Texas’ Workers’ Comp Reform Takes Effect, Deemed a ‘Win-Win’ for All

Conference panelists remain hopeful legislation will help state’s troubled system.

The Insurance Council of Texas recently held its 2005 workers’ compensation conference in Austin, Texas, where different perspectives were discussed regarding workers’ comp reform legislation passed this year.

The Texas House of Repre-sentatives passed legislation (House Bill 7) designed to overhaul the state’s workers’ compensation system by creating medical networks to help rein in skyrocketing costs while getting injured workers the care they need to return to work.

The bill took effect Sept. 1. Its author, Rep. Burt Solomons (R-Carrolton), called the legislation “true reform.” Solomons said the guiding principle was to have a fair and balanced system that would weed out the abusive people in the system through incentives. “As long as we provide good incentives, more will want to be in it,” he said.

Some of the reform legislation’s highlights were discussed.

One of the most significant changes provided by the bill is the abolishment of the Texas Workers’ Compensation Com-mission. The TWCC was replaced by a Division of Workers’ Compensation, within the Texas Department of Insurance, headed by Albert Betts Jr., who was appointed by Gov. Rick Perry.

The new division will exercise all authority, including rule-making authority, with the advice and comment of the commissioner. Also, the DWC will share support functions with TDI, as the two commissioners deem appropriate.

An Office of Injured Emp-loyee Counsel was established to advocate for injured workers. Headed by an attorney appointed by the governor, the Counsel will be staffed with attorneys who will not be allowed to directly represent injured employees.

The legislation also calls for the TWCC’s Ombudsman Pro-gram to be transferred to the OIEC where attorneys would supervise and advise ombudsmen assisting injured employees in administrative proceedings.

A dedicated Workers’ Compensation Research Group was established at the TDI. The Medical Advisory Committee was abolished and the DWC is required to adopt scientifically valid, evidence and outcome-based treatment guidelines.

The DWC may adopt a disability treatment planning process for out-of-network claims allowing parties to reach an agreed resolution on a treatment plan at the agency level. Either party may appeal to an independent review organization for resolution of a dispute.

The legislation authorizes new payment requirements for insurers. They will have 45 days in which to pay medical bills. Eighty-five percent of the bill must be paid if an insurer decides to audit. There will be a fine of $1,000 if the bill payment timeframe is exceeded; an insurer’s right to demand a refund will be allowed if payment is later deemed to be inappropriate.

Insurers are required to notify network health care providers of any denial of compensability or injury dispute, and will be responsible for paying health care bills until the providers are notified. Insurers’ liability will be capped at $7,000 until the health care providers are notified of a claim dispute.

If an injury is found to be non-compensible, that does not waive the exclusive remedy protection for an employer.

Provisions for an appeal of a medical dispute resolution decision to the State Office of Administrative Hearings was repealed. Such decisions may be appealed to district courts.

Insurance company peer review doctors will be required to have Texas licenses. The bill gives the DWC authority to adopt rules to regulate the peer review process.

TDI is now required to hold workers’ comp premiums to standards, and they cannot be excessive or inadequate. Insurers will be required to file information on their rate discounting practices. The bill allows TDI to implement mandatory premium discounts and states TDI must hold public hearings on rates and premiums every two years.

During a panel discussion Rick Levy, Legal Director, Texas AFL-CIO, said of Betts’ appointment, “I don’t envy him.” He said the perception is going to be, “If it works, it’s because of us. If it fails, it’s because of him.”

According to Levy, the system broke down due to a loss of trust and cooperation. “It became difficult for workers to see doctors and get back to work. We needed to refocus the system toward prompt, quality medical care, and we needed to make it as cheap as possible. Whether we’ve done that or not remains to be seen.”

Lucinda Saxon, governmental affairs manager for the Texas Association of Business, agreed the problem was getting people back to work and HB 7 was a step in the right direction. “We know these types of systems work in other states, and can in Texas.”

Rep. Larry Taylor (R-Friendswood) reiterated the bill’s primary goal, “Balance out the rising costs and remove the abusive people.” He added, “A lot of details were left out in order to get it pass the Senate. We wanted to get it out there, see how it works, then reevaluate. It’s a well balanced system, and a ‘win-win’ situation for doctors and workers with improved opportunities for both.”