Fact Checked Legislative Update
After almost ten years of disjointed separation, the legislature reunited the agencies that manage Wisconsin worker’s compensation. Not surprisingly, having two agencies attempt to manage one worker’s compensation system did not achieve the promised efficiencies. Going forward, effective January 1, 2026, BOTH the administration and adjudication of worker’s compensation claims will be handled by the Department of Workforce Development (DWD). This means all the administrative law judges (ALJs) who make the decisions on worker’s compensation cases will be back under the traditional DWD umbrella.
Background
Traditionally, the DWD was a unified “one-stop-shop” that housed all personnel—including judges—involved in the administration and adjudication of the Act. Under this structure, the ALJs worked within the DWD in close connection with claims management and dispute resolution staff. Judges—trained, experienced, thoughtful attorneys in work comp, had the benefit of 100+ years of case law and DWD policy to guide and direct claims administration. (e.gs., how do you calculate the wages for a part-time worker?; what is the appropriate PPD calculation for the loss of a leg below the knee; do health insurance premiums count as “wages” toward WC benefits?). Prior to 2016, independent national studies revealed that Wisconsin’s long-term unified worker’s compensation structure had been a major factor in the beneficial metrics of the system compared to the rest of the country: low and stable employer premiums, large number of insurers writing business and making profits, swift return to work rates for injured workers, low costs per claim, and very low litigation rates.
However, the entire system was split in two back in 2016. Effective January 11, 2016 (per 2015 Wis. Act 55), most administrative law judges moved to a new agency: the state’s Department of Administration, Division of Hearings & Appeals, Office of Worker’s Compensation Hearings—OWCH (statutorily known as the “Division”). Some core administrative personnel (e.g., wage analysts, dispute resolution staff, support staff, etc.) remained at DWD. The OWCH at the Division handled litigated worker’s compensation claims, with the Department (DWD) responsible for administrative functions and non-litigated claims. This structural change dramatically affected all stakeholders and practitioners in the system.
Many of us expressed our concerns about the pending changes at the time in 2015: Major Changes to Administration’s Proposed Break-Up.
Two-Agency Structure
For almost ten years, the worker’s compensation system operated under a bifurcated structure. OWCH/Hearing and Appeals handled claims litigation and DWD handled administrative functions. Inevitably, issues arose regarding claims handling, file control, and judicial authority between the agencies—many times, leaving practitioners and injured workers unsure of which agency handled what tasks. The agencies attempted to find some common ground through MOUs (Memorandum of Understandings), but issues and confusion persisted at times. (Of course, not everything was difficult or confusing. ALJs still held comprehensive hearings and issued thoughtful, well-reasoned Orders. Further, OWCH’s expanded use of mediators was a great benefit to the system in mediating disputed cases for successful settlements).
Overall, larger issues remained present. As indicated in recent legislative testimony, when the agency split occurred, two metrics needed to be watched: (1) whether the costs of the work comp program would decrease; and (2) whether litigation timeframes would be shortened. Unfortunately, program costs increased and the adjudication timeline increased as well. While claims still progressed forward, navigating a two agency structure continued to create difficulties (this included a policy change on limited compromise agreements that appeared to toll the statute of limitations indefinitely).
Reunited, and it feels so good
Practitioners, industry groups, and the legislature acknowledged the attempted two-agency structure was not working. Changes needed to be made. A bipartisan Act was passed by the legislature. Governor Evers signed the bill on August 8, 2025.
What does this mean?
Effective January 1, 2026, the worker’s compensation system will have one agency again that manages the entire system. 2025 Wis. Act 33 transfers the adjudicatory functions relating to disputed worker’s compensation claims from OWCH/Hearings & Appeals back to the Department of Workforce Development (DWD). These functions include: receiving answers; scheduling and conducting prehearings and hearings; receiving testimony; issuing findings, orders, and awards; dismissing parties and applications for hearings; and conducting mediation.
Many details will need to be ironed out as the agencies get put back together. Practitioners and those interested in the work comp system certainly hope for renewed efficiency, continued use of mediations, and shorted timeframes for hearing dates.
For now, as our work comp friend and colleague, Bill Sachse, referenced, we can all say “Reunited…and it feels so good.”
