbursement of second-injury and supplementary benefits. In many cases, the SCF has already obtained benefit rates from the claimant, insurer or the SSA via manual fax requests. In those cases where benefit rates would not be available via the data exchange program beyond eight years, the SCF would rely on faxed benefit data. Also, the electronic data exchange sent to

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DHS does not include dependency benefit information, such as rates, dates of birth and death, or marital status. These are all critical elements to a dependency benefit claim. Again, the SCF would resort to obtaining this information via faxed requests to the SSA. The SSA requires an audit trail of all information released to other agencies. Electronic audit trails are simple to program and produce, whereas manual audit trails of faxed benefit information are labor intensive. The Chicago SSA office has been notified of these limitations in data and the two agencies are continuing to work cooperatively to a successful end. Kask-Meinke noted October is the heaviest month for claims and the SFC will continue to process claims as they always have, but this will not help them speed up the processing of those annual claims. Johns asked whether there was any information about what the fund was getting and what information the insurers received. Kask-Meinke said some of the information provided to some insurers is different from what the fund has received in the past. The SSA provides various computer runs to different organizations. Depending on the benefit report provided by the SSA, there is sometimes minor rounding of amounts that, over time, can lead to significant mathematical discrepancies. Kask-Meinke informed the group that as of April 27, 2005, the SCF established a $50 minimum adjustment policy per 52-week claim period. This means annual claims for reimbursement will not be adjusted for differences of less than $50, an amount that represents the average time and labor involved in an extensive audit. The SCF will still alert the insurers to the differences in claims and the rate DLI sees, so the mistakes are not compounded the next year, but will not adjust the claims if the amount is less than $50. It will be up to the employee to report the Social Security rate. Robert Farber said they were hoping for an arbitrary threshold amount and thought this would save everyone a lot of time. After the most recent WCITF meeting, he approached his reimbursement staff members and they indicated that the $50 minimum has already made a significant impact and that should take care of the problem. 7) Penalty and denial process Phil Moosbrugger outlined the department’s penalty and denial processes and provided an excerpt from his unit’s Basic Adjusters’ Training Guide about penalties (section five regarding penalties and part of section one about liability determinations as they relate to NOPLDs). The most common and major penalties for late filing of the First Report of Injury form, late first payment of benefits and late denial of liability are listed on pages 5-3 through 5-7 of that document. Frivolous denial of liability information was provided beginning on page 5-9 and nonspecific denial of liability was on page 5-11. Prohibited practices penalties, which are listed on page 5-12, can be assessed in addition to other penalties. The most commonly written penalties were for failure to respond to the department within 30 calendar-days after receipt of a written inquiry from the department about a claim. A list of all the penalties that can be assessed are on pages 5-19 through 5-22. After a penalty is issued by the department, the insurer has 30 days to object to a penalty it feels was wrongly issued for possible action by DLI and resolution. The purpose of a penalty is not to punish; it is to improve the behavior of claims adjusters. This can either be accomplished by a negotiation or the matter could be referred to OAH. That determination could then be appealed to the Workers' Compensation Court of Appeals. DLI has been concerned with denials and will now start to review them for conformance with the law. There have been various COMPACT articles during the past four years clarifying DLI's policy. In May 2002, there was a

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COMPACT article that explained denials, because the agency noted a wide variance in denial rates among insurers and that caused concern about the quality of denials. In August 2002 and August 2004, there were COMPACT articles written by Assistant Commissioners Hall and Hargarten, which provided some guidance about the issue and attempted to alert the industry to the concern the department had about this issue. The COMPACT articles are available online at www.doli.state.mn.us/compact.html. Moosbrugger wrote an article for the November 2005 COMPACT alerting insurers the department would be reviewing denials as a part of its penalty process. All NOPLDs with box three checked for a denial will be reviewed to determine whether the rationale meets the statutory and rule requirements of denials. The department will contact the insurer if a denial is judged to be nonspecific. A letter will be sent to the claims adjuster requesting clarification and affording a chance to rectify the situation and create a specific denial. If it is amended and no further problems are seen, no further action will be taken. If it were confirmed that there was no investigation done, then a penalty would be assessed. Moosbrugger noted these are the existing standards and they remain unchanged. DLI is not changing the statute or rule, but it is going to be looking more carefully at denials that come in to ensure they follow the department's long-standing policies to conform to the rules and statutes. This should improve the system by ensuring the fair delivery of benefits, maintaining a level playing field among all the competitors in a competitive industry and reducing unnecessary litigation. Johns noted Robert Farber raised the issue at the most recent meeting about whether DLI was going to require that a FROI form be filed within 14 days of an insurer receiving a claim petition. Discussion occurred. Todd said she reviewed this specific fact situation with staff members and it was dealt with. Farber agreed this penalty had been negotiated, but still had concerns about how to prevent it from happening in the future. The statute and rules conflict and he asked what the correct procedure was. Todd responded that the department's policy has not changed and agreed it could provide further information at a later meeting. Because Farber's penalty was unique to his situation, a separate discussion would be more appropriate. Robert Farber thought the 14-day requirement for an NOPLD would conflict with the 20day period allowed for filing an answer, but Moosbrugger did not think it was a conflict. Each document has a separate purpose and is required to be filed on its own timeline. There was a general discussion about whether an answer would meet the requirements of a FROI or NOPLD in the first place. There was general agreement that it would not. It was the consensus in the room that no one knows of any exception in the statute that would allow an insurer to rely on the answer to serve as their NOPLD. Everyone agreed the statute technically requires a NOPLD within 14 days of notice, and if the first notice is a claim petition, then a FROI is technically due. Moosbrugger suggested that although DLI is not presently changing its policy about requiring a FROI or NOPLD after a claim petition was filed, it would probably be a good practice for insurers to do that anyway. It is technically required and the insurer may discover facts during its investigation that may make the litigation unnecessary, thus saving claim administration dollars. He suggested that documentation of a good-faith attempt to conduct an investigation or other specific information about why a denial occurred on an NOPLD would fulfill the law. Dave Clark raised the point that if DLI were going to require FROI's on Asbestos Claim Petitions that would be burdensome to both the insurers and to DLI. Jana Williams responded that those cases were handled differently.

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Discussion followed and Todd again noted Farber's case had unique circumstances with clear conversations with DLI about why the penalty was happening and what was happening in that specific case. If DLI changes its penalty policy it would clearly communicate with its stakeholders that are involved, as it is doing with the denials, specifying DLI will look at all denials and look for specific information and would change that process. Johns pointed out the 2006 meeting schedule in the packets and asked members to put the meetings on their calendars. The meeting was adjourned at 10:15 a.m. Respectfully submitted, Debbie Caswell Executive Secretary dc/s