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Case Law Update – April 22, 2016

Navigating Recent Amendments to the Wisconsin Worker’s Compensation Act

Microsoft Word - 4 of 5 FormattedInstallment 4 of 5

The Wisconsin Worker’s Compensation Act has been substantially amended in favor of employers and insurers.

This is part four in a five-part series aimed at exploring the predicted consequences of some of the key changes to the Worker’s Compensation Act. This format allows us to dive deep into the new statutory changes, so you’ll have a fuller understanding of your new rights under the law.

For the fourth installment we’ll look at the addition of Wis. Stats. §102.175(3), which permits employers and insurance carriers to use medical records and “other competent evidence” of preexisting disability as a basis for apportionment. The new law requires injured workers to disclose all prior findings of disability and for physicians to provide an opinion on the percentage of disability attributed to the accidental work injury as compared to the percentage of disability caused by other factors.

Apportionment of Prior Disability

As part of its “agreed bill,” the Wisconsin Worker’s Compensation Advisory Council included a revision to Wis. Stat. §102.175 (Apportionment of Liability). This revision added a provision addressing apportionment of permanent partial disability for traumatic injuries. The addition of Wis. Stat. §102.175(3) to the Worker’s Compensation Act of Wisconsin is generally favorable to the interests of employers and worker’s compensation insurance carriers. The agreed bill was released by the Advisory Council in December of 2015, introduced to the Wisconsin Legislature on January 8, 2016 as Senate Bill 536, and became law effective March 2, 2016.

Microsoft Word - 4 of 5 FormattedWhat did the law used to say?

The addition of Wis. Stat. §102.175(3) to the Act supplements the prior version of Wis. Stat. §102.175, and does not materially change the wording of the first two sections of that statute. Prior to January 1, 2016, the text of that statute read:

102.175. Apportionment of liability

(1) If it is established at the hearing that 2 or more accidental injuries, for each of which a party to the proceedings is liable under this chapter, have each contributed to a physical or mental condition for which benefits would be otherwise due, liability for such benefits shall be apportioned according to the proof of the relative contribution to disability resulting from the injury.

(2) If after a hearing or a prehearing conference the department determines that an injured employee is entitled to compensation but that there remains in dispute only the issue of which of 2 or more parties is liable for that compensation, the department may order one or more parties to pay compensation in an amount, time and manner as determined by the department. If the department later determines that another party is liable for compensation, the department shall order that other party to reimburse any party that was ordered to pay compensation under this subsection.

What did the recent amendment change?

It should be noted that Wis. Stat. §102.175(2) was amended effective January 1, 2016 to replace references to the “department” with references to the “division.” This is due to the creation of the Office of Worker’s Compensation Hearings (OWCH) within the Division of Hearings and Appeals. This minor amendment was not part of the agreed bill.

The agreed bill, through Section 32, created §102.175(3) which states:

(a) If it is established by the certified report of a physician, podiatrist, surgeon, psychologist, or chiropractor under §102.17(1)(d)1., a record of a hospital or sanitorium under §102.17(1)(d)2., or has incurred permanent disability, but that a percentage of that disability was caused by an accidental injury sustained in the course of employment with the employer against whom compensation is claimed and a percentage of that disability was caused by other factors, whether occurring before or after the time of the accidental injury, the employer shall be liable only for the percentage of permanent disability that was caused by the accidental injury. If, however, previous permanent disability is attributable to occupational exposure with the same employer, the employer is also liable for that previous permanent disability so established.

(b) A physician, podiatrist, surgeon, psychologist, or chiropractor who prepares a certified report under §102.17(1)(d)1. relating to a claim for compensation for an accidental injury causing permanent disability that was sustained in the course of employment with the employer against whom compensation is claimed shall address in the report the issue of causation of the disability and shall include in the report an opinion as to the percentage of permanent disability that was caused by the accidental injury and the percentage of permanent disability that was caused by other factors, including occupational exposure with the same employer, whether occurring before or after the time of injury.

(c) Upon request of the department, the division, the employer, or the employer’s worker’s compensation insurer, an injured employee who claims compensation for an injury causing permanent disability shall disclose all previous findings of permanent disability or other impairments that are relevant to that injury.

Significance of the Addition of Wis. Stat. §102.175(3) to the Act

The addition of Wis. Stat. §102.175(3) provides statutory clarification that an employer is only liable for the percentage of permanent disability caused by an accidental injury sustained in the course of employment. It is important to note this newly created statute is limited to traumatic injury claims – it has no applicability to claims of occupational disease. Subsection (b) of Wis. Stat. §102.175(3) requires that practitioners preparing certified reports provide an opinion as to the cause of permanent disability, including the apportionment between a work-related accidental injury and other factors. The statute provides that a practitioner “shall” address the issue of causation of a disability and “shall” include an opinion in his or her report as to the percentage of permanent disability that was caused by factors other than the traumatic work injury. This puts the onus on treating medical providers and independent medical examiners to provide thorough explanations of their PPD ratings in their certified reports.

Employees will now be required to disclose previous findings of permanent disability upon request. Subsection (c) of Wis. Stat. §102.175(3) states that the department the division, the employer or the worker’s compensation insurer can request this information from the employee, and that the employee “shall” acquiesce to such requests by disclosing all previous findings of permanent disability or other impairments relevant to the injury.

Unanswered Questions

The creation of Wis. Stat. §102.175(3) appears to create more questions than it does answers. While generally beneficial to worker’s compensation respondents (employers and insurance carriers), the statute is also incredibly vague, and certainly invites significant future litigation. As the statute is only weeks old, there are no Labor and Industry Review Commission decisions or relevant case law that can assist us in interpreting the grey areas of this new law.

Before digging into the ambiguities of the new law, and the questions that will need to be answered,it is worth discussing how this new law originated. It should come as little surprise, given the “respondent friendly” nature of Wis. Stat. §102.175(3), that this particular statutory amendment arose out of the suggestion of a management-side member of the Advisory Council. During Advisory Council discussions of this provision, the member pushing this change used an example of an employer that is required to pay an employee 20% PPD to the knee following a work-related meniscal repair (minimum of 5% per DWD 80.32(4)) in spite of a pre-existing history involving a surgery to the same knee arising out of a non-industrial motorcycle accident.

The language of the new amendment is based on a similar provision found in California’s Worker’s Compensation Act.

Question 1: Is this statutory limited to functional permanent partial disability?

A plain reading of the statute would seem to answer this question in the affirmative. However, unscheduled permanent partial disability benefits are, in theory, intended to compensate an employee for future loss of earnings. Could an argument be made that this statute also applies to loss of earning capacity benefits? I certainly feel that would be an argument worth making, even if it proves to be a longshot.

Question 2: What constitutes “other competent evidence”?

Subsection (a) of Wis. Stat. § 102.175(3) provides, in part: “If it is established by the certified report of a physician, podiatrist, surgeon, psychologist, or chiropractor under s. 102.17(1)(d)1., a record of a hospital or sanitorium under s. 102.17(1)(d)2., or other competent evidence that an injured employee has incurred permanent disability, but that a percentage of that disability was caused by an accidental injury sustained in the course of employment with the employer against whom compensation is claimed and a percentage of that disability was caused by other factors, whether occurring before or after the time of the accidental injury, the employer shall be liable only for the percentage of permanent disability that was caused by the accidental injury.” (Emphasis added). The inclusion of the phrase “other competent evidence” in addition to certified practitioner reports and records of a hospital or sanitorium leaves the door wide open for respondents to submit proof of a prior permanent disability through witness testimony, circuit court documents, etc. This phrase is borrowed from the occupational deafness statute: “An employer is liable for the entire occupational deafness to which his or her employment has contributed; but if previous deafness is established by a hearing test or other competent evidence, whether or not the employee was exposed to noise within the 2 months preceding such test, the employer is not liable for previous loss so established nor is the employer liable for any loss for which compensation has previously been paid or awarded.” Wis. Stat. § 102.555(8)

Microsoft Word - 4 of 5 FormattedQuestion 3: As a practical matter, will WKC-165 (Medical Report on Industrial Injuries) and WKC-16Bs (Practitioner’s Report on Accident or Industrial Disease in Lieu of Testimony) in their current forms suffice in complying with Wis. Stat. § 102.175(3)?

The newly created statute requires physicians, podiatrists, surgeons, psychologists and chiropractors who complete certified reports to affirmatively include in these reports an opinion as to the permanent partial disability to the affected body part caused by factors other than the accidental work injury.

While the WKC-16B in its current form does ask the practitioner to estimate the percentage of disability caused by the accident or work exposure, there is no specific prompt for the practitioner to address “other factors” causing the permanent disability. The DWD has indicated that the forms will need to be changed, but not necessarily when.

Microsoft Word - 4 of 5 FormattedQuestion 4: Are practitioners being educated as to this change in law, and if so, how?

Absent a revision to the WKC-16 and WKC-16B, it would appear that it is up to us, the Wisconsin worker’s compensation stakeholders, to educate physicians, podiatrists, surgeons, psychologists and chiropractors preparing certified reports pursuant to Wis. Stat. §102.17(1)(d)(1) of the new obligations set forth in Wis. Stat. §102.175(3).

This means asking the requisite in referral letters to independent medical examiners. For worker’s compensation insurance carriers that need to get treating practitioners to complete a WKC-16B, already a difficult task, the new statute would appear to add another layer to this standard request.

Question 5: Regarding the employee disclosure requirement…

a. What constitutes “previous findings of permanent disability or other impairments”?

Is an employee required to disclose findings of permanent disability from another state? What if these prior findings rate permanency based on AMA guidelines? The statute does not include any limitations on the employee’s duty to disclose previous findings of permanent disability or other impairments, so I would argue the employee does have a duty to disclose in these hypothetical situations.

b. What are the consequences for an employee if he or she fails to make the disclosures now necessary under Wis. Stat. §102.175(3)(c)?

While this portion of the statute is clear that an employee is now obligated to disclose previous findings of permanent disability or other impairment relevant to the alleged injury, what happens if that employee either refuses such a request, or conveniently “forgets” about these previous findings?

The terms of Wis. Stat. §102.175(3)(c) contradict the statement made by the Wisconsin Supreme Court in Tews Lime and Cement Co., et al. v. DILHR, that “there is no general requirement that an employee must volunteer information concerning all his ailments to his employer.” 38 Wis. 2d 665, 674 (1968). Clearly, there is now such a requirement with the adoption of Wis. Stat. §102.175(3)(c).

If an employee either refuses an employer’s request under Wis. Stat. §102.175(3) (c), or makes a misrepresentation in doing so, does the employer now have a reasonable basis to terminate the employee?

How would this scenario fit within the recent amendment to Wis. Stat. §102.43(9)(e), by which employers now have a defense to payment of temporary disability benefits when an injured employee’s wage loss is due to a suspension or termination for misconduct or their own substantial fault?

I think the most likely result of an employee failing to make the necessary disclosure under Wis. Stat. §102.175(3)( c ) is that it will diminish his or her credibility to the trier of fact, as well as the credibility of the practitioner(s) supporting the claim for PPD benefits. It may result in the WKC-16B completed by the treating practitioner being “thrown out” by an ALJ.

c. How will it be determined what previous findings of permanent disability or other impairments are “relevant to the injury”?

As we know when we request medical records by statute, what is relevant to a work injury is in the eye of the beholder. We often fight battles with medical records custodians to convince them that records of back treatment have relevance to a claim involving an ankle injury, due to the potential for an altered gait theory of causation, just as an example.
Will we now be fighting these same battles at worker’s compensation hearings over an employee’s failure to disclose permanent disability or other impairments relevant to the injury at hand?

Conclusion

The addition of Wis. Stat. §102.175(3) to the Worker’s Compensation Act of Wisconsin will have a positive effect on employers and worker’s compensation insurance carriers. This statutory provision clarifies that where permanent disability is caused by an accidental injury sustained in the course of employment, an employer is only liable for the percentage of permanent disability caused by that injury.

Perhaps more importantly, this statute adds certain requirements of treating practitioners, independent medical examiners and employees that should make it easier for employers and insurance carriers to apportion functional PPD ratings arising out of traumatic injury claims.

However, this new law is also certain to increase the litigation of worker’s compensation claims due to its ambiguity. There will undoubtedly be many decisions in the years to come from the Commission and all levels of the Wisconsin court system that attempt to interpret the provisions of Wis. Stat. §102.175(3).


Jack Ebbott

Jack is a shareholder at Aplin & Ringsmuth, LLC, working out of the firm’s Deerfield, Wisconsin office. He primarily practices in the area of worker’s compensation defense, representing employers and insurers in defending worker’s compensation claims. Jack also practices in the areas of employment law, business law, family law and real estate.

Although born in Washington, D.C., Jack considers himself a Wisconsin native, earning his B.A. in political science at the University of Wisconsin-Madison and his Juris Doctor from the University of Wisconsin Law School.

Jack began his legal career as a staff attorney with the Outagamie County Circuit Court in Appleton, Wisconsin, and joined Aplin & Ringsmuth as an associate in 2007. Jack lives on the west side of Madison with his wife, JoAnn, and their two exhausting children – Andy and Hannah. In his free time, Jack enjoys spending time with his family, running, drumming and sports.


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