October 2005 Changes in the Texas Workers' Compensation System

by Ellen Jensen

• Creation of workers' compensation networks - It is anticipated that networks will lower the cost of workers' compensation. Medical providers may seek certification through TDI to serve as health care provider in the workers' compensation network. Injured employees will choose their treating doctor from within the network of medical providers.
• Enhanced benefits -- Injured employees wait half as long to receive compensation for the first week of lost pay. The cap on weekly income benefits is rising by about 15% bringing it in line with the national average. This is the first significant change in income benefits for more than 15 years.
• State agency management - TWCC became a division within TDI to integrate it into TDI's regulatory structure and expertise. A Governor-appointed commissioner heads TDI.
• Creation of the Office of Injured Employee Counsel (OIEC) - The OIEC will oversee the ombudsman program and advocate for the interests of injured employees to ensure balance and fairness in the system.
• Renewed focus on return-to-work - Return-to-work will remain one of the highest priorities of TDI. Guidelines will encourage return-to-work programs. HB 7 also creates a pilot return-to-work program for small employers with workers' comp insurance. The program will provide reimbursements up to $2,500 per employer to pay for workplace modifications that facilitate early return to work. The pilot program is funded by administrative penalties collected by the Division.
• Insurance rate and premium oversight - TDI can impose sanctions on carriers when savings are not passed back to employers through lower premiums.

HB 7 eliminated the Field Safety Representative, Hazardous Employer (HE), and Drug Free Workplace Programs. The requirement for workers' compensation insurance carriers to employ field safety representatives with specific qualifications is removed; however, the statute still requires a carrier to provide prevention services to its policyholders. The former functions of the Safety Education and Training, Occupational Safety and Health Consultation (OSHCON), Safety Violations Hotline, Job Safety Information Systems, Accident Prevention Services, and the Rejected Risk Program were transferred to the Texas Department of Insurance, Division of Workers' Compensation Division. The Division will continue to provide consultations, training, reference materials, and research to assist employers with their health and safety programs. As of September 1, 2005, the division has not sent HE employer notifications, safety data verifications, employer identifications, inspections, consultations, and other associated HE activities. Additionally, beginning September 1, 2005, employers are not required to adopt and distribute Drug Abuse Policies.

House Bill 7 (HB 7) made significant changes in the timeframes for medical billing and payment regarding workers' compensation. Medical bills are to be submitted to the insurance carrier on or before the 95 th day after the date of service. If the insurance carrier intends to perform an audit, they must pay 85 percent of the fee guideline amount or the contracted rate, within 45 days of receipt of the medical bill. The audit must be completed within 160 days of receipt of the medical bill. If the health care services provided are determined to be appropriate, the carrier must pay the remaining 15 percent within that 160-day period. Health care providers must reimburse the insurance carrier or appeal a refund request with the insurance carrier no later than 45 days after receipt of the request. The insurance carrier, in turn, must act on the appeal no later than 45 days after the date the health care provider files the appeal. All of these provisions apply to health care provided through a workers' compensation health care network certified by the Texas Department of Insurance under Chapter 1305 of the Insurance Code. Workers' compensation health care networks can apply for certification beginning January 1, 2006.

This change will prompt many modifications to letters and other correspondence generated by TWCC as well as TWCC forms and the website. Letters and notices that are generated by the Division reflect the new name. The TWCC website and the TXCOMP web pages reflect the Division's new name. The next priority is to modify all TWCC forms and republish them on the Division's website. This process is occurring now with all changes expected to be complete by January 1, 2006.

Parties that disagree with a medical dispute resolution decision may seek judicial review of the decision. Section 413.031(k) clarifies that TDI and the Texas Department of Insurance, Division of Workers' Compensation (Division) are not considered to be parties to the medical dispute for the purposes of an appeal. This means that an appeal of a medical dispute resolution decision that was not pending on or before August 31, 2005 is not entitled to an Office of Administrative Hearings (SOAH) hearing. Appeals of medical dispute resolution decisions must be made directly to district court (Subchapter G, Chapter 2001, Government Code). An appeal to district court must be filed not later than 30 days after the date on which the medical dispute resolution decision is final and appealable.

Workers' compensation rules remain in effect unless the rules conflict with statutory provisions. The following highlights the enforcement changes effective September 1, 2005.

• The Division is not required to prove "willful or intentional" conduct in order to assess an administrative penalty.
• The current classification system for administrative penalties is eliminated. The Commissioner of Workers' Compensation is authorized to assess administrative penalties up to a maximum of $25,000 per day per occurrence.
• A penalty schedule is no longer required by rule. The penalty calculator will be removed from the Division's website.
• An insurance carrier commits an administrative violation if that insurance carrier makes a statement denying all future medical care for a compensable injury.
• Civil and administrative penalties are statutorily authorized for knowingly using or causing to be used the Division's name and logo, the name and initials of TDI, or any combination of the words " Texas " and "Workers' Compensation" by a person offering or performing workers' compensation services in the state.
• The Division may share workers' compensation investigative material with an insurance carrier if the investigative file relates to a felony regarding workers' compensation or a claim in which restitution is required to be paid to the insurance carrier.

Obtain a complete copy of HB7 and detailed information regarding the changes in the Workers' Compensation system and the implementation of HB 7 at the TWWC/TDI website at http://www.tdi.state.tx.us/wc/indexwc.html.