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WORKERS' COMPENSATION BOARD
Board of Directors’ Meeting
January 18, 2005

A meeting of the Workers’ Compensation Board of Directors was held on Tuesday, January 18, 2005 at the Board's Central Office in Augusta (located in the AMHI Complex, Deering Building – Rm. 170, Augusta, Maine). Chair Dionne called the meeting to order at 9:54 a.m.

ROLL CALL

PRESENT: Paul Dionne, James Mingo, Gary Koocher, John Cooney, Anthony Monfiletto, Rodney Hiltz and Joan Kirkpatrick.

MINUTES

  1. Draft Minutes (December 21 and January 4): Directors received and approved an amended version of the draft minutes of their 12-21-04 business meeting and approved, as written, the draft minutes of
    their business meeting that took place on 1-4-05.

Anthony Monfiletto MOVED TO APPROVE, AS WRITTEN, THE MINUTES OF DECEMBER 21, 2004 AND JANUARY 4, 2005; John Cooney seconded.

Discussion:
Directors discussed the motion and adjournment vote on page 6 of the 12-21-04 draft minutes (Director Koocher pointed out that he proposed the 60-day moratorium motion on 12-7-04, not on 12-21-04, and noted the motion was voted on at the 1-4-05 meeting, and remarked that the adjournment vote on page 6 should read 6-0, instead of 7-0, because there were only six members present at that meeting) and withdrawing the motion and taking action on the minutes after staff has amended the 12-21-04 minutes and distributed a revised version to the Board for final action.

Amendments

Directors agreed to the amend the 12-21-04 minutes by removing the motion on page 6 and changing the adjournment vote to 6-0.

Conclusion

Chairman Dionne called for a vote to accept the minutes of 12-21-04, as amended, and the 1-4-05 minutes as written:

MOTION, AS AMENDED, PASSES 6-0-1 (Director Cooney abstained)

SUBCOMMITTEE REPORTS

  1. Budget Subcommittee: Budget Subcommittee Member J.Cooney informed the Board that he and Subcommittee Member J.Kirkpatrick met with Board staff this morning at which time the Subcommittee reviewed L.D.’s 54 and 97. Directors were also advised that Deputy Director of Business Services’ R.Dunn is preparing financial reports for the group to review at its next subcommittee meeting.

EXECUTIVE DIRECTOR REPORT

  1. New Form Filing Requirements (See Chapter 3 Below): After advising Board members of Technology Officer P.Fortier’s receipt of three more waiver requests filed pursuant to Ch. 3, Sec. 5, which he is recommending the Board grant for six months to give the parties sufficient time to migrate to an electronic data interchange program to transmit Form WCB-1 electronically after 1-1-05, Executive Director P.Dionne, referring to the three waiver requests received from Claims Management, Inc., National Grange Mutual, and CHN Solutions inquired of directors how they would like to proceed with respect to taking formal action on the requests.

CHAPTER 3 - FORM FILINGS

§ 4. Electronic filing

1. “Electronic data interchange” or “EDI” means the computer-to-computer exchange of business transactions in a standardized electronic format. Acceptable formats are (1) the State of Maine Proprietary EDI Format, and (2) an International Association of Industrial Accident Boards and Commissions (IAIABC) enhanced Release 01 Flat-File Format.

2. All First Reports of Injury (WCB-1) involving a day or more of lost time shall be filed with the Board by EDI not later than January 1, 2005.

3. All Notices of Controversy (WCB-9) shall be filed with the Board by EDI not later than July 1, 2005.

4. All Memoranda of Payment (WCB-3) shall be filed with the Board by EDI not later than January 1, 2006.

5. The Board, at its discretion by majority vote of its membership, may grant an employer, insurer or third-party administrator a waiver of the filing requirements of this section if the employer, insurer or third-party administrator establishes to the satisfaction of the Board that compliance with these requirements would cause undue hardship. For purposes of this section, undue hardship means significant difficulty or expense. The selection of EDI format is one factor that the Board may consider in deciding upon a request for a waiver. Requests for waivers should be submitted in writing and addressed to the Chair of the Workers’ Compensation Board, 27 State House Station, Augusta, Maine 04333-0027.

6. The Board file shall include all electronic submissions, regardless of whether a paper copy is physically in the file.

Gary Koocher MOVED TO GRANT THE THREE EDI WAIVER REQUESTS; John Cooney seconded. (withdrawn).

Discussion (Waiver Requests Filed Pursuant to Ch. 3, Sec. 5):    Directors and Staff discussed the request from Claims Management, Inc.—the entity currently handling workers’ compensation claims for Wal-Mart, whose performance the Board discussed at length on 12-7-04 regarding its poor claims handling practices; the waiver requests the Board has approved to date which require the entities to come into compliance with Chapter 3, Section 2 on or before 7-1-05 and the three requests currently before the Board (Director Hiltz, referring to the three requests, stated they are late because Ch.3, Sec. 2 went into effect on 1-1-05 and stated the Board may want to deny them for that reason); amending the motion to include the following language “six months from January 1, 2005”, which will be the same timeframe given to those entities receiving a six-month extension; withdrawing the motion and acting on each request individually;
Claims Management, Inc. requesting a two-month extension, even though staff recommends giving the entity six months to come into compliance – the same timeframe given to the other entities who have been granted an extension to comply with the new form filing procedures; the 60-day moratorium approved by the Board on 1-4-05 applying to those entities filing forms electronically after 1-1-05; the Board being consistent with respect to its action on the waiver requests it has received and granted to date; those entities that are currently using the International Association of Industrial Accident Boards and Commissions’ Release 1 EDI program, which will soon be migrating to the Association’s new Release 3 program; how best to proceed with the waiver request filed by Claims Management, Inc. as it relates to their poor claims handling practices and request for an extension of time to comply with the new requirements in Chapter 3 (a suggestion was made for the Board to deal with the two issues separately); the Board’s discussion with Wal-Mart’s Legal Representative Sheila McLauglin on 12-7-04; whether the Board needs to act on the requests since the Board instituted a 60-day moratorium for late filings on 1-4-05; Technology Officer P.Fortier recommending the Board grant each of the requests for six months; a recommendation made by J.Greenier with respect to increasing the $100 penalty to $1,000 for late-filed lost-time First Reports (Mr. Greenier stated the Board may want to consider raising the fine for late filings to $1,000 and asserted his employer was assessed a fine that was not paid. In response, Staff stated the $100 penalty is imposed by statute and would require legislative action to change the amount); including language in the motion that states the six-month extension begins on 1-1-05 and ends on 7-1-05 and Director Koocher’s withdrawal of his motion regarding the three requests and Director Cooney’s withdrawal of his second to the motion so that the Board can act on the requests individually.

Gary Koocher MOVED TO GRANT A WAIVER FOR THE THREE REQUESTS THROUGH JULY 1, 2005; John Cooney seconded.

Rodney Hiltz MOVED TO AMEND THE MOTION TO DEAL WITH EACH REQUEST INDIVIDUALLY; Anthony Monfiletto seconded. MOTION PASSES 4-3(Directors Koocher, Cooney and Mingo opposed).



Chairman Dionne called for a vote on granting the waiver request filed by Claims Management, Inc. MOTION FAILS 3-4 (Directors Dionne, Monfiletto, Hiltz and Kirkpatrick opposed).

Chairman Dionne called for a vote on granting the waiver request filed by CHN Solutions. MOTION PASSES 6-1 (Director Hiltz opposed).

Chairman Dionne called for a vote on granting the waiver request filed by National Grange Mutual, MOTION PASSES 5-2 (Directors Monfiletto and Hiltz opposed).

  1. Tri-Agency Annual Report: In accordance with a mandate that the W.C.B., in consultation with the Superintendent of Insurance and Director of the Bureau of Labor Standards, submit an Annual Report to the Governor and Legislative Committees on Labor and Banking & Insurance by February 15 of each year, Executive Director P.Dionne reported that the Tri-Agency Annual Report is a final draft and will be distributed to the Governor and 122nd Legislature on or before 2-15-05.
  2. Section 213 Hearing (Pending Request for Extension of Benefits Due to Extreme Financial Hardship): Directors were advised that the hardship hearing the Board scheduled for 11 o’clock today in the Holland case has been cancelled and rescheduled to the morning of 2-15-05.

Discussion:
Directors and Staff briefly discussed the Board’s prior hearing on the Holland case and Director Monfiletto’s inability to attend the proceedings on 2-15-05 because he will be out of town.

  1. Actuarial Study (See 39-A M.R.S.A. §213): In response to Director Monfiletto’s inquiry as to when the Board can expect to receive the actuary’s final report, P.Dionne reported that the Board has hired Practical Actuarial Solutions to conduct the actuarial study and noted staff have been working with Jeffrey Kadison on the matter. Directors were also advised that the timeframe for the report has been extended to March of 2005.

GENERAL COUNSEL REPORT

  1. Pending Request for Extension of Benefits Due to Extreme Financial Hardship (See 39-A M.R.S.A. §213): General Counsel J.Rohde, referring to the pending Sec. 213 Request in the Stewart case, advised directors that the Board’s decision in the case was contingent upon Hearing Officer J.Sprague’s ruling and that Mr. Sprague found that the effects of the employee’s injury had ended and that he is no longer entitled to benefits. Mr. Rohde explained that the ruling will result in Mr. Stewart not receiving an extension of benefits under Sec. 213. Mr. Rohde also reminded directors that today’s hearing in the Holland case has been moved to 2-15-05.
  2. Update on Chapter 5 Consensus-Based Rulemaking Committee Deliberations: J.Rohde informed the Board that the Chapter 5 Consensus-Based Rulemaking Committee will be meeting again shortly to review information gathered by the Committee’s members on what changes, if any, should be made to the Board’s Medical Fee Schedule.
  3. Independent Medical Examiners (See §312): After inquiring of IME Subcommittee Members J.Kirkpatrick and J.Mingo if the IME Subcommittee has had an opportunity to review the application the Office of Medical/Rehabilitation Services received from Bruce Sigsbee, M.D. – the neurologist who is interested in performing independent medical examinations for the Board under Section 312,
    IME Subcommittee Member J.Kirkpatrick stated the group is not prepared to act on the matter today. In response, Chairman Dionne stated he will add the item to the next agenda.

OLD BUSINESS

  1. Legislative Update: J.Rohde, referring to his 1-13-05 memorandum and attached legislation, summarized the two bills attached to his memo and stated L.D. 97 will be in front of the Joint Standing Committee on Insurance and Financial Services and that L.D. 54 will be before the Joint Standing Committee on Labor.

LD 97
AN ACT TO TERMINTE PAYMENTS TO THE MAINE WORKERS’ COMPENSATION RESIDUAL MARKET POOL FROM THE MAINE INSURANCE GUARANTY ASSOCIATION

Summary:
The bill amends Title 24-A, §§4435(5) and 4438(1) and terminates the Maine Insurance Guaranty Association’s quarterly payment obligation s to the Maine Workers’ Compensation Residual Market Pool.

Discussion on L.D. 97:
Directors and Staff discussed the bill terminating the obligation of the Maine Insurance Guaranty Association to make payments to the residual market pool (Staff noted that it is believed that the residual market pool is adequately funded for the remaining cases and that by virtue of the Insurance Guaranty Association having to make payments into the residual market pool it is increasing the costs of other lines of insurance such as homeowners and automobile insurance) and the bill, if enacted, amending Title 24A.

LD 54
AN ACT TO REDUCE WORKERS’ COMPENSATION COSTS FOR SMALL BUSINESS EMPLOYERS

Summary:
The bill exempts employers of six or fewer employees from securing workers’ compensation coverage if they have an employers’ liability policy with limits of $100,000 times the number of full-time equivalent employees and medical payment coverage of not less than $5,000 and would require employers to provide healthcare coverage for its employees.

Discussion:
Directors, Staff and Participants discussed the bill exempting employers with six or fewer employees from obtaining workers’ compensation coverage for their employees if they have an employer’s liability policy with limits of $100,000 times the number of workers plus medical payment coverage of not less than $5,000; the bill also requiring employers to have health insurance coverage for its employees – either through the Dirigo plan or another plan that has benefits that are the equivalent, no hearing being scheduled on L.D.’s 54 or 97 at this time, L.D. 54 being heard by the Joint Standing Committee on Labor; Board staff being unable to ascertain the number of employers that will be affected by the bill (Mr. Rohde stated he is looking into whether information is available on how many employers in Maine have six or fewer employees); taking no action at this time on L.D. 54 until information becomes available on the number of employers the bill will affect (Chairman Dionne stated the bill will most likely have an impact on a significant number of employers) Rep. Watson sponsoring L.D. 54 and Representatives Patrick, Smith and Trahan co-sponsoring the bill;
Attorney Muir’s comments about L.D. 54 (Mr. Muir noted the proposal was put forth approximately four years ago and that several entities opposed the bill at the time because of the uncertainties, such as how the number of employers with six or fewer employees would be counted, how premiums would be calculated and the difficulty it creates from an underwriting standpoint, seasonal employers with six or fewer employees and how they would factor into the equation, whether an employer liability policy even exists in the marketplace, which only pays if an employer is liable, etc. Mr. Muir noted most employees would not get paid under a liability policy which allows for a $5,000
medical plan and stated he obtained information this morning on the average number of dollars spent on medical claims which is about $85,000 for a total compensation case); the Dirigo healthcare plan excluding occupational injuries (Mr. Muir noted that the plan does not cover work-related injuries and that employers would need to provide medical payments under their liability policies); the significant number of employers in the State of Maine that will be affected by the bill, if passed (Mr. Muir noted that approximately 90% of the employers affected will be MEMIC insureds and remarked that most small employers are not self-insured and that he estimates that at least 5,000 employers out of the 22,000 employers in Maine will fall under the definition of the bill) and L.D. 54 most likely being opposed again during the First Session of the 122nd Legislature.

ADJOURNMENT

John Cooney MOVED TO ADJOURN; Anthony Monfiletto seconded. MOTION PASSES 7-0.

The meeting formally adjourned at 10:37 a.m.

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