SB 346--Am.
As Amended by Senate Committee
Session of 1997
By Committee on Commerce

10 AN ACT concerning workers compensation; amending K.S.A. 44-523, 44- 11 534, 44-536, 44-557a, 44-567 and 74-713 and K.S.A. 1996 Supp. 44- 12 510, 44-534a, 44-551 and 44-566a and repealing the existing sections. 13 14 Be it enacted by the Legislature of the State of Kansas: 15 Section 1. K.S.A. 44-523 is hereby amended to read as follows: 44- 16 523. (a) The director, administrative law judge or board shall not be 17 bound by technical rules of procedure, but shall give the parties reason- 18 able opportunity to be heard and to present evidence, insure the em- 19 ployee and the employer an expeditious hearing and act reasonably with- 20 out partiality. 21 (b) Whenever a party files an application for hearing pursuant to 22 K.S.A. 44-534 and amendments thereto, the matter shall be assigned to 23 an administrative law judge for hearing and the administrative law judge 24 shall set a terminal date to require the claimant to submit all evidence in 25 support of the claimant's claim no later than 30 days after the first full 26 hearing before the administrative law judge and to require the respondent 27 to submit all evidence in support of the respondent's position no later 28 than 30 days thereafter. An extension of the foregoing time limits shall be 29 granted if all parties agree. An extension of the foregoing time limits may 30 also be granted: 31 (1) If all parties agree; 32 (2) (1) If the employee is being paid temporary or permanent total 33 disability compensation; 34 (3) (2) for medical examination of the claimant if the party requesting 35 the extension explains in writing to the administrative law judge facts 36 showing that the party made a diligent effort but was unable to have a 37 medical examination conducted prior to the submission of the case by the 38 claimant but then only if the examination appointment was set and notice 39 of the appointment sent prior to submission by the claimant; or 40 (4) (3) on application for good cause shown. 41 (c) When all parties have submitted the case to an administrative law 42 judge for an award, the administrative law judge shall issue an award 43 within 30 days. When the award is not entered in 30 days, any party to SB 346--Am.

 1  the action may notify the director that an award is not entered and the
 2  director shall assign the matter to an assistant director or to a special
 3  administrative law judge who shall enter an award forthwith based on the
 4  evidence in the record, or the director, on the director's own motion, may
 5  remove the case from the administrative law judge who has not entered
 6  an award within 30 days following submission by the party and assign it
 7  to an assistant director or to a special administrative law judge for im-
 8  mediate decision based on the evidence in the record.
 9    (d)  Not less than 10 days prior to the first full hearing before an
10  administrative law judge, the administrative law judge shall conduct a
11  prehearing settlement conference for the purpose of obtaining stipula-
12  tions from the parties, determining the issues and exploring the possibility
13  that the parties may resolve those issues and reach a settlement prior to
14  the first full hearing.
15    Sec. 2.  K.S.A. 1996 Supp. 44-510 is hereby amended to read as fol-
16  lows: 44-510. Except as otherwise provided therein, medical compensa-
17  tion under the workers compensation act shall be as follows:
18    (a)  It shall be the duty of the employer to provide the services of a
19  health care provider, and such medical, surgical and hospital treatment,
20  including nursing, medicines, medical and surgical supplies, ambulance,
21  crutches, and apparatus, and transportation to and from the home of the
22  injured employee to a place outside the community in which such em-
23  ployee resides, and within such community if the director in the director's
24  discretion so orders, including transportation expenses computed in ac-
25  cordance with subsection (a) of K.S.A. 44-515 and amendments thereto,
26  as may be reasonably necessary to cure and relieve the employee from
27  the effects of the injury.
28    (1)  The director shall appoint, subject to the approval of the secretary,
29  a specialist in health services delivery, who shall be referred to as the
30  medical administrator. The medical administrator shall be a person li-
31  censed to practice medicine and surgery in this state and shall be in the
32  unclassified service under the Kansas civil service act. The medical ad-
33  ministrator, subject to the direction of the director, shall have the duty
34  of overseeing the providing of health care services to employees in ac-
35  cordance with the provisions of the workers compensation act, including
36  but not limited to:
37    (A)  Preparing, with the assistance of the advisory panel, the fee
38  schedule for health care services as set forth in this section;
39    (B)  developing, with the assistance of the advisory panel, the utili-
40  zation review program for health care services as set forth in this section;
41    (C)  developing procedures for appeals and review of disputed
42  charges or services rendered by health care providers under this section;
43    (D)  developing a system for collecting and analyzing data on expend-
SB 346--Am.

 1  itures for health care services by each type of provider under the workers
 2  compensation act; and
 3    (E)  carrying out such other duties as may be delegated or directed
 4  by the director or secretary.
 5    (2)  The director shall prepare and adopt rules and regulations, which
 6  shall be in effect on or before July 1, 1993, and which establish a schedule
 7  of maximum fees for medical, surgical, hospital, dental, nursing, voca-
 8  tional rehabilitation or any other treatment or services provided or or-
 9  dered by health care providers and rendered to employees under the
10  workers compensation act. The schedule shall include provisions and re-
11  view procedures for exceptional cases involving extraordinary medical
12  procedures or circumstances and shall include costs and charges for med-
13  ical records and testimony.
14    (3)  The schedule of maximum fees shall be reasonable, shall promote
15  health care cost containment and efficiency with respect to the workers
16  compensation health care delivery system, and shall be sufficient to en-
17  sure availability of such reasonably necessary treatment, care and atten-
18  dance to each injured employee to cure and relieve the employee from
19  the effects of the injury.
20    (4) (A)  In every case, all fees, transportation costs, charges under this
21  section and all costs and charges for medical records and testimony shall
22  be subject to approval by the director and shall be limited to such as are
23  fair, reasonable and necessary. The schedule of maximum fees shall be
24  reviewed annually revised as necessary at least every two years by the
25  director to assure that the schedule is current, reasonable and fair.
26    (B)  There is hereby created an advisory panel to assist the director
27  in establishing a schedule of maximum fees as required by this section.
28  The panel shall consist of the commissioner of insurance and seven mem-
29  bers appointed as follows:  (i) One person shall be appointed by the Kansas
30  medical society, (ii) one member shall be appointed by the Kansas asso-
31  ciation of osteopathic medicine, (iii) one member shall be appointed by
32  the Kansas hospital association, (iv) one member shall be appointed by
33  the Kansas chiropractic association, and (v) three members appointed by
34  the secretary. One member appointed by the secretary shall be a repre-
35  sentative of employers recommended to the secretary by the Kansas
36  chamber of commerce and industry. One member appointed by the sec-
37  retary shall be a representative of employees recommended to the sec-
38  retary by the Kansas AFL-CIO. One member appointed by the secretary
39  shall be a representative of entities providing vocational rehabilitation
40  services pursuant to K.S.A. 44-510g and amendments thereto. Each ap-
41  pointed member shall be appointed for a term of office of two years which
42  shall commence on July 1 of the year of appointment.
43    (C)  All fees and other charges paid for such treatment, care and at-
SB 346--Am.

 1  tendance, including treatment, care and attendance provided by any
 2  health care provider, hospital or other entity providing health care serv-
 3  ices, shall not exceed the amounts prescribed by the schedule of maxi-
 4  mum fees established under this section or the amounts authorized pur-
 5  suant to the provisions and review procedures prescribed by the schedule
 6  for exceptional cases. A health care provider, hospital or other entity pro-
 7  viding health care services shall be paid either such health care provider,
 8  hospital or other entity's usual charge for the treatment, care and atten-
 9  dance or the maximum fees as set forth in the schedule, whichever is less.
10  In reviewing and approving the schedule of maximum fees, the director
11  shall consider the following:
12    (i)  The levels of fees for similar treatment, care and attendance im-
13  posed by other health care programs or third-party payors in the locality
14  in which such treatment or services are rendered;
15    (ii)  the impact upon cost to employers for providing a level of fees
16  for treatment, care and attendance which will ensure the availability of
17  treatment, care and attendance required for injured employees;
18    (iii)  the potential change in workers compensation insurance premi-
19  ums or costs attributable to the level of treatment, care and attendance
20  provided; and
21    (iv)  the financial impact of the schedule of maximum fees upon health
22  care providers and health care facilities and its effect upon their ability
23  to make available to employees such reasonably necessary treatment, care
24  and attendance to each injured employee to cure and relieve the em-
25  ployee from the effects of the injury.
26    (D)  Members of the advisory panel attending meetings of the advi-
27  sory panel, or attending a subcommittee of the advisory panel authorized
28  by the advisory panel, shall be paid subsistence allowances, mileage and
29  other expenses as provided in K.S.A. 75-3223 and amendments thereto.
30    (5)  Any contract or any billing or charge which any health care pro-
31  vider, vocational rehabilitation service provider, hospital, person, or in-
32  stitution enters into with or makes to any patient for services rendered in
33  connection with injuries covered by the workers compensation act or the
34  fee schedule adopted under this section, which is or may be in excess of
35  or not in accordance with such act or fee schedule, is unlawful, void and
36  unenforceable as a debt.
37    (6)  The director shall have jurisdiction to hear and determine all dis-
38  putes as to such charges and interest due thereon and shall prescribe
39  procedural rules to be followed by the parties to such disputes. In the
40  event of any controversy arising under this section, payments shall not be
41  delayed for any amounts not in dispute or controversy. Acceptance by
42  any provider of services of a payment amount under this section which is
43  less than the full amount charged for the services, shall not affect the
SB 346--Am.

 1  right to have a review of the claim for the outstanding or remaining
 2  amounts. In the event of a dispute as to such charges, the health care
 3  provider, hospital, institution, person or other provider under this section
 4  may appear and be represented in the action under the workers com-
 5  pensation act.
 6    (7)  If the director finds, after utilization review and peer review, that
 7  a provider or facility has made excessive charges or provided or ordered
 8  unjustified treatment, services, hospitalization or visits, the provider or
 9  facility shall not receive payment pursuant to this section from an insur-
10  ance carrier, employer or employee for the excessive fees or unjustified
11  treatment, services, hospitalization or visits and such provider or facility
12  shall repay any fees or charges collected therefor.
13    (8)  Not later than December 31, 1993, the director shall develop and
14  implement, or contract with a qualified entity to develop and implement,
15  utilization review and peer review procedures relating to the services
16  rendered by providers and facilities, which services are paid for in whole
17  or in part pursuant to the workers compensation act. The director may
18  contract with one or more private foundations or organizations to provide
19  utilization review, as appropriate, of entities providing health care services
20  or vocational rehabilitation services, or both, pursuant to the workers
21  compensation act.
22    (9)  By accepting payment pursuant to this section for treatment or
23  services rendered to an injured employee, a health care provider or health
24  care facility shall be deemed to consent to submitting all necessary records
25  to substantiate the nature and necessity of the service or charge and other
26  information concerning such treatment to utilization review and peer re-
27  view under this section. Such health care provider shall comply with any
28  decision of the director pursuant to subsection (a)(10).
29    (10)  If it is determined by a peer review committee that a provider
30  improperly overutilized or otherwise rendered or ordered unjustified
31  treatment or services or that the fees for such treatment or services were
32  excessive, the director may order the provider to show cause why the
33  provider should not be required to repay the amount which was paid for
34  rendering or ordering such treatment or services and shall provide the
35  provider a hearing thereon if requested. If a hearing is not requested
36  within 30 days of receipt of the order and the director decides to proceed
37  with the matter, a hearing shall be conducted and if a prima facie case is
38  established a final order shall be issued by the director. If the final order
39  is adverse to a health care provider, the director shall provide a report to
40  the licensing board of the health care provider with full documentation
41  of any such determination, except that no such report shall be provided
42  until after judicial review if the order is appealed. Any order of the di-
43  rector under this section shall be subject to review by the board.
SB 346--Am.

 1    (11)  Except as provided by K.S.A. 60-437 and amendments thereto
 2  or this section, all reports, information, statements, memoranda, pro-
 3  ceedings, findings and records which relate to utilization review or peer
 4  review conducted pursuant to this section, including any records of peer
 5  review committees, shall be privileged and shall not be subject to discov-
 6  ery, subpoena, or other means of legal compulsion for release to any
 7  person or entity and shall not be admissible in evidence in any judicial or
 8  administrative proceeding, except those proceedings authorized pursuant
 9  to this section.
10    (12)  A provider or facility may not improperly charge or overcharge
11  a workers compensation insurer or charge for services which were not
12  provided, for the purpose of obtaining additional payment.
13    (13)  Any violation of the provisions of this section which is willful or
14  which demonstrates a pattern of improperly charging or overcharging
15  workers compensation insurers constitutes grounds for the director to
16  impose a civil fine not to exceed $5,000. Any civil fine imposed under
17  this section shall be subject to review in accordance with the act for
18  judicial review and civil enforcement of agency actions in the district court
19  for Shawnee county. All moneys received for civil fines imposed under
20  this section shall be deposited in the state treasury to the credit of the
21  workers compensation fund.
22    (14)  As used in this subsection (a), unless the context or the specific
23  provisions require otherwise, ``provider'' means any health care provider
24  or vocational rehabilitation service provider, and ``facility'' means any fa-
25  cility providing health care services or vocational rehabilitation services,
26  or both, including any hospital.
27    (b)  Any health care provider, nurse, physical therapist, any entity pro-
28  viding medical, physical or vocational rehabilitation services or providing
29  reeducation or training pursuant to K.S.A. 44-510g and amendments
30  thereto, medical supply establishment, surgical supply establishment, am-
31  bulance service or hospital who accept the terms of the workers compen-
32  sation act by providing services or material thereunder shall be bound by
33  the fees approved by the director and no injured employee or dependent
34  of a deceased employee shall be liable for any charges above the amounts
35  approved by the director. If the employer has knowledge of the injury
36  and refuses or neglects to reasonably provide the services of a health care
37  provider required by this section, the employee may provide the same
38  for such employee, and the employer shall be liable for such expenses
39  subject to the regulations adopted by the director. No action shall be filed
40  in any court by a health care provider or other provider of services under
41  this section for the payment of an amount for medical services or materials
42  provided under the workers compensation act and no other action to
43  obtain or attempt to obtain or collect such payment shall be taken by a
SB 346--Am.

 1  health care provider or other provider of services under this section, in-
 2  cluding employing any collection service, until after final adjudication of
 3  any claim for compensation for which an application for hearing is filed
 4  with the director under K.S.A. 44-534 and amendments thereto. In the
 5  case of any such action filed in a court prior to the date an application is
 6  filed under K.S.A. 44-534 and amendments thereto, no judgment may be
 7  entered in any such cause and the action shall be stayed until after the
 8  final adjudication of the claim. In the case of an action stayed hereunder,
 9  any award of compensation shall require any amounts payable for medical
10  services or materials to be paid directly to the provider thereof plus an
11  amount of interest at the rate provided by statute for judgments. No
12  period of time under any statute of limitation, which applies to a cause
13  of action barred under this subsection, shall commence or continue to
14  run until final adjudication of the claim under the workers compensation
15  act.
16    (c) (1)  If the director finds, upon application of an injured employee,
17  that the services of the health care provider furnished as provided in
18  subsection (a) and rendered on behalf of the injured employee are not
19  satisfactory, the director may authorize the appointment of some other
20  health care provider. In any such case, the employer shall submit the
21  names of three health care providers that are not associated in practice
22  together. The injured employee may select one from the list who shall
23  be the authorized treating health care provider. If the injured employee
24  is unable to obtain satisfactory services from any of the health care pro-
25  viders submitted by the employer under this subsection (c)(1), either
26  party or both parties may request the director to select a treating health
27  care provider.
28    (2)  Without application or approval, an employee may consult a
29  health care provider of the employee's choice for the purpose of exami-
30  nation, diagnosis or treatment, but the employer shall only be liable for
31  the fees and charges of such health care provider up to a total amount of
32  $500. The amount allowed for such examination, diagnosis or treatment
33  shall not be used to obtain a functional impairment rating. Any medical
34  opinion obtained in violation of this prohibition shall not be admissible
35  in any claim proceedings under the workers compensation act.
36    (d)  An injured employee whose injury or disability has been estab-
37  lished under the workers compensation act may rely, if done in good faith,
38  solely or partially on treatment by prayer or spiritual means in accordance
39  with the tenets of practice of a church or religious denomination without
40  suffering a loss of benefits subject to the following conditions:
41    (1)  The employer or the employer's insurance carrier agrees thereto
42  in writing either before or after the injury;
43    (2)  the employee submits to all physical examinations required by the
SB 346--Am.

 1  workers compensation act;
 2    (3)  the cost of such treatment shall be paid by the employee unless
 3  the employer or insurance carrier agrees to make such payment;
 4    (4)  the injured employee shall be entitled only to benefits that would
 5  reasonably have been expected had such employee undergone medical
 6  or surgical treatment; and
 7    (5)  the employer or insurance carrier that made an agreement under
 8  paragraph (1) or (3) of this subsection may withdraw from the agreement
 9  on 10 days' written notice.
10    (e)  In any employment to which the workers compensation act ap-
11  plies, the employer shall be liable to each employee who is employed as
12  a duly authorized law enforcement officer, ambulance attendant, mobile
13  intensive care technician or firefighter, including any person who is serv-
14  ing on a volunteer basis in such capacity, for all reasonable and necessary
15  preventive medical care and treatment for hepatitis to which such em-
16  ployee is exposed under circumstances arising out of and in the course
17  of employment.
18    (f)  No person shall be subject to civil liability for libel, slander or any
19  other relevant tort cause of action by virtue of performing utilization
20  review or peer review under contract with the director pursuant to sub-
21  section (a)(7).
22    Sec. 3.  K.S.A. 44-534 is hereby amended to read as follows: 44-534.
23    (a) Whenever the employer, worker, Kansas workers compensation fund
24  or insurance carrier cannot agree upon the worker's right to compensation
25  under the workers compensation act or upon any issue in regard to work-
26  ers compensation benefits due the injured worker thereunder, the em-
27  ployer, worker or insurance carrier may apply in writing to the director
28  for a determination of the benefits or compensation due or claimed to be
29  due. The application shall be in the form prescribed by the rules and
30  regulations of the director and shall set forth the substantial and material
31  facts in relation to the claim. Whenever an application is filed under this
32  section, the matter shall be assigned to an administrative law judge. The
33  director shall forthwith mail a certified copy of the application to the
34  adverse party. The administrative law judge shall proceed, upon due and
35  reasonable notice to the parties, which shall not be less than 20 days, to
36  hear all evidence in relation thereto and to make findings concerning the
37  amount of compensation, if any due to the worker.
38    (b)  No proceeding for compensation shall be maintained under the
39  workers compensation act unless an application for a hearing is on file in
40  the office of the director within three years of the date of the accident or
41  within two years of the date of the last payment of compensation, which-
42  ever is later.
43    Sec. 4.  K.S.A. 1996 Supp. 44-534a is hereby amended to read as
SB 346--Am.

 1  follows: 44-534a. (a) (1) After an application for a hearing has been filed
 2  pursuant to K.S.A. 44-534 and amendments thereto, the employee or the
 3  employer may make application for a preliminary hearing, in such form
 4  as the director may require, on the issues of the furnishing of medical
 5  treatment and the payment of temporary total disability compensation.
 6  At least seven days prior to filing an application for a preliminary hearing,
 7  the applicant shall give written notice to the adverse party of the intent
 8  to file such an application. Such notice of intent shall contain a specific
 9  statement of the benefit change being sought that is to be the subject of
10  the requested preliminary hearing. If the parties do not agree to the
11  change of benefits within the seven-day period, the party seeking a change
12  in benefits may file an application for preliminary hearing which shall be
13  accompanied by a copy of the notice of intent and the applicant's certi-
14  fication that the notice of intent was served on the adverse party or that
15  party's attorney and that the request for a benefit change has either been
16  denied or was not answered within seven days after service. Copies of
17  medical reports or other evidence which the party intends to produce as
18  exhibits supporting the change of benefits shall be included with the ap-
19  plication. The director shall assign the application to an administrative
20  law judge who shall set the matter for a preliminary hearing and shall give
21  at least seven days' written notice by mail to the parties of the date set
22  for such hearing.
23    (2)  Such preliminary hearing shall be summary in nature and shall be
24  held by an administrative law judge in any county designated by the ad-
25  ministrative law judge, and the administrative law judge shall exercise
26  such powers as are provided for the conduct of full hearings on claims
27  under the workers compensation act. Upon a preliminary finding that the
28  injury to the employee is compensable and in accordance with the facts
29  presented at such preliminary hearing, the administrative law judge may
30  make a preliminary award of medical compensation and temporary total
31  disability compensation to be in effect pending the conclusion of a full
32  hearing on the claim, except that if the employee's entitlement to medical
33  compensation or temporary total disability compensation is disputed or
34  there is a dispute as to the compensability of the claim, no preliminary
35  award of benefits shall be entered without giving the employer the op-
36  portunity to present evidence, including testimony, on the disputed is-
37  sues. A finding with regard to a disputed issue of whether the employee
38  suffered an accidental injury, whether the injury arose out of and in the
39  course of the employee's employment, whether notice is given or claim
40  timely made, or whether certain defenses apply, shall be considered ju-
41  risdictional, and subject to review by the board. Such review by the board
42  shall not be subject to judicial review. If an appeal from a preliminary
43  order is perfected under this section, such appeal shall not stay the pay-
SB 346--Am.

 1  ment of medical compensation and temporary total disability compen-
 2  sation from the date of the preliminary award. If temporary total com-
 3  pensation is awarded, such compensation may be ordered paid from the
 4  date of filing the application, except that if the administrative law judge
 5  finds from the evidence presented that there were one or more periods
 6  of temporary total disability prior to such filing date, temporary total com-
 7  pensation may be ordered paid for all periods of temporary total disability
 8  prior to such date of filing. The decision in such preliminary hearing shall
 9  be rendered within five days of the conclusion of such hearing. Except
10  as provided in this section, no such preliminary findings or preliminary
11  awards shall be appealable by any party to the proceedings, and the same
12  shall not be binding in a full hearing on the claim, but shall be subject to
13  a full presentation of the facts.
14    (b)  If compensation in the form of medical benefits or temporary
15  total disability benefits has been paid by the employer or the employer's
16  insurance carrier either voluntarily or pursuant to an award entered under
17  this section and, upon a full hearing on the claim, the amount of com-
18  pensation to which the employee is entitled is found to be less than the
19  amount of compensation paid or is totally disallowed, the employer and
20  the employer's insurance carrier shall be reimbursed from the workers
21  compensation fund established in K.S.A. 44-566a and amendments
22  thereto, for all amounts of compensation so paid which are in excess of
23  the amount of compensation the employee is entitled to less any amount
24  deducted from additional disability benefits due the employee pursuant
25  to subsection (c) of K.S.A. 44-525, and amendments thereto, as deter-
26  mined in the full hearing on the claim. The director shall determine the
27  amount of compensation paid by the employer or insurance carrier which
28  is to be reimbursed under this subsection, and the director shall certify
29  to the commissioner of insurance the amount so determined. Upon re-
30  ceipt of such certification, the commissioner of insurance shall cause pay-
31  ment to be made to the employer or the employer's insurance carrier in
32  accordance therewith. No reimbursement shall be certified unless the re-
33  quest is made by the employer or employer's insurance carrier within one
34  year of the final award.
35    Sec. 5.  K.S.A. 44-536 is hereby amended to read as follows: 44-
36  536. (a) With respect to any and all proceedings in connection with
37  any initial or original claim for compensation, no claim of any at-
38  torney for services rendered in connection with the securing of com-
39  pensation for an employee or the employee's dependents, whether
40  secured by agreement, order, award or a judgment in any court
41  shall exceed (1) a reasonable amount for such services or (2) the
42  amount equal to the total of 25% of that portion of total compensation
43  recovered and paid which is less than $10,001, 20% of that portion of
SB 346--Am.

 1  total compensation recovered and paid which is greater than $10,000 and
 2  less than $20,001, and 15% of that portion of the total amount of the
 3  compensation recovered and paid which is in excess of $20,000 25% of
 4  the amount of compensation recovered and paid, whichever is less, in
 5  addition to actual expenses incurred, and subject to the other pro-
 6  visions of this section. Except as hereinafter provided in this section,
 7  in death cases, total disability and partial disability cases, the
 8  amount of attorney fees shall not be based upon compensation exceed
 9  25% of the sum which would be due under the workers compensation
10  act beyond 415 weeks of permanent total disability based upon the
11  employee's average gross weekly wage prior to the date of the ac-
12  cident and subject to the maximum weekly benefits provided in
13  K.S.A. 44-510c and amendments thereto.
14    (b)  All attorney fees in connection with the initial or original
15  claim for compensation shall be fixed pursuant to a written contract
16  between the attorney and the employee or the employee's depend-
17  ents, which shall be subject to approval by the director in accor-
18  dance with this section. Every attorney, whether the disposition of
19  the original claim is by agreement, settlement, award, judgment or
20  otherwise, shall file the attorney contract with the director for re-
21  view in accordance with this section. The director shall review each
22  such contract and the fees claimed thereunder as provided in this
23  section and shall approve such contract and fees only if both are in
24  accordance with all provisions of this section. Any claims for attor-
25  ney fees not in excess of the limits provided in this section and ap-
26  proved by the director shall be enforceable as a lien on the com-
27  pensation due or to become due. The director shall specifically and
28  individually review each claim of an attorney for services rendered
29  under the workers compensation act in each case of a settlement
30  agreement under K.S.A. 44-521 and amendments thereto or a lump-
31  sum payment under K.S.A. 44-531 and amendments thereto as to
32  the reasonableness thereof. In reviewing the reasonableness of such
33  claims for attorney fees, the director shall consider the other pro-
34  visions of this section and the following:
35    (1)  The written offers of settlement made prior to representation
36  received by the employee prior to execution of a written contract between
37  the employee and the attorney; the employer shall attach to the settlement
38  worksheet copies of any written offers of settlement which were sent to
39  the employee before the employer was aware that the employee had hired
40  an attorney;
41    (2)  the time and labor required, the novelty and difficulty of the
42  questions involved and the skill requisite to perform the legal serv-
43  ices properly;
SB 346--Am.

 1    (3)  the likelihood, if apparent to the employee or the employee's
 2  dependents, that the acceptance of the particular case will preclude
 3  other employment by the attorney;
 4    (4)  the fee customarily charged in the locality for similar legal
 5  services;
 6    (5)  the amount of compensation involved and the results ob-
 7  tained;
 8    (6)  the time limitations imposed by the employee, by the em-
 9  ployee's dependents or by the circumstances;
10    (7)  the nature and length of the professional relationship with
11  the employee or the employee's dependents; and
12    (8)  the experience, reputation and ability of the attorney or at-
13  torneys performing the services.
14    (c)  No attorney fees shall be charged with respect to compen-
15  sation for medical expenses, except where an allowance is made for
16  proposed or future treatment as a part of a compromise settlement.
17  No attorney fees shall be charged with respect to vocational reha-
18  bilitation benefits.
19    (d)  No attorney fees shall be charged in connection with any
20  temporary total disability compensation unless the payment of such
21  compensation in the proper amount is refused, or unless such com-
22  pensation is terminated by the employer and the payment of such
23  compensation is obtained or reinstated by the efforts of the attor-
24  ney, whether by agreement, settlement, award or judgment.
25    (e)  With regard to any claim where there is no dispute as to any
26  of the material issues prior to representation of the claimant or
27  claimants by an attorney, or where the amount to be paid for com-
28  pensation does not exceed the written offer made to the claimant or
29  claimants by the employer prior to representation by execution of a
30  written contract between the employee and an attorney, the fees to any
31  such attorney shall not exceed either the sum of $250 or a reason-
32  able fee for the time actually spent by the attorney, as determined
33  by the director, whichever is greater, exclusive of reasonable attor-
34  ney fees for any representation by such attorney in reference to any
35  necessary probate proceedings. With regard to any claim where the
36  amount to be paid for compensation does exceed the written offer
37  made prior to representation, fees for services rendered by an at-
38  torney shall not exceed the lesser of (1) a reasonable amount for
39  such services or; (2) the an amount equal to the total of 25% 50% of
40  that portion of the amount of compensation recovered and paid,
41  which is in excess of the amount of compensation offered to the
42  employee by the employer prior to the execution of a written contract
43  between the employee and the attorney; or attorney's entry of appearance
SB 346--Am.

 1  in the claim and which is less than $10,001, 20% of that portion of the
 2  amount of compensation recovered and paid, which is in excess of the
 3  amount of compensation offered to the employee prior to the attorney's
 4  entry of appearance in the claim and which is more than $10,000 and less
 5  than $20,001 and 15% of that portion of the amount of compensation
 6  recovered and paid, which is in excess of the amount of compensation
 7  offered to the employee prior to the attorney's entry of appearance in the
 8  claim and which is in excess of $20,000, as specified in subsection (a). (3)
 9  25% of the total amount of compensation recovered and paid as described
10  in subsection (a).
11    (f)  All attorney fees for representation of an employee or the
12  employee's dependents shall be only recoverable from compensa-
13  tion actually paid to such employee or dependents, except as spe-
14  cifically provided otherwise in subsection (g) and (h).
15    (g)  In the event any attorney renders services to an employee
16  or the employee's dependents, subsequent to the ultimate disposi-
17  tion of the initial and original claim, and in connection with an
18  application for review and modification, a hearing for additional
19  medical benefits, an application for penalties or otherwise, such at-
20  torney shall be entitled to reasonable attorney fees for such services,
21  in addition to attorney fees received or which the attorney is enti-
22  tled to receive by contract in connection with the original claim,
23  and such attorney fees shall be awarded by the director on the basis
24  of the reasonable and customary charges in the locality for such
25  services and not on a contingent fee basis. If the services rendered
26  under this subsection by an attorney result in an additional award
27  of disability compensation, the attorney fees shall be paid from such
28  amounts of disability compensation. If such services involve no ad-
29  ditional award of disability compensation, but result in an additional
30  award of medical compensation, penalties, or other benefits, the director
31  shall fix the proper amount of such attorney's attorney fees in accor-
32  dance with this subsection and such fees shall be paid by the em-
33  ployer or the workers compensation fund, if the fund is liable for
34  compensation pursuant to K.S.A. 44-567 and amendments thereto,
35  to the extent of the liability of the fund. If the services rendered herein
36  result in a denial of additional compensation, the director may authorize
37  a fee to be paid by the respondent.
38    (h)  Any and all disputes regarding attorney fees, whether such
39  disputes relate to which of one or more attorneys represents the
40  claimant or claimants or is entitled to the attorney fees, or a division
41  of attorney fees where the claimant or claimants are or have been
42  represented by more than one attorney, or any other disputes con-
43  cerning attorney fees or contracts for attorney fees, shall be heard
SB 346--Am.

 1  and determined by the administrative law judge, after reasonable
 2  notice to all interested parties and attorneys.
 3    (i)  After reasonable notice and hearing before the administra-
 4  tive law judge, any attorney found to be in violation of any provi-
 5  sion of this section shall be required to make restitution of any ex-
 6  cess fees charged.
 7    Sec. 5. 6.  K.S.A. 1996 Supp. 44-551 is hereby amended to read as
 8  follows: 44-551. (a) The duties of the assistant directors of workers com-
 9  pensation shall include but not be limited to acting in the capacity of an
10  administrative law judge.
11    (b) (1)  Administrative law judges shall have power to administer
12  oaths, certify official acts, take depositions, issue subpoenas, compel the
13  attendance of witnesses and the production of books, accounts, papers,
14  documents and records to the same extent as is conferred on the district
15  courts of this state, and may conduct an investigation, inquiry or hearing
16  on all matters before the administrative law judges. All acts, findings final
17  orders, awards, decisions, rulings or modifications of findings or awards,
18  or preliminary awards under K.S.A. 44-534a and amendments thereto
19  made by an administrative law judge shall be subject to review by the
20  board upon written request of any interested party within 10 days. Review
21  by the board shall be a prerequisite to judicial review as provided for in
22  K.S.A. 44-556 and amendments thereto. On any such review, the board
23  shall have authority to grant or refuse compensation, or to increase or
24  diminish any award of compensation or to remand any matter to the
25  administrative law judge for further proceedings. The orders of the board
26  under this subsection shall be issued within 30 days from the date argu-
27  ments were presented by the parties.
28    (2) (A)  If an administrative law judge has entered a preliminary
29  award under K.S.A. 44-534a and amendments thereto, a review by the
30  board shall not be conducted under this section unless it is alleged that
31  the administrative law judge exceeded the administrative law judge's ju-
32  risdiction in granting or denying the relief requested at the preliminary
33  hearing. Such an appeal from a preliminary award may be heard and
34  decided by a single member of the board. Members of the board shall
35  hear such preliminary appeals on a rotating basis and the individual board
36  member who decides the appeal shall sign each such decision. The orders
37  of the board on any acts, findings, awards, decisions, rulings or modifi-
38  cations of findings or awards under this subsection shall be issued within
39  30 days from the date arguments were presented by the parties.
40    (B)  If an order on review is not issued by the board within the ap-
41  plicable time period prescribed by subsection (b)(2)(A) (1), medical com-
42  pensation and any disability compensation as provided in the award of
43  the administrative law judge shall be paid commencing with the first day
SB 346--Am.

 1  after such time period and shall continue to be paid until the order of
 2  the board is issued, except that no payments shall be made under this
 3  provision for any period before the first day after such time period. Noth-
 4  ing in this section shall be construed to limit or restrict any other remedies
 5  available to any party to a claim under any other statute.
 6    (C)  In any case in which the final award of an administrative law judge
 7  is appealed to the board for review under this section and in which the
 8  compensability is not an issue to be decided on review by the board,
 9  medical compensation shall be payable in accordance with the award of
10  the administrative law judge and shall not be stayed pending such review.
11  The employee may proceed under K.S.A. 44-534a and amendments
12  thereto and may have a hearing in accordance with that statute to enforce
13  the provisions of this subsection.
14    (c)  Each assistant director and each administrative law judge or spe-
15  cial administrative law judge shall be allowed all reasonable and necessary
16  expenses actually incurred while in the actual discharge of official duties
17  in administering the workers compensation act, but such expenses shall
18  be sworn to by the person incurring the same and be approved by the
19  secretary.
20    (d)  In case of emergency the director may appoint special local ad-
21  ministrative law judges and assign to them the examination and hearing
22  of any designated case or cases. Such special local administrative law
23  judges shall be attorneys and admitted to practice law in the state of
24  Kansas and shall, as to all cases assigned to them, exercise the same pow-
25  ers as provided by this section for the regular administrative law judges.
26  Special local administrative law judges shall receive a fee commensurate
27  with the services rendered as fixed by rules and regulations adopted by
28  the director. The fees prescribed by this section prior to the effective date
29  of this act shall be effective until different fees are fixed by such rules
30  and regulations.
31    (e)  All special local administrative law judge's fees and expenses shall
32  be taxed as cost in each case heard by such special local administrative
33  law judge and when collected shall be paid directly to such special local
34  administrative law judge by the party charged with the payment of the
35  same.
36    (f)  Except as provided for judicial review under K.S.A. 44-556 and
37  amendments thereto, the decisions and awards of the board shall be final.
38    Sec. 6. 7.  K.S.A. 44-557a is hereby amended to read as follows: 44-
39  557a.  (a) The director shall: (1) Compile and publish statistics to deter-
40  mine the causation of compensable disabilities in the state of Kansas and
41    (2) compile and maintain a database of information on claim character-
42  istics and costs related to open and closed claims, in order to determine
43  the effectiveness of the workers compensation act to provide adequate
SB 346--Am.

 1  indemnity, medical and vocational rehabilitation compensation to injured
 2  workers and to return injured workers to remunerative employment. The
 3  commissioner of insurance shall cooperate with the director and shall
 4  make available any information which will assist the director in compiling
 5  such information and statistics and may contract with the director and
 6  the secretary of the department of health and environment to collect such
 7  information as the director deems necessary.
 8    (b)  A primary source of such information and statistics shall be the
 9  compliance of employers, group-funded workers compensation pools and
10  insurance carriers in reporting of all accidents which are required to be
11  reported under the workers compensation act. Each self-insured em-
12  ployer, group-funded workers compensation pool, insurance carrier and
13  vocational rehabilitation provider shall submit to the director the dispo-
14  sition of a statistically significant sample of open and closed claims under
15  the act and, in connection with the closing of each claim in which pay-
16  ments were made, the following: (1) The dates, time intervals, amounts
17  and types of weekly disability payments made, (2) the dates and gross
18  amounts of payments made to each type of medical compensation pro-
19  vider, (3) the dates and type of service for which payment was made and
20  the gross amounts paid to each vocational rehabilitation provider, and (4)
21  the dates and types of fees paid as claim costs. The director shall prescribe
22  by rules and regulations such formats, computer media and methods as
23  may be necessary to provide information to the director on a periodic
24  basis. Each self-insured employer, group-funded workers compensation
25  pool, insurance carrier, vocational rehabilitation provider, health care
26  provider or health care facility shall submit medical information, by pro-
27  cedure, charge and zip code of the provider in order to set the maximum
28  medical fee schedule. The director of workers compensation may adopt
29  and promulgate such rules and regulations as the director deems neces-
30  sary for the purposes of administering and enforcing the provisions of this
31  section.
32    (c)  The director may contract for professional actuarial or statistical
33  services to provide assistance in determining the types of information and
34  the methods of selecting and analyzing information as may be necessary
35  for the director to conduct studies of open and closed claims under the
36  workers compensation act and to enable the director to make valid sta-
37  tistical conclusions as to the distribution of costs of workers compensation
38  benefits.
39    (d)  The director shall obtain such office and computer equipment
40  without competitive bid and employ such additional clerical help as the
41  director deems necessary to gather such information and prepare such
42  statistics.
43    Sec. 7. 8.  K.S.A. 1996 Supp. 44-566a is hereby amended to read as
SB 346--Am.

 1  follows: 44-566a. (a) There is hereby created in the state treasury the
 2  workers compensation fund. The commissioner of insurance shall be re-
 3  sponsible for administering the workers compensation fund, and all pay-
 4  ments from the workers compensation fund shall be upon warrants of the
 5  director of accounts and reports issued pursuant to vouchers approved
 6  by the commissioner of insurance or a person or persons designated by
 7  the commissioner. The commissioner of insurance annually shall report
 8  to the governor and the legislature the receipts and disbursements from
 9  the workers compensation fund during the preceding fiscal year.
10    (b) (1)  On June 1 of each year, the commissioner of insurance shall
11  impose an assessment against all insurance carriers, self-insurers and
12  group-funded workers compensation pools insuring the payment of com-
13  pensation under the workers compensation act, and the same shall be due
14  and payable to the commissioner on the following July 1, the proceeds of
15  which shall be credited to the workers compensation fund. The total
16  amount of each such assessment shall be equal to an amount sufficient,
17  in the opinion of the commissioner of insurance, to pay all amounts, in-
18  cluding attorney fees and costs, which may be required to be paid from
19  such fund during the current fiscal year, less the amount of the estimated
20  unencumbered balance in the workers compensation fund as of the June
21  30 immediately preceding the date the assessment is due and payable
22  under this section. The total amount of each such assessment shall be
23  apportioned among those upon whom it is imposed, such that each is
24  assessed an amount that bears the same relation to such total assessment
25  as the amount of money paid or payable in workers compensation claims
26  by such insurance carrier, self-insurer or group-funded workers compen-
27  sation pool in the immediately preceding calendar year bears to all such
28  claims paid or payable during such calendar year. The commissioner of
29  insurance may establish experience-based rates of assessments under this
30  subsection and make adjustments in the assessments imposed under this
31  subsection based on the success of accident prevention programs under
32  K.S.A. 44-5,104 and amendments thereto and other employer safety pro-
33  grams.
34    (2)  The commissioner of insurance shall remit all moneys received
35  by or for such commissioner under this subsection to the state treasurer.
36  Upon receipt of any such remittance the state treasurer shall deposit the
37  entire amount thereof in the state treasury to the credit of the workers
38  compensation fund.
39    (c) (1)  Whenever the workers compensation fund may be made lia-
40  ble for the payment of any amounts in proceedings under the workers
41  compensation act, the commissioner of insurance, in the capacity of ad-
42  ministrator of such fund, shall be impleaded in such proceedings and shall
43  represent and defend the workers compensation fund. The commissioner
SB 346--Am.

 1  of insurance shall be deemed impleaded in any such proceedings when-
 2  ever written notice of the proceedings setting forth the nature of the
 3  liability asserted against the workers compensation fund, is given to the
 4  commissioner of insurance. The commissioner of insurance may be made
 5  a party in this manner by any party to the proceedings. A copy of the
 6  written notice shall be given to the director and to all other parties to the
 7  proceedings.
 8    (2)  The administrative law judge shall dismiss the workers compen-
 9  sation fund from any proceeding where the administrative law judge has
10  determined that there is insufficient evidence to indicate involvement by
11  the workers compensation fund.
12    (3)  In any case in which the workers compensation fund has been
13  impleaded, if the liability of the fund has not been established within five
14  years of the date of the employee filing a written notice of claim, the
15  commissioner of insurance may cause to be filed with an administrative
16  law judge a motion to dismiss the fund from the case. The administrative
17  law judge shall notify counsel of record not less than 10 days prior to
18  issuing any order dismissing the fund from a case. The administrative law
19  judge shall dismiss the fund from any such case absent a showing by one
20  of the parties that the case should be left open due to medical necessity
21  or other just cause by the employer or insurance carrier and where an
22  award has been entered deciding all of the issues in the employee's claim
23  against the employer, but not deciding the issues between the employer
24  and the fund, the fund may file an application with the administrative
25  law judge requesting that the fund be dismissed from the case with prej-
26  udice. The employer shall have a period of six months from the filing of
27  the application in which to complete the employer's evidence on the fund
28  issues and submit the case to the administrative law judge for decision.
29  The fund shall then have a period of 60 days after the submission
30  of the employer's evidence to submit its own evidence concerning
31  the fund issues in the case. If the employer fails to do so, the adminis-
32  trative law judge shall dismiss the fund from the case with prejudice on
33  the judge's own motion.
34    (d)  The commissioner of insurance, in the capacity of administrator
35  of the workers compensation fund, may make settlements of any amounts
36  which may be payable from the workers compensation fund with regard
37  to any claim under the workers compensation act, subject to the approval
38  of the director.
39    (e)  The workers compensation fund shall be liable for:
40    (1)  Payment of awards to handicapped employees in accordance with
41  the provisions of K.S.A. 44-569 and amendments thereto for claims aris-
42  ing prior to July 1, 1994;
43    (2)  payment of workers compensation benefits to an employee who
SB 346--Am.

 1  is unable to receive such benefits from such employee's employer under
 2  the conditions prescribed by K.S.A. 44-532a and amendments thereto;
 3    (3)  reimbursement of an employer or insurance carrier pursuant to
 4  the provisions of K.S.A. 44-534a and amendments thereto, subsection (d)
 5  of K.S.A. 44-556 and amendments thereto, subsection (c) of K.S.A. 44-
 6  569 and amendments thereto and K.S.A. 44-569a and amendments
 7  thereto;
 8    (4)  payment of the actual expenses of the commissioner of insurance
 9  which are incurred for administering the workers compensation fund,
10  subject to the provisions of appropriations acts; and
11    (5)  any other payments or disbursements provided by law.
12    (f)  If it is determined that the workers compensation fund is not liable
13  as described in subsection (e), attorney fees incurred by the workers com-
14  pensation fund may be assessed against the party who has impleaded the
15  workers compensation fund other than impleadings pursuant to K.S.A.
16  44-532a and amendments thereto.
17    (g)  The commissioner of insurance shall provide for the implemen-
18  tation of the workers compensation fund as provided in this section and
19  shall be responsible for ensuring the fund's adequacy to meet and pay
20  claims awarded against it.
21    Sec. 8. 9.  K.S.A. 44-567 is hereby amended to read as follows: 44-
22  567. (a) An employer who operates within the provisions of the workers
23  compensation act and who knowingly employs or retains a handicapped
24  employee, as defined in K.S.A. 44-566 and amendments thereto shall be
25  relieved of liability for compensation awarded or be entitled to an appor-
26  tionment of the costs thereof as follows:
27    (1)  Whenever a handicapped employee is injured or is disabled or
28  dies as a result of an injury which occurs prior to July 1, 1994, and the
29  administrative law judge awards compensation therefor and finds the in-
30  jury, disability or the death resulting therefrom probably or most likely
31  would not have occurred but for the preexisting physical or mental im-
32  pairment of the handicapped employee, all compensation and benefits
33  payable because of the injury, disability or death shall be paid from the
34  workers compensation fund; and
35    (2)  subject to the other provisions of the workers compensation act,
36  whenever a handicapped employee is injured or is disabled or dies as a
37  result of an injury and the administrative law judge finds the injury prob-
38  ably or most likely would have been sustained or suffered without regard
39  to the employee's preexisting physical or mental impairment but the re-
40  sulting disability or death was contributed to by the preexisting impair-
41  ment, the administrative law judge shall determine in a manner which is
42  equitable and reasonable the amount of disability and proportion of the
43  cost of award which is attributable to the employee's preexisting physical
SB 346--Am.

 1  or mental impairment, and the amount so found shall be paid from the
 2  workers compensation fund.
 3    (b)  In order to be relieved of liability under this section, the employer
 4  must prove either the employer had knowledge of the preexisting im-
 5  pairment at the time the employer employed the handicapped employee
 6  or the employer retained the handicapped employee in employment after
 7  acquiring such knowledge. The employer's knowledge of the preexisting
 8  impairment may be established by any evidence sufficient to maintain the
 9  employer's burden of proof with regard thereto. If the employer, prior
10  to the occurrence of a subsequent injury to a handicapped employee, files
11  with the director a notice of the employment or retention of such em-
12  ployee, together with a description of the handicap claimed, such notice
13  and description of handicap shall create a presumption that the employer
14  had knowledge of the preexisting impairment. If the employer files a
15  written notice of an employee's preexisting impairment with the director
16  in a form approved by the director therefor, such notice establishes the
17  existence of a reservation in the mind of the employer when deciding
18  whether to hire or retain the employee.
19    (c)  Knowledge of the employee's preexisting impairment or handicap
20  at the time the employer employs or retains the employee in employment
21  shall be presumed conclusively if the employee, in connection with an
22  application for employment or an employment medical examination or
23  otherwise in connection with obtaining or retaining employment with the
24  employer, knowingly: (1) Misrepresents that such employee does not have
25  such an impairment or handicap; (2) misrepresents that such employee
26  has not had any previous accidents; (3) misrepresents that such employee
27  has not previously been disabled or compensated in damages or otherwise
28  because of any prior accident, injury or disease; (4) misrepresents that
29  such employee has not had any employment terminated or suspended
30  because of any prior accident, injury or disease; (5) misrepresents that
31  such employee does not have any mental, emotional or physical impair-
32  ment, disability, condition, disease or infirmity; or (6) misrepresents or
33  conceals any facts or information which are reasonably related to the
34  employee's claim for compensation.
35    (d)  An employer shall not be relieved of liability for compensation
36  awarded nor shall an employer be entitled to an apportionment of the
37  costs thereof as provided in this section, unless the employer shall cause
38  the commissioner of insurance, in the capacity of administrator of the
39  workers compensation fund, to be impleaded, as provided in K.S.A. 44-
40  566a and amendments thereto, in any proceedings to determine the com-
41  pensation to be awarded a handicapped employee who is injured or dis-
42  abled or has died, by giving written notice of the employee's claim to the
43  commissioner of insurance twenty ten days prior to the first full hearing
SB 346--Am.

 1  where any evidence is presented on the claim.
 2    (e)  Amendments to this section shall apply only to cases where a
 3  handicapped employee, or the employee's dependents, claims compen-
 4  sation as a result of an injury occurring after the effective date of such
 5  amendments.
 6    (f)  The total amount of compensation due the employee shall be the
 7  amount for disability computed as provided in K.S.A. 44-503a, 44-510
 8  through 44-510g and 44-511, and amendments thereto, and in no case
 9  shall the payments be less nor more than the amounts provided in K.S.A.
10  44-510c and amendments thereto.
11    Sec. 9. 10.  K.S.A. 74-713 is hereby amended to read as follows: 74-
12  713. The director shall provide by regulation for the collection of each
13  carrier's, self-insurer's and group-funded workers' compensation pools'
14  proportionate amount of the carrier's share of expense. The maximum
15  amount which shall be collected from any carrier, self-insurer or group-
16  funded workers' compensation pool shall be 3% of the workers' compen-
17  sation benefits paid by such carrier, self-insurer or group-funded workers'
18  compensation pool as listed by the director. Such amounts shall be paid
19  within 30 days from the date that notice is served upon such carrier, self-
20  insurer or group-funded workers' compensation pool. If such amounts
21  are not paid within such period, the director may assess a civil penalty
22  equal to 10% of the amount so unpaid for each 30 days the liability re-
23  mains due and unpaid, and such civil penalty shall be collected at the
24  same time and as a part of the original amount as determined by the
25  director under the terms of this act. Upon assessment, if the total dollar
26  amount due is $10 or less, the amount due is waived.
27    Sec. 10. 11.  K.S.A. 44-523, 44-534, 44-536, 44-557a, 44-567 and 74-
28  713 and K.S.A. 1996 Supp. 44-510, 44-534a, 44-551 and 44-566a are
29  hereby repealed.
30    Sec. 11. 12.  This act shall take effect and be in force from and after
31  its publication in the statute book.