Report on April 21, 2006 Meeting with Workers’ Compensation Agency Personnel

The MSIA Board of Managers, members of the Michigan Manufacturers’ Association, the Chamber of Commerce, and various other organizations met with personnel from the Workers’ Compensation Agency on April 21, 2006. The purpose of the meeting was to discuss current problems employers are encountering at the Agency. Director Jack Nolish and Deputy Director Bruno Czyrka were present to address our concerns.

The Agenda for the meeting was as follows:

1. Welcome and introduction.
2. Vocational Rehabilitation Concerns.
a. When is vocational rehabilitation triggered?
b. The effect on the voluntary pay system.
c. Intimidation of vocational consultants.
d. Proposed statutory change in draft three.
e. Proposed administrative rule changes.
f. Rule 5 hearings.


3. Changes in the application for medication or hearing form in light of Stokes.
4. Draft 3
5. Other issues.
   

The first problem identified was confusion resulting from employers using vocational consultants to make wage earning capacity determinations for disability purposes and traditional vocational rehabilitation under Section 319. Employers expressed concerns that stopping voluntary payment on the strength of vocational consultants’ labor market surveys (or wage earning capacity analyses) was being rejected by the Agency. Employers reported that the Agency’s indications seemed to be that vocational rehabilitation procedures under §319 must be followed in such situations. In addressing this problem, the Agency personnel agreed with us that use of vocational consultants for disability determinations is distinct and independent of traditional vocational rehabilitation under Section 319. The employer community was assured that the Agency would not blend the two categories simply because vocational consultants are used in each.

Director Nolish suggested in this regard that when an employer or insurance carrier disputes a disability claim on the basis of report from a vocational consultant and files a Notice of Dispute with the Agency, the employer should not indicate that the reason for stopping benefits is “failure to cooperate with vocational rehabilitation.” If you characterize the dispute in that fashion, the Agency treats it as a traditional Section 319 vocational rehabilitation issue that goes before the Director, rather than a dispute relating to disability that goes before the Magistrates.

In order to help dispel the tendency to blend the two areas, vocational consultants engaged to help make disability determinations for employers must make it clear in their reports that they are not engaging in “rehabilitation” of the employee but instead analyzing the employee’s present wage earning capacity. The vocational consultants should also advise the employees of this at the outset.
Similarly, reports from vocational consultants that relate to disability evaluations should be clearly labeled as a “Wage Earning Capacity Analysis,” rather than as a “Vocational Rehabilitation” report.

The important point to remember here is: “vocational rehabilitation” only applies where the employer is not disputing disability or where there has been a prior order entered by the Agency finding the employee disabled.

With respect to other issues, the Agency is considering changing the Application for Mediation or Hearing forms filed by employees. The contemplated change may require employees to furnish information regarding their skills, education, hobbies as well as past employments so as to expedite disability evaluations and trials on disability issues. The Agency will draft proposed changes to this effect and input from employers as to how the forms might read would be helpful at this time. Suggestions can be forwarded to Director Nolish at the Agency or to MSIA for forwarding to Director Nolish.

Finally, the group discussed statutory changes proposed by the Agency. One proposed change relates to the penalty provision in Section 801(1). The provision presently precludes imposition of penalties on employers if there is any ongoing dispute. The proposed change would have the statute read that penalties can be imposed unless there is a “valid, ongoing, good faith dispute.” The proposed change adds that “issues regarding vocational rehabilitation, including job placement and assessment of residual capacities, do not constitute a good faith dispute unless” the traditional vocational rehabilitation Section 319 process has been engaged. Penalties would also be increased to $1,500.00 and penalties could be imposed for each week under the proposal. Besides these proposed changes, other changes include strengthening the Director’s power to enforce compliance with procuring workers’ compensation insurance including issuance of “stop work” orders. The group present at the meeting expressed their concern on these proposed changes to the statute.

We also discussed with the Director his suggestion that an Uninsured Employers Security Fund be revived and established. The Fund would provide a means for injured workers to receive workers’ compensation benefits when their employer is not self insured and has not obtained workers’ compensation insurance. We advised the Director of concerns we have with regard to such a Fund.

First, we said the state’s public policy should be one that encourages insurance; establishment of such a Fund has the opposite effect. Second, we expressed concerns that such a Fund may tempt certain companies, such as closely-held or family businesses, to forego workers’ compensation insurance knowing that there is an Uninsured Employers Security Fund that would pick up payment of benefits. Third, we expressed concern about funding. That is, once established with seed money, such a Fund may prove politically difficult to terminate. The discussion concluded with our request to see the specific proposal for an Uninsured Employers Security Fund before making further comments or commitments.

The MSIA and other employer and carrier groups represented at the meeting deeply appreciated the dialogue afforded by the Agency personnel. We believe that many issues have now been clarified and developments will continue to be monitored.