1. How AB 501 Would Change Wisconsin Workers’ Compensation Gregory Krohm December 2, 2015

2. Perspective Wisconsin enjoys few disability claim greater than 1 week 37 out of 45 states in rank on average cost of claims lowest duration of TTD lower average WC insurance rates than any neighboring state relatively little litigation and swift hearings

3. Agreed Bill Process The Advisory Council (AC) negotiation of any change to the workers’ compensation system has a 50+ year tradition Last budget bill eroded the authority of the AC AB 501 circumvents the agreed bill process Modifying negotiate law changes Inserting changes that were rejected by labor Introducing “out of the blue” law changes that had no previous public discussion with the WCAC process

4. Much Overlap in AB 501 and Agreed Bill Very Similar Provisions in Both Numerical trigger for coverage Definition of local government Administrative review of cases Judicial review of cases Electronic medical records Supplemental PT benefit Eliminate TTD for lawful discharge Misrepresentation and claim denial TTD during vocational training reduced for hours worked >24/week Self-insurance and assessments for local govt. Rehab benefit max for part time Rehab interlocutory orders permitted Similar Goal but Differences in Approach/Details PPD minimums Physician dispensing of drugs

5. Comparison: Parts missing from AB 501 Strangely, some provisions that could reduce cost to employers (marked with *) were omitted from AB 501 Eliminates all compensation for injury after violating employer drug/alcohol policy* Maximum fee for final report ($100)* PPD maximum increase ($322 to $342 injuries before 1/2017) Coverage for those providing long term care for defined entities Apportionment of permanent disability to causes outside of work*

6. Comparison: Parts added by AB 501 Social Security Retirement Offset Wellness claim defense added* Health care fee dispute duty for DWD* Employee misrepresentation of physical condition* Claim denial in other state* Elimination of stacking of concurrent state benefits Three year review of PPD impairment* Diminished compensation from employee negligence* Note: * indicates a lack of public stakeholder testimony for the provision

7. Some problems with AB 501 Diminish compensation for negligence of employee Constitutional? Major shift in exclusive remedy concept Employer choice of providerNo performance and quality standards for networks Referral procedure undefined What about employees who do not participate in employer plan? Choosing the provider constrains the course of treatment Social Security Retirement OffsetConstitutionality? Meaning and test for “available for work” Wellness activity claimsAdded criterion may hamper defense of claims 3 yr review of PPD impairmentFew cases with significant reductions after 3 yrs? Inexplicably leaves out Perm Total “final award” seems to exclude interlocutory orders Fee dispute review by WC DivisionObtaining contracts may be a problem, expertise needed Eliminating minimum PPD ratings“Unimpaired” is not defined Could any rating less than the minimum default to the minimum? Denial of claim in another stateRare situation; unnecessarily punative Concurrent benefits in another stateNot common; does not change existing practice Employee misrepresentation on app.Not common to ask for physical condition (unrelated to job duties)

8. Litigation Burden of AB 501 Stakeholders generally agree that AB 501 would create much new litigation, especially for: Asserting negligence Proving lawful discharge for misconduct/substantial fault Determining “availability for work” Defending new employer rights will be costly: would involve more hearings and more complex evidence at hearing new case law would be developed constitutional challenges on some provisions seem probable

9. Summary The agreed bill (AB) was the product of labor-management negotiation This year’s bill had many more “pro-employer” concessions than past years AB 501 substantially same for 14/20 provisions in the agreed bill No obvious grounds for some of the minor deviations Some important elements from AB were left out of AB 501 AB 501 adds several provisions that were not in the AB These additional elements are fraught with legal uncertainty Part of the uncertainty is poor drafting and part due to unpredictable court interpretations