History of Texas Workers Compensation


The idea that employees should be compensated for work-related injuries and that governments should administer programs to ensure compensation, spread to the United States from Europe during the opening decade of the 20th Century.  Maryland and New York were the first states to enact workers’ compensation laws, but both laws later were overturned by the courts. Courts of the time generally held that mandatory, government-administered workers’ compensation programs denied employer property rights without due process of law. To ease judicial objections, most states enacted laws that allowed employers to choose whether or not to participate in the state workers’  compensation program.  In 1911, Wisconsin became the first state to enact a workers’ compensation law that was allowed to stand in court.  Texas enacted its first workers’ compensation law in 1913. Under pressure from Congress and the President, the courts began to take a different view of workers’ compensation.  In 1917 the U.S. Supreme Court ruled that states could legally require employers to provide compensation to injured employees.  As a result of the ruling, many states revised their laws to include mandatory workers’ compensation. 

Texas Workers Compensation
Texas also revised its workers’ compensation law  in 1917 but chose to retain voluntary employer participation in the system.  Today, Texas is the  only state that allows private employers to choose whether to provide workers’ compensation, although public employers and employers that enter into a building or construction contract with a government entity must provide workers’ compensation. The 1917 Texas law provided the basic framework for the state workers’ compensation system for the next 75 years.  Between 1917 and 1987, the law was amended or modified a number of times: 
• In 1947, the Legislature created the Second Injury Fund and classified certain occupational diseases as compensable. 
• In 1957, the Legislature extended medical benefits through the injured employee’s lifetime, established a maintenance tax paid by insurance carriers to fund the Industrial Accident Board (IAB), and extended the IAB’s jurisdiction in medical disputes past the date of a judgment or award. 
• In 1959, the Legislature prohibited attorney fees in fatal cases in which the insurance carrier accepted liability. 
• In 1969, the Legislature established a pre-hearing system to resolve disputes. 
• In 1973, the Legislature allowed injured employees unrestricted choice of health care providers. 
• In 1975, employees of certain public entities in Texas were brought into the system. 
• In 1987, the Legislature authorized the IAB to  establish guidelines for medical treatments and charges, and appointed a Joint Select Committee on Workers’ Compensation Insurance to study the state workers’ compensation system and make recommendations for change. 

1989 - 1994 
The Joint Select Committee on Workers’ Compensation conducted a comprehensive, two-year study of the system.  In 1989, the Committee reported the following: 
• Work-related fatality rates in Texas were among the highest in the nation. Statistics comparing state injury rates were unavailable or considered unreliable. 
• Texas benefit rates and payment durations, especially those for seriously injured employees, were low when compared to other states. 
• Nearly 50 percent of all compensable lost-time claims were filed with the help of attorneys, regardless of whether the claim was disputed. 
• Workers’ compensation-related medical costs were higher than in other states and had increased faster than medical costs outside the system and faster than indemnity costs. 
• More claim disputes were resolved in the courts; therefore, settlements sometimes were inequitable or inappropriate for the injury. 
• The cost of the Texas system to employers was among the highest in the nation.  Insurance rates had more than doubled over the previous five years. 
• Texas was one of only three states that did not allow private employers to self-insure. 

Based on those and other findings, the Committee identified fourteen key policy objectives for the state workers’ compensation system. The Committee reported that the system should do the following: 
• Promote workplace safety and health through employer incentive programs 
• Provide broad coverage of employees and work-related injuries and illness, regardless of fault 
• Provide appropriate and quality  medical care directed toward prompt restoration of the employee’s physical condition and earning capacity 
• Provide temporary benefits that replace a high proportion of after-tax lost earnings and permanent disability benefits that alleviate the economic hardships that occur because of the disability 
• Provide similar benefits to employees who suffer similar injuries and provide benefits proportionate to the severity of the injury 
• Provide benefits promptly and minimize the likelihood of claim disputes 
• Ensure compliance with the law and rules 
• Allow policymakers to exercise policy control to ensure that the system operates in accordance with the law 
• Encourage employees to return to work as quickly as possible and medically safe 
• Provide a safe, secure and efficient insurance and benefits delivery system 
• Appropriately allocate costs of the system to employers 
• Make insurance available to all employers at reasonable rates 
• Allow methods for continued monitoring and input from both business and labor 
• Prevent the transfer into the system of costs not related to workers’ compensation

Legislators responded by adopting a new Texas Workers’ Compensation Act in 1989.  The Act included the following provisions: 
• Created the Texas Workers’ Compensation Commission and eliminated the IAB 
• Consolidated and enlarged state-administered workplace health and safety programs and created health and safety assistance and incentive programs 
• Established a new income benefit system and raised benefit levels 
• Set specific payment and reporting deadlines for employers and insurance carriers to improve benefits delivery 
• Established a multi-level administrative system to resolve disputes and eliminated the use of compromise settlement agreements 
• Established a program to allow disputes to be  resolved informally and to assist unrepresented injured employees and other participants 
• Mandated that the Commission assess administrative penalties against participants who violate the Act or Commission rules 
• Granted the Commission authority to investigate fraud and changed Texas law to make some workers’ compensation fraud a felony (until Sept. 1, 1994) 
• Broadened the Commission's authority to develop and enforce medical fee and treatment guidelines and established other measures to control medical costs 
• Limited attorney fees to time and actual expenses, up to a maximum of 25 percent of an employee’s total income benefits recovered 
• Established the Workers’ Compensation Research Center to conduct independent studies on the performance of the system 
• Established the Legislative Oversight Committee on Workers’ Compensation to monitor the Commission and system and recommend changes to the Act to the Legislature Benefit and administrative provisions of the Act  were effective January 1, 1991. The following provisions came later: 
• Provisions authorizing the Commission to enforce the Act and Commission rules by assessing administrative penalties became effective June 1, 1991. 
• Provisions allowing arbitration as an alternate means of dispute resolution became effective January 1, 1992. 
• Provisions allowing large private employers to self-insure their workers’ compensation obligations, with Commission approval, became effective January 1, 1993. 
• Provisions making most non-covered employers subject to health and safety requirements became effective on January 1, 1994.  

Shortly after the Act was passed by the Legislature, the Texas AFL-CIO, the Texas Legal Services Union Local No. 2 and three Texas employees filed a lawsuit challenging its constitutionality on several grounds.  The plaintiffs prevailed in the 365th District Court of Maverick County and the 4th Court of 
Civil Appeals in San Antonio.  However, the Texas Supreme Court overturned the lower courts and issued an opinion February 7, 1995, declaring the Act constitutional. 

Subsequent to the significant changes made in 1989  and in an attempt to provide more stability in the workers’ compensation insurance market as well as increase the availability of workers’ compensation coverage for Texas employers, the 72nd
 Legislature passed HB 62 in 1991, which called for the Texas Workers’ Compensation Insurance Facility (the former insurer of last  resort) to stop writing workers’ compensation policies and created the Texas Workers’ Compensation Insurance Fund (Fund) to serve as a competitive force in the market and as the insurer of last resort.  The Fund began writing new workers’ compensation insurance policies and assumed responsibility for the residual market at the beginning of 1994. 

1995 Sunset Review  
The Texas Workers’ Compensation Commission (TWCC or the Commission) underwent Sunset review by the Texas Sunset Advisory Commission in 1994.  As a result of that process, the Legislature enacted HB 1089 in 1995, which continued TWCC until 2007  (In 2001, the 77th  Legislature passed HB 2600 which changed the agency’s Sunset date to 2005.) HB 1089 also amended the Act to include the following requirements: 
• Make state agencies directly responsible for managing employees' injuries by defining each individual agency as the employer for workers’ compensation purposes 
• Require agencies to actively manage risks and require the Commission’s Risk Management Division to review, verify, monitor, and approve agency risk management programs; 
• Require state agencies to develop, implement,  and maintain health and safety return-to-work programs 
• Require the Commission’s Risk Management Division to identify state agencies that do not comply with statutory risk management requirements in its biennial report to the Legislature;  
• Require the Commission to establish training guidelines and continuing education requirements for ombudsmen 
• Require the Commission to develop plain language information for injured employees about the workers’ compensation process in English and Spanish 
• Require the Commission to contact injured employees having missed eight or more days of work to provide information about the workers’ compensation process 
• Give the Commission's executive director the discretion to exclude a business from being identified as an extra-hazardous employer if the  business can show that it would be identified only because of a fatal accident beyond the owner's control or not related to the work environment 
• Require, for extra-hazardous employer designation, that the case must go through an Administrative Procedure Act hearing if the case history indicates that the employer or the employment environment was a proximate cause of the fatality 
• Establish an inspection time window so the Commission can conduct an accident prevention plan implementation inspection for an extra-hazardous  employer between six and nine months after the plan has been implemented 
• Require the Commission to adopt rules to address  fatalities that may not be related to the work environment, including heart attacks, diseases of  life, homicides, suicides, third-party vehicle accidents, common insurance carrier accidents and natural events 
• Authorize the Commission to impose an administrative fine of up to $500 on non-covered employers with five or more employees who fail to file required reports on injuries and illnesses 
• Authorize the Commission to develop the qualifications for field safety representatives by rule
• Require insurance carriers to file employer reports of injury on behalf of their policyholders 
• Require employers to give a copy of the injury report to the employee 
• Require the employee's copy of the injury report to contain a summary of the employee’s rights and responsibilities under the statute written in plain language 
• Transfer the Commission's Administrative Procedure Act hearings to the State Office of Administrative Hearings 
• Remove the executive director of the Commission as a voting member of the Texas Certified Self-Insurer Guaranty Association Board and require continued service on the Board as a nonvoting member 
• Require Commissioners to complete a training program before assuming their duties 
• Require the governor to designate the chair of the Commission 
• Make investigation files confidential 
• Entitle sole proprietors, partners or corporate executive officers to  workers’ compensation benefits as employees 
• Terminate income benefits for an occupational disease on the expiration of 401 weeks after the date on which benefits begin to accrue 
• Require specific qualifications for Designated Doctors 
• Restrict communication with a Designated Doctor to the injured employee or an appropriate staff member of the Commission 
• Require an ombudsman to meet privately with an unrepresented claimant for at least 15 minutes before a hearing 
• Make certain workers’ compensation fraud a state jail felony In a separate bill, the Legislature, in effect, combined the Legislative Oversight Committee on Workers’ Compensation and the Workers’ Compensation Research Center to create the Research Oversight Council on Workers’ Compensation (ROC). 

1997 
The 75th Legislature passed HB 2133, which created the State Office of Risk Management (SORM) by merging the responsibilities of the Risk Management Division of the Texas Workers’ Compensation Commission with the duties of the Workers’ Compensation Division of the Attorney General’s Office.  By statute, SORM is charged with administering the workers' compensation program for state agency and public university employees, with the exception of the Texas A&M University System, the University of Texas System, and the Texas Department of Transportation.  

1999 
In 1999, legislators passed amendments to the Workers’ Compensation Act to improve the efficiency of the workers’ compensation system. Legislation was approved with the following provisions: 
• Permit or require electronic transmission of information among system participants (HB 2511) 
• Allow benefit review officers and hearing officers to issue interlocutory orders for payment of part or all medical and income benefits (HB 2512) 
• Allow TWCC to accept a one-time grant from the Texas Workers’ Compensation Insurance Fund to control medical costs and ensure delivery of quality medical care (HB 2510) 

In 1999, legislators passed several amendments to the Workers’ Compensation Act to improve the efficiency and equity of the workers’ compensation system.  Legislation was approved to: 
• Require insurance carriers to provide income benefits to injured employees via electronic funds transfer (EFT) at the request of an injured employee (HB 729) 
• Make several revisions to the Staff Leasing Services Act, including: 1) clarifying that a certificate of insurance coverage showing that a license holder maintains workers’ compensation insurance constitutes proof of coverage for the license holder and the client company with respect to all 
employees of the license holder assigned to the client company; and 2) expanding the provisions that must be included in a contract between a license holder and a client company to specify those responsibilities that are shared with regard to assigned employees (HB 1184) 
• Prohibit an insurance carrier from requesting a medical examination more than once a year for 
certain injured employees receiving Supplemental Income Benefits (SIBs) (HB 1826) 
• Clarify that if an injured state employee chooses to exercise the right to exhaust sick leave under the Workers Compensation Act, the employee may also choose to use some or all annual leave before receiving workers compensation income benefit payments (not applicable to employees of the Texas Department of Transportation, the University of Texas System and the Texas A & M University System, who are governed by separate sections of the Texas Labor Code) (HB 2509)  
• Clarify that payments of medical and income benefits made by the State Office of Risk Management (SORM) are subject to the provisions of the Workers Compensation Act applicable to insurance companies, and not to payment provisions of the Government Code applicable to state agencies (HB 2509)
• Requ i r e   tha t   the   in sur anc e   c ar r i e r  pay   int e r e s t  on  a c c ru ed   but  unpa id   income  b e ne f i t s  wi thou t   an  orde r   f rom TWCC,   a t   t h e   t i me   the  a c c rued bene f i t s   a r e  pa id  and  inc r e a s e the  int e r e s t   r a t e   appl i c abl e  unde r  prov i s ion s  of  th e  Ac t   f rom  the   cu r r ent   Tr e a su ry  Bi l l   r a t e  to  th e   cur r ent  Tr e a su ry  Bi l l   r a t  e  p lu s  3.5  per c en t  to b e t  t e r   approxi ma t e  bus in e s s   int  e r e s t  r a t e s   (HB 2510)      
• Cl  a r i  fy   tha t   an   inju r ed   e mploy e e   i  s  not   ent i  t l  ed   to Te mpo r a  ry   Income  Ben e f  i t  s   ( T I B s  ) ,  and  an  insu r an c e   c a r r i e r  may   suspend paym ent  of  TIBs ,   i f   the   employ e e   f a i l s ,  wi thout  good  c aus e ,   to  a t t end   an  insur an c e   c a r r i e r Requi r ed Medi c a l  Exam  (RME)   (HB 2510 )  
• Requ i r  e   an  i n sur  anc  e   c a  r  r i e  r   to  cont  i nue  pay ing TIBs   to  an  injur ed  employ e e   for   a t   l e a s t  14 day s   f rom   the  da t e   the   c a r r i e r  not i f i  e  s   TWCC  and   th e   employ e e  of   th e   in t en t   to susp end ben e f i t s  b a s ed on  a  medi c a l   r epor t   a ri s ing out  of   a   c a r r i e r  RME;   r equi r e  TWCC to  s e t   a  Bene f i t  Revi ew  Conf e r  en c e   (BRC)  wi thin 10 d a y s  of   r e c e iving not i  c e  o f   th e  c a r r i  e r ’ s   int  ent   to   su sp end  to d e t  e  rmine  whe the r   an  int e r locu tory  orde r   to  cont inue  bene f i t s   shou ld be  ent e r ed  (HB 2510)    
• Author i z e   an  employ e e  or   a   l eg a l  bene f i c i a ry   to  r eque s t ,   and  an   insu r anc e   c a r r i e r   to pay ,   income  or  de a th b e ne f i t  paym ent s  month ly   r a th e r   th an we ekly ,  wi t h   the   agr e ement  of   the   in su r anc e   c a r r i  e r .    Addi t ion a l  ly ,   a l low a   c a r r i e r   to pur cha s e   an  annui ty   to pay  the  b en e f i t s  of   an   emp loye e   r e c e iv ing  L i f e t ime   In com e  B ene f i t s   (LIB s ) ,  or   a   l ega l  
bene f i c i a ry   r e c e iving d e  a th b en e f i t s ,   subj e c t   to TWCC  r egul a t ion  (HB 2510)    
• Author i z e  TWCC,  by   rul e ,   to  adopt   the   four th  edi t ion  of   the  Ame r i c an Medi c a l  As  so c i  a t ion ’  s   (AMA)   Guide s   to  the  Evaluat ion of  Pe rman ent   Impai rment,   for  de t  e r m in ing   the   exi  s t  en c e   and d eg r  e e  of   an in jur ed  employ e e ’ s   imp a i rment   (HB 2510) .    
• Inc r e a s e   th e  max i mum bur i a l  ben e f i t   f rom $2,500  to $6,000  to mo r e   a c cu r a t e ly   r e f l e c t  the   av e r age   cos t  of   a  bu r i a l   in Tex a s   (HB 2510)   
• Authorize a political subdivision to provide volunteer firefighters, police officers, or other specifically named emergency medical personnel, who are injured in the course of performing volunteer duties, with more than the minimum income benefits authorized by the Act (HB 2510)   
• Allow TWCC to accept a one-time grant from the Texas Workers’ Compensation Insurance Fund (Fund) to control medical costs and ensure delivery of quality medical care (HB 2510) 
• Permit or require electronic transmission of information among system participants; require TWCC to develop a paperwork reduction plan;  and allow TWCC to contract with a data collection agent to fulfill the agency’s data collection requirements if necessary (HB 2511) 
• Require Certified Self-Insurers and political subdivisions to provide TWCC with notice of coverage (i.e., whether the employer has a commercial workers’ compensation policy or provides coverage through a pool or self-administered  arrangement) and claim administration contact information, and require employers and insurance carriers to identify or confirm an employer’s coverage status and claim administration contact information at TWCC’s request (HB 2511) 
• Allow benefit review officers and hearing officers to issue interlocutory orders for payment of part or all medical and income benefits and allow the TWCC executive director to enter interlocutory orders for all or part of accrued and/or future medical benefits as allowed by rule (HB 2512)  
• Authorize TWCC to establish minimum qualifications and credentialing standards for private providers of vocational rehabilitation services within the workers’ compensation system; require TWCC to inform insurance carriers of those injured employees eligible to receive Supplemental Income Benefits (SIBs) who are good candidates for vocational rehabilitation services; and clarify that an injured employee who refuses the services of (or refuses to cooperate with) a carrier-sponsored private vocational rehabilitation provider loses entitlement to SIBs (HB 2513)  
• Require TWCC to develop a guideline which outlines expected return-to-work timeframes; to provide information to employers regarding effective return to work programs though the agency’s health and safety information and medical review outreach programs; and to establish a program that encourages communication between employers and health care providers regarding the availability of modified duty to encourage more timely return to work of injured employees (HB 2513)  
• Allow TWCC, at the request of an employer, an insurance carrier, or on its own initiative, to request a functional capacity report from an injured employee’s treating or examining doctor to determine what ability, if any, an injured employee has to return to work (HB 2513)  
• Change the name of the program from the "Extra Hazardous Employer Program" to the "Hazardous Employer Program" and limit the application of the program to comply with a 1996 Third Court of Appeals ruling which stated that provisions of the program that duplicated or regulated federal Occupational Safety and Health Act standards were preempted and therefore invalid (HB 2514)
• Require TWCC to re-inspect the accident prevention services of insurance carriers who fail an initial biennial inspection within 180 to 270 days, and to collect reasonable re-inspection costs from those insurance carriers (HB 2514) 
• Provide workers’ compensation medical coverage  for volunteers in a state declared emergency (HB 2706) 
• Clarify that an employer may continue to pay the salary of an employee who sustains disability from a compensable injury in lieu of paying Temporary Income Benefits (TIBs) and that such payments are considered payment of income benefits for determining the accrual date of any subsequent income benefits (HB 2842)  
• Authorize the Fund to establish multi-tiered premium systems to set prices for insurance policies; eliminate the Fund’s state premium tax credit; require the Fund to be a member of the Texas Property and Casualty Insurance Guaranty Association; refund part of the Fund’s surplus to 
policyholders who paid a maintenance tax surcharge between 1991 and 1996; and require the Research and Oversight Council on Workers’ Compensation to conduct specific research studies to examine:  
  • methods to improve employee safety and facilitate return to work;  
  • the quality and cost-effectiveness of  the current workers’ compensation health care delivery system; and  
  • medical provider treatment patterns and insurance carrier utilization review practices (HB 3697). 
• Define members of the state’s military forces as “state employees” for the purposes of providing workers’ compensation coverage, effective for compensable injuries sustained on or after August 15, 1998 and clarify that a member’s average weekly wage for workers’ compensation purposes 
is equal to the sum of the member’s regular civilian weekly wage and regular military weekly wage (SB 525) 

2001
Medical costs in the system continued to be of concern in 2001. Legislators approved HB 2600 containing numerous amendments to the Act designed to: 
• Improve TWCC’s ability to regulate and sanction the various types of doctors providing services in the workers’ compensation system 
• Require doctors to register with and be approved by TWCC (i.e., the Approved Doctor List) 
• Require TWCC to establish impairment rating training and testing, and financial disclosure requirements for registered doctors 
• Formalize the role of the Medical Advisor and create a Medical Quality Review Panel 
• Require a feasibility study on the creation of regional workers’ compensation medical networks, and, if networks are determined to be feasible, 
• Require TWCC to contract with regional networks, and 
• Provide an option for injured employees and insurance carriers to participate in regional medical networks. 
• Eliminate the current second opinion process for spinal surgery and include those services in the pre-authorization process 
• Establish a minimum list of medical services requiring pre-authorization and/or concurrent review 
• Allow insurance carriers and health care providers to voluntarily pre-certify health care services that do not require pre-authorization 
• Allow the Commission to adopt rules requiring insurance carriers to pay for pharmaceutical services for the first seven days after an injury if the health care provider receives verification of coverage and confirmation of injury 
• Modify the Required Medical Examination process to bring TWCC Designated Doctors into the process more quickly to resolve questions on impairment and maximum medical improvement. 
• Modify qualification requirements for Designated Doctors 
• Require the TWCC to adopt an open pharmaceutical formulary including generic and over-thecounter medications 
• Require the use of Independent Review Organizations for resolving pre-authorization and medical necessity disputes 
• Require employers to, by request, report to the employee, treating doctor, and insurance carrier whether they offer modified duty opportunities for injured employees 
• Require insurance carriers to offer return-to-work coordination services to their policyholders 
• Move the TWCC Sunset review date up from Sept. 1, 2007 to Sept. 1, 2005 
• Allow employees to count all IRS-reportable wages, including multiple jobs, for calculating their average weekly wage (applies to a compensable injury that occurs on or after July 1, 2002) 
• Amend the determination of Temporary Income Benefits for school district employees to be based on the wages earned in a week rather than wages paid in a week (Applies to a compensable injury that occurs on or after Dec. 1, 2001) 
• Provide that the cost of risk management services be allocated to state agencies in the same manner as workers’ compensation premiums 
• Create a risk/reward program for workers’ compensation costs of state agencies 
• Allow Texas Department of Transportation injured employees to elect to use sick and annual leave time prior to receiving income benefits for their injury 
• Expand the Subsequent (previously Second) Injury Fund’s (SIF) responsibility for reimbursements to insurance carriers to include payment of pharmaceutical services for the first seven days after the injury where the injury  is determined not to be compensable and for additional benefits paid due to multiple employment 
• Provide for the SIF to make partial payment of some insurance carrier requests, if necessary 
• Provide for a maintenance tax increase, if necessary, to fund the SIF 
• Require the Commission to use the treasury constant maturity rate for one-year treasury bills as published by the Federal Reserve Board for the computation of interest and discount rates 
• Prohibit the waiver of an employee’s cause of legal action against a non-subscribing employer before the employee’s injury, illness, or death 

In addition to the passage of HB 2600, a few other key pieces of workers’ compensation legislation passed in 2001 containing the following provisions: 
• Authorize the State Office of Risk Management (SORM) to provide risk management services for most state agencies (except the University of Texas System, the Texas A&M University System, and the Texas Department of Transportation ) and to purchase or approve insurance coverage for 
most state agencies, with the above exceptions and an exception for Texas Tech University (HB 1203)  
• Allow certain sub-claimants (as defined by Labor Code Section 409.009) on workers’ compensation claims to access the claims records of the Texas Workers’ Compensation Commission to determine whether or not sub-claims exist.  To qualify for this access, such a subclaimant must be an insurance carrier and must have adopted an anti-fraud plan (HB 1562) 
• Change the structure of the Texas Workers’ Compensation Insurance Fund, which writes a significant share of the workers’ compensation insurance policies in the  state and serves as the "insurer of last resort" for Texas employers.  Under the bill, the Fund was renamed Texas Mutual Insurance Company and became  a member-owned entity, with any surpluses in the Fund's operations available to be passed back to members as dividends (HB 3458) 
• Allow for a disability payment for  peace officers injured by criminal conduct in the course of their duties (SB 850) 

2003 
Given the significant reforms enacted by HB 2600 in 2001, the 78th  Legislature enacted fewer changes in 2003; however, several significant bills were passed to: 
• Reduce workers’ compensation subrogation recovery  potential by the percentage of the employer’s responsibility for on-the-job injury (HB 4) 
• Give TWCC authority to file suit to enforce its orders.  Also require notice to TWCC of district court filings; if no notice is given, case cannot proceed (HB 145) 
• Allow injured employees to pay to “upgrade” to  brand-name drugs when generics are prescribed, resolving conflict with Pharmacy Act (HB 833) 
• Allow employees of County Community Service and Corrections Departments to receive risk management services provided by the State Office of Risk Management (SORM) (HB 1230). 
• Allow group self-insurance by private employers  and allows the purchase of group workers’ compensation coverage by trade associations (HB 1865 and HB 2095) 
• Define employees of Texas Task Force 1 (emergency responders) as state employees for workers’ compensation purposes (HB 2116) 
• Change seven-day requirement for carrier to pay or deny benefits to 15 days; violation of 15-day requirement is not a waiver of compensability timeframe, but an administrative violation (HB 2199) 
• Clarify that a suit filed in district court after the exhaustion of the TWCC administrative dispute process may be transferred if filed in the wrong court, and that the 40-day filing timeframe is satisfied if filed timely in the first court (HB 2323) 
• Exempt the Employee Retirement System (ERS)  from the state workers’ compensation program administered by SORM (HB 2359 and HB 2425)
• Allow TWCC to create by rule a lower-cost medical dispute resolution process for medical services costing less than an IRO review (HB 3168) 
• Designate the SIF as a dedicated general revenue fund (HB 3318 and HB 3378) 
• Require the State Board of Medical Examiners (BME) to notify TWCC if BME discovers a potential violation of workers’ compensation laws (SB 104) 
• Provide confidentiality for Board of Chiropractic Examiners (BCE) investigation files, but require BCE to share information with TWCC at TWCC’s request (SB 211) 
• Clarify that a person who performs services that  may benefit a political subdivision in connection with the operation of certain entertainment events, but who does not receive payment, is not eligible for workers’ compensation benefits from the political subdivision (SB 478) 
• Set a 90-day timeframe to dispute an assignment of an injured employee’s date of Maximum Medical Improvement or impairment rating and provide certain statutory exceptions for both first and subsequent assignments or ratings (HB 2198, HB 3168 and SB 820) 
• Make numerous changes to statute for Texas Property and Casualty Insurance Guaranty Association to conform Texas law more closely with model workers’ compensation acts and facilitate cooperation with other states in liquidation issues (SB 1192) 
• Clarify that for self-insured employers and political subdivisions, notice to the carrier of a workrelated injury  occurs when the third party claims administrator (TPA) receives notice, not the employer (SB 1282) 
• Allow TWCC to adopt non-nationally recognized  treatment guideline, if no nationally recognized guideline exists; guideline adopted by TWCC must still be scientifically valid and outcome-based.  Also allows TWCC to adopt individual treatment protocols (SB 1572) 
• Allow TWCC and Board of Medical Examiners/Board of Chiropractic Examiners to share information without compromising confidentiality; provides stronger immunity protection for members of TWCC’s Medical Quality Review Panel (SB 1574) 
• Set State Average Weekly Wage at dollar-certain amount for fiscal years 2004 ($537) and 2005 ($539) (SB 1574) 
• Clarify that pharmacy services can be voluntarily pre-certified prior to delivery, and that carrier must pay for services that it voluntarily pre-certifies.  Independent review organizations are required to consider payment policies of TWCC in deciding medical disputes, if payment policy is raised (SB 
1804) 

2005 Interim Studies
In 2005, legislators received two interim study reports recommending changes to the workers’ compensation system. The Senate Select Interim Committee on Workers’ Compensation and the House Business and Industry Committee both presented recommendations on implementing health care networks in the workers’ compensation system and on other issues. Among its recommendations, the Senate Select  Interim Committee on Workers’ Compensation recommended the following: 
• The Texas workers’ compensation system should  define medical necessity in a manner that encourages evidence-based treatment focused on return to work and functional restoration. 
• TWCC should adopt treatment guidelines that meet the statutory standards and are evidencebased, to the greatest extent possible. Since a major purpose of guidelines is education, TWCC and appropriate system stakeholders should take steps to more strongly emphasize education of 
employers and employees about the benefits of early return to work. 
• Workers’ compensation networks should be allowed in the workers’ compensation system. 
• TWCC should continue discussion with stakeholders on how to implement a treatment planning process designed to prospectively review problem claims on a pilot program basis. 
• In regard to medical disputes, it is suggested  to eliminate the ability of a party to a medical dispute to appeal an IRO decision to the State  Office of Administrative Hearings. In regard to indemnity disputes, insert independent medical expertise into an evaluation of frequently disputed issues such as the extent of an employee’s injury and the employee’s ability to work through a review by a TWCC Designated Doctor.
• The TWCC Medical Advisor and Medical Quality Review Panel functions should continue with a redirected focus. 
• Enhancements should be made to income benefits in the Texas workers’ compensation system to approach the national medians. The retroactive period should be shortened from 28 to 14 days. The cap on weekly income benefits should be raised to more closely approximate the national 
median state (currently Tennessee, at about $600 a week, compared to Texas’ $539). 
• The workers’ compensation administrative agency should operate under a single commissioner structure, with the commissioner appointed by the Governor with the advice and consent of the Senate. 
• State agency enforcement activities must be enhanced to better ensure appropriate incentives are in place for compliance. 
• The system should retain a workers’ compensation research function, adequately staffed to complete a similar level of research projects to the former Research and Oversight Council. 
• TWCC should take steps to implement electronic billing for health care providers. 

In its report to the Legislature, the House Business and Industry Committee recommended: 
• Health care networks in the workers’ compensation system should maximize choice of treating doctors and allow a change of treating doctor. 
• Health care networks should provide injured employees with adequate access to medical specialists. 
• Networks should guarantee that health care providers be paid promptly and fairly. 
• A reporting system should be established for networks so that the Legislature and others are aware of their effectiveness. 
• Explore the idea of patient advocates to represent the injured employee in the network system. 
• Utilize Workers’ Compensation Research Group at the Department and contacts at the Workers’ Compensation Research Institute to measure performance to ensure that employees are getting the care they deserve and employers are getting the best of network care for their money. 
• Investigate incentives to make network concept more acceptable to employees and labor.  
• Have the Department conduct a study to determine if there are measurable and/or significant differences between non-owned referrals and self-referrals. 
• Establish return-to-work guidelines and education programs for employers. 
• Implement electronic billing of workers’ compensation insurance carriers by physicians. 
• The Texas Commissioner of Insurance should study the effects of a managed care system on workers’ compensation insurance rates.  

2005 Sunset Review 
The Commission underwent review by the Texas Sunset Advisory Commission in 2004. As a result of legislation containing recommendations from the House and Senate interim committees and from the Sunset Commission, the 79th Texas Legislature enacted HB 7 in 2005. HB 7 abolished the Commission and created the Division of Workers’ Compensation within the Texas Department of Insurance with a Commissioner of Workers’ Compensation appointed by the Governor to serve as Executive Authority for the Division.   

HB 7 also amended the Act to: 
• Remove the statutory designation of specific Divisions within the Division of Workers’ Compensation, allowing the Commissioner of  Workers’ Compensation to determine the organizational structure of the Division to best meet performance goals 
• Require the Division to assess the performance of insurance carriers and health care providers against regulatory goals established by the Commissioner of Workers’ Compensation 
• Require the Division to implement a regulatory  approach that emphasizes overall compliance, rewards performance, and efficiently handles complaints 
• Establish specific duties and studies of the Workers’ Compensation Research and Evaluation Group, including preparing workers’ compensation network consumer report cards 
• Establish the Office of Injured Employee Counsel (OIEC) to be administered by a Public Counsel appointed by the Governor. Transfer the Ombudsman Program from the Division to OIEC by March 1, 2006 
• Simplify the provision of workers’ compensation health care by allowing for the creation of networks similar to those found in group health insurance 
• Provide that all employees of an employer covered by an insurance carrier that establishes or contracts with a certified network must obtain medical care for their work-related injuries through the network 
• Provide that the insurance carrier is liable for approved, out-of-network referred care, emergency care and health care for an employee who does not live in the network service area 
• Provide that an injured employee may request that his or her primary care provider under a group health HMO plan also serve as his or her treating doctor if the primary care provider agrees to abide by network requirements 
• Provide that a network may operate under its  own treatment guidelines and pre-authorization requirements. However, medical care may not be denied solely because it is not specifically addressed by the treatment guidelines used by the insurance carrier or network 
• Create a pilot return-to-work program for small employers with workers’ compensation insurance which provides grants of up to  $2,500 per employer to pay for workplace modifications that facilitate early return to work 
• Require the Division to assist injured employees  receiving income benefits to return to work, including referring injured employees to other employment assistance programs 
• Streamline the medical benefit dispute resolution process by requiring that parties seeking to appeal a review by an Independent Review Organization (IRO) or the Division must seek judicial review directly rather than appeal the IRO decision to the State Office of Administrative Hearings  
• Streamline the process for determination of compensable injury and the process for insurance carriers to either accept or dispute the findings of the treating doctor regarding the scope of the compensable injury 
• Require that treatment for a diagnosis/injury that is accepted by the insurance carrier may not be reviewed later for compensability but may be reviewed for medical necessity 
• Require that treatment for a diagnosis/injury that is not accepted by the insurance carrier must be pre-authorized before treatment is rendered 
• Require that an injured employee receive written notice once a treating doctor certifies Maximum Medical Improvement (MMI) and assigns an impairment rating 
• Provide that requests by insurance carriers for Required Medical Examinations (RME) are only allowed prior to a Designated Doctor Examination in order to examine the appropriateness of the health care received outside of a network 
• Provide that an injured employee may have a doctor of the employee’s choice present at an RME  if the examination relates to the employee’s impairment rating or MMI date 
• Provide that a doctor in the health care network may not serve as a Designated Doctor or perform an RME for an employee receiving medical care through a network with which the doctor contracts or is employed 
• Require the Commissioner of Workers’ Compensation to adopt a pharmacy fee guideline as well as treatment and return-to-work guidelines that  are “evidence-based, scientifically valid and outcome-focused” 
• Provide that the Commissioner of Workers’  Compensation may adopt disability management rules, including the use of treatment plans, for non-network claims 
• Limit the validity of post-injury waivers signed by employees of non-subscribers, including a prohibition against the signing of a waiver before the tenth business day after the employee was injured 
• Increase the maximum and minimum income benefit amounts paid to employees injured after October 1, 2006 by approximately 12 percent 
• Reduce the amount of time an injured employee  must be off work before that employee may recoup income benefits for the initial waiting period (i.e., the first seven days of disability) from four weeks to two weeks. The two-week waiting period applies only to injuries that occur after 
September 1, 2005 
• Clarify that work-related injuries determined as non-compensable remain subject to the exclusive remedy provision of workers’ compensation 
• Prohibit the misuse of the Division’s name, abbreviations, symbols, and logos 
• Require the Division to ensure all workers’ compensation forms and explanatory materials are prepared in plain language in both English and Spanish 
• Expand the statutory definition of intoxication in the workers’ compensation system 
• Remove the requirement that the state show that a party committed a violation of the Act or rules “willfully and intentionally” in order to assess administrative penalties 
• Clarify that employees in the University of Texas System and Texas A&M University System may use their accrued sick and annual leave in lieu of receiving Temporary Income Benefits (TIBs). If an employee chooses to use sick leave, the employee must exhaust all sick leave before 
receiving TIBs 

80th Legislative Session 2007 
During the 80th Legislative Session legislators passed thirteen bills relating to workers’ compensation to improve the efficiency of the system and to provide licensing requirements for certain system participants.  There were no bills passed that directly affected the organizational structure or management of the Division.  Bills that were passed amended the Act to include the following provisions: 
• Make it an administrative violation for an insurance adjuster, case manager, or other person who has authority under the Texas Workers’  Compensation Act to request performance of a service affecting the delivery of benefits to an injured employee 
• Require third party administrators performing administrative services in connection with workers’ compensation benefits to obtain a certificate of authority from the Department 
• Allow for deviation from fee guidelines by informal or voluntary network contracts and list specific information that informal and voluntary networks are required to provide to the Division 
• Require that informal and voluntary networks be certified as workers’ compensation health care networks under Texas Insurance Code Chapter 1305 no later than January 1, 2011 
• Reinstate the authority of the benefit review officer who presides over a Benefit Review Conference to consider a request for interlocutory order for the payment or suspension of benefits, allow the opposing party the opportunity to respond before issuance of an interlocutory order, and allow the benefit review officer to issue an interlocutory order if determined to be appropriate 
• Allow parties in a medical necessity or medical fee dispute an opportunity to administratively appeal a medical dispute resolution decision to either a Contested Case Hearing or the State Office of Administrative Hearings 
• Provide a reimbursement procedure for an accident or health insurer to recover amounts paid for health care services provided to an injured employee from the workers’ compensation insurance carrier in cases where an injury is determined to be compensable 
• Add an “eligible parent” to the list of legal beneficiaries eligible for death benefits where there are no other legal beneficiaries 
• Provide small employers with the option of submitting to the Division a pre-authorization plan for workplace modifications to accommodate an injured employee’s return to work  
• Allow an Office of Injured Employee Counsel ombudsman to request and receive from a health care provider at no cost the medical records of an injured employee
• Provide that, notwithstanding Texas Insurance Code Section 4202.002 relating to the Independent Review Organization (IRO), an IRO that uses doctors to perform reviews of health care services provided under the Labor Code  or Insurance Code Chapter 1305, may only use 
doctors licensed in Texas 
• Clarify that a health care provider who fails to submit a medical bill within ninety-five days after the services are provided to the injured employee does not forfeit the right to reimbursement if the provider submits proof that the bill was timely filed with a group accident and health insurer or a health maintenance organization that issues coverage under which the injured employee is covered or a workers’ compensation insurance carrier other than the insurance carrier liable for the reimbursement 
• Require that utilization review agents and insurance carriers use doctors licensed in Texas for performing utilization review or review conducted under the Workers’ Compensation Act or Texas Insurance Code Chapter 1305 
• Require that doctors performing peer review, utilization review, independent review, Required Medical Examination or Designated Doctor evaluation must be certified in the specialty appropriate to the care the injured employee is receiving 
• Amend the definition of “health care” in Texas Labor Code, § 401.011 to include the fitting, training, change or repair of a “prosthetic” or “orthotic” device 
• Require the Commissioner to establish by rule the information and reporting requirements that must be reported on workers’ compensation claims and remove provisions specifying such information and requirements 
• Provide that a person who commits an offense of fraud under the Texas Labor Code, Chapter 418 (Criminal Penalties) may be prosecuted under that chapter or any other applicable state law, including the Texas Penal Code 

Source:  Texas Department of Insurance Division of Workers Compensation Self Advisory Report to the Sunset Review Commission, 2009

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