Ratings Bureau Update

On March 30, 2020, the Worker’s Compensation Ratings Bureau released its Circular Letter addressing new issues that impact Wisconsin Worker’s Compensation Insurance Carriers and Employers.  One specific issue we felt should be highlighted is how premiums paid by Employers would be impacted by wages paid to employees who were furloughed during the state-wide emergency orders issued by Governor Evers.  Basically, these wages will not be included when the worker’s compensation premium determination is made during a subsequent policy audit.  Employers should keep separate records that identify whether it is payroll for furloughed employees or for employees who are still working to prevent future issues when determining their worker’s compensation premium.

A link to the circular letter can be found here: WCRB 2020 Circular Letter

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Safer at Home Extended

On April 16, 2020, Governor Evers extended his “Safer at Home” order through May 26, 2020.  The previous order was set to expire next week, on April 24, 2020.

The extension also included some changes, these include:

  • Public libraries may now provide curb-side pick-up of books and other library materials.
  • Golf courses may open again, but with restrictions, mainly no golf cart usage, and pro shops/clubhouses need to remain closed.
  • Non-essential business can begin minimum basic operations, including deliveries, mailings, and curb-side pick-up. These businesses must notify workers whether they are necessary for minimum basic operations.
  • Arts and craft stores can offer expanded curb-side pickup of materials necessary to make face masks or other personal protective equipment.
  • Aesthetic or optional exterior lawn care or construction is now allowed, as long as it can be done by one person.
  • Both public and private schools will remain closed for the remainder of the 2019-2020 school year.
  • Local health officials may close public parks and open spaces if it becomes too difficult to ensure social distancing or the areas are being mistreated.
  • People are strongly encouraged to stay close to home, not travel to second homes or cabins, and not to travel out-of-state if it is not necessary.

Additionally, the extension outlined safe business practices for essential businesses and operations, these include:

  • Increased cleaning and disinfection practices, ensure that only necessary workers are present, and adopt policies to prevent workers exposed to COVID-19 or symptomatic workers from coming to work.
  • Retail stores must limit the number of people in the store at one time, must provide proper spacing for people waiting to enter, and large stores must offer at least two hours per week of dedicated shopping time for vulnerable populations.
  • Businesses that supply, manufacture, or distribute goods and services to other Essential Businesses and Operations can only continue operations that are necessary to those businesses they supply. All other operations must continue as Minimum Basic Operations.

The order will remain in effect until 8:00 a.m. on May 26, 2020.

You can view the full text of the order here: EMO28-SaferAtHome

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New WI Law for COVID-19

On April 15, 2020, the Governor Evers signed 2019 ASSEMBLY BILL 1038.  This law has a key provision for Work Comp claims:

It creates a rebuttable presumption that injury caused to first responders during COVID-19 is caused by employment.

Here is the language of the bill:

“This bill provides that, for the purposes of worker’s compensation, an injury caused to a first responder, during any public health emergency declared by the governor on March 12, 2020, by executive order 72 and ending 30 days after the termination of the order, is presumed to be caused by the individual’s employment. The presumption requires a diagnosis or positive test for COVID-19, and may be rebutted by specific evidence that the injury was caused outside of employment.”

Here is a link to the entire bill:  https://docs.legis.wisconsin.gov/2019/related/proposals/ab1038

If you have an employee making a claim that COVID-19 is a work injury, you will need to take a detailed recorded statement where you ask questions such as:

  • When did the symptoms first begin, and how does this compare to their shifts at work (see note below for explanation)?
  • Are they aware of any known cases at work w/ co-workers, patients, etc.?
  • Has the employee done any traveling, and if yes, where, when, etc.?
  • Does anyone in their home have COVID-19, and if yes, who, when, etc.?
  • Has the employee been going to any store, etc.?

Please note that per John Hopkins’ website, symptoms take 48 hours to begin.  You will also want to ask the employer whether there is any known source at work.

This is a complicated issue.  Let us know if you have any questions.

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Telephonic Appearances Extended

OWCH has extended the conversion of in-person hearings to telephone settlement conferences for the immediate future.

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How Important is an Accurate Medical History?

Smith v. Zielles Tress Serv., Inc. – LIRC

Decided October 14, 2019.

Facts: Applicant told his treating doctors that he had no prior shoulder issues when treating for an allegedly work-related shoulder injury. Medical records showed Applicant had serious preexisting shoulder problems, and was scheduled for surgery prior to his alleged injury.

Decision: LIRC found Applicant’s doctor’s opinion not to be credible because they relied on incomplete and/or inaccurate information/medical histories.

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FFCRA Effective Today

As a reminder, the Families First Coronavirus Response Act or FFCRA becomes effective today.  The applies to employers who have fewer than 500 employees.  The employers must certify why an employee is taking eave under the Act.  This is a simple process that involves the employee answering some simple questions and providing required information.  These include:

  • Date the leave begins.
  • Reason for leave.
  • Supporting medical documentation, if necessary (for the employee or personal employee is caring for)
  • Supporting documentation for school closing, if caring for child.

The employee should re-certify every couple of weeks, if continued leave is needed.

If the employer does not have this certification, that could impact their ability to take a tax credit for these payments.

If you have any questions on how to create this form or why this information is needed, please contact our office.

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The Overlap of the FFCRA, Unemployment, and Work Comp in Wisconsin.

COVID-19 update:  Today, 3/31/20, is the last day for employers to lay off employees prior to FFCRA becoming effective.  A few key points for Wisconsin employers and worker’s compensation carriers:

Question #1:  If an employee is laid off today (or some prior date), what can they collect?  They would qualify for Unemployment.  Also, per the CARES stimulus, the amount of the Unemployment benefit increases.  That said, you need to make sure there is not a pending worker’s compensation (WC) claim where the employer is accommodating work restrictions.  If there is a WC claim pending, see Question 3.

Question #2:  What if additional quarantine rules go into effect after today and/or the quarantine is tended longer than first anticipated?  Starting tomorrow, 4/1/20, for an employer under 500 employees, FFCRA requires two weeks of Sick Pay and 10 weeks of paid Extended FMLA.  The amounts of Sick Pay or Extended FMLA payments vary depending on whether the employee is full time or part time (see Question #7).  An employee cannot collect more than the two weeks of Sick Pay even if the employee returns to work and then has to go back off work due to new quarantine concerns.

Question #3:  What if there is a pending worker’s compensation claim?  Do I re-start TTD benefits?  It depends.  If your employer is either doing FFCRA or voluntarily continuing pay (as some larger employers are doing), then you may not owe TTD benefit until the FFCRA/salary continuation ends.  You should compare what is being paid each week to determine whether Temporary Partial Disability (TPD) is owed.

Question #4:  What if the employer objects to the renewed TTD, as a) they were accommodating the employee, b) were forced to close, and c) they think the employee should go on Unemployment instead?   Unfortunately, WC overrides Unemployment.  If an employer shuts down, the employer is no longer accommodating work restrictions and WC benefits are owed unless the employer is somehow continuing wages.  Here is a link to DWD’s website discussing TTD during shut downs:  https://dwd.wisconsin.gov/wc/insurance/training/tpd/tpd_layoffs.htm

Question #5:  Can an employee collect Unemployment and TTD/TPD at the same time?  No.  The employee needs to collect one or the other.  And with the increase in Unemployment benefits under the CARES Act and waiver for the employee to look for work, employees may already be receiving Unemployment before you even know it.  So, talk to your employee before restarting work comp benefits.

Question #6:  Do I need to update the WKC-13?  That depends on what is being paid and by whom.  If the employer is doing salary continuation or FFCRA payments, I would not update the WKC-13 at this time.  If the injured worker was laid off before FFCRA went into effect (or you have a large employer), and you restarted TTD benefits, then yes.

Question #7:  If the employee is part-time, what would be paid?  If the employer is covered by FFCRA, then the employer calculates the average wage over the past six months.  This is then FFCRA wage.  This wage is likely different than the average weekly wage for worker’s compensation claims.  For part-time employees under a worker’s compensation claim, the wage may be expanded to full time unless certain exceptions apply.  Or, if the employer is accommodating the light duty restrictions, you use the actual wage instead of the expanded wage to determine whether any Temporary Partial Disability (TPD) benefits are owed.  COVID-19 lay offs may impact all of this.  FFCRA eligible employees will receive something, but you will need to compare this to the actual wage to determine whether TPD benefits are paid.

Question #8:  What does the employee need to do to collect Sick Pay or Extended FMLA?  The employer is required to have the employee certify they are collecting these benefits due to a COVID-19 quarantine (there are several reasons).  The employer needs this documentation to claim these payments on their tax returns.  You should obtain the documentation of the payments and certifications for your WC files.

Question #9:  What if the employee begins a new job while off on quarantine (as some employers – mainly grocery stores) are hiring?  You would treat this as any other new employer after a WC injury.  You obtain the wage records for the new employer and offset these wages against any TTD payments.

Question #10:  What if the employer has under 50 employees and FMLA did not apply previously?  The new laws apply to small business too, but the Department of Labor can provide exemptions.  DOL has not yet provided guidance any the exemptions.  We will continue to follow this situation as it develops.  We anticipate additional clarification from the Dept of Labor in the coming days, as the exact exemptions have yet to be determined.

Question #11:  Can short term disability (STD) off-set the Sick Pay and/or impact WC TTD payments?  It depends.  Maybe. If the reason for Sick Pay also allows the employee to qualify for STD and the amount of wages paid under STD is equal to or greater than what the employee is entitled for Sick Pay, there does not appear to be an issue in allowing the offset. However, keep in mind that employees are entitled to Sick Pay immediately, so any waiting period or other restriction imposed under a company’s STD plan will need to be accounted for.  Also, WC can only offset for STD if the premium is 100 percent paid by the employer.

Question #12:  Does the employer have any options if they are required to close, but want to avoid TTD being paid, and if yes, are there any key points in which the employer may want to do this?  Yes, the employer can offer telecommute work.  If the employer normally does not have telecommute work, they can have the employee watch safety videos or similar type work.  The employer may want to do this especially if the injured worker was only part time, and TTD benefits would be expanded to full time.  In other words, the employee will have a significant increase benefits from WC whereas the employer may be able to offer only a few hours of work each week to prevent this from occurring.

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FFCRA Update

The Department of Labor (DOL) recently updated its question and answer section on the FFCRA, which came in response to increased questions by employers on how the FFCRA will impact them.  Here is a summary of the DOL guidance:

  • Employers that believe they are exempt from the child-care or coronavirus paid Sick Pay and/or Expanded FMLA (employers with less than 50 employees) are encouraged to gather documentation, but not send it to the DOL as there is addition regulation and guidance anticipated that will help clarify this issue.
  • Employees are limited to two weeks of eligible Sick Pay Leave regardless of the reason for eligibility.  Employees cannot take more than two weeks, even if they meet more than one of the qualifying reasons.
  • Employers must and are encouraged to obtain and maintain records when employees take paid Sick Pay or Expanded FMLA.  Employees must provide documentation demonstrating school closures, scheduled testing for COVID-19, a COVID-19 diagnosis, the need to care for someone diagnoses with COVID-19, the need to isolate due to a COVID-19 diagnosis, or the need to provide care for someone in self-isolation after a COVID-19 diagnosis.
  • If Employers plan to claim the tax credits for payment of Sick Pay under the FFCRA, documentation needs to be retained.
  • Employees who are capable of telework (i.e. their Employer makes telework available) are not eligible for paid leave even if they otherwise meet the criteria for paid Sick Pay or Expanded FMLA leave.
  • Paid Sick Pay cannot be taken incrementally (i.e. whole days need to be taken, employees cannot supplement limited work hours with paid Sick Pay under the Act, but instead are directed to use the expanded unemployment benefits to supplement the lost wages.
  • That said, employees are not allowed to collect unemployment benefits for any time they receive paid Sick Pay or Expanded FMLA under the Act.  Receipt of paid leave makes the receiving employee ineligible for unemployment benefits during the paid leave period.
  • Employers, unless otherwise exempted, must continue healthcare coverage for employees who are eligible and take paid Sick Pay or Expanded FMLA leave.
  • Employees, if only eligible for 2/3 wages under the FMLA expansion (see our March 23, 2020 post: https://mil-law.com/families-first-coronavirus-response-act-ffcra/), the employee may use preexisting PTO to supplement and receive the additional 1/3 if the employer permits it.  Employers will not receive a tax credit for any supplemental PTO paid during this period.

Continue to follow our blog for updates as we continue to monitor this constantly developing situation.

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CARES (Coronavirus Aid, Relief, and Economic Security) Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on March 27, 2020.  This Act is designed to curb any potential recession caused by the outbreak of COVID-19.  The Act included a $367 billion loan and grant program for small businesses.  It also expanded unemployment benefits to include people laid off, gig workers, and freelancers who were impacted by the social distancing rules implemented to slow the spread of the virus.  Additionally, families making up to $150,000 jointly will receive $2,400 plus $500 per dependent under the age of 17.  Single filers making up to $75,000 will receive $1,200.

In addition to the direct payments to taxpayers, the Act provides $130 billion to health care providers and $500 billion fund for loans to corporations overseen by the inspector general and a congressional panel.  There are additional funds and grants earmarked for other industries, including airlines, air cargo, and state/local governments.  We are happy to discuss these in detail if you are interested, but for the purposes of this blog post, we have limited the discussion to the portions of the bills that impact Employers and Carriers.

For smaller employers (those with less than 500 employees), it is important to remember that eligibility for the loans provided by the Act is still decided by the Treasury or Small Business Administration.  That said, the Act also provides for paycheck protection to encourage employers to keep their workers paid and employed during the state of emergency.  Any business with under 500 employees is eligible to receive a loan from the $349 billion allocated by the Act to cover payroll and essential overhead with most or all of the loan forgivable.  However, this loan is capped at $10 million per business.  Additionally, the amount of forgiveness available can be impacted by the average number of employees kept on payroll after the loan origination date.  Simply put, if an employer wishes to maintain forgiveness potential for the entire loan, they should not make an unnecessary staffing changes after the loan origination date.

The Act also created a new Employee Retention Credit against employment taxes that encourages employers to retain and pay their employees.  This is not available to any business that receives a Small Business Interruption Loan described above.

In addition to helping businesses, the unemployment eligibility is extended to people who would not otherwise be eligible IF their work loss is related to the coronavirus pandemic.  It also extends the collection period from 26 weeks to as long as 39 weeks for included workers.  Those eligible now include contractors, the self-employed, those who had previously exhausted their existing benefits amounts, and part-time workers.  The Act also allows benefits for those with an insufficient work history and broadly includes “anyone else who would not otherwise qualify”.  Importantly, the only workers who cannot collect unemployment benefits under the Act are remote online workers and those who already receive other paid leave.

If you wish to discuss this or have any questions, please contact our office.

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Third Party Attorney Fees: Is Recovery Limited by the Insurance Policy?

Kasal v. Stryker – Court of Appeals

Decided March 17, 2020.

Facts: Applicant worked for Aurora Healthcare and was injured in 2016 when a product made by Stryker Industries broke.  Sentry represented Aurora Healthcare and paid worker’s compensation benefits to Applicant during her healing period.  Applicant filed a subsequent negligence claim against Stryker for the injuries caused by their product.  Aurora and Sentry agreed to help, but did not assist as Applicant anticipated.  They were added as parties to the negligence claim for their failure to assist.  Applicant learned, through discovery, that a Stryker employee had removed the injury causing product prior to Aurora or Sentry being given notice.  Thus, the negligence claim against them was dismissed, but Sentry remained a party to suit in order to recover the worker’s compensation benefits paid to Applicant.  Sentry also brought a claim for punitive damages against Stryker and began their own investigation independent of Applicant.  Applicant settled her claim with Stryker in January 2019.  The settlement approved by the trial court apportioned settlement funds to Sentry to reimburse for the WC benefits and to pay Applicant’s attorney fees and costs.  Sentry was not reimbursed for their attorney fees and costs.  Sentry argued that under Sec. 102.29 Stats., they should be, Applicant said because Sentry’s policy was silent as to fees and costs, they should not be reimbursed.

Issue: When an insurance policy outlines specific reimbursement terms for third party claims contrary to the relevant statute (Sec. 102.29 Stats.), which should be followed?

Discussion:  The trial court stated that Sentry’s own policy, which did not discuss reimbursement of attorney’s fees and costs, should be followed because they had the opportunity to include this language in the policy, but did not.  The Court of Appeals agreed citing American Family Mut. Ins. Co. v. American Girl, Inc., 2004 WI 2, ¶23, 268 Wis. 2d 16, 673 N.W.2d 65. Specifically they said the court’s job when interpreting an insurance policy is to “determine and give effect to the intent of the contracting parties” and must be construed “as they would be understood by a reasonable person in the position of the insured.”  Moreover, the court pointed to the language in the statute that allows for the apportionment of attorney’s fees and costs for all parties involved in the claim “unless otherwise agreed upon.”  They expanded stating Sentry’s policy and failure to address reimbursement of attorney’s fees and cost fell into the “unless otherwise agreed upon” category; thus, the Court of Appeals upheld the trial court judgement stating “it is reasonable to conclude that if Sentry had intended to mandate the recovery of attorney’s fees and costs in worker’s compensation cases, it would have included similar language in its policy”

Practical Takeaway: If an insurer wants to recover attorney fees and costs in third party actions, the policy either needs to adopt the language set forth in Sec. 102.29, Stats., as a whole or if they have a specific policy, outlines all the terms of recovery so it is clearly understood prior to litigation.

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