Workers’ Compensation Advisory Council

Feb. 18, 2004

Minutes

Voting members: Visitors:

Paul Bailey Craig Anderson; MWCIA

James Cavanaugh Carol Backstrom; Regions Hospital
Stan Daniels Barbara Baum; MN APTA
Wayne Ellefson Greg Coon; Grinnell Mutual
Mike Hickey Mary C. Edwards; Fairview
Brad Lehto for Glen Johnson Henry Erdman; Attorney
David Olson Tim Gallagher; MPHA
Reed Pollack Kevin Gregerson; Wilson-McShane Corp.
Brad Robinson Tom Harms; MWCIA
Diane Edwards for Julie Schnell Judy Hawley; MN Chp American PTA
Gary Thaden Steve Hollander; MARP
Ray Waldron Todd Johnson; WCRA
Larry Koll; Koll, Morrison
Nonvoting members: Tom Lehman; MN Hospital Assn
Perry Lewis; TPS
Rep. Dan Dorman Tammy Lohmann; Commerce
Sen. Geoff Michel Bob Lund; State Fund Mutual
Tim McCoy; Attorney for employees
Nonvoting-members absent: Marnie Moore; Cook Hill
Andy Morrison; Koll, Morrison
Rep. Joe Mullery John Nesse; MDPA
Sandy Olentehn; Park Nicollet Clinic
Staff: Marlys Peterson; MARP Board
Robin Peterson; MN APTA
Scott Brener Mark Pixme; MAPS
Debbie Caswell Dorothy Quick; Columbia Park Med. Group
Jim Feckey Erin Sexton; MMA & MN Orthopedic Society
Beth Hargarten Mike Stockstead; MN Fire Fighters Assn
Jerry Meyer Omar Syed; Attorney General’s Office
Cindy Miner Bruce Tollefson; MWCIA
Phil Moosbrugger Kevin Tribula; PMSI
Terry Mueller Bob Weeks; MN Occupational Health
Teri Van Hoomissen Gary Westman; MN DOER
Dan Wolf; APTA

Commissioner Scott Brener, chairman, called the meeting to order at 10:20 a.m.

Roll was called. A quorum was present on both sides. Brener noted Sen. Linda
Higgins would rotate off of the Workers’ Compensation Advisory Council (WCAC)
effective today. Sen. Tom Bakk will be Higgins’ replacement. Higgins is no longer on the
Jobs Committee, so Senate leadership felt it appropriate to place the vice chair of that
committee in her spot.
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Minutes

Gary Thaden made a motion to approve the minutes from the Oct. 8, 2003, and
Jan. 7, 2004 meetings. Ray Waldron seconded the motion. All voted in favor of the
motion.

III. Approval of agenda

Discussion occurred about the agenda and item, IV. B. Gillette injuries, that was
moved to the summer meeting schedule because there was no legislative change being
proposed by Thaden.

Per Rep. Dorman’s request, Henry Erdman and Mike Stockstead were added to
the agenda to speak on behalf of the Minnesota Professional Fire Fighters Association as
item IV. B.

IV. A. Commissioner’s update

The commissioner did not have any items for a commissioner’s update.

Presumption of coverage

Mike Stockstead, president of the Minnesota Professional Fire Fighters’

Association, and the organization’s attorney, Henry Erdman, proposed a change to
Minnesota Statutes §176.011 regarding occupational disease and the presumption of
coverage for firefighters with heart disease. They brought this proposal to the WCAC last
year. They propose adding the phrase “with a copy delivered to the employee within 60
days of the rebuttal used to deny benefit” to 176.011, subd. 15 (b).

Current law contains a presumption of workers’ compensation coverage for

certain specific employments when those employees contract a communicable disease.
Within current law there is also a rebuttal standard that allows the employer and the
insurer to rebut the presumptions with substantial factors. The firefighters association
asked last time they were before the WCAC that there be some type of an opportunity to
make this neutral. What they are asking for now is a listing of the substantial factors that
are being brought and that a copy of this listing go to the employee. This will set out the
reasons why the denial was made, so the employee has an understanding of why they are
being denied.

Wayne Ellefson asked what that language would do and why they would want it
added. Stockstead said the denials are made and they have no knowledge of what, why,
when or where, so, basically, it drags the process on for a number of years before they get
the relief they need. This would give notice early on, so they can determine what the
basis was and why it was denied and the individual can either provide additional
information or proceed to the next step, which currently is being delayed because they are
not getting any response whatsoever.
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Brener noted he has no problem this. He suggested the language should be

cleaned up to some degree, so we define a copy of what is needed, to make it quite clear.

Thaden asked whether the intent is that the employee is aware of what the factors
are. Stockstead said that is correct, so the employee would have the document the insurer
prepared with the substantial factors. Thaden noted if they were not delivered to the
employee within the 60 days, say it took place on the 70th day, they would be in violation
of the statute and there would be a presumption of some fine or some imposition of a
violation of the statute, but it would not actually change the use of the factors. If you
went to court, the presumption would not change and the use of the factors would not
change. It would just be a violation of the statute for not having told you within a certain
timeline. Stockstead said, “yes.”

Reed Pollack speculated if a firefighter is denied and has legal counsel, does this
supersede that relationship? If represented by an attorney, all communication goes to the
attorney rather than the employee. Stockstead responded that up until this point an
employee does not generally have an attorney. Assistant Commissioner Beth Hargarten
said we could add language that says a copy of the substantial factors should be delivered
to the employee and the employee's attorney, if they have one.

Jim Cavanaugh said he does not have a problem with this, as long as he knows the
who, how and what, such as what is being delivered to whom and what constitutes
delivery. From that standpoint, the language needs to be cleaned up. He suggested we
tighten the language, because it is not clear – at all – what you are doing, but noted the
concept is OK.

Thaden asked for the procedure to be defined. He asked whether the insurance
company has all the medical information before they put together these “substantial
factors” or whether they deny and then start accumulating medical information.
Stockstead said, in his experience, it has gone every way. The insurer has access to the
employee’s entire medical information within 10 days of an injury. Thaden expressed
concern they may not have all the information if the employee is still seeking medical
care and, in this case, the insurer may not know all the facts yet and the insurer would be
required to deliver this document even though they do not have all of the information.
Stockstead said, under current law, they have a certain period of time in which to deny a
claim. The only way the insurer is allowed to deny is through “substantial factors,” so not
having the information is not a factor. In these particular cases, the information is gained
rapidly.

Brener suggested a motion be made to add the firefighters’ proposal to the 2004
package with the premise they work with the Department of Labor and Industry (DLI) to
define the language more carefully. Cavanaugh said he wants to make sure what we are
doing is not in some way hamstringing the employer in terms of the time. He does not
know the procedure and is not clear whether 60 days is enough time and whether all the
medical information is gathered by that time. Stockstead clarified the 60 days is from the
time of rebuttal. They are not asking to change the time of the review and denial. When
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the review and denial are done, they are looking for the clock to start and then they would
have 60 days to get a copy of the information about whatever was used to make that
determination to the employee.

Thaden made a motion to include the firefighter language in the 2004 WCAC
bill, subject to review of the language. Ray Waldron seconded the motion. All voted in
favor of the motion.

IV. C. Collective bargaining agreements

Kevin Gregerson administers the Union Construction Workers’ Compensation

Program for the Wilson-McShane Company. Gregerson distributed a brochure that
briefly explains the program. He noted these issues are important to both labor and
management.

The program is an alternative workers' compensation program created through

collective bargaining. This program was authorized by Minnesota Statutes §176.1812 in
1995. This was requested by labor and management in the construction industry, to allow
them to collectively bargain an alternative method for resolving any and all problems on
workers’ compensation claims. It is, essentially, a private mediation/arbitration program.

In 1997, a program was approved by DLI and has been operating for six-and-a-
half years, serving the unionized construction industry in Minnesota. It has been very
successful. In the pilot provision language, it says the employers in the public and private
sectors outside of construction may also negotiate an alternative workers’ compensation
program. To date, that has not happened. However, in the past year, his company has
been approached by unionized employers and their unions in the grocery industry, the
trucking industry and the warehouse industry to perhaps model a program for their
industry based on what has been done in the construction industry. They would like to do
this under the pilot provision; however, that provision expires at the end of this year.

Gregerson asked for support for an amendment to M.S. §176.1812 to extend the
time period of the pilot provision to allow these programs to be built and to see how they
work. Next year, he would report back to the WCAC about how the program is doing and
may ask that there be no pilot program at all. Instead, collectively bargained workers’
compensation would be provided to any unionized employer in any industry whether
public or private.

Cavanaugh asked if a year was enough time. Gregerson said he is asking for two
years to extend that filing period. Brener stated he is in support of Gregerson’s proposal.

Olson made a motion to extend the pilot program for two years. Paul Bailey
seconded the motion.

Robinson asked why the pilot program was originally limited. Brener recalled the
intent at the time. Bechtel was working through the construction trade, primarily. The
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program was working in 1995, so they decided to give it a chance to work outside of the
construction industry. Robinson clarified that the request was to give the program extra
time to see how the program might work outside the construction industry now that it has
been discovered that it works inside the construction industry. Brener agreed.

All voted in favor of the motion.

IV. D. Legislative list

Brener announced that Jamie Anderson was out and he presented the legislative
list. After conversations about the legislative bill with many people at this table and in the
audience over the last nine months, he thinks they have something that will work for
everyone.

Brener suggested the language from the 2003 WCAC bill be included in the 2004
package. That bill is still sitting on the Senate floor.

The 2004 proposal currently includes housekeeping proposals to assign all

penalties to be deposited into the Assigned Risk Safety Account instead of the Special
Compensation Fund (SCF). That is generally what happens now, but there are a couple of
outstanding accounts that go back into the SCF. This change is not a financial issue and
there will be no SCF assessment impact. It is better bookkeeping. The second
housekeeping provision is to delete the statutory requirement regarding sending notice of
cancellation letters. This service is a duplication, because the insurance industry sends
cancellation letters. This is a cost-saving effort on the part of DLI to be more efficient
without any impact on the system.

Brener noted other potential legislation includes a proposal from the Minnesota
Association of Rehabilitation Providers to change the retraining plan filing deadline from
156 weeks to 52 weeks after the initial service of maximum medical improvement. It also
includes issues from Stan Daniels relating to the layoff of employees with work-related
injures in northern Minnesota mining operations and an exemption from workers’
compensation insurance requirements from the Amish community.

The 2004 proposal includes the following medical cost issues:

Pharmacy
• Allow the employer/insurer to negotiate with a pharmacy network from
which the injured employee must select a pharmacy to fill prescriptions.
The pharmacy must be within 15 miles of the employee's home or work
location.
• Pharmacy benefit managers are required to disclose any rebates.
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Managed care
• Allow managed care plans to negotiate fees with participating providers.
• Make peer review, utilization review, case management and dispute
resolution optional features of certified managed care.

Utilization
• Add to the statutory definition of “reasonably required treatment” as
defined by any applicable treatment parameter. The treatment exceeding a
parameter is presumed to be not reasonably required. The presumption is
rebuttable by a preponderance of medical evidence. This section will
sunset in three years.
• Require judges and payers to apply the parameters. Payers must cite the
parameters to deny claims of treatment to injured workers. Fact finders
must make decisions based on those parameters. If the parameter was not
used, the fact finder must explain why. This section would sunset three
years post enactment.
• Authorize the department to use “expedited” rulemaking to update and
amend parameters with a legal standard that the parameter must reflect
evidence-based medical practice and be developed in consultation with the
MSRB. Language will be added that ensures the issue runs through the
MSRB and gets a sign off by the MSRB before any rulemaking systems
go into place.
• Amend the statute to define any technology not approved by the FDA
prior to the date of enactment as “not reasonably required” unless
approved for use by the commissioner in consultation with the MSRB.

Medical fee schedule

• Direct the commissioner to develop a service-based fee schedule.

Brener opened discussion about the WCAC 2004 bill.

Daniels asked for an explanation about why the first two bullets under utilization
are necessary, when the provisions will sunset in three years. Brener said the treatment
parameters were designed and developed in 1993 to provide a best practices medical care
system in workers’ compensation. These best practices are developed principally by
physicians. Labor has a stake in that, as well as the employer community. They come out
of DLI’s MSRB, which is a group that include union officials, employer officials,
doctors, chiropractors and physical therapists. Research shows that people who work
through a best-practice system come out healthier and the system works in a more
efficient manner. The problem the department has had is the application of the treatment
parameters in court. The intent is to strengthen what is on the books with respect to
treatment parameters. The practical effects are you should see fewer IMEs and fewer
instances of insurers pulling away from what is considered to be necessary treatment. At
the same time, it should cut down unnecessary medical expense.
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Daniels asked what percentage of the treatment parameters work now. Brener
responded that DLI’s surveys tell us the parameters are being applied approximately 70
percent of the time right now. Daniels thinks 70 percent is pretty good and we should not
change the language. Brener said it is not good enough. He noted that in the 30 percent
where the treatment parameters are not being applied, those folks were coming out in
worse shape and at a higher cost to the system according to DLI’s research. Brener
clarified that all the treatment parameters have “escape clauses” built into them. In
situations where a treatment parameter clearly is not the correct process, you are not
obliged to follow that particular treatment parameter. There are ways out of them through
implementing best practice work. Daniels asked, if this language were applied, how it
would it stop the 30 percent who are getting around the treatment parameters. Brener
responded it is DLI’s belief that if the courts start applying the treatment parameters there
would be fewer cases of folks going around them, unless doctors go around them. That is
the intent. Daniels said he is not totally against this proposal, but he would feel more
comfortable if he had more time to talk about it.

A break was called at 11 a.m., so the employee and employer representatives

could caucus individually and attempt to come to agreement about additional legislative
proposals.

Brener called the meeting to order at 11:07 a.m. No further agreements were
made and the remaining legislative proposals were set aside until the March meeting. In
the meantime, the commissioner, Olson and Waldron will get together to try to come to a
mutual understanding regarding those elements that are confusing to some folks.

The following proposals were approved for inclusion in the 2004 bill:

• the 2003 WCAC bill language will be maintained;

• the two housekeeping proposals;
• the two pharmacy proposals;
• the two managed care proposals;
• the last two utilization proposals; and
• the medical fee schedule proposal.

The following proposals will be discussed at the March meeting:

• Change the retraining plan filing deadline from 156 weeks to 52 after the
initial service of MMI.
• The first two utilization proposals to add to the statutory definition of
“reasonably required treatment.”
• Require judges and payers to apply the parameters.

Olson made a motion to approve the list of proposals and the plan for the
March meeting as outlined by the commissioner. Waldron seconded the motion. All
voted in favor of the motion.
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Ellefson asked for discussion. He pointed out the last two bullets under utilization
and asked for stronger language about the MSRB not only having an opportunity – but to
actually do – a review and make a recommendation. Brener said that was the intent and
was acceptable to him

Thaden wanted to make sure we know what we are going to do procedurally.

Thaden made a motion to put the language together for the first list Brener enunciated.
The two caucus leaders will get together with the commissioner to seek some resolution
about the three outstanding issues. When the language is drawn up, it will be sent to all
of the council members. The bill will get introduced. If there are any additional issues
that are agreed upon, the language will be sent to the council members and then we
can do an amendment to the bill afterwards. Cavanaugh seconded the motion. All
voted in favor of the motion.

Brener noted he is still in discussions with the Minnesota Medical Association.

They are getting quite close and he thought they would have an agreement about medical
reimbursement issues shortly. That will be another issue to be considered in the next
week or so.

Brener asked Daniels if he has a proposal about laying off employees with work-
related injuries in northern Minnesota mining operations ready for consideration at this
point. Daniels responded he is not yet ready to discuss that issue and it might not be
feasible for this session.

IV. E. Workers' compensation exemption

Brener noted the workers’ compensation exemption can either be litigated and we
face the consequences with the court systems, which he thought would not be positive for
either side at the table, or the WCAC can come up with its own solution to try to move
forward.

Waldron asked for a recommendation.

Cavanaugh proposed an amendment to the language provided in the meeting

packets. He said he was ambivalent about doing anything, but he would be less
ambivalent if the provision were sunset in three years. Brener stated that was acceptable
to him. Cavanaugh moved that the WCAC adopt the language provided, with a proviso
that a three-year sunset provision be added to it. Waldron seconded the motion. All but
Robinson approved the motion and the motion passed. The religious exemption will be
included in the WCAC’s 2004 bill.

Hickey said his concern is whether this issue has gone the litigation route in other
states and what the outcome was of that litigation. Hargarten responded that the
exemption law has never been challenged in the states that have the exemption provision
we talked about in the past. Those states are Kentucky, Pennsylvania and Wisconsin.
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Omar Syed, from the Attorney General’s Office, was not aware of any lawsuits in other
states that were similar to Minnesota’s situation.

Robinson said he has a problem with using a religious exemption as a crow bar to
change a statute that has something to do with an economic relationship. He feels we are
being extorted. He sees this as a judicial issue and, even though we might finish second,
he would rather finish second honestly than to submit to what he perceives to be an
extortion based on a religious reference. He does not support this change.

As a point of order, Bailey asked for a revote on whether to adopt the religious
exemption, because the motion was passed without discussion. Daniels seconded the
motion. A roll-call vote was taken for the motion to reconsider the vote. The motion
failed. The motion to add the religious exemption to the 2004 bill stands.

Brener announced the 2004 WCAC bill will consist of a religious exemption, a
collective bargaining agreement pilot project extension, a firefighter notice piece, as well
as the variety of medical cost containment proposal pieces previously agreed upon and a
majority of the provisions from last year’s bill.

Discussion occurred and it was decided to schedule an extra meeting March 10,
2004, at 9 a.m.

Respectfully submitted,
Debbie Caswell
Executive Secretary