©2005 – Flahive, Ogden & Latson OCTOBER 2005 VOLUME 10, … · 2015-03-26 · FOLIO4 CLIENT...

F O L I O C L I E N T N E W S L E T T E R B Y F L A H I V E , O G D E N & L A T S O N 1

©2005 – Flahive, Ogden & Latson OCTOBER 2 0 0 5 V O L U M E 10, N O . 10

A P R I V I L E G E D A T T O R N E Y - C L I E N T C O M M U N I C A T I O N B Y F L A H I V E , O G D E N & L A T S O N

continued on p. 21

FOLFOLFOLFOLFOLFOLIO

MAKE SURE THAT PLN ISCLAIM-SPECIFIC

Special rules due to Rita ..........................

Questions re: recent reforms ................

In This Issue . . .

p. 2

p. 9

The newly created Division of Workers’ Compensation

has been moving very quickly to assume its role in the

administration of the Texas Act. Commissioner Betts

has prominently asserted his vision for the agency.

That is reflected in a press release that the schedule

for rule making announced by DWC was “premature.”

Commissioner Betts further noted that “the Division

will work closely with all system stakeholders and

legislatures to allow a full airing of proposed rules while

following the time schedule set in HB 7 for

implementing changes in the workers’ compensation

system as closely as possible.”

We understand that the Division will continue to

follow the same protocol that it followed in the

proposed Network Rules. Itwill publish a staff proposal,

receive comments, then formally propose the rule,

receive comments, and then adopt the new rule. We

anticipate staff proposals for the next round of

rulemaking to begin as early as the first week in

October. At page 7 of FOLIO, we have published the

HB 7 Implementation Deadlines contained in House

Bill 7. The Division anticipates proposing the rules in

an orderly fashion permitting full input from all

participants. We will monitor the draft proposals and

will forward those electronically.

By the time that you receive this issue of FOLIO,

the comment period for the Network Rules will have

closed. TDI will then promulgate formal Network

Rules for adoption after assimilating the filed comments.

The deadline for completing this is December 1, 2005.

The division is well on schedule for meeting that

deadline.

Notwithstanding one of the largest hurricanes in

history, and the resulting disruption to everyone

associated with insurance, and not withstanding a great

deal of uncertainty for all of us about these very

substantial changes, the new agency has moved quickly

to assimilate TWCC staff and to carry on the work of

administering the Act. It has been a good beginning.

VISION FOR TWCC

There has been a recent upsurge in challenges to the

sufficiency of the language used by carriers when

disputing the compensability of a claim (filing a PLN 1).

For example, if a carrier states in its plain language

notice that “carrier denies that claimant sustained an

injury in the course and scope of employment” without

any additional substantive or factual information, then

the claimant’s attorney asserts that carrier has waived its

right to dispute the compensability of the claim.

This argument stems from section 409.022(a) of the

Texas Labor Code and Rule 124.2(f) of the Texas

Administrative Code. Rule 124.2(f) provides more

specific direction by stating that the denial must contain

sufficient claim-specific substantive information to

enable the employee to understand the carrier’s position

F O L I O C L I E N T N E W S L E T T E R B Y F L A H I V E , O G D E N & L A T S O N2

Flahive, Ogden & Latson, a 26 lawyer firm,

defends contested workers’ compensation

cases statewide every day. The firm has

represented insurance companies and

employers before the Texas Workers’

Compensation agency for more than 50 years.

For general questions concerning the

newsletter call (512) 435-2234.

Flahive, Ogden & LatsonP.O. Box 13367

Austin Texas 78711

An electronic copy of FOLIO, our monthly client newsletter, is now

available for clients. If you are interested in receiving FOLIO by e-

mail, please let us know. FOLIO is prepared for the exclusive use of

Flahive, Ogden & Latson clients only. It contains privileged

communications and further sharing of this newsletter (in either hard

copy or electronic format) outside your company without the express

written consent of Flahive, Ogden & Latson is not permitted.

Our regular office hours are 8:15 a.m. to

4:45 p.m.. If you need to call after 4:45,

please call Patsy Shelton at (512) 435-2234.

She will be on duty until 6:00 p.m. daily.

FO&L OFFICE HOURS

Don't wait until the last hour

of the day for deadline filing.

Any faxes with information due

must be received by 3:30 p.m.

for any deadline handling for same day

delivery to the Commission, and faxed

according to the fax directory listed on the last

page of FOLIO.

Furthermore, if you have a last minute

deadline, call our office by 3:00 p.m. and

speak with Tillie Aguirre or Patsy Shelton to

advise that a last minute filing is necessary to

meet a deadline. We will be watching and

waiting for the fax. Otherwise, last minute

faxes could delay receipt. Our last daily run to

the Commission will be at 4:00 p.m., in order

to get across town to meet their 5:00 closing

time.

SPECIAL RULES IN EFFECTBECAUSE OF HURRICANE RITA

According to Commissioner’s Bulletin No. B-0056-05 that we

previously forwarded, special rules apply to all aspects of workers’

compensation insurance in areas affected by Hurricane Rita. This

will affect all workers’ compensation policies and claims in

the Texas coastal area from Sabine Pass to Brownsville (the

entire Gulf Coast including the metropolitan areas of

Houston and Corpus Christi). The geographical scope of this

rule may be limited by further Commissioner Bulletin. The dates

affected are all dates after September 20, 2005 until subsequent

notice from TDI.

For employers, employees, healthcare providers and any other

system participant in the affected areas for dates after September

20, 2005, carriers must accommodate the following issues:

1. All claim deadlines are relaxed and should not apply.

Accordingly, from September 20, 2005 until further notice

from TDI, do not assert any deadlines involving those dates.

This will toll any deadlines, including but not limited to 30-

day notice to employer, one year filing of claim, 90-day rule to

dispute impairment ratings, 95-day requirement to submit a

medical bill, time deadlines for protecting rights in dispute

resolution, etc.

2. Preauthorization requirements under Rule 134.600

are waived. Do not assert the defense that the service was

not preauthorized. If no preauthorization was obtained,

retrospectively review the service for medical necessity issues.

The relaxed requirements apply to “necessary health care.” B-

0054-05. You may deny preauthorization or retrospectively

deny unnecessary services. However, note that payment

should not be denied on the basis that the same services had

been “recently provided.” B-0055-05. Voluntary certification

of requested medical treatment not covered by Rule 134.600

should be considered, even if your company does not

otherwise routinely certify medical care in advance. (See

Paragraph 4 below for rules regarding medications.)

3. Carriers should not deny bills because of lack of

ADL registration by the treating provider. Carriers

should not deny bills because necessary treatment was

continued on p. 21


RULING ONTDI/TWCC ADVISORIES

SIB RULES REMAIN IN EFFECT

continued on pg. 23

On September 30, 2005, Judge Darlene Byrne issued

a ruling on the declaratory judgment action filed by

FO&L involving TDI/TWCC Advisories 2003-10

and 2003-10B (which increases impairment ratings

on spinal fusion cases in violation of the AMA

Guidelines).

Judge Byrne found that:

1) Rule 130.1 (adopting the 4th Edition of the AMA

Guidelines) is a valid rule, the plain language of

which does not contain exceptions;

2) Advisories 2003-10/2003/10B are not applicable

to establish impairment ratings and constitute ad

hoc rulemaking and therefore the application of

these advisories is an ultra vires (without authority)

act; and

3) the TDI/TWCC is permanently enjoined from

the application and enforcement of these

Advisories.

As reported in the July 2004 issue of FOLIO,

this firm filed a declaratory judgment action against

the TWCC over the issuance of the increased spinal

fusion ratings in Advisories 2003-10 and 2003-10B.

These advisories attempted to artificially inflate

impairment ratings by equating fusion surgery with a

spinal fracture (a “broken” back). This

interpretation changes the impairment rating from

the 5% or 10% specified by the AMA Guidelines to

20% or 25%, thus creating an additional IIBs

obligation as well as SIBs exposure. The advisories

only applied to instances where fusion surgery had

taken place prior to the performance of flexion and

extension x-rays.

By the time this lawsuit went to trial, the lead

plaintiff, Lumbermens Mutual Casualty Company,

had been joined by five other party intervenors.

Trial took place on September 13, 2005 before

Judge Darlene Byrne of the 126th Judicial District

Court of Travis County. The TWCC called its

HB 7 Amended the Labor Code to foreclose the

authority of a Benefit Review Officer to issue an

Interlocutory Order. The Commissioner of the Division of

Workers’ Compensation is authorized to designate a staff

member, other than the Benefit Review Officer handling

the BRC, to review Interlocutory Orders.

Until further notice, requests for Interlocutory Orders

for payment of income benefits (there is no provision for

IO directing the suspension of payments) should be sent to

the attention of Randy Steger, the Manager of Benefit

Review Officers.

Although HB 7 adopted new compliance standards to

qualify for Supplemental Income Benefits (SIBs), the

Division announced that, “until new rules are adopted,”

current TWCC rules will govern the eligibility and payment

of SIBs to injured workers.

HB 7 changed the language from “good faith effort” to

“active participation” in job search efforts and vocational

rehabilitation.

For further details, refer to Commissioner’s Bulletin

No. B-0058-05

DWC ISSUES BULLETINRE: INTERLOCUTORY ORDERS


TOPIC: NOTICE OF REFUSAL (PLN-1)We are providing an attached nonexclusive checklist

of many of the grounds of refusal permitted by statute and

by case law. You should always add further evidentiary

facts to the PLN-1 to fully comply with Rule 124.2(f).

CHECKLIST OF DEFENSES FOR NOTICE OF

REFUSALS

COVERAGE

1. Employer was not an insured on the date of the injury.

(Alternative: We have no coverage for this insured).

EMPLOYEE

2. The claimant was not an employee of the insured. Add

specific defense where applicable:

a) Claimant was an independent contractor.

b) Claimant was a borrowed servant.

c) Claimant was terminated prior to injury.

d) Claimant did not work on the date in question.

e) (For occupational diseases) The claimant was not

employed by the employer on the date of last injurious

exposure to the hazards of the disease. (Section 409.001

Tex. Lab. Code).

NO INJURY

3. The claimant did not suffer an injury as a result of the

job. (Remember, we recommend that you recite evidentiary

issues such as no witness, inconsistent history of injury,

claimant not credible witness, delay in reporting, spite

claim, no physical evidence of injury, claimant’s activities

inconsistent with injury, etc.). As a part of a “no injury”

defense, add specific defense where applicable:

a) The injury on the job was limited to the claimant’s

(state body part). No other injury naturally resulted to any

other part of the claimant’s body.

b) The injury on the job was limited to a temporary

strain, sprain or soft tissue injury. We specifically deny an

injury to the claimant’s spine, intervertebral disc (state

specific extent of the injury that is denied.)

c) The emotional or psychological injury, if any,

resulted from repetitious mental or emotional stress.

d) This is a heart attack case that does not meet the

three part test for compensability under Section 408.008

Tex. Lab. Code.

e) Avoid pleading “sole cause.” A sole cause issue

requires the carrier to prove the defense. The employee

should prove that the problems are the natural result of the

injury.

COURSE & SCOPE

4. The injury did not occur in the course and scope of

employment. Add specific defense where applicable:

a) Claimant was traveling to and from home.

b) Claimant was involved in a personal mission at the

time of the alleged accident.

c) Claimant was intoxicated at the time of the alleged

injury.

d) Alleged injury was caused by the claimant’s willful

intention to injure himself.

e) The injury was caused during the claimant’s

unlawful attempt to injure another.

f) The injury was caused by horseplay.

g) The injury resulted because of a third party’s

personal attack on the claimant and not because of the

employment.

h) The injury occurred in an off-duty recreational

activity not associated with the claimant’s work.

i) We deny a compensable mental trauma; however,

if a mental or emotional injury is proven, it resulted from

a legitimate personal action.

j) This claim involves an exposure to a communicable

disease by [law enforcement officer, firefighter, EMT,

paramedic or correctional officer]. No test was performed

within ten days of the last exposure and the employer was

not timely notified by a sworn affidavit.

NOTICE/CLAIM

5. Claimant did not notify employer within 30 days of

injury, and no good cause has been shown

6. No claim was filed with the Commission within one

year from the date of injury and no good cause has been

shown. continued on pg.23


JUDICIAL REVIEW: MUST PAY EMPLOYEEATTORNEY FEE AT NONSUIT

An El Paso Court of Appeals required the carrier to pay

the claimant’s fees on a judicial review filed by the

carrier even though the carrier nonsuited the case.

Generally, attorneys’ fees in a workers’

compensation case are payable out of the claimant’s

recovery. However, under TEXAS LABOR CODE §

408.221(c) an insurance carrier that seeks judicial review

under Subchapter G, Chapter 410, of a final decision of

a commission appeals panel regarding compensability or

eligibility for, or the amount of, income or death

benefits is liable for reasonable and necessary attorney’s

fees as provided by Subsection (d) incurred by the

claimant as a result of the insurance carrier’s appeal if the

claimant prevails on an issue on which judicial review is sought

by the insurance carrier in accordance with the

limitation of issues contained in Section 410.302.

If the carrier appeals multiple issues and the

claimant prevails on some, but not all, of the issues

appealed, the court shall apportion and award fees to

the claimant’s attorney only for the issues on which the

claimant prevails. In making that apportionment, the

court shall consider the factors prescribed by Subsection

(d). The question before the two appellate courts that

have addressed this issue has been whether a carrier’s

nonsuit of its claims allows it to avoid payment of the

employee’s attorney fees.

In Pacific Employers Ins. Co. v. Severiano Torres, —

S.W.3d ——, 2005 WL 2053862 (Tex.App.—El Paso,

2005 n.w.h.), the court held on equitable grounds that

TEXAS LABOR CODE § 408.221(c) could not have

intended to permit carriers to avoid payment of

attorney’s fees. Pacific Employers Insurance Co.

appealed to district court from a Texas Workers’

Compensation Commission Appeals Panel decision.

Severiano Torres answered, filing a general denial and

claim for attorney’s fees under the TEXAS LABOR CODE §

408.221(c). On January 19, 2005, after almost 19

months of litigation, and less than three weeks before

trial, Pacific Employers filed a notice of nonsuit

dismissing all claims against the employee without

prejudice. The order granting the nonsuit was filed on

January 24, 2005. Severiano Torres then filed a motion

for attorney’s fees.

The trial court entered an order awarding attorney’s

fees and expenses be paid to counsel for the employee

in the amount of $15,175 plus interest, with an

additional award of $5,000 for an appeal to this Court

and an additional award of $5,000 for an appeal to the

Supreme Court. Pacific Employers appealed to the El

Paso Appeals Court, contending that the employee is

not a “prevailing party” as contemplated by the statute

and, therefore, was not entitled to an award of

attorney’s fees.

The court first noted that the appealed issue

presented a question of statutory construction.

Considering TEXAS LABOR CODE § 408.221(c); it held

that the employee was a prevailing party for purposes of

the statute. The Torres court believed that the inequities

inherent in the defense of an award by an employee to a

challenge by an insurance carrier had been contemplated

by the statute, even recognizing that an employee may

recover attorney’s fees when prevailing on only some of

the claims.

Arguably, this holding is contrary to Cigna Ins. Co. of

Texas v. Middleton, 63 S.W.3d 901(Tex.App.—Eastland

2001, pet. denied). However, in Cigna, both parties

challenged the award and each filed a nonsuit, in

essence, making both parties prevailing parties. The El

Paso Appeals court believed that, in Torres, the only

party challenging the award essentially conceded defeat

by nonsuiting its challenge making the claimant the only

prevailing party.


COMMISSIONER'S BULLETINRE: LEGISLATION ENACTED: 79TH LEGISLATIVE SESSION

continued on pg. 23

The purpose of this bulletin is to provide information,

including a brief summary, on selected bills enacted

during the 79th Regular Legislative Session. The

summary highlights portions of the bills pertinent to the

business of life and health coverage, including the

effective and implementation dates, as well as identifies

some of the responsibilities and/or actions the bills

require of insurers, HMOs, TPAs, URAs, MEWAs, and

agents.

This bulletin includes four attachments. The first

two attachments, A and B, include staff’s summaries of

the major bills that may affect you and the coverages

that you issue, renew, sell, or service in Texas. The

summaries also identify key compliance actions and

responsibilities for insurers, HMOs, TPAs, URAs,

MEWAs, and agents implementing the new provisions.

Along with the bill summaries, we have provided a

“key” to abbreviations appearing in them.

The department has limited the summaries to

providing information only with regard to the particular

provisions of a bill that apply to life and health coverage

or licensing issues. You will need to refer to the actual

bills for the complete content of the legislation. You

may access an electronic copy of the bills in two ways.

You may access the bills directly from the attachments,

as each bill number will link you directly to the enrolled

bill text. Alternatively, you may access the bills, as well

as a broad variety of other legislative information, at the

Texas Legislature Online website at

www.capitol.state.tx.us. You may obtain paper copies of

the bills for a charge by contacting, for House and

Senate bills respectively, House Bill Distribution at

(512) 463-1144 and Senate Bill Distribution at (512)

463-0252.

Staff has not summarized the bills contained in

Attachment C, as they relate only indirectly to the

business of health and life coverage or affect a scope of

business beyond just life and health care coverage. You

may also access these bills at the Texas Legislature

Online website cited above.

While the department has endeavored to include all

recently enacted legislation relevant to life and health

care coverage, the attachments may not list all

legislation which may affect your life and health

business or your agency. Moreover, it may not list every

action you need to take to maintain compliance and

implement new legislation. While we encourage you to

use the bulletin to aid your compliance efforts, you

remain responsible for ensuring compliance with all

enacted legislation affecting the business you conduct.

To complement your review of this listing of the

major bills, the department has posted its legislative

implementation plan on the TDI website at

DISCOUNT RATE AND INTERESTRATE DETERMINED

The Texas Department of Insurance, Division of

Workers’ Compensation, has determined, pursuant to

the authority and direction given under the Texas

Workers’ Compensation Act (Texas Labor Code, §

401.023), that any interest or discount provided for in

the Act shall be at the rate of 7.36 percent. This rate is

computed by using the treasury constant maturity rate

for one-year treasury bills issued by the United States

Government, as published by the Federal Reserve

Board on September 16, 2005 (3.86 percent) plus 3.5

percent as required by Section 401.023. The rate shall

be effective October 1, 2005 through December 31,

2005.

For more information, please call Joseph Meyer at

512-463-6143.


HB 7 IMPLEMENTATION DEADLINESDate HB 7 Statutory Citation

December 1, 2005 Date by which the Commissioner of Insurance shall adopt rules

regarding the certification of workers’ compensation networks.

Section 8.014 of HB 7 (p. 363)

December 1, 2005 Date by which the Commissioner of Insurance and the Commissioner

of Workers’ Compensation shall adopt rules relating to the transfer of

TWCC programs to TDI.

Section 8.002(c) of HB 7(p. 357)

January 1, 2006 TDI shall accept applications from a workers’ compensation network

seeking certification under Chapter 1305, Insurance Code.

Section 8.014 of HB 7 (p.363)

January 1, 2006 The Commissioner of Workers’ Compensation shall adopt rules

regarding electronic submission of medical bills by this date.


January 1, 2006 Effective date for the creation of the small employer return-to-work

pilot program at the Division of Workers’ Compensation at TDI.

Section 8.010 of HB 7 (pp. 361-362)

February 1, 2006 The Commissioner of Workers’ Compensation shall adopt rules

regarding changes to Section 408.004 (Required Medical Examinations)

and Section 408.0041 (Designated Doctor Examinations), Labor Code.


February 28, 2006Except as otherwise provided by the bill, all powers, duties, obligations,

rights, contracts, funds unspent appropriations, records, real or personal

property, and personnel of TWCC shall be transferred to the Division

of Workers’ Compensation at the TDI not later than this date.

Section 8.001(b) of HB 7 (p. 357)

March 1, 2006 All powers, duties, obligations, rights, contracts, etc. and personnel of

TWCC’s ombudsman program is transferred to the Office of Injured

Employee Counsel not later than this date. An ombudsman

transferred to the Office of Injured Employee Counsel shall begin

providing services not later than this date.

Section 8.002(e) of HB 7 (p. 358)

March 1, 2006 The Injured Employee Counsel of the Office of Injured Employee

Counsel shall adopt initial rules for the office not later than this date.

Section 8.005 of HB 7 (pp. 359-360)

March 31, 2006 Date by which the LBB may adopt an order under Section 317.005,

Government Code, to transfer the appropriations of TWCC to TDI

and the Office of Injured Employee Counsel.


August 1, 2006 Date by which the Division of Workers’ Compensation at TDI and

the Department of Assistive and Rehabilitative Services shall report to

the legislature on their actions to improve the access to and

effectiveness of vocational rehabilitation programs for injured

workers.

Section 409.012(f), Labor Code

(p. 163)

October 1, 2006 On or after this date, the state average weekly wage (SAWW) is equal

to 88 percent of the average weekly wage of covered employment as

computed by the Texas Workforce Commission (TWC) under

Section 207.002, Labor Code.

Section 408.047, Labor Code

(p. 134) Section 8.009 of HB 7 (p.

361)

October 1, 2006 The Commissioner of Workers’ Compensation shall compute the

maximum and minimum weekly income benefits for each state fiscal

year not later than October 1st of each year.

Sections 408.061-408.062, Labor

Code (p. 135)

continued on pg. 20


eBILL TECHNOLOGY RULEDRAFT DOCUMENT REVIEW

FEEDBACK SESSION

TRAVEL REIMBURSEMENT HASINCREASED

DWC Rule 134.6 prescribes the amount of expenses

reimbursed to an employee for travel to obtain

reasonable and necessary medical care.

The rule limits medical reimbursement to

necessary travel not reasonably available within 20

miles of the injured employee’s residence (one way)

so long as the employee timely submits a request

within one year of the travel.

The rule adopts the reimbursement rate for state

employees on the date the travel occurred. State

employees are reimbursed according to TEX.GOV’T

CODE ANN. §660.043(c). The Texas Comptroller

of public accounts promulgates the rate on the

competitor's website.

Effective 10/1/2005, mileage is reimbursed at

48.5 cents per mile. For the month of September, the

mileage reimbursement rate was 40.5 cents per mile.

The increase in the rate that we are to pay resulted

from an increase in the rate to be paid state

employees as calculated by the Comptroller. Please

make sure that you reimburse travel at these amended

rates.

Note that lodging is reimbursed at $85 per day.

Meals are to be reimbursed at $36 per day.

These expenses are less frequently claimed. If

the mileage is disputed, use the TExas mileage guide

promulgated by the Comptroller to check mileage..

The August eBill Formats Work Group meeting

was dedicated to reviewing revised draft language

for the eBill Technology Rules. A revised draft

document of the rules was distributed to eBill

stakeholders prior to the meeting. In addition,

responses received electronically and feedback

received during the July eBill Stakeholder meetings

was compiled and distributed to participants.

The discussion and rules are informal information

sharing with eBill stakeholders. Stakeholders

were notified that the September stakeholders

meetings would likely canceled due to the timing of

the pre-proposal and proposal processes. The

meetings will likely resume in October depending

on the rule action.

The feedback and comments are available to

eBill stakeholders and the general public on

request. Since the comments and responses are

informal, the documents are not posted to the

Commission website. Stakeholders and the public

may request an electronic copy of the draft

rule language and the comments by sending an

email titled “eBill Draft Technology Rules” to

either [email protected] or to Joseph

Montoya at [email protected].


GENERAL

Q. I understand that the Texas Workers’ Compensation

Commission has been abolished. Is that correct?

A. Yes. HB 7 abolished the Texas Workers’

Compensation Commission (TWCC) and transferred

most of its functions to the newly created Division of

Workers’ Compensation (Division) at the Texas

Department of Insurance (TDI). The Division will be

governed by a Commissioner of Workers’

Compensation appointed by the Governor.

Q. Is the Division a separate state agency?

A. No. The Division is part of the Texas Department

of Insurance. The only difference is that the Division is

governed by the Commissioner of Workers’

Compensation rather than the Commissioner of

Insurance. The Governor appointed Albert Betts as

Commissioner of Workers’ Compensation September 1,

2005.

Q. When do the changes under HB 7 take effect?

A. HB 7 took effect on September 1, 2005; however,

there are many legislative changes that go into effect

later, as specified in the bill. Also, some of the changes

made by HB 7 won’t go into effect until new rules are

adopted, while other changes apply only to an injury

that occurs on or after September 1, 2005. For more

information about the effective dates for certain

changes made by HB 7, please see http://

www.tdi.state.tx.us/commish/hb7changes.html.

Q. How do I find out about new rules that are being

adopted?

A. Information about newly adopted or proposed rules

will be posted on the TDI website (http://

www.tdi.state.tx.us) periodically. The Division will also

continue to update these frequently asked questions

(FAQs) as more questions arise about new rules. As

always, employers are encouraged to call their insurance

carrier and their local TDI - Division of Workers’

QUESTIONS REGARDING RECENT WORKERS' COMPENSATIONREFORMS--EMPLOYERS AND CARRIERS

continued on pg. 24

The 79th Texas Legislature recently passed House Bill (HB) 7, which represents the most significant reforms to the Texas

workers’ compensation system since 1989. For a summary of HB 7, please go to http://www.tdi.state.tx.us/commish/

hb7changes.html. Please note that the information in this document will be updated on a continuous basis as new questions and

answers become available.

Compensation field office for specific questions about

their employee’s claim.

ASSISTANCE TO EMPLOYERS AND EMPLOYEES

Q. Will my local field office phone number and address

change? Who should I call if I have a question about

my employee’s claim?

A. All of the local TWCC field offices became TDI -

Division of Workers’ Compensation field offices on

September 1, 2005. The addresses and phone numbers

for these field offices remain the same. If you have

specific questions about your employee’s claim, you

should first contact the insurance carrier’s claim

adjustor for assistance. However, if you need further

information or assistance with your employee’s claim,

please call, write or visit your local field office or call

the Division’s central office at 1-800-372-7713.

Q. I understand there’s a new state agency to help

injured workers. Is this office separate from the Texas

Department of Insurance and the Division of Workers’

Compensation?

A. HB 7 creates a new state agency, the Office of

Injured Employee Counsel (OIEC) to provide

assistance for injured workers. The OIEC will be

governed by a Public Counsel who will be appointed by

the Governor no later than October 1, 2005. The

OIEC was created to assist injured workers in several

ways, including:

· Providing free ombudsman assistance to injured

workers during Division dispute hearings at local

field offices;

· Monitoring new workers’ compensation rules that

affect injured workers;

· Providing rule comments to the Division and the

Texas Department of Insurance on behalf of

injured workers;

· Assisting injured workers with complaints they have

filed with the Division or the Texas Department of


Q:

Q:

Q:

A:

A:

A:

How will I know whether I’m required to get

care from a network provider for an injury on

the job?

If your employer has elected to purchase

workers’ compensation health care network

coverage, you are required to obtain medical

treatment for a compensable injury through a workers’

compensation health care network if you live within the

network’s service area. Your employer is required to

give you notice that describes the network’s

requirements, including a list of network providers. You

will be asked to sign an acknowledgment form stating

that you have received the notice. Even if you don’t sign

and return the form, you will be required to use

network providers in the event of an on-the-job injury if

you live within the service area of a network provided

by your employer’s workers’ compensation insurance

carrier. If you require emergency room treatment for the

injury, you may go to any hospital for the emergency

care. After the emergency situation has passed, you will

be required to seek any additional care for the injury

from network providers. If you don’t go to network

providers after you have received the notice from your

employer, you may have to pay for your care.

I have health insurance through my job. If I am

injured on the job, can I go to my primary care

physician for my health insurance instead of a

network doctor?

If your health insurance is health maintenance

organization (HMO) coverage and you are

required to receive health care services within a

workers’ compensation health care network, you may

HB 7 IMPLEMENTATIONWORKERS' COMPENSATION (WC) NETWORKSFrequently Asked Questions for Employees

The information contained in this document does not cover each portion of House Bill 7 (HB 7), and therefore may

not address a particular circumstance applicable to the reader. As it becomes available, the Department will

supplement this document with additional questions and answers and updated information.

select your primary care physician, who you selected

prior to your injury, as your treating doctor. Your

primary care physician must agree to follow all the

terms and conditions of the network’s contract and

comply with the Workers’ Compensation Health Care

Network Act (Chapter 1305, Insurance Code) and

applicable rules.

If my employer purchases workers

compensation health care network coverage and

I have to choose a treating doctor from the list

given to me by my employer, can I select another

treating doctor if I am not satisfied with the doctor I

select?

Under House Bill 7, an employee who is

dissatisfied with the initial treating doctor has

the right to select an alternate treating doctor

from the network’s list of treating doctors who provide

services in the employee’s service area. The employee

must notify the network in the manner prescribed by the

network. The network may not deny the selection of an

alternate treating doctor who is within the network. An

employee who is unhappy with the alternate treating

doctor must get authorization from the network to

select a subsequent treating doctor.

I was injured on the job a week ago. Since then

I have received treatment from an approved

workers’ compensation doctor and had three

physical therapy visits. Today my employer gave me a

notice that our workers’ compensation insurance has

changed and we now have a workers’ compensation

health care network plan. I had to sign an

acknowledgment form. The notice says I have to receive

treatment from a doctor or therapist in the network or I

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might have to pay the bills myself. I didn’t know I had

to go to a certain doctor. What if I receive bills for the

care that I received before I received my employer’s

notice?

Under House Bill 7, your employer’s insurance

carrier is liable for payment of out-of-network

medical care under Title 5, Labor Code, for an

injured employee who does not receive notice until the

employee receives notice of network requirements. An

injured employee is not required to comply with the

network requirements until the employee has received

information concerning the network and the network’s

requirements. An injured employee who lives within the

network’s service area and has received the notice is

required to obtain medical treatment within the network

for a compensable injury. An insurance carrier must pay

for out-of-network care that is provided to an injured

employee who does not live within the service area of

any network established by the insurance carrier or with

which the insurance carrier has a contract.

I was injured on the job three years ago and I

am very happy with my current treating doctor

who is completely familiar with my case and

provides excellent care. Will I have to change to a

network doctor when this bill goes into effect?

Possibly. House Bill 7 requires that an

employee who lives in a service area and who

sustained a compensable injury before

September 1, 2005, must receive medical treatment

through a network provider if the insurance carrier is

liable for that care elects to use a workers’

compensation health care network to provide medical

benefits to injured employees. If your treating doctor is

contracted with your carrier’s network, you may not

have to change doctors. However, if he is not part of

the network, you may have to change.

What if I go to a network doctor and have a

complaint about the care I received?

You may file a complaint with the network

about any care you receive from network

providers. You should have received a notice from your

employer or the carrier that will explain how you can

file the complaint.

For further information about WC Networks, contact:

[email protected]

For further information about WC Statistics, contact:

http://www.tdi.state.tx.us/wc/regulation/roc/

index.html

We do not often comment about case law from

other states – however, because the Supreme Court of

Arizona in Grammapico v. The Industrial Commissioninvalidated the intoxication defense and the drug free

workplace initiative in Arizona, there has been a great

deal of interest among our clients in this case.

This decision should not be applicable in Texas.

The Constitution of the State of Arizona is very

unique in that it requires that an employee receive

workers’ compensation for “any accident arising out

of and in the course of employment.” An employee

must only prove legal causation – and once legal

causation is proven, the Legislature has no power to

create a defense that would preclude discovery for a

job-related accident.

Thus, an employee with a .17% blood alcohol

whose benefits were denied by the Industrial

Commission was entitled to recover as a matter of

Arizona Constitutional Law.

In Arizona, an employer must prove that the

intoxication was part of the reason for the accident (a

fault concept). In Texas, there is no need to prove

fault. If an employee is intoxicated, he/she is barred

from recovery whether the intoxication caused the

injury or not. In Texas workers’ compensation, fault

is accordingly irrelevant.

As a result, we believe that the GrammapicoArizona decision is irrelevant to Texas workers’

compensation law.

INTOXICATION CASE(Reprint)


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In Texas, is the employer/insured required to

notify their insurance carrier of all potential

claims, even though the accident did not initially result

in medical treatment?

No. They are only required to notify the carrier

if there was lost time or if the injury is an

occupational disease.

We have an injured worker in Texas that is

going to have surgery and the provider wants us

to pre-pay the surgery fee for the doctor. If this

doctor is in the network, do we still have to pre-pay?

First of all, there are no workers’ compensation

networks in Texas yet. The certification

process begins January 1, 2006. So, the current

statute and rules still apply. Surgery has to be

preauthorized. If it is, and the carrier or self-insured

agrees it is reasonable and necessary, then payment is

made pursuant to the fee guidelines once the procedure

is performed. There are no provisions authorizing pre-

payment for services.

The carrier received a pharmacy invoice

requesting payment for medications. Carrier

denied the request for payment as not

reasonable, necessary and related based on a peer

review. Carrier’s bill processing department failed to

provide the pharmacy with a copy of the peer based on

the assumption that the carrier is under no obligation to

forward a copy. Also, the medical processing

department contends that neither the pharmacy nor

DME provider is entitled to copies of the peer review.

What is TWCC’s position on this issue?

TWCC would disagree with the medical

processing department. Any time a carrier files

an EOB with a denial based upon a peer

review, the peer review should be attached per Rule

133.304(h). The pharmacy/DME would definitely be

entitled to get the peer review as a “sender” of the bill

and would certainly be entitled in any later exchange of

information should a medical dispute be pursued.

We denied a December 7, 1999 claim due to

intoxication and denied medical bills. Per

Benefit Review Conference agreement in March 2000,

We agreed that claimant sustained a compensable injury.

Some of the bills were never re-issued after the Benefit

Review Conference agreement and the provider did not

request reconsideration until February 2004. What

timeframe do providers have to request reconsideration

on disputed services? Do we owe payment since the

bills were never re-audited after the Benefit Review

Conference agreement was signed?

The provider is not really required to request

reconsideration once the injury is accepted.

Rather, your basis for disputing is invalid and

the bill should be paid. There is no timeframe for

requesting reconsideration under the circumstances.

You should pay the bill if it was for compensable

treatment.

How long does a provider have to submit a bill

for resubmission? I have just received a bill

(DOS August 15, 2002) that was paid back on

September 12, 2002. The provider is requesting

reconsideration for the remaining bill. Can we deny it

or do we have to send it in for reprocessing?

A resubmission constitutes a new bill. See Rule

133.300 and FOL editorial comments. It must

be timely submitted per 134.801(c), which

requires submission no later than the first day of the

eleventh month after date of service. Note that this

deadline changes effective September 1, 2005.


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The claimant’s attorney has now withdrawn

although he still has outstanding attorney fees.

Prior to the claimant receiving an impairment rating, we

received the Commission’s order for attorney’s fees. I

would assume that the attorney fees would still be deducted

from the impairment income benefits. Is that correct?

Yes. Attorney’s fees approved for services rendered

prior to the withdrawal are a lien on future income

benefits.

I have an employee that was in a fight with another

employee. We are in the process of getting facts

together to determine who initiated the altercation.

In some jurisdictions, this would make a difference in

compensability. Is that the case in Texas?

In Texas, it does matter whether the claimant

instigated the fight. The law states that the carrier

is relieved of liability if the claimant was injured

while unlawfully attempting to injure another person. If

the claimant is an innocent victim of another’s aggression,

then the claimant would be entitled to benefits, assuming

that the fight had something to do with the employment.

If, however, both workers acted aggressively, it becomes a

fact question. It does not matter who won the fight. If the

claimant started it and got the worse of it, he is not entitled

to benefits.

The claimant is a part-time employee who was

injured the first week on the job. Her regular

hours would be 20 per week. The employer does

not have a similar employee due to the fact that after four

weeks (if employee works out), the employee is hired on

full time at 40 hours per week. The employer sent a wage

statement for a 40 hour per week person. Do we have to

assume that, if the claimant was not injured, she would be

hired on for 40 hours per week? Do we split the average

weekly wage in half?

Since there is no similar employee, and assuming

that there are no similar employees in the vicinity,

you must use a method that is just, fair, and

reasonable to all of the parties. This can be any method that

meets that standard. One method might be to get wage

statements on several employees who had previously gone

through this process and average them. Another would be

to just figure 20 hours. Another would be to split the

average weekly wage as you suggest. It is up to you, subject

to agreement (either explicit or tacit) from the claimant.

Note, however, that you will be subject to the provisions

of Section 408.042(b), which will modify the impairment

income benefits and supplemental income benefits rate.

I have an individual who was taken off work by a

doctor that is not on the ADL. I advised him today

that he needs to select a new doctor that is

approved to treat workers’ compensation. In the meantime,

are temporary income benefits still owed?

The mere fact that a doctor takes a claimant off of

work is not sufficient to establish disability. On

the other hand, disability may be established by a

claimant’s testimony alone, even when contradicted by all

of the medical experts. Thus, the fact that the doctor taking

the claimant off of work is not on the ADL is irrelevant to

a determination of disability. Rather, you must evaluate all

of the evidence, including this doctor’s opinion, the nature

of the injury, the nature of the claimant’s employment,

whether the claimant had a change in his condition, and any

disability guidelines you want to use. If the preponderance

of the evidence suggests that the claimant is disabled, then

you owe temporary income benefits. If not, then you do

not. If the claimant had previously demonstrated an ability

to work and there is no evidence of a change in his

condition, then the claimant certainly has not established

disability despite what the doctor says.

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OCCUPATIONAL FATALITIES DECREASED IN TEXAS IN 2004

In 2004, Texas recorded the second lowest number of

occupational fatalities since data collection began in

1990. A total of 440 fatal occupational injuries

occurred, a decrease of 10 percent from 2003, according

to data released today by the Census of Fatal

Occupational Injuries (CFOI ).

There were 5,703 fatalities in the U.S. in 2004, an

increase of 2 percent from the revised total of 5,575

fatal work injuries reported in 2003.

In Texas in 2004, a total of 194 persons were killed

in transportation incidents — the leading cause of

occupational fatalities last year. The number of deaths

resulting from assaults and violent acts declined 40

percent compared to 2003 and the total of 54 fatalities

in this category was the lowest total in the 13-year

history of the fatality census (Chart 2).

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

800

600

400

200

Number of Fatal Occupational Injuries in Texas1990-2004

The Texas Workers’ Compensation Commission

compiles detailed information on all work-related

fatalities occurring in Texas for the CFOI, a program

jointly administered with the U.S. Department of Labor,

Bureau of Labor Statistics (BLS). The Commission

annually releases total fatality counts and descriptive

data in an effort to prevent fatal work-related injuries

and to promote occupational safety.

Causes of Fatalities Transportation incidents accounted for 44 percent of

the total occupational fatalities in Texas in 2004 (Table

2). This was a 3 percent decrease from 2003. Despite

the reduction in the number of fatalities in

transportation incidents overall, fatalities that resulted

from highway incidents increased slightly (3 percent) for

the second year in a row (compared to a 10 percent

increase in 2003). Sixty-two percent of all transportation

incidents occurred on highways; 14 percent were

aircraft related, and 12 percent involved pedestrian

workers who were struck by vehicles or mobile

equipment. Forty-three percent of the transportation

incident fatalities occurred in the transportation and

material moving occupations.

Following transportation incidents, contact with

objects and equipment accounted for the second

highest percentage of fatalities (18 percent). The number

of fatalities involving contact with

objects

and equipment increased by 10 percent

from 2003. Forty-four percent of these

fatalities occurred in

the construction and extraction

occupations.

Of the 54 occupational fatalities in

2004 caused by assaults and violent acts (Chart

2), 24 percent

occurred in the sales and related occupations.

At a national level, there were 795 fatalities

resulting

from assaults and violent acts. There were 35

occupational fatalities caused by exposure to

harmful substances and environments in Texas

in 2004, a 31 percent decline compared to 2003.

Nationally, there were 459 fatalities in this category;

construction and extraction occupations fatalities

accounted for 40 percent of these U.S. occupational

fatalities

OccupationsThe occupation with the largest number of fatalities in

2004 was construction trades workers (19 percent), with

one-third of the total fatalities due to falls. The second

leading occupation was motor vehicle operators (16

Chart 1

Chart 2

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

150

100

50

0

Number of Fatal Occupational Injuries by Event1992-2004

Assaults & violent acts Exposure to harmful substances/environments


percent) and 79 percent

of those fatalities were

due to transportation

incidents.

WorkerDemographicsWomen accounted for 7 percent of

the total fatalities. Women were

victims of transportation incidents in

52 percent of the cases, and the

victims of assaults and violent acts

in 34 percent of the cases.

Transportation incidents were the

leading cause of fatalities involving

men (44 percent), followed by

contact with objects and equipment

(19 percent). Twenty-four percent of

all fatalities were experienced by

workers between 25 and 34 years of

age, regardless of gender. White

non-Hispanic workers comprised 54

percent of the total; Hispanics

accounted for 34 percent, and black

non-Hispanics accounted for 9

percent.

Fatality Prevention To encourage injury and illness

prevention in the workplace, the

Commission’s Workers’ Health

and Safety Division provides safety

programs and services, including

free safety and health consultations,

free safety publications and video

loans, and low-cost safety training.

Additional information may be

obtained by contacting the

Commission at 512-804-4200 or by

e-mail at

[email protected].

Year 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990

Number 440 491 417 536 572 468 523 459 514 475 497 529 536 530 516

Table 1 Annual Number of Fatal Occupational Injuries in Texas, 1990-2004

Note: Data for 2004 are preliminary; data for previous years are final.Source: Texas Workers' Compensation Commission, Census of Fatal Occupational Injuries (CFOI) in cooperation with the Bureau of LaborStatistics, U. S. Department of Labor.

04 03 02 01 00 99 98 97 96 95 94 93 92

Transportation incidents 194 201 157 209 216 204 213 209 205 200 191 165 188

Highway incidents 121 118 107 141 135 150 122 116 125 111 113 81 104

Aircraft incidents 28 29 7 12 25 9 15 12 17 23 14 7 12

Worker struck by vehicle,

mobile equipment 23 32 20 30 22 29 29 36 24 32 27 35 34

Contact with objects &

equipment 77 70 66 85 91 68 77 73 72 65 65 84 66

Struck by object 49 44 39 53 53 35 41 36 41 39 38 51 36

Falls 61 52 69 68 76 55 59 41 50 57 53 55 45

Fall to lower level 58 47 64 65 73 51 57 36 45 52 48 48 40

Assaults and violent acts 54 90 63 96 101 71 79 63 103 86 107 135 121

Homicides 37 69 54 69 82 59 60 47 84 74 90 113 105

Exposure to harmful

substances or environments 35 51 42 54 64 54 74 57 50 49 68 71 86

Contact with electric current 21 36 26 34 34 35 42 38 31 33 34 36 38

Fires and explosions 18 27 19 22 21 16 21 17 32 17 12 16 12

Other - - - - - - - - - - - - 18

Event or Exposure

Table 2 Annual Number of Fatal Occupation Injuries in Texas by Event,1992-2004

Note: 1 Data for 2004 are preliminary; data for previous years are final. 2 Totals for major categories may include subcategories not shown separately. 3 Dashes indicate no data reported or data that do not meet publication criteria. 4 Event data for 1990 and 1991 are not available.Source: Texas Workers’ Compensation Commission, Census of Fatal Occupational Injuries (CFOI) in

cooperation with the Bureau of Labor Statistics, U.S. Department of Labor.


*Attorney's direct dial fax no. is directed to his/her paralegal. ** Alternative e-mail address: first initial+last [email protected] (Example: [email protected])

FLAHIVE, OGDEN & LATSON DIRECTORY

Bobby Stokes 435-2150 867-1705 RDS Anita Drake 435-2249

Carlos Acosta 435-2177 867-1712 CA1 Sally Stephens 435-2242

Chuck Finch 435-2158 867-1713 CCF Marci Roberts 435-2223

Dana Gannon 435-2151 867-1710 DMG Margo Davis 435-2263

Greg Solcher 435-2175 867-1718 GDS Sally Stephens 435-2242

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Tricia Blackshear 435-2180 867-1723 PHB Lisa Black 435-2260

Attorneys Direct Dial(512)

Direct Fax*(512)

E-Mail **[email protected]

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Client Consultant Trina DeCecco 435-2239 867-1700 TAD

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Direct Fax(512)

[email protected]

Contact Person


Interest Rate Effective from 10/1/2005 through 12/31/2005: 7.36%

1 Determine number of weeks of continuous payment owed. Find corresponding “X” value on chart.

2 Multiply “X” by weekly compensation rate. This is the approximate amount of interest owed on the ending date of benefits.

3 Determine number of weeks between ending date of payments and date benefits are to be paid. Find corresponding “Y” value onchart.

4 Multiply “Y” by the total benefits owed (not including interest determined in steps 1 and 2 above). This is the approximate amount ofinterest owed from benefit ending date to payment date.

5 Determine total benefits plus interest owed by adding interest from steps 2 and 4, and adding total benefits to be paid.TIBs: Calculate interest from the 7th day after first day benefits began, or the 7th day after the first notice, whichever is

LATER.IIBs: Calculate interest from the 5th day after notice of the certification of MMI and impairment, or the date of a

CARRIER dispute of MMI or impairment, whichever is EARLIER.

NOTE: For partial weeks, round up to next week (8 2/7ths weeks = 9 weeks).

Weeks “X” Value Weeks “X” Value Weeks “Y” Value Weeks “Y” Value

1 0.0019 27 0.5340 1 0.0014 27 0.0382

2 0.0047 28 0.5736 2 0.0028 28 0.0396

3 0.0090 29 0.6145 3 0.0042 29 0.0410

4 0.0146 30 0.6569 4 0.0057 30 0.0425

5 0.0217 31 0.7006 5 0.0071 31 0.0439

6 0.0301 32 0.7458 6 0.0085 32 0.0453

7 0.0400 33 0.7924 7 0.0099 33 0.0467

8 0.0513 34 0.8403 8 0.0113 34 0.0481

9 0.0640 35 0.8897 9 0.0127 35 0.0495

10 0.0781 36 0.9406 10 0.0142 36 0.0510

11 0.0937 37 0.9928 11 0.0156 37 0.0524

12 0.1106 38 1.0464 12 0.0170 38 0.0538

13 0.1289 39 1.1015 13 0.0184 39 0.0552

14 0.1487 40 1.1579 14 0.0198 40 0.0566

15 0.1699 41 1.2158 15 0.0212 41 0.0580

16 0.1925 42 1.2751 16 0.0226 42 0.0594

17 0.2165 43 1.3358 17 0.0241 43 0.0609

18 0.2419 44 1.3979 18 0.0255 44 0.0623

19 0.2687 45 1.4614 19 0.0269 45 0.0637

20 0.2969 46 1.5263 20 0.0283 46 0.0651

21 0.3266 47 1.5927 21 0.0297 47 0.0665

22 0.3576 48 1.6604 22 0.0311 48 0.0679

23 0.3701 49 1.7296 23 0.0326 49 0.0694

24 0.4240 50 1.8002 24 0.0340 50 0.0708

25 0.4592 51 1.8722 25 0.0354 51 0.0722

26 0.4959 52 1.9456 26 0.0368 52 0.0736

INTEREST CALCULATORSECOND QUARTER

Accumulated Interest from Beginning toEnd of Continuous Payment

Accumulated Interest from End ofPayment Period to Date Paid


CASE DECISIONS TEXAS COURT OF APPEALSPacific Employers Insurance Co. v. Torres, No. 08-05-00086-CV (2005Tex.App.-El Paso, August 25, 2005).

HOLDING:

FACTS:

If an appellant to a TWCC Appeals Panel decision non-suits prior to trial, then the appellee will be consideredthe prevailing party and thus entitled to attorney’s fees under Texas Labor Code § 408.221.

Affirmed. The court of appeals held that there is a basis for awarding attorney’s fees where anappellant non-suits its claim on the eve of trial because an appellee would be in the same positionhe would be in if he had prevailed after a trial on the matter. Though, the appeals court didrecognize that a different result would be possible where both parties appealed or challenged theaward below.

The court of appeals relied on general cannons of statutory construction to interpret Texas LaborCode §408.221. Specifically, there was a liberal construction of this section in favor of the injuredworker. The court of appeals reasoned that it was the legislature’s intent that insurance carriers beheld liable for attorney’s fees in the event that the employee is the prevailing party. Further, thecourt distinguished Cigna Ins. Co. of Texas v. Middleton, 63 S.W.3d 901 (Tex.App.-Eastland2001, pet. denied), in that, here, only the insurance carrier, Appellant, appealed the belowdecision. Whereas in Middleton, both parties appealed the trial court decision and non-suited thechallenge, thus both were prevailing parties not entitled to attorney’s fees under the statute. Thecourt further reasoned that the inequities inherent in a claimant defending such a claim werecontemplated by the statute. Thus, the court found that when a party challenges an earlier decisiononly later to non-suit, that party was conceding defeat and making the other a prevailing party.

Appellant, Pacific Employers Insurance Co., filed suit seeking judicial review of a Texas Workers’Compensation Commission Appeal Panel decision granting Appellee, Severiano Torres, workers’compensation award. After nearly 19 months of litigation and less than three weeks before trial,Appellant filed a non-suit dismissing all claims, which was granted. The Appellee filed motionsfor attorney’s fees under Texas Labor Code §408.221. The trial court awarded counsel forAppellee attorney’s fees and expenses. Appellant argued that the Texas Labor Code does notprovide for attorney’s fees when a judicial review is disposed of by non-suit as the employee is nota “prevailing party” as contemplated by the Act. Whether Appellee is entitled to attorney’s feesrested upon the appellate court’s interpretation of Texas Labor Code §408.221


APPEALS PANEL DECISIONS

NO. 051306-S

FACTS:

HOLDING:

Where multiple areas of the spine are involved in a compensable injury, a doctor rating impairment should choose the region “primarilyinvolved” and then rate that region. If more than one spinal region is impaired, the doctor should determine the impairment of the separateregions and combine the regional impairments using the Combined Values Chart.

The claimant’s injury involved his neck, thoracic and lumbar areas and his right hip. The designated

doctor initially diagnosed a “Thoracolumbar syndrome” and provided a 10% impairment rating

under the DRE lumbosacral spine impairment section of the Guides. The claimant argued that his

hip was not rated resulting in the sending of a letter of clarification to the doctor. The designated

doctor re-examined the claimant and certified that the claimant reached MMI on the date of the

second examination, January 22, 2004. The designated doctor awarded a 10% impairment rating

consisting of 5% for the lumbar spine and 5% for the right hip.

The claimant again objected to the designated doctor’s impairment rating arguing that the rating did

not include impairment for the thoracic injury. A third letter of clarification was sent to the

designated doctor resulting in a third examination on January 4, 2005. The designated doctor again

certified the claimant reached MMI on January 22, 2004. He provided a 5% impairment rating

under DRE II for the thoracolumbar injury. The designated doctor awarded nothing for the right hip

noting that the right hip range of motion was normal at the time of this third evaluation.

The hearing officer concluded that the claimant’s impairment rating was 5% as found by the

designated doctor on the third examination. The claimant appealed.

Reversed and rendered that the impairment rating is 10%. The Appeals Panel notes that the

claimant’s impairment rating must be based upon his condition on the date of maximum medical

improvement. The Appeals Panel comments that the 5% impairment rating assessed by the

designated doctor following the third examination was clearly based upon his findings at the time of

that examination, not his findings on the date of MMI.

The Appeals Panel next addresses the contention that the impairment rating assessed by the

designated doctor on the date of maximum medical improvement did not include impairment for all

of the spinal regions injured. In that regard the Appeals Panel indicates the following:

“Consequently, our reading of the AMA Guides would indicate that a doctor in the exercise of

medical judgment, using the DRE model, in calculating how individual aspects of the spine are

rating in accordance with the Guides, should select the region primarily involved and then rate that

region. Applying the language from the bottom of page 3/95 of the AMA Guides, if the injury is

primarily to the cervical spine the rating would be under part 3.3h, page 3/103 cervicothoracic spine

impairment, if the injury was primarily to the thoracic area of the spine the rating would be under

3.3i page 3/106 for thoracolumbar spine impairment and if the injury is primarily to the lumbar

portion of the spine, the impairment would be under part 3.3g page 3/101 lumbosacral spine

impairment. Pursuant to part 3.3f, page 3/101, paragraph 8, if more than one spine region is

impaired, the doctor is to determine the impairment of the other regions and combine the regional

impairments using the Combined Values Chart to express the patient’s total spine treatment.”


FACTS: The Commission records reflect that the hearing officer’s decision was mailed to the claimant on

April 18, 2005. The envelope in which the claimant’s appeal was mailed to the Appeals Panel

contained a postmark of May 17, 2005. Based upon these dates the Appeals Panel determined that

the claimant’s appeal was not timely filed. The Appeals Panel notes that the 5th day after April 18,

2005, was Saturday, April 23, 2005, which was not a working day per Rule 102.3b. Since the 5th day

of the deemed receipt period fell on a non-working day, the hearing officer’s decision is considered

received on the next working day which was Monday, April 25, 2005. While the claimant indicated

in her appeal that she received the hearing officer’s decision on April 27, 2005, she did not provide

any information regarding why it was not received by the deemed date of receipt, April 25, 2005.

NO. 051129-S

Concerning the specific rating assigned by the designated doctor, the Appeals Panel comments as

follows: “We believe that Dr. F is correct in wanting to rate the spine as a ‘single entity’ but was

ambivalent whether it was the thoracic spine or the lumbar spine which was primarily involved, a

fact that the AMA Guides recognize as ‘difficult to separate’ as indicated on page 3/95.”

Where the 5th day after the date a decision and order is mailed falls on a non-working day, the deemed receipt date is the next workingday on the calendar.

HOLDING: The Appeals Panel notes that it has held in past decisions that the mere assertion that the decision

was received after the deemed date of receipt is insufficient to extend the date of receipt past the

deemed date of receipt. As the 15th day after April 25, 2005, excluding Saturdays and Sundays and

holidays was Monday, May 16, 2005, the claimant’s appeal contained in the envelope postmarked

May 17, 2005 was not timely.


continued from page 1

or action taken on the claim. A generic statement with

no further description of a factual basis for the action

taken does not satisfy the requirements of the rule.

The question remains, however, whether carrier

waives its right to dispute compensability if it uses

generic language and violates Rule 124.2(f). A recent

San Antonio Court of Appeals decision held that no

magic words are needed to raise the issue of

compensability. The cases make it clear that some

ground for contesting liability must be given, but they

do not require precision.

The Division of Workers’ Compensation Appeals

Panel also follows this general rule. In one decision,

the Panel held that “magic words are not necessary” to

contest the compensability of an injury under the statute

and rule, and that the Commission will look to “a fair

reading of the reasoning listed” to determine if the

notice of refusal or denial is sufficient. The key point

to be determined is whether, read as a whole, any of the

reasons listed by carrier would be a defense to

compensability that could prevail in a subsequent

proceeding.

So far, the Panel has not found that a carrier has

waived its right to dispute compensability as a result of

carrier’s notice of refusal lacking substantive or factual

information. In other words, the Panel has yet to hold

that a carrier waives its right to dispute compensability

by making a generic denial without claim-specific

substantive information.

Nonetheless, carriers who utilize generic denials

may still be subject to an administrative violation for

failing to comply with Rule 124.2(f). Carriers should

also keep in mind that its denial language is subject to

interpretation. The more generic and less claim-specific

the language, the more risk there is of misinterpretation.

In order to avoid a potential administrative

violation and to avoid defending against a waiver

argument raised by a claimant (which could be very

problematic in state court) we strongly recommend that

you state the defensive legal theory followed by claim-

specific substantive information that supports the

defensive theory.

See Advisory 120 on our web site resource center

and reprinted in the back pages of FOLIO for a list of

legal defenses to a workers compensation claim. Supply

one or more particular facts along with the legal defense

on the PLN 1.


provided by a non-treating doctor without a

treating doctor referral. B-0054-05.

4. If requested, carriers should “authorize

payment to pharmacies for up to a 90 day

supply of any prescription medication.” B-

0047-05.

5. Carriers should endeavor to identify current

addresses for displaced injured workers and to

“use all available means” to provide “prompt

and immediate relief.”

6. Policies of insurance should not be

cancelled because of failure to pay premiums.

Further details are available in Commissioner

Bulletin Nos. B-0047-05, 0049-05, 0050-05, 0051-05,

0054-05 0055-05 and 0056-05.


Date HB 7 Statutory Citation

October 1, 2006 The Commissioner of Workers’ Compensation shall report to the governor,

lieutenant governor, speaker and the 79th Legislature on the implementation

of changes to the Designated Doctor program (Section 408.1225, Labor

Code)

Section 8.011(a) of HB 7 (p.

362)

December 1, 2006 The Commissioner of Workers’ Compensation shall forward legislative

recommendations regarding changes to the WC Act to the legislature no

later than this date every even-numbered year.


(p. 23)

December 1, 2006 The Commissioner of Insurance shall issue the first report to the governor,

lieutenant governor, speaker and the legislature on the impact of HB 7 on

the affordability and availability of workers’ compensation insurance for

Texas employers. All subsequent reports shall be issued by December 1st of

every even-numbered year.

Section 8.011(c) of HB 7 (p.

362)

December 31, 2006

(approximately)

In its evaluation of networks, TDI shall offer recommendations to the 80th

Legislature regarding whether statutory changes are needed to allow an

injured worker to receive workers’ compensation medical care from PPO

providers (i.e., allow a worker to select his or her PPO primary care

provider as the worker’s treating doctor within a workers’ compensation

network). HB 7 contained no specific statutory timeline for this legislative

report.

Section 1305.105(d),

Insurance Code (p. 293)

December 1, 2006 The Division of Workers’ Compensation at TDI shall study the issue of

required accreditation of interdisciplinary pain rehabilitation programs or

interdisciplinary pain rehabilitation treatment facilities that provide services

to injured employees and shall report to the legislature regarding any

statutory changes that the division considers necessary to require that

accreditation. HB 7 contained no specific statutory timeline for this

legislative report.


(p. 131)

June 2007

(approximately)

The Workers’ Compensation Research and Evaluation Group at TDI shall

issue the first workers’ compensation network report card no more than 18

months after the date that TDI certifies the first workers’ compensation

network.

Section 8.015 of HB 7 (pp.

363-364)

January 1, 2008 The Commissioner of Insurance may adopt rules, but not before this date,

regarding the electronic payment of medical bills by insurance carriers to

health care providers upon sufficient evidence that such payments can be

made without undue burden to carriers.

Section 408.0251, Labor

Code (p. 123)

October 1, 2008 The Commissioner of Workers’ Compensation shall report to the governor,

lieutenant governor, speaker and the legislature on the implementation and

results of the small employer return-to-work pilot program.

Section 8.011(b) of HB 7 (p.

362)

December 1, 2008 The Commissioner of Insurance shall conduct a public hearing no later

than this date to review rates to be charged for workers’ compensation

insurance in this state.

Article 5.60A, Insurance

Code (pp. 331-333)

December 1, 2008 The Workers’ Compensation Research and Evaluation Group at TDI shall

issue the first report to the governor, lieutenant governor, speaker and the

legislature on the impact of workers’ compensation networks on the cost

and quality of medical care on this date. All subsequent reports shall be

issued by December 1st of every even-numbered year.

Section 8.003 of HB 7

(p. 358) Section 8.011(d) of

HB 7 (p. 362)

December 1, 2008 The Office of Injured Employee Counsel shall report to the governor,

lieutenant governor, speaker, and the chairs of the legislative committees

with appropriate jurisdiction on the activities of the office, the

identification of any problems in the system from the perspective of the

Section 404.106, Labor

Code (pp. 59-60)



worker and any legislative recommendations to correct these

problems and an analysis of the ability of the system to

provide adequate, equitable and timely benefits to injured

workers.

September 1, 2009 Expiration date of the small employer return-to-work program. Section 413.022, Labor Code

(pp. 214-216)

September 1, 2009 This is the Sunset date for TDI, the Division of Workers’ Compensation at

the TDI, and the Office of Injured Employee Counsel.Section 31.004, Insurance

Code (pp.340-341) Section

404.003, Labor Code (p. 51)

medical advisor, Dr. Charles Nemeth, as its expert

witness. Dr. Nemeth is an orthopedic surgeon and

author of both advisories. The carriers called Dr. Marc

Taylor. Dr. Taylor was a contributor to both the 4th and

5th editions of AMA Guides to the Evaluation of Permanent

Impairment (the Guides).

At trial, the carriers noted that both §408.124 of the

Labor Code and Rule 130.1 require impairment ratings

in Texas to be based on the Guides. We argued that

both advisories were inconsistent with the 4th edition of

the Guides and thus effectively modified Rule 130.1. We

argued that neither the TWCC nor the executive

director had authority to modify or change a rule or

statute by advisory.

The TWCC argued at trial that the advisories were

consistent with the 4th edition of the Guides. TWCC

claimed that “surgery” was not being rated under the

advisories; instead, the “condition produced by the

surgery” was rated. TWCC also argued that the lawsuit

should not have been filed in Travis County and should

have been filed in the county where venue was

appropriate for each.




ELECTION OF REMEDY

7. The employee elected a remedy inconsistent with the

claim for workers’ compensation benefits. [Identify the

inconsistent choice].

JURISDICTION

8. The TWCC has no jurisdiction to hear this case. Add

the following where applicable:

a) Claimant elected to recover workers’ compensation

www.tdi.state.tx.us. When you open TDI’s Website,

select Section Link “Bulletins/Rules”, then scroll down

on the new page to “Legislative Reports” and link to the

implementation plan under the “2005 Legislative

Session” heading.

We request that you share this information with

your staff, agents, and other affected parties so that you

may completely and timely implement any changes

necessary to comply with new and amended statutes.

If you have questions concerning the attachments

please contact the following divisions as applicable:

Life/Health Division at (512) 322-3409 or E-Mail:

[email protected]

HMO/URA/QA Division at (512) 322-4266 or E-Mail:

[email protected] or

Licensing Division at (512) 322-3503 or E-mail:

[email protected].

under the law of another jurisdiction.

b) Claimant did not have significant contacts with

Texas and employment was not principally located in

Texas.

c) Claimant elected to retain common law rights and

is not covered under workers’ compensation. (Section

406.034(b) Tex. Lab. Code).



Insurance;

· Assisting injured workers in contacting appropriate

licensing Boards concerning complaints against health

care providers;

· Assisting injured workers with referrals to local, state,

and federal financial assistance, rehabilitation or work

placement programs, as appropriate; and

· Issuing recommendations to the legislature on how the

system can be improved for injured workers.

Q. Is the OIEC a separate state agency?

A. Yes. The OIEC is separate from both the Texas

Department of Insurance and the Division of Workers’

Compensation. This is to ensure that the OIEC can

independently assist injured workers with workers’

compensation complaints and disputes. However, the OIEC

will work closely with both the Texas Department of

Insurance and the Division to address injured workers’

concerns.

NETWORKS

Q. Does HB 7 allow for the use of networks by insurance

carriers?

A. Yes. HB 7 allows for the creation of workers

compensation health networks to provide health care services

to injured workers. Under HB 7, an insurance carrier

(including insurance companies, certified self-insured

employers, group self-insured employers, and governmental

entities) may establish or contract with a workers’

compensation health network.

Q. What is a workers’ compensation health network?

A. A network is an organization formed as a health care

provider network to provide health care services to injured

employees. A network may be formed by an insurance

carrier or may operate under contract with an insurance

carrier. The network must be certified in accordance with

Chapter 1305, Insurance Code, and rules adopted by the

Commissioner of Insurance.

Q. Will networks be required to comply with utilization

review requirements?

A. Networks are not required to perform utilization review.

However, if they choose to contract with carriers to do so,

then HB 7 requires networks to comply with statutory

requirements relating to utilization review and retrospective

review, including new and amended provisions in HB 7 that

impact such reviews.

Q. Will networks be required to comply with Division rules

specifying which health care treatments and services require

the insurance carrier’s express preauthorization or concurrent

review?

A. No. If a network or carrier uses a preauthorization

process within a network, the requirements of Insurance

Code Chapter 1305 and applicable TDI rules apply. A

network or carrier may establish its own list of which health

care treatments and services require preauthorization or

concurrent review within a network.

Q. What are the requirements for setting up a workers’

compensation health network?

A. There are specific requirements in HB 7 relating to

networks, including financial requirements, contracting

requirements, access and availability of care requirements,

quality improvement program and case management

requirements. TDI must adopt rules to certify networks by

December 1, 2005, and begin accepting applications for

certification by January 1, 2006.

Q. When will rules on networks be available?

A. The network rules are to be adopted by the

Commissioner of Insurance not later than December 1,

2005. Proposed rules regarding workers’ compensation

health care networks are posted on the TDI website

(www.tdi.state.tx.us ) and published in the September 2, 2005

issue of the Texas Register (30 TexReg 5099). Written

comments on the proposed rules must be submitted as

specified in the proposal no later than 5:00 p.m. on October

3, 2005. Adoption of the proposed rules will be considered

in a public hearing under Docket No. 2622 scheduled for

Thursday, October 6, 2005 at 9:30 a.m., 1400 N. Congress,

Austin, Texas. The public hearing may be continued through

October 7, 2005, if necessary. A complete timeline for

development of these rules can be accessed through the

following link: http://www.tdi.state.ts.us/wc/transition/

twcc5.html

Q. When will there be stakeholder meetings on networks?

A. A stakeholder meeting on networks was held on July 12,

2005. Notification of future stakeholder meetings will be

provided on the TDI website and through e-mail to

interested parties.

Q. How do networks impact employers?

A. If an employer’s insurance carrier establishes or contracts

with a certified network, then the employer’s employees who

receive notice of network requirements and live in the

network service area will be required to seek health care

services through a network health care provider if the

employee is injured on-the-job.

Injured workers must choose a treating doctor from the list


of treating doctors provided by the network. If specialty

treatment or services are required, the injured worker must

be referred, by the treating doctor, to another provider in the

network for such care. If specialty treatment or health care

services are not available, a treating doctor must refer the

injured worker to a provider outside the network, subject to

the approval of the network.

Q. Is the employer required to inform employees about a

network?

A. Yes. If an employer has agreed to use the insurance

carrier’s workers’ compensation health network, then the

employer is required to provide notice of network

requirements to all existing employees and all new hires of

network requirements. The employer shall obtain a signed

acknowledgment from each employee that the employee has

received the information and shall post notice of network

requirements at each place of employment. An employee is

not required to comply with network requirements until he

or she receives this notice. The refusal of an employee to

sign the acknowledgment form does not allow the employee

to obtain health care services outside of the network, except

for an emergency. The employer must also notify an injured

employee of the network requirements at the time the

employer receives notice of an injury.

Q. Who will be a treating doctor in a network?

A. The network determines the specialty or specialties of

doctors who may serve as treating doctors. However, even if

a specialty is excluded as being a treating doctor for that

network, providers of that specialty may provide health care

services if they are in the network and the injured worker is

referred to that provider by the treating doctor.

Q. Can an employer require an injured worker to use a

network treating doctor?

A. If the employer contracts with an insurance carrier for

the provision of health care services through a network, the

requirement to use network providers depends on whether

the injured worker lives in the network service area and

whether the worker has received notice of the network

requirements. If the injured employee lives within the

network’s service area and has received notice of network

requirements, that employee is required to choose his or her

treating doctor from the network’s list of treating doctors

and receive health care from network health care providers,

regardless of the date of injury. There are exceptions for

emergency care and for health care provided by an out-of-

network provider pursuant to a referral from a treating

doctor for medically necessary services that are not available

in the network. The out-of-network referral must be

approved by the network.

Requirements to use a network provider apply to all injured

workers, including those with injuries occurring prior to

September 1, 2005.

Q. I offer health insurance to my employees through an

HMO plan. Can my employees go to their HMO primary

care physician instead of a workers’ compensation health

network doctor?

A. Depends. If your employees have health insurance

through a health maintenance organization (HMO) plan,

your employees may select their primary care physician,

whom they selected prior to their injury, as his/her treating

doctor for his/her workers’ compensation claim. However,

your employee’s primary care physician must agree to follow

all the terms and conditions of the workers’ compensation

health network’s contract and comply with the Workers’

Compensation Health Care Network Act (Chapter 1305,

Insurance Code) and applicable rules.

Q. Can my employees continue to select any provider as a

treating doctor?

A. Depends. If the employer contracts with an insurance

carrier for the provision of health care services through a

network, the injured worker must select a treating doctor

from the list of available treating doctors in that network..

However, network doctors do not have to be on the

Division’s Approved Doctors’ List (ADL) to provide

treatment. If there is not a network in place, the only

requirement is that the doctor must be on the ADL, which is

in effect until September 1, 2007. Doctors who have been

removed from the ADL or denied admission to the ADL

prior to 9-1-07 will not be allowed to provide health care for

injured employees in the workers’ compensation system.

Q. What requirements apply under HB 7 if an insurance

carrier disputes the compensability of an employee receiving

in-network medical care?

A. HB 7 requires carriers to notify a network health care

provider in writing if the carrier decides to dispute the

compensability of a claim. The carrier is prohibited from

denying a medical bill on the basis of compensability for

health care services that were provided before the carrier’s

written notification to the provider.

Q. What requirements apply under HB 7 if a carrier

successfully contests the compensability of a claim for in-

network medical care?

A. HB 7 provides that if the carrier successfully contests

compensability, the carrier is liable up to a maximum of

$7000 for health care provided before the carrier’s written

notification that the carrier contests the compensability of an

injury.


WORKERS’ COMPENSATION RESEARCH AND REPORTCARDS

Q. How do I determine whether my insurance carrier’s

network is good or not? Is there a network report card I can

use?

A. HB 7 requires TDI to issue an annual report card

comparing workers’ compensation health networks certified

by TDI on various performance measures, including:

· employee access to care;

· return-to-work outcomes;

· health-related outcomes;

· employee satisfaction with care; and

· health care costs and utilization of health care.

This report card will be developed by TDI over the next

fiscal year with input from workers’ compensation system

stakeholders and the legislature. In accordance with HB 7,

the first workers’ compensation network report card will be

issued within eighteen months from the date the first

network is certified by TDI. These report cards will be

available at no cost on TDI’s website (www.tdi.state.tx.us).

Q. What additional provisions does HB 7 contain relating to

research?

A. HB 7 contains several provisions to ensure that adequate

research is available on the impact of HB 7 on the

operational effectiveness of the Texas workers’

compensation system, including:

· A requirement that the Commissioner of Insurance

adopt an annual research agenda for the Workers’

Compensation Research and Evaluation Group at TDI;

· A requirement that the Group must also produce a

biennial report on the impact of networks on the cost

and quality of medical care, including comparisons of

medical care provided in and outside of networks (first

report due December 2008);

· A requirement that TDI conduct a study on the impact

of HB 7 on the availability and affordability of workers’

compensation insurance for Texas employers (first

report due December 2006);

· A requirement that the Division study the issue of

requiring accreditation of interdisciplinary pain

rehabilitation programs and facilities and report the

findings to the legislature;

· A requirement that TDI review and make

recommendations to the 80th Legislature on the

possibility of allowing injured employees to receive

treatment from an employee’s primary care provider

under a Preferred Provider Organization (PPOs) plan;

and

· A requirement that the OIEC issue a biennial report to

the legislature identifying problems with the workers’

compensation system from the perspective of injured

employees, which include proposed legislative and

regulatory recommendations to address these problems.

OTHER STATUTORY REQUIREMENTS

Q. Will all doctors, including network doctors, still have to

follow all requirements of the statute and rules?

A. All doctors must continue to comply with the statute and

Division rules relating to the role of a treating doctor,

outcome information to be collected by treating doctors,

disclosure of financial interests, and impairment rating

training and testing requirements if the doctor intends to

provide certifications of maximum medical improvement or

assign impairment ratings. Network doctors, however, will

not be required to participate in the Approved Doctors’ List

(ADL), if they are not providing care outside of a network.

DESIGNATED DOCTORS

Q. What changes does HB 7 make relating to designated

doctors?

A. Previously, a designated doctor (DD) examination was

scheduled to resolve questions about maximum medical

improvement (MMI) or impairment ratings (IR). Under HB

7, in addition to MMI and IR, a DD examination may also be

used to resolve questions about extent of injury, disability,

the ability to return to work, or similar issues.

HB 7 provides for sanctions against designated doctors who

fail to issue quality and timely decisions resulting from these

exams.

Q. Will there be new requirements for designated doctors?

What are the new requirements?

A. Yes. Although there are rules in place now, the TDI -

Division of Workers’ Compensation is required to adopt new

rules for DD requirements.

The report of the designated doctor will still have

presumptive weight, which may be overcome by the

preponderance of the other medical evidence, rather than by

the great weight of other medical evidence as under the

previous statute.

Q. When will the new designated doctor provisions apply?

A. The Division is required to adopt designated doctor rules

by February 1, 2006, and the changes will be effective on the

date provided by those rules.

Q. If an injured employee is sent to a Designated Doctor

(DD) exam, can the DD be part of the workers’

compensation network through which the injured employee

is receiving health care?


A. No. A doctor who contracts with or is employed by a

network may not serve as a designated doctor for a claim in

which the injured worker is receiving care through that

network.

PEER REVIEW

Q. What are the new requirements for peer reviews?

A. HB 7 requires the Commissioner of Workers’

Compensation to adopt rules regarding doctors who perform

peer review functions for insurance carriers. Those rules

may include:

· standards for peer review,

· imposition of sanctions on doctors performing peer

review functions, and

· other issues important to the quality of peer

review.

A doctor who performs peer review must hold the

appropriate Texas professional license.

REQUIRED MEDICAL EXAMS (RME’s)

Q. How does HB 7 change Required Medical Examinations

(RMEs)?

A. Under HB 7, a RME may now be used only to resolve

questions about the appropriateness of the health care.

Other issues currently addressed in RME’s will be handled

by designated doctor examinations.

A carrier may no longer suspend the payment of temporary

income benefits because an injured worker fails to submit to

a RME.

An insurance carrier may not suspend temporary income

benefits or calculate impairment income benefits based upon

a certification of maximum medical improvement or an

impairment rating assigned by a doctor who fails to comply

with the impairment rating training and testing requirements

established by Division rule. This requirement applies to

network and non-network doctors. A person who makes a

frivolous request for a RME commits an administrative

violation.

FEE GUIDELINES, TREATMENT GUIDELINES, LOST TIMEGUIDELINES

Q. What requirements does HB 7 impose regarding

adoption of treatment guidelines?

A. The Division must adopt treatment guidelines that are

evidence-based, scientifically valid, and outcome-focused,

and designed to reduce excessive or inappropriate medical

care while safeguarding necessary medical care. This is part

of the emphasis HB 7 places on evidence-based medicine.

Q. Will treatment guideline requirements be the same for

network and non-network?

A. No. Each network is required to adopt treatment

guidelines, return-to-work guidelines, and individual

treatment protocols. The treatment guidelines and individual

treatment protocols adopted by networks do not have to be

the same as those adopted by the Division for non-network

health care. Treatment guidelines must be evidence-based,

scientifically valid, and outcome-focused and designed to

reduce inappropriate or unnecessary health care while

safeguarding necessary care. Treatment may not be denied

solely on the basis that the treatment for the compensable

injury is not specifically addressed by the treatment

guidelines used by the insurance carrier or network.

PRE-AUTHORIZATION

Q. Are there any new requirements or changes regarding

preauthorization of medical services and treatment? What

are the changes?

A. Yes. HB 7 requires preauthorization for physical and

occupational therapy in accordance with rules to be adopted

by the Commissioner of Workers’ Compensation. (See

Commissioner’s Bulletin No. B-0039-05A dated August 30,

2005.) However, health care networks will not be required

to comply with Commissioner adopted rules relating to

preauthorization for specific services and treatment nor the

requirements in Section 413.014, Labor Code, but may

establish their own preauthorization requirements.

Preauthorization cannot be required for emergency care.

Health care that has been preauthorized is not subject to

retrospective review for medical necessity.

An employer must provide their employees a list of the

health care services for which the insurance carrier or

network requires preauthorization or concurrent review.

MEDICAL BILLING AND PAYMENT

Q. What medical billing and payment timelines are required

by HB 7?

A. HB 7 made significant changes in the timeframes for

medical billing and payment regarding workers’

compensation:

· A health care provider must submit a medical bill to the

insurance carrier on or before the 95th day after the date

of service. Failure to timely submit the medical bill


constitutes a forfeiture of the health care provider’s right

to reimbursement.

· An insurance carrier must pay, reduce, deny, or

determine to audit the bill no later than 45 days after the

carrier’s receipt of the bill. The insurance carrier may

request additional documentation necessary to clarify the

health care provider’s charges at any time during the 45-

day bill review period. The health care provider must

provide the requested documentation no later than the

15th day after the date of receipt of the insurance

carrier’s request.

· If the insurance carrier intends to perform an audit, the

insurance carrier must pay 85 percent of the fee

guideline amount or the contracted rate, within 45 days

of receipt of the medical bill. Further, 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.

Q. Do these medical billing and payment timelines apply to

health care provided through a network?

A. 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.

Q. When are these medical billing and payment changes

applicable?

A. These changes are applicable to medical bills with dates

of service that occur on or after September 1, 2005.

ELECTRONIC BILLING AND PAYMENT

Q. Will providers be required to submit bills electronically?

Will carriers be required to pay bills electronically?

A. Yes. The Workers’ Compensation Commissioner, in

cooperation with the Commissioner of Insurance, will adopt

rules regarding the electronic submission and processing of

medical bills by health care providers to insurance carriers.

These rules are to be adopted by January 1, 2006. On or

after January 1, 2008, the Commissioner of Workers’

Compensation may adopt rules regarding the electronic

payment of medical bills by insurance carriers to health care

providers.

Q. When will providers and carriers be required to comply

with the requirements for electronic billing and payment?

A. The dates for compliance will be stated in the rules.

PHARMACY

Q. What does HB 7 require regarding pharmacies and

pharmaceuticals?


Compensation to adopt a closed pharmaceutical formulary as

well as pharmacy fee guidelines. HB 7 also clarifies that

rules adopted by the Commissioner of Workers’

Compensation for the reimbursement of prescription

medications and services must authorize pharmacies to use

agents or assignees to process claims and act on behalf of

pharmacies under terms and conditions agreed on by the

pharmacies. These rules will apply to non-network and

network claims.

Q. What are the HB 7 requirements regarding closed

formularies?

A. Closed formulary rules adopted by the Commissioner of

Workers’ Compensation must allow an appeals process for

claims in which a treating doctor determines and documents

that a drug not included in the formulary is necessary to treat

an injured worker’s compensable injury.

Q. What are the HB 7 requirements regarding pharmacy fee

guidelines and reimbursement?


Compensation by rule to adopt a fee schedule for pharmacy

and pharmaceutical services that will provide reimbursement

rates that are fair and reasonable, assure adequate access to

medications and services for injured workers, and minimize

costs to employees and insurance carriers. Insurance carriers

must reimburse for pharmacy benefits and services using the

fee schedule adopted by the Commissioner of Workers’

Compensation or at rates negotiated by contract.

INCOME BENEFITS

Q. How does HB 7 change workers’ compensation income

benefits?

A. HB 7 makes some changes in how the maximum

amounts which may be paid for workers’ compensation

benefits, are calculated. These changes only apply to income

benefits for injuries that occur on or after September 1,

2005. For injuries occurring prior to September 1, 2005,

there will be no change in income benefits as a result of HB

7.

The maximum and minimum income benefits that may be


paid for injuries occurring this year and in all prior years may

be accessed through the following link: http://

www.tdi.state.tx.us/wc/information/maxminbens.html

Q. Are there other changes relating to income benefits?

A. Yes. Under current law, if disability continues for four

weeks or longer, income benefits must then be paid for the

first week of disability. HB 7 changes this waiting period

from four weeks to two weeks. However, as with the change

in the maximum/minimum benefits amounts, this change

only applies to an injured employee whose injury occurs on

or after September 1, 2005.

DISPUTE RESOLUTION – INCOME BENEFITS

Q How does HB 7 change the income benefit dispute

resolution process?

A. In an effort to make the income benefit dispute process

more timely and efficient for all dispute parties, HB 7 made

the following changes:

· The Division is required to develop and publish, on the

TDI- Division Website (http://www.tdi.state.tx.us), a list

of information that system participants will need to

resolve disputes regarding income benefits and to post

the list on its website (http://www.tdi.state.tx.us). When

a Benefit Review Conference (BRC) or Contested Case

Hearing (CCH) is scheduled, the Division must provide

the list to parties to the dispute;

· Any party who requests a BRC must provide

documentation of efforts that the party has made to

resolve the dispute before the request for a BRC is

submitted to the Division. The Commissioner of

Workers’ Compensation will adopt rules that provide

guidelines regarding the type of information that will be

necessary to satisfy this requirement; and the Division

may no longer schedule more than two BRCs on the

same disputed issues.

Q. Does HB 7 change anything relating to judicial review of

income benefit disputes?

A. Yes. Although the provision was set to expire on

September 1, 2005, HB 7 makes permanent the provision

that an insurance carrier that seeks judicial review of an

Appeals Panel decision is liable for the claimant’s attorney

fees if the claimant prevails in court. HB 7 also provides

that the record of a CCH is admissible in judicial review of

an Appeals Panel decision.

DISPUTE RESOLUTION - MEDICAL

Q. Are there any changes to the medical dispute resolution

process?

A. Yes. Effective September 1, 2005, medical dispute

decisions can no longer be appealed to the State Office of

Administrative Hearings (SOAH). Any party who wants to

appeal a medical dispute decision must appeal that decision

directly to district court. If you already have a SOAH case

scheduled, that hearing will still take place and you will still

have the ability to appeal the SOAH decision to district

court. Also, regardless of whether your employees are

receiving medical care in or outside of a workers’

compensation network, Independent Review Organizations

(IROs) will continue to resolve disputes regarding denials of

preauthorization and medical necessity.

COMPENSABILITY DISPUTES

Q. How does HB 7 change the compensability dispute

process?

A. HB 7 has made significant changes to the compensability

dispute process. Under the old system, health care providers

did not receive notice when an insurance carrier disputed the

compensability of a worker’s compensation claim until the

provider’s medical bill had been denied. HB 7 establishes

the following process:

· On request from an insurance carrier, the Division must

require an injured employee to submit to a single

medical examination by the employee’s treating doctor

to define a compensable injury.

· The treating doctor is required to submit to the carrier a

report that details all injuries and diagnoses related to

the compensable injury.

· After receiving the treating doctor’s report, the carrier

must accept all injuries and diagnoses related to the

compensable injury or dispute the determination of

specific injuries and diagnoses.

· Any treatment for an injury or diagnoses that is not

accepted by the carrier as compensable at the time of

the medical examination must be preauthorized before

treatment is rendered.

· If the carrier denies preauthorization because the

treatment is for an injury or diagnosis unrelated to the

compensable injury, the injured employee or affected

health care provider may file an extent of injury dispute.

· Any treatment for an injury or diagnosis that is accepted

by the carrier as compensable at the time of the medical

examination may not be reviewed for compensability,

but may be reviewed for medical necessity.

Q. Who pays for a medical examination by a treating doctor

to define a compensable injury?

A. HB 7 requires the insurance carrier to pay the costs of a

medical examination to define a compensable injury.


Q. What if an insurance carrier contests the compensability

of an injury and the injury is determined not to be

compensable?

A. HB 7 provides that a carrier may recover the amounts

paid for health care services from the employee’s accident or

health care benefit plan, or any other person who may be

obligated for the cost of the health care services.

RETURN-TO-WORK

Q. How will return-to-work disputes be handled after HB 7?

A. Previously, an insurance carrier could request that an

injured worker see a Required Medical Examine (RME)

doctor chosen by the insurance carrier to determine whether

the injured worker was physically able to return to work in

any capacity. If the opinion of the RME doctor was

different than the opinion of the injured worker’s treating

doctor, then the issue usually became a dispute. Under HB

7, designated doctors selected by the Division will examine

the injured worker and make a determination about an

injured worker’s physical ability to return to work. Either the

injured worker or the insurance carrier can dispute the

designated doctor’s opinion, but the designated doctor’s

opinion has presumptive weight during Division dispute

proceedings.

Q. What additional provisions or requirements does HB 7

contain relating to return-to-work?

A. HB 7 made several changes to highlight the importance

of returning injured workers back to work as quickly and

safely as possible. Some of these changes include:

· A requirement that the Division must provide injured

employees with information regarding the benefits of

early return-to-work, including information on how to

receive assistance in accessing high-quality medical care

through the workers’ compensation system.

· A requirement that the Division provide employers

with information regarding “best practices” for return-

to-work and workplace safety programs.

· A requirement that the Division do more to assist

injured workers to return-to-work, including training

Division staff to respond to questions and assist injured

workers in their efforts to return to the workforce,

creating a process for the Division to refer injured

workers to the Texas Workforce Commission (TWC)

and local workforce development centers for

employment opportunities and initiating post-referral

contacts by the Division, and collecting, tracking, and

sharing return-to-work data with other state agencies and

workforce programs; and

· A requirement that if the Division determines that an

injured worker is unable to ever return to the workforce,

the Division must inform the worker of his or her

possible eligibility for other forms of benefits, such as

social security disability income benefits.

Q. What is the Return-to-Work pilot (RTW) program and

when will it be available?

A. Research shows that small employers are less likely to

have return-to-work programs for their injured workers,

primarily due to a lack of resources. In an effort to provide

additional resources to small non-governmental Texas

employers, HB 7 institutes a pilot program that will

reimburse small employers (up to $2,500 per employer) for

workplace modifications they make to accommodate an

injured worker’s return to work. Non-governmental

employers who employ at least two but not more than 50

employees, and have workers’ compensation insurance

coverage will be eligible to participate in this program. The

pilot program takes effect on January 1, 2006, and expires

September 1, 2009. The operation of this pilot program will

be determined by rules adopted by the Commissioner of

Workers’ Compensation.

SUPPLEMENTAL INCOME BENEFITS (SIBs)

Q. How does HB 7 affect entitlement to Supplemental

Income Benefits (SIBs)?

A. HB 7 made some important changes to the eligibility

requirements for Supplemental Income Benefits (SIBs).

Previously, an injured worker was required to show that he

or she made a “good faith effort” to find work that matched

the worker’s physical abilities. Now, HB 7 requires an

injured worker to make an “active effort to obtain

employment” through:

· Active participation in a vocational rehabilitation

program conducted by the Department of Assistive and

Rehabilitative Services (DARS) or a private vocational

rehabilitation provider;

· Active participation in work search efforts conducted

through the Texas Workforce Commission (TWC); or

· Active work search efforts documented by job

applications submitted by the recipient.

HB 7 requires the Commissioner of Workers’ Compensation

to adopt rules to set standards injured workers must meet for

these new eligibility requirements, including the required

level of activity an injured worker must have with DARS or

TWC, and the number of job applications an injured worker

must have documented to satisfy the work search

requirements. Until these new SIBs eligibility rules can be

adopted, injured workers and insurance carriers should

continue to follow the current SIBs eligibility requirements

and forms.


POST INJURY WAIVERS

Q. I do not have workers’ compensation insurance. Can I

require my employees to sign post-injury liability waiver

agreements? When do those requirements apply?

A. Yes, but HB 7 establishes new requirements for post-

injury liability waivers. Under Section 406.033, Labor Code,

a cause of action against an employer who does not carry

workers’ compensation coverage may not be waived by the

employee after an injury unless:

· The employee voluntarily enters into the waiver with an

understanding of the waiver’s effect;

· The waiver is entered into no earlier than the 10th

business day after the date of the initial report of injury;

· The employee, before signing the waiver, has received a

medical evaluation from a non-emergency care doctor;

· The waiver is in writing and the true intent of the

parties is specifically stated in the document; and

· The waiver must be conspicuous and appear on the

face of the agreement either in type larger than the type

contained in the body of the agreement or in

contrasting colors.

SANCTIONS AND ENFORCEMENT

Q. What changes were made by HB 7 relating to

administrative violations or penalties?

A. HB 7 made several changes to align the enforcement

structure of the Division with the current enforcement

structure of TDI. Specifically, HB 7 removed the various

“classes” of administrative penalties previously found

throughout the statute and provided the Commissioner of

Workers’ Compensation with the authority to assess

administrative penalties up to $25,000 per day per

occurrence. Without specific classes of penalties in statute,

HB 7 removed the requirement that the Division develop a

penalty schedule. As a result, the penalty calculator will be

removed from the Division’s website. Other enforcement

changes, effective September 1, 2005, include:

· The removal of the requirement that a violation of the

statute or the rules must have been committed “willfully

or intentionally;”

· A provision clarifying that an insurance carrier commits

an administrative violation if that insurance carrier

makes a statement denying all future medical care for a

compensable injury;

· A provision authorizing civil and administrative penalties

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; and

· A provision clarifying that 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.

WORKERS’ COMPENSATION INSURANCE RATES ANDPREMIUMS

Q. Will the passage of workers’ compensation reforms result

in lower insurance premiums for my business?

The passage of House Bill 7 will provide greater oversight of

the rates, premiums, and underwriting guidelines of workers’

compensation insurers. The goal of this legislation was to

remove cost drivers from the existing system and provide

more freedom in the development of cost containment

measures and efficiency. The main result of this effort was

the creation of workers’ compensation health networks that

are certified by TDI.

Although there is an expectation of lower premiums, it will

take time for the reforms to result in lower rates and

premiums for business consumers. Before December 1,

2008, the TDI is required to conduct a public hearing and

each subsequent biennium to review rates. If the reforms

have resulted in rate and premium savings which have not

been passed on to employers, the Commissioner of

Insurance has the authority to pass rules and order

mandatory rate reductions and modify individual risk

variations. Additionally, the implementation of the networks

and cost savings resulting from them could result in

mandatory rate or premium reductions if employers have not

seen lower premiums.

The legislature will closely monitor the results of the reforms

by requiring TDI to report every two years on the

affordability and availability of workers’ compensation

insurance for employers including projected premium

savings, percentage of employers providing workers’

compensation coverage and related economic development

and job creation, market conditions and competition, and

participation of small and medium size employers in the

system.


Flahive, Ogden & Latson

P.O. Box 13367

Austin, Texas 78711

FOL FAX DIRECTORYTo help expedite your faxed information to the correct area within FO&L and get it to the responsible person at the earliest

time, use the following fax directory. Please remember the 3:30 p.m. receipt deadline for material required to be date

stamped at the Commission. Material received after 4:00 p.m. does not permit time to deliver it across town prior to the

Commission close.

(512) 477-4996 or Tillie Aguirre PLNs 1 & 11(512) 472-4936 BRC Requests (TWCC-45)

(512) 867-1700 Trina DeCecco Client Consultant

(512) 867-1748 Phyllis Devine Insurance Coverage (TWCC-20)Record Checks

Photostats

(512) 867-1733 Katie Foster Medical Review Disputes (TWCC-60)SOAH/Medical Review

(512) 867-1701 Patsy Shelton Advisory InformationClient Seminars, TWCC Audits

(512) 867-1724 Dianne Townsend Compliance & Practices

(512) 479- 5319 Brandi Senters Designated Doctor Filings (TWCC-32)Suspension of TIBs (TWCC-34)

(512) 477-4987 Cindi Friedel BRC & PHC HearingsRFEs, Set Notices, Hearings,

Files, Cancellations

(512) 867-1700 Paralegals All CCH-Related Info.

(512) 867-1700 FOL All materials not listed above

(512) 472-9160 Joel Ogden TWC Manual Orders & Information

Fax Number Attention To Subject Matter

©2005 – Flahive, Ogden & Latson OCTOBER 2005 VOLUME 10, … · 2015-03-26 · FOLIO4 CLIENT...

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Transcript of ©2005 – Flahive, Ogden & Latson OCTOBER 2005 VOLUME 10, … · 2015-03-26 · FOLIO4 CLIENT...