STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

ROY G LADWIG, Applicant
 

CONTRACT TRANSPORT SER, Employer
 

ACUITY INSURANCE CO, Insurer
 

FREMONT CASUALTY INS WISF, Insurer
 

WORKER'S COMPENSATION DECISION
Claim No. 2003-036364 & 1997-012923


An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own, except that it makes the following modifications:

1. At pages 2 and 3 of the ALJ's decision, in the third paragraph of the Interlocutory Order delete the phrase "and shall pay Acuity Insurance Company Eleven thousand two hundred thirty dollars and thirty-five cents ($11,230.35) as reimbursement for medical expenses it paid on the applicant's behalf by mistake of fact".

2. At pages 2 and 3 of the ALJ's decision, delete the fourth and fifth paragraphs of the Interlocutory Order.

3. On page 4 of the ALJ's decision, in the first line of the chart labeled "TTD", delete "7/26/2002" and substitute "7/26/2003".

4. On page 11 of the ALJ's decision, delete the first two paragraphs, and substitute:

"In addition to the aforementioned amounts, the Fund shall reimburse applicant $3,061.26 for out-of-pocket medical expense."

5. On page 11 of the ALJ's decision, delete the heading "CLAIMS FOR REIMBURSEMENT/OVERPAYMENT" and substitute "OVERPAYMENT".

6. At pages 11 and 12 of the ALJ's decision, delete the second and third paragraphs of IV of the ALJ's Findings of Fact and Conclusion of Law.

ORDER

The findings and order of the administrative law judge, as modified, are affirmed.

Pursuant to Wis. Stat. § 102.18(3) and (4)(c), this matter is remanded to the Department of Workforce Development, Worker's Compensation Division to determine whether further action is appropriate regarding the potential claims of Touchpoint and United Healthcare under Wis. Stat. § 646.31(11)(c).

Dated and mailed September 9, 2008
ladwigr . wmd : 101 : 8 ND 2.6, 5.43, 5.46

/s/ James T. Flynn, Chairperson

Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner


MEMORANDUM OPINION

1. Date of injury.

The applicant, a truck driver, suffered a conceded injury on February 18, 1997, when he slipped on ice at work and developed low back and leg pain. Between March 1997 and the second alleged date of injury in January 2003, the applicant had back pain on and off with occasional leg pain. Indeed, he sought treatment for severe back pain in late 1997 and 1998, as well as for back pain and leg tingling in October 2001.

The applicant testified he slipped again and fell on ice at work again in late 2002 or 2003. He says he reported the injury and sought treatment about that time (in January or February 2003), but continued to work with back pain. He then had a hiatus in treatment--though still having symptoms--until June 2003. He eventually underwent another discectomy surgery at L5-S1 in November 2003, and again in July 2005, followed by a fusion surgery at L5-S1 in November 2005.

A different insurer is on the risk for the two dates of injury. Dr. Monacci did a record review for Acuity Insurance Co. (Acuity), who is on the risk for the alleged January 2003 injury. He noted the applicant's March 1997 lumbar discectomy, and stated patients who undergo lumbar discectomy have approximately a ten percent likelihood of a subsequent symptomatic recurrence of disc herniation or degenerative changes requiring medical or surgical treatment at that level. He attributed the applicant's need for surgery in 2003 and 2005 to the March 1997 surgery, and stated that if the need for March 1997 surgery were work-related, the need for the treatment beginning in 2003 would be as well. Dr. Monacci thought the January 2003 injury would have caused only a mild, temporary aggravation, given that the applicant did not treat for five months after his early visits. See Acuity exhibit 1.

Acuity also retained Michael Orth, M.D., who examined the applicant twice, most recently November 9, 2005. His opinion is set out at length at Acuity exhibit 2, page 6, point 6. To summarize, he views the applicant's problem as due to degenerative disc disease going back to at least 1984. Dr. Orth opines that the February 1997 slip-and-fall caused a herniated disc due in part to the degenerative condition, but views that as discrete event that was resolved by surgery, while the underlying degenerative changes themselves did not resolve. He attributes the 2003 and 2005 surgeries to that underlying disease, not any work injuries.

Fremont Casualty Insurance/Wisconsin Insurance Security Fund (Fremont/WISF), who is on the risk for the February 1997 injury, retained Stephen Weiss, M.D. He opined that the February 1997 injury was casually related only to the March 1997 surgery. He opined that the applicant "did very well" after his March 1997 surgery but then worsened in 2003 when he slipped and fell. Assuming the history of a 2003 slip-and-fall was accurate, Dr. Weiss opined that the 2003 and 2005 surgeries would be due to that event. Exhibit WISF 1.

The ALJ concluded that the applicant did not slip and fall on the ice in December 2002 or January 2003. The ALJ noted the applicant was inconsistent about exactly when the injury happened. The medical notes indicate the applicant initially was unable to say if the incident occurred in December 2002 or in January 2003, but could later precisely remember that it had occurred on January 30 or 31, 2003. At the hearing, he testified--again--that he could not remember the exact date. Further, the ALJ noted the hiatus in treatment from February to June 2003. After resuming treatment, the applicant told a doctor on July 15, 2003, that the symptoms had started in the absence of injury. A week later on July 22, 2003, however, the applicant reported to his employer an injury occurring on January 30 or 31, 2003.

Having carefully considered the record here, the commission is satisfied the ALJ correctly found there was no injury in late 2002 or early 2003. Again, the commission notes the applicant's inability to remember when the 2002-03 slip-and-fall occurred. After the injury allegedly occurred, he treated a time or two before stopping treatment for 5 months. Given this history, the commission is left with some doubt as to whether a slip-and-fall at work in late 2002 or early 2003, assuming it did occur, resulted in any injury.

In any event, the occurrence of the late 2002 or early 2003 injury is not the focus of the case on appeal. The applicant asks the commission to affirm the ALJ's decision which is based on the earlier February 1997 date of injury. Noting the weakness in the evidence supporting a second in 2002-03, Fremont/WISF asserts that the commission should adopt Dr. Orth's finding that the applicant's treatment and disability since 2003 relate to his underlying degenerative condition rather than his February 1997 injury.

However, the commission agrees with the ALJ that it was the February 1997 injury--as opposed to simply the normal progression of the underlying disease--that caused the need for additional treatment beginning in 2003. All the treatment involved the same area, L5-S1, that the applicant hurt in February 1997. Dr. Monacci's opinion, which notes the 10 percent chance of recurrent problems after discectomy surgery, makes the most sense on this history which includes the applicant's low back and periodic leg complaints after the March 1997 surgery.

It is true, as Fremont/WISF points out, that Dr. Monacci did not have the records from the February 1997 injury. However, as Acuity counters, that injury was conceded. The commission reads Dr. Monacci's opinion to be that the fact of the March 1997 discectomy itself, not the precise mechanics of the February 1997 injury or the treatment he underwent before the March 1997 discectomy, drives the doctor's opinion on causation.

 

2. Reimbursement of other insurers by WISF

a. Issue and law.

On appeal, Fremont/WISF also raises the legal question of whether the ALJ properly ordered Fremont/WISF to reimburse Acuity and a non-industrial insurer for payments they made for temporary disability and medical expenses. The ALJ's order on this point, of course, is consistent with Wis. Stat. § § 102.18(1)(bw) and 102.30(7)(a) which provide:

102.18(1)(bw) If an insurer, a self-insured employer or, if applicable, the uninsured employers fund pays compensation to an employee in excess of its liability and another insurer is liable for all or part of the excess payment, the department may order the insurer or self-insured employer that is liable to reimburse the insurer or self-insured employer that made the excess payment or, if applicable, the uninsured employers fund.

102.30(7)(a) The department may order direct reimbursement out of the proceeds payable under this chapter for payments made under a nonindustrial insurance policy covering the same disability and expenses compensable under s. 102.42 when the claimant consents or when it is established that the payments under the nonindustrial insurance policy were improper. No attorney fee is due with respect to that reimbursement.

Part of the policy behind ordering such payments is to encourage insures to pay first and resolve disputes between themselves later, so that injured workers receive prompt treatment.(1)

However, this case also involves the application of Wis. Stat. 646.31(11), a more specific(2) statute in the chapter governing the Wisconsin Insurance Security Fund. That section provides, with certain exceptions, that an insurance entity may not assert a claim against the Wisconsin Insurance Security Fund "for any amount due from the [insolvent] insurer to the insurance entity as subrogation, contribution, or indemnification recoveries or otherwise."

The court of appeals has recent addressed Wis. Stat. § 646.31(11) in Wisconsin Ins. Security Fund v. LIRC, 2005 WI App 242, 25 to 38, 288 Wis. 2d 206. That case involved a commission order directing the Wisconsin Insurance Security Fund to reimburse a non-industrial health insurer for medical expense payments that the non-industrial insurer had made for an injury later determined to be a compensable injury under the Worker's Compensation Act. In Wisconsin Ins. Security Fund, the court of appeals found that the group health insurer was "an insurer ... that has paid a claim and thereby has become subrogated or otherwise entitled to the amount of that claim" within the meaning of Wis. Stat. § 646.31(11), and that the commission was therefore precluded from ordering the Wisconsin Insurance Security Fund to repay the health insurer. Wisconsin Ins. Security Fund v. LIRC, 288 Wis. 2d 206, 33, 38.

However, the legislature subsequently amended Wis. Stat. § 646.31 (11) to allow for the recovery of health care costs, presumably in reaction to the holding in Wisconsin Ins. Security Fund. See 2007 Wisconsin Act 170, Sections 32 and 33. Specifically, Wis. Stat § 646.31(11), Wis. Stats.., now provides:

646.31 (11) SUBROGATION CLAIMS. (a) In this subsection:

1. "Health care costs" has the meaning given in s. 609.01 (1j).

2. "Insurance entity" means a reinsurer, an insurer, an insurance pool, or an underwriting association.

(b) An insurance entity may not assert a claim against the fund for any amount due from the insurer to the insurance entity as subrogation, contribution, or indemnification recoveries or otherwise, except as provided in sub. (2) (a). An insurance entity that has paid a claim and thereby has become subrogated or otherwise entitled to the amount of that claim may assert that claim against the liquidator of the insurer in liquidation but not against the insured of the insurer in liquidation.

(c) Notwithstanding par. (b), an insurance entity may assert a claim against the fund for health care costs if all of the following conditions are met:

1. The insurance entity paid the claim for health care costs under a disability insurance policy issued by the insurance entity.

2. The insurance entity is not obligated to pay the health care costs under the express terms of the disability insurance policy
because the claim arose out of, or in the course of, the claimant's employment.

3. The claim is covered by a worker's compensation insurance policy and would otherwise be an eligible claim under this section.

The amendment to Wis. Stat. 646.31(11) went into effect on April 9, 2008, after briefing was completed in this case. The changes first apply to "insurance company liquidations commenced or pending on" April 9, 2008.(3)

                

b. Reimbursement to United Healthcare and Touchpoint.

In this case, the ALJ ordered Fremont/WISF to reimburse to $83.69 to Touchpoint and $57,557.15 to United Healthcare for medical expenses those entities paid, pursuant to Wis. Stat. § 102.30(7). The ALJ took this action based on exhibit I, the applicant's Statement of Treatment, Drug, and Appliance Expense Claimed on form WC-3. That exhibit identifies Touchpoint and United Healthcare as "other insurance" that have paid a portion of the applicant's medical expenses due various providers.

Prior to the recent amendment of Wis. Stat. § 646.31(11), and specifically the creation of Wis. Stat § 646.31(11)(c), reimbursement of Touchpoint and United Healthcare would have unquestionably have been precluded under the Wisconsin Ins. Security Fund case. Recently-created Wis. Stat § 646.31(11)(c) may now provide Touchpoint and United Healthcare a claim, if the liquidation of Fremont Casualty Insurance is pending and depending on the express terms of the policies under which they paid the health care expenses. However, based on the record before it, the commission cannot determine whether the conditions of Wis. Stat. § 646.31(11)(c) have been met, assuming for argument's sake the commission even has jurisdiction to do so.

Consequently, the commission has amended the ALJ's order to eliminate the requirement that Fremont/WISF reimburse United Healthcare and Touchpoint under Wis. Stat. § 102.30(7). However, because Touchpoint and United Healthcare may have claims under Wis. Stat. § 646.31(11)(c) (depending in part upon whether the liquidation of Fremont Casualty Insurance was pending on April 9, 2008) and because it is unclear whether those claims fall within the jurisdiction of the Department of Workforce Development, the commission remands the matter to the department's Worker's Compensation Division to determine whether further action is appropriate with respect to the claims.

 

c. Reimbursement to Acuity.

The ALJ also ordered Fremont/WISF to reimburse Acuity, the worker's compensation insurer on the risk for the alleged January 2003 injury in this case, $11,230.35 for medical expense it paid on the applicant's behalf by mistake of fact. The ALJ further ordered Fremont/WISF to reimburse Acuity $30,418.37 in temporary disability benefits paid by mistake of fact. In Wisconsin Ins. Security Fund, again, the court of appeals held that § 646.31(11) precluded the commission from ordering the Wisconsin Insurance Security Fund to reimburse a group health insurer under Wis. Stat. § 102.30(7). Fremont/WISF argues that the case should apply equally to another worker's compensation insurer who has paid temporary total disability or medical expense under the mistaken belief that it was liable for the work injury and subsequently claims reimbursement under Wis. Stat. § 102.18(1)(bw). The commission agrees, and thus has amended the ALJ's order to eliminate the requirement that Fremont/WISF reimburse Acuity for medical expense and indemnity payments(4) it made by mistake of fact.

Acuity argues that Wisconsin Ins. Security Fund applies only to cases where another insurer becomes "subrogated" by its payment to the injured worker, and that Acuity is not "subrogated" because it paid by mistake of fact. Indeed, citing Wis. Stat. § § 102.18(1)(bw) and 102.30(7), Acuity asserts that the term "subrogation" is alien to the Worker's Compensation Act as the act contains its own mechanisms for reimbursement.

However, "subrogation" means that one is placed in the position of asserting another's rights with respect to a lawful claim.(5) The commission is not altogether certain that an insurer who pays under the mistaken belief it is liable is not "subrogated," at least as the court of appeals construed that term with respect to Wis. Stat. § 646.31(11) in Wisconsin Ins. Security Fund. Indeed, the non-industrial group health insurer in that case evidently paid the worker's medical expense in the mistaken factual belief that the injury was not covered by worker's compensation so that it, rather than a worker's compensation insurer, was liable for the medical expenses. In any event, given the holding in Wisconsin Ins. Security Fund, it seems likely that the court of appeals would conclude that by paying the temporary disability benefits and medical expenses to the applicant, Acuity was "subrogated" to the applicant's claim against Fremont for those payments for the purposes of Wis. Stat. § 646.31(11).

Beyond that, of course, the preclusive effect of Wis. Stat. § 646.31(11)(b) is not limited to the "other" insurer's subrogation rights against an insolvent insurer. Rather, the statute also bars an insurance entity from asserting a claim against the Wisconsin Insurance Security Fund for "any amount due" from the insolvent insurer (here, Fremont/WISF) to the other insurance entity (here, Acuity) "as subrogation, contribution, or indemnification recoveries or otherwise." In this case, of course, Acuity's claim that it is entitled to reimbursement from Fremont/WISF under Wis. Stat. § 102.18(1)(bw) falls, at the very least, within the "or otherwise" language. Under the statute, then, Acuity must press its claim against Fremont Casualty Insurance's liquidator, not the Wisconsin Insurance Security Fund.

Finally, the commission concludes that recently-enacted Wis. Stat. § 646.31 (11)(c), does not apply to the medical expenses or health care costs paid by Acuity. In order to obtain reimbursement from the Wisconsin Insurance Security Fund for medical expenses or health care costs under that provision, Acuity would have to be "not obligated to pay the health care costs under the express terms of the disability insurance policy because the claim arose out of, or in the course of, the claimant's employment." Wis. Stat. § 646.31(11)(c)2. Here, the reason Acuity is not obligated to pay the medical expenses or health care costs is because a different date of injury applies, not because the applicant's injury arose out of his employment. Indeed, Acuity--as a worker's compensation insurer--would normally be liable only if this were a worker's compensation injury (that is, one arising out of the applicant's employment), albeit one with another date of injury. While non-industrial health insurers (such as Touchpoint and United Healthcare) may have a claim or right under Wis. Stat. § 646.31(11)(c)2, Acuity does not under the facts of this case.

 

3. Conclusion

In sum, the commission affirms the ALJ's order holding Fremont/WISF liable on the 1997 date of injury, but modifies the ALJ's order to eliminate the requirement the Wisconsin Insurance Security Fund reimburse Acuity, Touchpoint and United Healthcare, and remands the matter to determine if further action is appropriate with respect to the potential claims of Touchpoint and United Healthcare.

 

cc: Attorney Tony Welhouse
Attorney Jeffrey J. Strande
Attorney Joseph Danas


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Footnotes:

(1)( Back ) See Rose v. DaimlerChrysler Corp., WC Claim No. 1999054818 (LIRC, September 28, 2001).

(2)( Back ) When two statutes relate to the same subject matter, the more specific statute controls the more general. Wisconsin Ins. Security Fund v. LIRC, 2005 WI App 242, 31, 288 Wis. 2d 206. Between Wis. Stat. 102.30(7) and 646.31(11), the court of appeals has found the latter to more specific. Id., at 31, 34. The commission believes that the same rationale that led the court of appeals to conclude that Wis. Stat. 646.31(11) controls Wis. Stat. 102.30(7) leads to the conclusion that Wis. Stat. 646.31(11) controls Wis. Stat. 102.18(1)(bw).

(3)( Back ) 2007 Wisconsin Act 170, SECTION 47(1).

(4)( Back ) The ALJ's carefully-detailed calculations include a deduction from the payments due the applicant for previous overpayment of temporary total disability benefits by Acuity in the amount of $1,417.06. Although the Wisconsin Insurance Security Fund is not required to repay that amount to Acuity under Wis. Stat 646.31(11)(b) and the Wisconsin Ins. Security Fund case, the amount was overpaid and will still be deducted from the applicant's award.

(5)( Back ) Black's Law Dictionary, (5th ed. 1979). The Supreme Court has held that "the right to subrogation arises 'when a person other than a mere volunteer pays a debt which in equity and good conscience should be satisfied by another.'" Employers Health Ins. v. General Casualty Co., 161 Wis. 2d 937, 956  (1991), citing American Ins. Co. v. Milwaukee, 51 Wis. 2d 346, 351 (1971).

 


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