November 2004

Minnesota Department of Labor and Industry

CONTENTS Department
advisory
2 Rules amendment proposals pending; sign up to groups:
receive notice mailings 2005
schedules,
3 Department advisory groups: 2005 meeting open
schedules, open positions positions

6 Case-studies showcase mediation advantages 3

6 IAIABC awards Keith Keesling

8 Catch us in the act ...

Case-studies showcase
mediation advantages
9 Minnesota workers' compensation costs
increase in 2003

10 Workers' compensation family farm coverage

where other insurance coverage requirements
are met

D-1 Court decisions: July through September 2004 6

Court decisions: July

TABLES through September 2004

9 Workers' compensation system cost

per $100 of payroll, 1997-2003

10 Family farm coverage

D-1
 Rule amendment proposals pending;
sign up to receive notice mailings
The Department of Labor and Industry (DLI), Workers' Compensation Division,
is preparing to publish proposed amendments to the following rules in the
Minnesota State Register during the next two months:

• Litigation Rules of Practice with

the Office of Administrative Hearings (OAH)
Minnesota Rules, chapter 1415 (joint rules
with DLI) and chapter 1420 (OAH rules);

• Vocational Rehabilitation Rules

Minnesota Rules, chapter 5220;

• Pharmacy Reimbursement Rules

Minnesota Rules, part 5221.4070; and

• Certified Managed Care Rules

Minnesota Rules, chapter 5218.

Information about amendments to the Litigation Rules can be found on the

Office of Administrative Hearings Web site at www.oah.state.mn.us/wc.html.
The Notices of Intent to Adopt Rules will be published in the State Register
on Mon., Nov. 22.

Information about amendments to the Vocational Rehabilitation, Pharmacy

Reimbursement and Certified Managed Care rules can be found on the DLI
Web site at www.doli.state.mn.us/workcomp.html.

Publication of a Notice of Intent to Adopt Rules (with or without a

hearing) in the Minnesota State Register initiates an official 30-day
public comment period. These notices are sent by U.S. mail to people
who have registered to receive rule notices with DLI. If you would like
to receive the notices by U.S. mail, send complete mailing information to
DLI.Communications@state.mn.us or to Char Chilson, Department of Labor
and Industry, 443 Lafayette Road N., St. Paul, MN 55155.

The rule notices will also be sent by e-mail to those on the COMPACT e-mail
notification list. If you do not want to receive rule notices by e-mail, send a
message to DLI.Communications@state.mn.us with "No rule mailings" as
the subject line and with your name and e-mail address in the body of the
message.

2 • COMPACT • November 2004

DEPARTMENT ADVISORY GROUPS:
2005 meeting schedules, open positions
Medical Services Review Board
The Medical Services Review Board (MSRB) was created by Minnesota Statutes
§176.103 in 1983. The MSRB is composed of two chiropractic representatives,
one hospital administrator representative, one registered nurse, one physical
therapist, six physicians of different specialties, one employee representative,
one employer/insurer representative and one general public
representative.

Under M.S. §176.103, the MSRB advises the department

about workers’ compensation medical issues; is the
liaison between the department and the medical-provider
community; and supports and engages in the education
of the provider community about workers’ compensation.
The MSRB also has the authority to sanction a provider
if there has been a violation of any part of the workers’
compensation chapter or rules.

• 2005 meetings
In 2005, the MSRB is scheduled to meet Jan. 20, April 21, July 21 and Oct. 13. All
meetings are from 4 to 6 p.m. in the Minnesota Room at the Department of Labor
and Industry (443 Lafayette Road N., St. Paul).

• Open positions
Currently, the MSRB has three openings beginning Jan. 1,
2005. One position represents chiropractors, one represents
employers/insurers and one represents physicians. Each of
these positions have four-year terms. There also is a labor
representative position that is vacant and is scheduled to
expire Jan. 1, 2006. In addition, all alternate positions are
open as of Jan. 1, 2005. An alternate position is a one-year
term; alternates representative categories are: chiropractor,
employer/insurer, labor, hospital administrator, physical
therapist, general public, registered nurse and physician.

Individuals interested in applying for any of the open

positions must submit an "Open Appointments Application Form" with the
Secretary of State's office. The form is available online at www.sos.state.mn.us/
openapp/forms.html.

Rehabilitation Review Panel

The Rehabilitation Review Panel (RRP) was created in 1981, by Minnesota
Statutes §176.102, to offer advice and recommendations to the commissioner of
the Department of Labor and Industry about all aspects of vocational rehabilitation
care impacting work-related injuries or illnesses. The RRP is composed of two
Advisory groups, continues next page ...
Advisory groups, continued ...

members each representing employers, insurers, rehabilitation and medicine

(for a total of eight), one member representing chiropractors and four members
representing labor.

Under M.S. §176.102, the RRP reviews and makes determinations with respect
to appeals from orders of the commissioner regarding certification approval of
rehabilitation consultants and vendors; advises the department about vocational
rehabilitation issues; and assists in the education of the
provider community about workers’ compensation. The
RRP also has the authority to sanction a rehabilitation
provider after a hearing at the Office of Administrative
Hearings (OAH) if there has been a violation of the statutes
or rules.

• 2005 meetings
In 2005, the RRP is scheduled to meet April 7, from 1
to 3 p.m. at the Department of Labor and Industry (443
Lafayette Road N., St. Paul). Additional meeting dates will
be announced.

• Open positions
Currently, the RRP has three member positions open as of Jan. 1, 2005. One
must represent labor; the other two must represent the rehabilitation provider
community. There are also four vacant positions currently: an employer
representative (term expires Jan. 1, 2006); a labor representative (term expires Jan.
1, 2007) and two medical practitioners (terms expire Jan. 1, 2007). Three one-year
alternate positions are open Jan. 1, 2005. The alternate representative categories
are: chiropractic/medical/rehabilitation; employer/insurer; and labor.

Individuals interested in applying for any of the open positions must submit an
"Open Appointments Application Form" with the Secretary of State's office. The
form is available online at www.sos.state.mn.us/openapp/forms.html.

Workers' Compensation Advisory Council

The Workers’ Compensation Advisory Council (WCAC) was created by Minnesota
Statutes §175.007, in 1992, as a permanent council on workers’ compensation.
It consists of 12 voting members (six representing organized labor and six
representing Minnesota businesses), 10 of which are appointed by the governor,
the majority and minority leaders of the Senate, and by the speaker and minority
leader of the House of Representatives. The other two members are the presidents
of the largest statewide Minnesota business organization and the largest organized
labor association.

The WCAC advises the commissioner of the Department of Labor and Industry
about workers’ compensation matters and submits its recommendations for

Advisory groups, continues next page ...

Advisory groups, continued ...

proposed changes to the workers’ compensation statutes to the proper legislative

committees. The WCAC’s recommendations must be supported by a majority of
business and labor members.

• 2005 meetings
In 2005, the WCAC is scheduled to meet Feb. 9, April 13, June 8, Aug. 10, Oct. 12
and Dec. 14. All WCAC meetings are from 9:30 to 11:30 a.m., in the Minnesota
Room at the Department of Labor and Industry (443 Lafayette Road N., St. Paul).

Workers' Compensation Insurers' Task Force

The Workers’ Compensation Insurers’ Task Force is an organized body of
representatives of insurance companies that write workers’ compensation
insurance within the state of Minnesota and those employers who self-insure
for their workers’ compensation coverage. There is no statutory authority
vested in this body; however, the department values the input from the Workers’
Compensation Insurers’ Task Force.

• 2005 meetings
In 2005, the Workers' Compensation Insurers' Task Force is scheduled to meet
March 16, May 18, Aug. 17 and Nov. 16. All meetings are from 9 to 10:30 a.m.,
in the Minnesota Room at the Department of Labor and Industry (443 Lafayette
Road N., St. Paul).

Keep your finger on the pulse

For more information about any of these

advisory groups or to get up-to-the-minute
meeting and schedule information, visit
www.doli.state.mn.us/events.html.
 Case-studies showcase mediation advantages

Editor's note: The following excerpt is from the IAIABC 2004

Mediation and Dispute Resolution Guidebook. IAIABC awards
Keith Keesling
Historical perspective
In the fall of 1995, the Minnesota [Department of Labor and
Industry, Workers' Compensation Division] Customer Assistance
unit was created, adding the responsibility for answering "hotline"
calls to the already existing responsibilities for conducting
administrative conferences on rehabilitation and medical disputes
in the workers' compensation system, as well as mediation
sessions. This strategic decision coincided with and was partially
driven by the inauguration of the imaging system in Minnesota.
The hypothesis was that if the department were to combine
front-loading its expertise with "real-time" access to workers'
compensation files, via image, many disputes could be prevented
by the timely attention of department specialists.
DLI Customer Assistance
Director Keith Keesling received
History has shown that many disputes are borne of the Committee Member
misapprehension of information received by the injured worker Recognition Award from the
International Association of
from the insurer or some other miscommunication or lack of Industrial Accident Boards and
communication, combined with the time-lag inherent in a paper- Commissions (IAIABC) Council
based system. With a focus on "real-time" resolutions, afforded of Committee Chairs during its
annual convention in August, in
by instant access to the complete file, via image, the thinking was New York City.
that many unnecessary disputes could be avoided. Thus was born a
customer assistance approach to dispute prevention, coupled with a Keesling was recognized as
being "inspirational in the
"med-arb" approach to dispute resolution. design and implementation of
the Judicial Committee's work
Since 1995, the Customer Assistance unit has prevented thousands product, the 2004 Mediation and
Dispute Resolution Guidebook,
of disputes with a simple phone call. Additionally, it has resolved demonstrating his technical
with finality, thousands of other disputes, through the use of the expertise."
administrative conference for rehab and medical disputes and
The IAIABC is a not-for-profit
through the use of mediation for virtually every other kind of association representing most
dispute. The following mediation success stories are real. of the government agencies
charged with the administration
of workers' compensation
Minnesota mediation success stories
systems throughout the United
Mediation can produce resolutions where parties' positions are States, Canada, and other
seemingly far apart. Often, the distance between the parties is nations and territories.
caused by lack of understanding by one or both of the parties.

Case 1
The unrepresented injured worker demanded $300,000 to settle his claim on a full, final and
complete basis. The insurer made an initial counter of $25,000. The mediator asked the parties how
they'd arrived at their respective positions. It was then that the mediator learned that the injured
worker did not understand how to properly value the case.
Case studies, continues next page ...
6 • COMPACT • November 2004
 Case studies, continued ...
The plaintiff looked at what he had earned
during the previous 18 years, projected that
forward 18 years, then added $50,000 for a
possible retraining plan.
In a private caucus,
the mediator educated
this person about what
the likely amount of
exposure the insurer
might have in a case
such as his ($70,000)
and suggested that he
consider reducing his
demand. The injured
worker then demanded
$70,000.
The negotiation process
ended, then, with a resolution and a settlement
worth $50,000, leaving medical benefits open.
Case 2
This matter began as an administrative
conference under Minnesota Statutes §176.106.
The dispute was over the need for a rehabilitation
consultation. The arbitrator asked the parties if a
mediator could speak to each party in a private
caucus. They agreed. The mediator met with the
unrepresented insurance adjuster first, reviewing,
in detail, the law on this benefit claim and the
exposure for substantial attorney's fees if he lost.
He changed his position, reaching an agreement
with the plaintiff's attorney, not only on the QRC
who would perform the consultation, but also on
the amount of fees to be awarded in the dispute.
The two cases above illustrate how educating a
party created the opportunity for the parties to
resolve the dispute.
Sometimes, however, the gap is caused not by a
lack of education or information, but, instead, by
emotional, ego-based positions. Nevertheless, a
skilled mediator can provide a means to bridge
this type of gap, turning an impasse into a
resolution.
7 • COMPACT • November 2004
Case 3
During the course of a lengthy mediation
session, the parties were able to narrow a
$170,000 gap to
$45,000. The mediation
then stalled, as neither
party was willing to
budge from its final
position.
This situation can spell
the death of all hope for
settlement, and often
does, because the parties
are now emotionally
invested in their
respective positions. The
parties both fear that any
further movement would show weakness to the
other side and that this may be used to the other
side's advantage in the future.
A mediator's proposal is a good alternative to
terminating the session. It allows the parties to
continue forward toward resolution, without
risking their current position.
In this case, the mediator proposed what he
thought the settlement terms should be, advising
the parties to write "yes" or "no" on a sheet of
paper and to then seal the paper in an envelope.
The envelopes were then given to the mediator
to privately open and review.
If either party rejected the proposal, the mediator
would then inform the parties that there was
no settlement. Neither party would know how
the other party responded to the proposal. If
both parties said yes, which is what happened
in this case, then the mediator would announce
that the impasse was over, since agreement was
now reached. Now, neither party would have to
say that it gave in to the demands of the other
party. But, most importantly, both parties were
given the opportunity to successfully resolve the
dispute.
Case studies, continues next page ...
 Case studies, continued ...
Sometimes the dispute involved not only "what"
should be paid, but "who" should pay it. The
following is an example of how mediation can
expeditiously resolve an apportionment dispute.

Case 4
An employee had two alleged injuries at
successive employers. Each employer referred
her to the other to collect workers' compensation
benefits and neither would pay her claim, even
though there was never really any dispute that
she was owed benefits from someone.

The mediator contacted the two insurers and

pointed out that both may benefit from mediating
this dispute to at least explore the possibility
of resolving the dispute without litigation. The
mediator reminded the insurers that they risked
nothing but a couple of hours of their time; if an
agreement could not be reached, they still had all
of their rights and defenses.
agent would be. The injured worker agreed to
accept a small discount on some of the past due
indemnity benefits, but in return, established an
income stream for the future and payment of
medical bills so she could continue to receive
medical treatment for her condition.

The insurers agreed to try mediation. The
session, which was attended in person by the two
insurers and the injured worker, was successful.
The insurers not only agreed to pick up the
injured worker's claim, but also agreed to an
apportionment formula and who the paying
The insurers, through mediation, avoided a
substantial litigation expense, which they would
otherwise have incurred in order to get the
liability, apportionment and paying agent issues
resolved.

For more information about alternative dispute-

resolution services at the Minnesota Department
of Labor and Industry, Customer Assistance, visit
www.doli.state.mn.us/irdspres.html.

Catch us in the act ...

At the Minnesota Department of Labor and Industry we strive to provide a
positive experience for everyone we interact with. We know we have some
outstanding employees and want to learn how our assistance has helped
you.

If you've been a recipient of outstanding DLI service, please let us know.

You can e-mail your comments to DLI.Communications@state.mn.us.

8 • COMPACT • November 2004

 Minnesota workers' compensation
costs increase in 2003

By David Berry, Ph.D.

Research and Statistics

Minnesota's workers' compensation costs increased 6 percent relative to payroll in 2003.

The overall cost of the system came to $1.74 per $100 of payroll in 2003, up from $1.63 in 2002
(revised). The 2003 figure is 30 percent above its low-point of $1.34 in 2000.
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9 • COMPACT • November 2004

 Workers’ compensation family farm coverage where
other insurance coverage requirements are met

Farm operations are considered either family farms or employers for the purpose of workers’
compensation coverage. The chart below may be used in determining whether workers’
compensation coverage is mandatory for a farm operation where other coverage as provided
in the law is underwritten (see Minnesota Statutes §176.011, subd. 11a).*

The value of work performed (roughly payroll) during the previous year is compared to the
average annual wage (AAW) for the year in which the policy is written. Farm operations
with payrolls equal to or greater than the corresponding AAW are required to provide
workers’ compensation coverage for their farm laborers. The AAW figure is received from
the Department of Employment and Economic Development and is the number from which
the statewide average weekly wage (SAWW) is derived.

Family farm coverage

M.S. § 176.011, subd. 11a (a)(2)

Average annual wage under Services rendered Policy written

M.S. §176.011 subd. 20 (roughly payroll) year year

$28,708 Jan. 1-Dec. 31, 1997 Jan. 1-Dec. 31, 1998

$30,086 Jan. 1-Dec. 31, 1998 Jan. 1-Dec. 31, 1999

$31,943 Jan. 1-Dec. 31, 1999 Jan. 1-Dec. 31, 2000

$33,366 Jan. 1-Dec. 31, 2000 Jan. 1-Dec. 31, 2001

$35,311 Jan. 1-Dec. 31, 2001 Jan. 1-Dec. 31, 2002

$36,457 Jan. 1-Dec. 31, 2002 Jan. 1-Dec. 31, 2003

$37,311 Jan. 1-Dec. 31, 2003 Jan. 1-Dec. 31, 2004

$38,441 Jan. 1-Dec. 31, 2004 Jan. 1-Dec. 31, 2005

* If other insurance coverage requirements are not met, any farm operation that has $8,000 or more of
payroll for the previous calendar-year must provide workers’ compensation insurance for its employees.