A council including labor, management and insurance representatives said Tuesday that it wants assurances from Gov. Scott Walker’s administration that a proposed reorganization will not degrade the state’s highly regarded worker’s compensation program.

The Worker’s Compensation Advisory Council was reacting to Walker’s 2015-17 budget, released last week, that calls for splitting the program into two and removing it from the state Department of Workforce Development, along with several other changes.

Members questioned why the administration did not consult with the council, which for a century has operated as a mechanism for reaching agreement between labor and management about the operation of the worker’s compensation system.
“The normal process is to go through the council,” said management co-chairman Jeffrey Beiriger, president of Association Management Services Inc. in Menasha. “That has not been done here. … I would just urge that the process is restored and the council be consulted.”
In a memo to the council, DWD Secretary Reggie Newson said the changes were about “streamlining” the program and modeling it after states such as Texas, Florida, Illinois and Michigan with worker’s compensation systems that operate separately from state workforce agencies.

Co-chair Stephanie Bloomingdale, secretary-treasurer of Wisconsin AFL-CIO, asked a DWD official to describe how those systems are better than Wisconsin’s.

In a 2013 study, the nonpartisan Worker’s Compensation Research Institute found Wisconsin’s system is cheaper, injured workers return to work sooner and fewer employees hire lawyers than many other states.

DWD legislative liaison B.J. Dernbach was unable to name specifics but reiterated Walker’s contention that moving the insurance-related duties to the Office of the Commissioner of Insurance and the administrative law judges to the Department of Administration’s Division of Hearings and Appeals would be more efficient.

A memo analyzing Walker’s proposal by Milwaukee attorney William R. Sachse Jr. warned that Illinois’ system is “more litigious, less predictable and more expensive than (in) Wisconsin.”

Sachse, who represents employers and insurance carriers, said Texas allows employers to withdraw from the system, “forcing employees into the unpredictable civil justice system.” And, he wrote, “Florida’s law was recently declared unconstitutional by a federal judge for failing to deliver adequate benefits to injured employees.”

Changing the program to be more like those states, Sachse wrote, “will make Wisconsin’s system worse than it is now.”
DWD’s Worker’s Compensation Division, which handles medical and lost salary claims for injured workers and employers, has a $16.9 million annual budget, which would remain roughly the same under Walker’s proposal.
More than 99 percent of revenues come from assessments paid by insurance companies and self-insured employers, according to DWD spokesman John Dipko.

In 2014, there were 31,678 claims for compensation, not counting an estimated 65,000 “medical-only” claims, he said.

Dipko said Walker’s budget proposal for reorganizing the division “will support a government that is limited in scope and ensures resources are concentrated on direct service delivery.”

Said Bloomingdale: “If there are no fiscal savings from this … and there are potentials for programmatic protections being cut off or lessened — that’s a concern for us.”