ARIE G. OLDHAM, Applicant

KLUG AND SMITH COMPANY, Employer

GREAT AMERICAN INSURANCE COMPANY, Insurer

The applicant submitted a petition for Commission review alleging error in the Administrative Law Judge's Findings and Interlocutory Order issued on August 24, 1989. The employer/insurer submitted an answer to the petition, and both parties submitted briefs on the issues. At issue are : (1) whether the insurer is entitled to claim an interest credit against the cushion left over from a third party settlement; (2) whether the applicant is entitled to apply the value of his spouse's in-home services against the cushion, and if so, at what amount; and (3) whether additional expenses claimed by the applicant are compensable.

The Commission has carefully reviewed the entire record in this matter, and after consultation with the Administrative Law Judge regarding his credibility and demeanor impressions of the witnesses, hereby reverses in part his Findings and Interlocutory Order and makes the following:

The applicant sustained severe injuries on August 27, 1968, when he was painting structural steel next to a high voltage power line and came into contact with the line. He sustained third and fourth degree burns over 41 percent of his body, amputation of his right leg above the knee, and amputation of his left arm below the elbow. He underwent extensive surgery. His left foot is not functional and requires stretching exercises in order to keep it from curling into a claw-like deformity. His left leg/foot circulation is poor and he has problems with ulcers, infections and skin breakdowns on the leg and foot. When these conditions occur periodic soakings and dressing changes are required, especially on the applicant's foot. He requires additional assistance at various times of the day. 
 

INTEREST CREDIT

A third party settlement arising out of the work injury was approved by a Milwaukee County Circuit Court on February 13, 1973. In accordance with section 102.29, Stats., after deducting the costs of collection, the applicant received one-third of the settlement remainder, and the insurer received reimbursement for all worker's compensation payments it had made up to the date of the settlement. The remainder of the settlement amounted to $259,772.03, and this amount constitutes the "cushion" referred to in the introduction to this Order.

Also in accordance with section 102.29, Stats. , the Circuit Court note in the settlement that this cushion amount should be offset against any future worker's compensation, including medical expense, which the insurer would thereafter become liable to pay under the Worker's Compensation Act. However, the Circuit Court went on to order immediate payment of the full cushion amount to the applicant, rather than to a trust for future disbursement as worker's compensation payments became due. If the court had ordered payment of the cushion to a trust, it would immediately have begun generating interest, which could also have been applied to worker's compensation payments as they became due. The insurer asserts that it should receive a credit for this lost interest amount, which would have been generated had the cushion been placed in a trust with the court or the insurer. The Commission agrees that a credit is appropriate.

In Richtman v Honkamp, 245 Wis. 68, 13 N.W.2d 597 (1944), the Circuit Court had also ordered payment of the cushion amount, left over from a third party settlement, directly to the applicant in an immediate lump sum. In the separate worker's compensation proceedings, the Commission subsequently ordered payment of permanent partial disability over a period of 712 weeks, a portion of which was unaccrued. The insurer appealed the court's payment of the cushion as a lump sum to the employe, asserting that it should have been paid to him only in accordance with the Commission's Order, which would mean weekly payments over the period of 712 weeks.

The Supreme Court agreed with the insurer. It recounted the history of third party proceedings under Wisconsin's Worker' s Compensation Law, noting that originally an injured employe who received worker's compensation entirely lost his/her right to proceed in a third party action. The employer/insurer became the successors to that cause of action. The court explained that the right of the employe to participate in the fruits of the third party action has been expanded only to the extent allowed under 5ection 102.29, Stats. The employe was entitled to payment of his worker' s compensation benefits, which were to come out of the cushion amount, only in accordance with the Commission's Order that they be paid out over 712 weeks. The court noted that the employe could be adequately protected by payment of the cushion amount to the insurer in trust for its own reimbursement as it made future payments to the employe, or by letting the cushion remain in trust with the clerk of courts to be repaid to the insurer as fast as the insurer paid compensation to the employe. (Id. at 73 ).

Today, as in the past, section 102.29, Stats., requires reimbursement of the "balance remaining" (cushion) to the employer or insurance carrier, for all payments made by it, or which it may be obligated to make in the future. None of the cushion amount belongs to the employe until and unless he/she becomes entitled to payment of accrued compensation, in accordance with the provisions of Chapter 102 of the Statutes, or until it can be foreseen that the cushion amount will not be needed for future employer/insurer obligations. Additional medical expenses generated by the employe's injury should be paid by the employer/insurer from the cushion amount, without these payments passing through the employe's hands. Since the statute requires that future claims be reimbursed to the employer/insurer out of the cushion amount, it follows that interest generated by the cushion amount should remain in trust to be available for payment of those future claim. Of course, if the cushion amount were large, and it could be foreseen that only a limited dollar amount of future claims would become payable, then the employer/insurer would only be entitled to an appropriate portion of the cushion to be placed in trust. In the applicant's case, the claim subsequent to February 13, 1973 are substantial and ongoing, and could easily exhaust the entire cushion amount.

Accordingly, under section 102.29, Stats. , the applicant was not entitled to receive the lump sum payment of $259,772.03, which he did receive in accordance with the Circuit Court Order of February 13, 1973. The lump sum payment constituted an advance payment, within the meaning of section 102.32(6), Stats., and therefore the rate for an interest credit provided in section 102.32 (6 ), Stats., during the various years in question (February 13, 1973 to the present), shall be allowed to the insurer. The amount of the cushion balance available to generate interest during the period in question would have been a function of the amount of compensation/expenses payable to the applicant at various times during this period. Certain expenses the Commission finds compensable herein were not entered into the fund analysis completed by the insurer's Jesse Mueller. A new analysis must be completed, and should the parties disagree concerning the calculations, a hearing regarding such dispute would be available under the interlocutory aspect of this decision. 
 

COMPENSABILITY OF SPOUSAL HOME MEDICAL CARE:

The applicant's wife has attended to many of his medical needs since his return home from the hospital. She learned a number of his medical requirements during her attendance at his eight months of hospitalization, including care of his leg after skin had been sloughed, diet requirements and physical therapy.

On a typical day, Mrs. Oldham assists the applicant in getting into his wheelchair and washing. She places a foot brace on his left foot for two hours, and removes it for relief every 15 minutes during these two hours. She checks his arm and leg for sores or infection which require attention as they occur. The applicant periodically suffers from open sores on his foot, and these require half-hour foot soaks three or four times per day. Mrs. Oldham applies topical medication as needed, and massages and exercises the left foot to prevent the claw-like deformity. She checks the foot for skin problems after the applicant attempts any activity, since he cannot feel any pain in his foot. She assists the applicant in dressing, and in the afternoon again applies the brace to his foot over a two-hour period. She helps him stretch his leg stump, since he lies on it and without the stretching it "goes out too much." She assists him in bathing. She provides various other assistance to the applicant which is primarily personal rather than medical in nature.

The Administrative Law Judge found that virtually all the care the applicant's wife provided was "custodial" in nature, and that nursing services voluntarily performed by a relative without promise or expectation of compensation are not compensable, citing Milwaukee v. Miller, 154 Wis. 652, 144 N.W. 188 (1913). The Commission consulted with the Administrative Law Judge, who indicated that Mrs. Oldham's testimony regarding the home health care she has provided was credible. Given the credibility of her testimony, and the opinions of both the applicant's and the employer's physicians, the overwhelming evidence is that much of the care provided by Mrs. Oldham constituted medical care.

When the Wisconsin Supreme Court decided Miller (supra) in 1913, the law provided that the employer was required to provide the injured employe's medical services during the first 90 days subsequent to the injury. The court concluded that there was no provision in the law for compensation for any nursing services, other than those incidental to medical attention during the first 90 days after the injury. It quoted another section of the 1913 law which provided that if nursing assistance was required beyond the first 90 days, rather than compensation for those services, the employe would be entitled to an increase in his weekly indemnity (disability) rate. Miller at 668. The court added, in what was actually dicta, that in Mr. Miller's case, his niece had provided nursing service without promise or expectation of compensation; and that under the circumstances of that case, the service should be considered gratuitous and not compensable. Miller at 669-70.

The Miller decision is not applicable to current worker's compensation law in Wisconsin. The statutory framework for the provision of medical services is now substantially different, with section 102.142(1), Stats., having long been understood to provide for compensation of all reasonable nursing services attributable to the effects of the work injury There is no logical reason why the statute should not also be read to provide for reimbursement of reasonable spousal home medical services, where such services would otherwise have to be provided by a nurse, nursing assistant or a home health care provider. The policy reasons for interpreting the statute in this manner are obvious, since medical care does not always cease when an injured employe leaves the hospital and returns home. Indeed, one of the recognized methods of reducing health care costs is to shorten hospital stays whenever possible. Any employer or insurance company which distrusts spousal health care is always free to provide outside professional care in its stead. As with the provision of any medical service to an injured employe, the kind and amount of service must b reasonably required by the effects of the work injury.

The employer/insurer have agreed that even assuming spousal home health care is compensable, any portion of that care which is "custodial" in nature should not be compensable. The Commission considers the term "custodial" to be ambiguous in this context, since its meaning could be interpreted to be limited to ordinary househo1d and personal services, or to include necessary monitoring of and attendance to an injured employe's medical condition. Accepting "custodial" as referring to ordinary household and personal services not specifically required by the effects of the work injury, the Commission agrees that such services performed by a spouse or other family member are not compensable under section 102.42(1), Stats.

A Commission decision issued by two former Commissioners on June 9, 1981, Daniel Kluth v. Retzlaff Roofing, Inc. , found that medical treatment under section 102.42(1), Stats., did include the value of reasonably-required, nonprofessional nursing services performed for an injured employe by members of his family. That decision went on to state that compensable nursing care included: ". . . custodial or housekeeping duties of a 'nurse' performed by family members in the absence of or in lieu of performance of such services by a professional or semi-professional 'nurse''" The Commission would clarify that decision by emphasizing that the test of compensability is whether the activity performed by the spouse or other family member is reasonably required, or in other words made necessary, by the effects of the work injury. Housekeeping duties and personal services which the spouse or family member performed prior to the employe being injured, or which would have been performed even had the injury never occurred, or which are performed after the injury only because of personal devotion or concern are not compensable. In the case of a severely disabled worker, required medical care could include assistance in the performance of basic, daily tasks. Whether or not such assistance is reasonably required in a particular case will present a question of fact. 
 

AMOUNT OF COMPENSABLE HOME MEDICAL CARE:

The questions remain of what amount of Mrs. Oldham's time spent in caring for the applicant is actually spent performing services reasonably required by the effects of the work injury, and at what rate should those services be compensated.

The applicant submitted an assessment of his home care needs made by a registered nurse, Sherill Slack. Ms. Slack described Mrs. Oldham's services in detail. She concluded that if Mrs. Oldham was not able to perform these services, the applicant would need 24-hour care by a Licensed Practical Nurse (LPN). This opinion was shared by another registered nurse, Ruth Ainsworth, who evaluated the situation at applicant ' s request.

At the request of the employer/insurer, Dr. R. A. Sievert examined and evaluated the applicant on December 28, 1987. He submitted a written report dated January 5, 1988, and also testified at the hearing held on April 5, 1988. In his written report he opined that the applicant required care by someone such as a family member who had been taught and instructed in the necessary care needs. He added that at times the applicant would have required care by someone probably with the skill level of an LPN. At other times he would have required care by someone with lesser skills, such as a health aide or nursing assistant. He sees an ongoing need for such care. In his testimony, Dr. Sievert indicated that as of 1970 the applicant required two one-hour visits per day by a health aide. He conceded that in addition, when the applicant had open sores, several half-hour foot soaks would be needed each day, and that treatment of infections should be supervised by an LPN. He testified that application of the foot brace stopped being necessary "many years ago" when there was no more range of motion.

The employer/insurer requested an opinion from another registered nurse, Nancy Della Pia. She opined that all of Mrs. Oldham's care was gratuitous, unnecessary and contrary to the objective that the applicant attained independence. In his written report, Dr. Sievert specifically rejected this opinion.

Dr. John E. Hamacher is a plastic surgeon who has participated in the applicant's treatment since the date of injury. He testified at the hearing held on October 13, 1987, and opined that there are not many things the applicant can do on his own, and that he does have to stretch his foot and apply the foot brace. He testified that without his wife, the applicant would have to be in a nursing home or other institution, and that he needs 24-hour attention

Based on the various medical opinions, the Commission concludes that as of the date of the last hearing held on July 26, 1988, the applicant required home medical care on a regular but not full-time basis. Dr. Sievert's opinion was relied upon to the extent that he believed the applicant required two hours of daily care, with acknowledgement that additional care was needed on a frequent but intermittent basis. The Commission concludes that a fair assessment of the required care is three hours per day at the hourly rate of a home health aide, as set forth in applicant's Exhibit S for the years 1973-78. The 1973 amount, which begins with February 13, 1973 is $2,277.15; the 1974 amount is $2,737.50; the 1975 amount is $3,175.50; the 1976 amount is $3,149 1.64 ; the 1977 amount is $3,777.75; and the 1978 amount is $3,974.85. The record does not provide the prevailing wage for home health aides, or their equivalent, in the years 1979 through 1988. The employer/insurer were liable for such care, again at the rate of three hours per day for each day of the year. The parties should be able to reach agreement concerning such prevailing wage, although should there be disagreement, the order is interlocutory. All this liability constituted an offset against the cushion as of the various dates it was incurred.

The applicant's ongoing home medical care remains an issue between the parties after July 26, 1988. Absent a change in the amount of medical services the applicant reasonably required, the finding of three hours per day at the applicable rate would remain in effect. However, the applicant's need for medical services could have changed after July 26, 1988, or could change in the future. 
 

MISCELLANEOUS EXPENSES:

The applicant moved from Wisconsin to Florida in 1978, after being advised by Dr. Hamacher to move to a warmer climate. He asserts that he should be entitled an offset against the cushion for the expense he incurred in traveling back and forth from Florida to be seen by Dr. Hamacher in Wisconsin. He was dissatisfied with the Florida physicians he contacted, and indicated that several of them refused to treat him due to the complexity of his condition. However, he failed to credibly demonstrate that he was unable to obtain competent medical care from any physician within the Gainesville, Florida, area. The compelling inference is that he chose to continue treating with Dr. Hamacher because he felt more comfortable with him, and because it allowed him to visit friends and relatives in Wisconsin. Therefore, the expenses of this travel are found to be unreasonable, within the meaning of section 102.42(2)(b), Stats. They will not be offset against the cushion amount.

The applicant built a house in Wisconsin after the work injury, and he claims that $11,205 in handicap accommodations built into the house should be offset against the cushion amount. He also built a house with handicap accommodations when he moved to Florida, and makes the same claim for these costs in the amount of $111,918.

The figure of $11,205 represents the 1987 value of the accommodations to the Wisconsin residence, but their cost at the time of original construction in 1974w as $5,418. This latter figure is the amount which should have been offset against the cushion in 1974. When the applicant sold his Wisconsin residence, which apparently occurred in 1978, his testimony leads to the inference that he made money on the sale. Of course, there was a market appreciation of most real estate between these years. It was the applicant's burden to provide credible evidence substantiating all claimed expenses, but based on the record before the Commission, it is impossible to discern whether he recouped the value of the handicap accommodations when he sold the Wisconsin home. Therefore, it is inferred that he did recoup their value, and that such recoupment was available to him when he built his home in Florida. The 1987 value of the accommodations to the Florida home was $241,918, but the compensable cost was the value at the time of construction which was $27,804.

Therefore, as of the time of the construction of applicant's Wisconsin home in 1974, the cushion should have been reduced by $5,418, to reflect the cost of handicap accommodations. As of the time of the construction of applicant's Florida home in 1979, the cushion should have been further reduced by an additional $22,386. This latter amount reflects the cost of the accommodations in 1979, less the $5,418 recouped in the sale of the Wisconsin residence.

The applicant claimed additional medical, travel, utility, dental, prescription drug and other expenses totaling $72,126.67. One of these claims is for reasonable expenses incurred for relocation which Dr. Hamacher advised and Dr. Sievert conceded was probably advisable. Therefore, the relocation expenses are properly applied against the cushion. With regard to the claimed utility expenses, there is no credible showing of what proportion, if any, of such expenses were attributable to the effects of the work injury. The fact that there may have been previous payment of some utility expense is not controlling with respect to the compensability of the utility expense presently at issue. Therefore, that claim is denied.

Numerous other claimed expenses were not shown to have been reasonably required by the effects of the work injury, and the Administrative Law Judge (ALJ) disallowed them in a table set forth on pages 6 through 9 of his Order issued on August 24, 1989. The Commission agrees with all these disallowances and incorporates them by reference to the ALJ's Order. However, the ALJ miscalculated the sum of these disallowances as being $33,675.46, when in fact they totaled $32,143.78. Subtracting the disallowances ($32,143.78) from the claimed expenses ($72,126.67), results in a total allowable deduction against the offset cushion of $39,982.89. These allowances were deductible as of the dates the expenses accrued, as enumerated in applicant's Exhibit A attached as an appendix to this Order.

The applicant asserted that certain of the disallowed expenses just referred to were related to the work injury, and that they were found to have been compensab1e in a stipulation entered into with the employer/insurer's initial counsel in this matter. However, there is no evidence in the record of such a stipulation and there is no credible evidence relating any of the disallowed expenses to the work injury.

It is undisputed that the applicant is entitled to offset against the cushion amount for permanent total disability payments which were payable to him on a monthly basis at the rate of $73 per week through July 26, 1988. The applicant also received supplemental benefits beginning January 1, 1978, but such befits shall not be offset against the cushion amount since they are reimbursable to the employer/insurer under section 102.44(1)(c), Stats. The total of permanent total disability benefits payable to the applicant between August 27, 1968 and July 26, 1988, not including supplemental benefits, was $75,847. The total of permanent total disability befits, not including supplemental benefits, payable to the applicant between February 13, 1973 and July 26, 1988, was $58,874.50. The sum of $58,874.50 constitutes the total amount of such benefits which should have been offset against the cushion amount at the monthly rate of $316.33 beginning March 13, 1973.

To summarize, the applicant sustained a compensable work injury on August 27, 1968, which immediate1y resulted in permanent and total disability. As a result of a third-party settlement dated February 13, 1973, a cushion amount of $259,772.03 remained available to offset all future worker's compensation claims attributable to the 1968 work injury. Contrary to the provisions of section 102.29(1), Stats. , and Richtman v. Honkamp, 245 Wis. 68, 13 N.W.2d 597 (1944), the Circuit Court ordered full and immediate payment of this cushion amount to the applicant, rather than to a trust for disbursement as future claims accrued.

The Commission deems the lump sum payment by the Circuit Court to have constituted an advance payment of unaccrued compensation, within the meaning of section 102.32 (6), Stats. Accordingly, the insurer is entitled to calculate an interest credit at the statutory rate provided in section 102.32 (6), Stats. , for the various years between February 13, 1973 and July 26, 1988. This statutory interest rate should be applied against the cushion balance which would have remained in the trust on a daily basis, taking into account the amounts which would have been paid out of the trust on a daily basis to cover the applicant's allowable claims. The amounts which would have been paid out of the trust are: (1) the amounts enumerated above for spousal home health care between 1973 and 1988; (2) the amounts enumerated above for handicap accommodations to the applicant's homes; (3) the allowed expenses totaling $39,982.89 and enumerated in applicant's Exhibit A, attached as Appendix A; (14) permanent total disability payments in the total amount of $58,874.50, payable in monthly installments of $316.33 beginning March 13, 1973; and (5) any additional claims/expenses not listed which the employer/insurer paid between February 13, 1973 and July 26, 1988.

Jurisdiction will be reserved with respect to the need for additional medical treatment, additional spousal hone medical care, future disability payments, other compensable expenses, and resolution of the exact amount of offset due in accordance with this order.

NOW, THEREFORE, this

The employer/insurer are entitled to an interest credit, and the applicant is entitled to offsets against the cushion amount as detailed in the above findings.

Jurisdiction is reserved with respect to such further findings and orders as may be necessary.

Dated and mailed March 6, 1991
ND § 5.46  § 10.7 

/s/ Kevin C. Potter, Chairman

Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

cc:
Attorney P. Scott Hassett
Lawton & Cates, S. C.

Attorney Paul R. Riegel
Borgelt, Powell, Peterson & Frauen, S. C.

185 : CD0893

Appealed to Circuit Court.  Affirmed in part, reversed in part and remanded, sub nom. Oldham v. LIRC, Klug and Smith Co. and Great American Ins. Co., No. 91-CV-1304, Dane Co. Cir. Ct., July 21, 1992.  Appealed to the Court of Appeals.  Circuit Court decision affirmed, unpublished per curiam decision, December 2, 1993.

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