February 1999 Volume 4, No. 2 ©1999 - Flahive, Ogden & Latson … · 2015-03-27 · FOLFOL Client Newsletter by Flahive, Ogden & Latson FOLIO February 1999 Volume 4, No. 2©1999

FOLFOLFOLFOLFOLFOLClient Newsletter by Flahive, Ogden & Latson

FOLIO©1999 - Flahive, Ogden & LatsonFebruary 1999 Volume 4, No. 2

It’s a rare event when the U.S. Supreme Courttakes interest in a state-based workers’ compensation

issue. Yet, that’s exactly what hashappened in American ManufacturersMutual Insurance Co. v. Sullivan, acase argued January 19, 1999, at thehigh court in Washington. The caseconsiders whether, under thePennsylvania Act, employees havea constitutional right to be providedwith notice and an opportunity to be

heard before medical payments are suspended. ThePennsylvania Workers’ Compensation Act permitsemployers and insurers to withhold payment fortreatment of an employee’s work-related injuriespending a utilization review process that will determine

The TWCC moved quickly to recover from anadministrative defeat over the question of when acarrier may suspend TIBs based on the certification ofMMI by a non-treating doctor. The Commissionersdirected staff to develop a proposal for revision toexisting Rule 130.3 to clarify the Commission’s position.The proposal for the rule revision was presented to theCommissioners at the February 4, 1999, Public Meeting.

The proposed amendment states that TIBs maynot be suspended by carriers if a doctor other than atreating doctor or a Commission designated doctorcertifies that the injured employee has reachedmaximum medical improvement and the treating doctordisagrees with that certification. The proposed rulereflects the long-standing position of former ExecutiveDirector Todd Brown, as well as some of theCommissioners and the Appeals Panel.

Last month, the State Office of AdministrativeHearings dismissed a TWCC prosecution thatattempted to enforce an administrative violation andfine based on a carrier’s unilateral suspension of TIBsby an RME doctor. (See FOLIO, January 1999) TheSOAH judge ruled that the statutedid not prohibit a carrier fromsuspending TIBs based on an RMEcertification of MMI. Hespecifically noted the Commission’sfailure to pass a rule prohibitingsuch suspension. The TWCC didnot appeal the decision in the SOAHcase and it has now become final.

The proposed revision to Rule 130.3 would requirethat a certifying doctor (other than a treating doctor ordesignated doctor) send a copy of his report to thetreating doctor within seven days of completion of hisexamination. The rule then imposes a duty upon the

Proposed Rule Bars TIBs Suspensiontreating doctor to respond to the report, indicating hisagreement or disagreement within seven days. Thisprocedure is similar to existing practice.

New language in the proposed rule then outlinesthe carrier’s options regarding suspension of TIBsunder varying circumstances. If the treating doctoragrees with the certification of MMI, there is nodispute and the carrier is permitted to suspend TIBs.If the treating doctor disagrees with the certification ofMMI, this is a dispute and the carrier is not permittedto suspend TIBs until the dispute is resolved by thedesignated doctor process. Continued on p. 6

U.S. Supreme CourtExamines Utilization Review

Medical Benefit Suspension Challenged

"The Supreme Courtsays one judicial reviewdeadline is mandatory,but not jurisdictional."

See p.3

CLIENT NEWSLETTER BY FLAHIVE, OGDEN & LATSON

FOLIO - 2 -

whether the employee’s treatment is reasonable andnecessary.

The Sullivan case has a potential Texasramification. During the 1980s and 1990s, manystates enacted reform legislation to contain escalatingworkers’ compensation medical costs. The 1989Texas reform of workers’ compensation includedseveral programs designed to reduce out-of-controlmedical costs. The rules relating to preauthorizationof medical care, second opinion on spinal surgery andmedical fee guidelines all trigger medical utilizationdispute resolution procedures.

The insurers complained of a decision from theU.S. Court of Appeals for the Third Circuit whichholds that the suspension of medical payments pendingutilization review violates dueprocess. The carriers firstargued that the decisions ofprivate insurance companiesdo not fall within traditionalconcepts of “state action.”[The US Constitutionregulates action byGovernment only. It doesnot regulate the behavior ofprivate parties]. “The mistake that the Third Circuitmade,” argued Chicago attorney Michael W.McConnell, counsel for the several insurers, “was infocusing on the quantity of the contacts between theinsurance company and State officials during theURO process.” Mr. McConnell compared these withsimilar contacts in activities traditionally consideredprivate. He argued, for example, that private civillitigants engage in similar interaction with the state,but are not state actors. The carriers contend that thedecision to suspend medical payment pending utilizationreview is a private decision made voluntarily by eachinsurer without participation by the state in anymeaningful way.

Second, the carriers contend that plaintiffs arenot deprived of due process under the system. Theyargue that the Pennsylvania statute covers andrequires payment only for reasonable and necessarytreatment. An employee has no property right orvested entitlement, they contend, unless and until thedisputed treatment is determined to be reasonableand necessary. Therefore, nonpayment of such a billprior to that determination is not a deprivation ofconstitutional significance.

Philadelphia attorney Loralyn McKinley, counselfor the Respondents argued, and the Third Circuitfound, that due process requires pre-suspension noticeto the employee. Ms. McKinley insisted that once thecarrier initiated medical payments, it had, in effect,conferred a property right that cannot be terminatedwithout following due process procedures. The ThirdCircuit had held that the employee’s interest issignificant because suspension of payment in realitymeans suspension of treatment. The insurers’ interestis, on balance, less significant because it is a monetaryloss that is later subject to the right to full or partialreimbursement from a state fund. Ms. McKinleycharacterized the employee’s right as one rooted in a“public benefit system.” This description was

repeatedly challenged by thecourt. Justice Scalia asked:“But your argument is thatthis is a public benefit system,and I think the questionsuggests that we’re curiousas to know why that makes itdifferent analytically from thetraditional tort system.”

“Because the State hasthe duty, in the context of this system,” respondedMs. McKinley. “The State guarantees the benefit,number one. The State guarantees that the benefitswill be paid, that there is a source for the payment ofthose benefits through several different mechanisms.”This response focused on what appeared to be thecourt’s main fear: that a holding that private workers’compensation insurers are state actors wouldadversely affect other government programs.

Justice Souter asked how such a holding wouldaffect Blue Cross-Blue Shield, private accidentinsurance, ERISA and “Dozens of very complexregulatory schemes that involve insurance companies... . Now, we just see one more here, and so, what’sthe difference between yours – or do you think thatall private employer action or insurer action involvinghealth care, involving pensions, et cetera, insuranceof any sort that regulated is government action?” Thecourt did not appear to be satisfied with the answer.

By requiring that employees be provided with -notice and some opportunity - to be heard prior tosuspension of payment, plaintiffs argue, the courtcould reduce the risk that payment for reasonable andnecessary treatment will be erroneously suspended.

“The mistake that the Third Circuitmade, was in focusing on thequantity of the contacts betweenthe insurance company and Stateofficials during the URO process.”


FOLIO - 3 -

While the Respondents did not argue that due processrequired a full evidentiary hearing before suspensionwould be permitted, they did argue that the limitedprocedures outlined in the Third Circuit’s opinionshould apply. Those requirements, notice and anopportunity for the employee to submit a writtenstatement prior to suspension of payment, wouldprotect the employee and would not impede thegovernment’s interest in quick, efficient resolution ofa dispute.

At trial in Sullivan, the District Court had dismissedthe plaintiff’s claims on the pleadings. First, the courtruled that private insurance companies are not stateactors and thus, not required to comply with the dueprocess clause. Second, the court determined that thePennsylvania procedure did not violate due process.Therefore, the court dismissed the governmentdefendants.

The Third Circuit reversed the court, holding that,for purposes of the Pennsylvania scheme, privateemployers and insurers are state actors subject to thedue process clause. The court then held that theprocess by which medical benefits could be suspendedunder the Act violated due process. Due process, thecourt wrote, requires that the employee “Be given: (1)reasonable and timely notice of the imminentsuspension of the medical benefits and treatmentbefore the suspension takes effect; (2) a descriptionof the reasons why utilization review had been invoked;(3) a timely opportunity to submit a personal statementin writing regarding … the reasonableness and/ornecessity of the disputed medical treatments; and (4)a description of the procedures under which theemployee can appeal an adverse determination.”

Mr. McConnell shared his thirty minute argumentwith Assistant Solicitor General Malcolm L. Stewart.The involvement by the Solicitor General’s office isapparently due to the national scope of the question.The Court’s decision could strike down workers’compensation utilization review procedures adoptednot only by Pennsylvania but by a number of otherstates. In the 1980’s and 1990’s, many states enactedlegislation to contain rising workers’ compensationmedical care costs. These efforts included “utilizationreview” measurers and other reforms. A SupremeCourt ruling that Pennsylvania’s system violates dueprocess could render other states’ programsconstitutionally suspect. The court’s decision is notexpected to be issued before June 1999.

Flahive, Ogden & Latson, a 25 lawyer firm,defends contested workers’ compensation casesstatewide every day. The firm has representedinsurance companies and employers before theTexas Workers’ Compensation agency for morethan 50 years.

For general questions concerning the news-letter call (512) 435-2225. Folio's editor-in-chief isJack W. Latson.

FO&LFO&L

Flahive, Ogden & LatsonP.O. Box 13367Austin Texas 78711

A party appealing a case on judicial review mustfile a copy of its petition with the TWCC, but failureto do so is not jurisdictional, according to two casesdecided by the Texas Supreme Court on February 4,1999. The Court held that the requirement that a copyof the petition be filed with the Commission ismandatory. It held that the mailbox rule applies tosuch filings. However, it held that a party’s failure tomeet the deadline is not jurisdictional.

The two cases, Albertson’s, Inc. v. Sinclair (No.98-0945) and Ector County ISD v. Adkins (No. 98-0785) were decided by per curiam opinions withoutoral argument. The cases will be fully summarized inthe March 1999 edition of FOLIO.

Deadline Clarified bySupreme Court


FOLIO - 4 -

Our regular office hours are 8:15 a.m. to 4:45 p.m. Ifyou need to call after 4:45, please call Patsy Shelton at (512)435-2234, or Susan Quinn at (512) 435-2216. They will beon duty until 6:00 p.m. daily.

DON’T WAIT UNTIL THE LAST HOUR OFTHE DAY FOR DEADLINE FILING. ANY FAXESWITH INFORMATION DUE MUST BERECEIVED BY 4:00 p.m. for any deadline handlingfor same day delivery to the Commission, and faxedaccording to the fax directory listed on the last pageof FOLIO . Furthermore, if you have a last minutedeadline call our office by 3:00 p.m. and speak withJoyce Reagan, Tillie Aguirre, Margo Davis, or PatsyShelton to advise that a last minute filing is necessaryto meet a deadline. We will be watching and waitingfor the fax. Otherwise, last minute faxes could delayreceipt. Our last daily run to the Commission will beat 4:15 p.m., in order to get across town to meet their5:00 closing time.

TWCC Plans ToReview Rules

According to a plan approved by the TWCCCommissioners, all rules in effect beforeSeptember 1, 1997 will be reviewed to determinewhether they should be readopted or repealed.The review plan has been approved to satisfythe Legislature’s requirements as adopted lastsession in the General Appropriations Act. Thisreview is to be competed by August 31, 2001 andit will not include rule amendments.

The rules review plan provides that theTWCC Rule Review Teams will review eachrule and make recommendations to the AgencyManagement Team for approval. Onceapproved, a Notice of Intent to Review will bepublished in the Texas Register to invite publiccomment on whether the rule should bereadopted or repealed. At the end of the 30-daycomment period, the Rule Review Team willreview and respond to the comments.

After review by the General Counsel and theAgency Management Team, the Commissioners willbe presented with recommendations to readopt orrepeal each rule. These recommendations will beconsidered by the Commissioners at a public meeting.

We will keep you informed of importantdevelopments in this rules review process through ourmonitoring of the Texas Register and attendance atthe public meetings.

The TWCC continues to slowly decide HospitalFee guideline cases. FO&L has received twelvedecisions to date. Each decision, selected randomlyby the TWCC, involves application of reasonable andnecessary standards to outstanding hospital feedisputes. In each of the twelve cases, the carrier hasprevailed in its audit methodology and the hospitalshave failed to convince the Commission that themethodology used by the carrier was flawed.

Last month, the Commission began to decide thefirst of more than 25,000 disputes involving thereasonableness and necessity of hospital bills which

had previously been audited and reduced. Thesecases are expected to move through dispute resolutionin the State Office of Administrative Hearings. TheCommission has deliberately decided to send a seriesof randomly selected test cases through the disputeresolution process rather than inundate SOAH, thehospitals or carriers with a flood of decisions andorders in these cases.

According to information obtained through anopen records request filed by Flahive, Ogden &Latson, Texas hospitals are requesting more than$150 million in additional reimbursement, based on theinvalidation of the 1992 Acute Care Inpatient HospitalFee Guidelines.

FO&L has been assisting our clients in respondingto the medical disputes filed by the hospitals. Wereceive the notice of request for medical disputeresolution from the Commission and forward it to youwith a request for evidence. We have received anoverwhelming response from you; yet, we still havea list of claims for which we have received noresponse from you. If you have claims on this list, youhave received a letter from Erin Allen encouragingyou to send us the necessary documentation so thatwe may file a response in your behalf with theCommission. If you have not yet responded to thatrequest, you should give these disputes priority.

FO&L OFFICE HOURS

Early Fee GuidelineCases Favor Carriers


FOLIO - 5 -

Interest/Discount Rate for 1st Quarter ACCUMULATED VALUE OF UNPAID WEEKS ACCUMULATED VALUE OF UNPAID LUMP SUM

WITH INTEREST AT A GIVEN INTEREST RATE: WITH INTEREST AT A GIVEN INTEREST RATE:4.31% 4.31%

# of WeeksValue

W/Interest # of WeeksValue



W/Interest

1 1.00 51 52.07 1 1.00 51 1.042 2.00 52 53.11 2 1.00 52 1.043 3.00 53 54.16 3 1.00 53 1.044 4.00 54 55.20 4 1.00 54 1.055 5.01 55 56.25 5 1.00 55 1.056 6.01 56 57.30 6 1.00 56 1.057 7.02 57 58.34 7 1.01 57 1.058 8.02 58 59.39 8 1.01 58 1.059 9.03 59 60.44 9 1.01 59 1.0510 10.04 60 61.49 10 1.01 60 1.0511 11.05 61 62.54 11 1.01 61 1.0512 12.05 62 63.59 12 1.01 62 1.0513 13.06 63 64.65 13 1.01 63 1.0514 14.08 64 65.70 14 1.01 64 1.0515 15.09 65 66.75 15 1.01 65 1.0616 16.10 66 67.81 16 1.01 66 1.0617 17.11 67 68.87 17 1.01 67 1.0618 18.13 68 69.92 18 1.02 68 1.0619 19.14 69 70.98 19 1.02 69 1.0620 20.16 70 72.04 20 1.02 70 1.0621 21.17 71 73.10 21 1.02 71 1.0622 22.19 72 74.16 22 1.02 72 1.0623 23.21 73 75.22 23 1.02 73 1.0624 24.23 74 76.28 24 1.02 74 1.0625 25.25 75 77.35 25 1.02 75 1.0626 26.27 76 78.41 26 1.02 76 1.0627 27.29 77 79.48 27 1.02 77 1.0728 28.32 78 80.54 28 1.02 78 1.0729 29.34 79 81.61 29 1.02 79 1.0730 30.36 80 82.68 30 1.03 80 1.0731 31.39 81 83.75 31 1.03 81 1.0732 32.41 82 84.81 32 1.03 82 1.0733 33.44 83 85.88 33 1.03 83 1.0734 34.47 84 86.96 34 1.03 84 1.0735 35.50 85 88.03 35 1.03 85 1.0736 36.53 86 89.10 36 1.03 86 1.0737 37.56 87 90.17 37 1.03 87 1.0738 38.59 88 91.25 38 1.03 88 1.0839 39.62 89 92.33 39 1.03 89 1.0840 40.65 90 93.40 40 1.03 90 1.0841 41.69 91 94.48 41 1.03 91 1.0842 42.72 92 95.56 42 1.04 92 1.0843 43.76 93 96.64 43 1.04 93 1.0844 44.79 94 97.72 44 1.04 94 1.0845 45.83 95 98.80 45 1.04 95 1.0846 46.87 96 99.88 46 1.04 96 1.0847 47.91 97 100.96 47 1.04 97 1.0848 48.95 98 102.05 48 1.04 98 1.0849 49.99 99 103.13 49 1.04 99 1.0950 51.03 100 104.22 50 1.04 100 1.09


FOLIO - 6 -

If the treating doctor does not provide a timelyopinion on the certification, there is no dispute and thecarrier is allowed to suspend TIBs on the eighth dayafter it sends a copy of the report and a notice of intentto suspend TIBs to the treating doctor, by facsimiletransmission. If, after the carrier sends the facsimile,the treating doctor agrees with the MMI certification,there is no dispute and the carrier may suspend TIBs.If, after the carrier sends the facsimile, the treatingdoctor timely responds indicating disagreement withthe MMI certification, the carrier is not permitted tosuspend TIBs pending resolution of the dispute by thedesignated doctor process.

If, after the carrier has suspended TIBs under thenew procedure, the treating doctor responds with anagreement that the employee has reached MMI, thensuspension of TIBs remains appropriate. On theother hand if, after the carrier has suspended TIBs,the treating doctor responds with a disagreement thatthe employee has reached MMI, a dispute existswhich may be resolved through the designated doctorprocess. In this last situation, the carrier is notrequired to re-initiate TIBs, but must continue to payany IIBs that accrue and become due.

The rules were presented to Commissioners byAlan McDonald of the Agency’s central office staff.Commissioner O.D. Kennemore was openly criticalof the proposed rule. Other Commissioners indicatedvarying degrees of agreement with the procedureoutlined by Rule 130.3 in its revised form. Theproposal has been published in the Texas Register tosolicit public comment. Comments on the proposal orrequests for public hearing must be submitted toTWCC employee Donna Davila by March 22, 1999at 5:00 PM at Office of the General Counsel, Mailstop#4-D, TWCC, Southfield Building, 4000 South IH-35,Austin, Texas 78704-7491. The rule as adopted maybe revised from the rule as proposed. Supporters ofthe rule as proposed should comment to that effect.

Interest RatesQuarter/Year Interest Rate

1st/1999 4.314th/1998 4.513rd/1998 5.132nd/1998 5.11

TIBs Suspension continued from p.1

The Commission has passed new SIBs rules,effective in certain circumstances on January 31,1999. The rules modify the time period to be used incalculating the SIBs qualifying period. The TWCChas issued a public statement clarifying how carriersshould deal with the transition from the old calculationto the new calculation. The new rules affect allqualifying periods that begin on or after Jan. 31, 1999.

Under existing rules, the filing period forentitlement to supplemental income benefits occurs90 days before the beginning of the quarter. Underthe new rules, the qualifying period consists of the 13consecutive weeks that end two weeks before thebeginning of the quarter. Accordingly, if the qualifyingperiod under the new rules begins on or after Jan. 31,1999, the new rules regarding eligibility forsupplemental income benefits will apply.

Another way to determine which rules areeffective for determining entitlement to supplementalincome benefits on an individual claim is to considerthe actual dates of the quarter. If the quarter beginson or after May 15, 1999, then the new rules apply.The qualifying period for a quarter that begins on May15, 1999, is the period from Jan. 31, 1999, throughMay 1, 1999, inclusive. Since the date the qualifyingperiod begins on or after Jan. 31, 1999, the new rulesapply. A quarter that begins on or before May 14,1999, would be handled under the existing rules.

The Commission currently is revising the TWCC-52, Application for Supplemental Income Benefits, toinclude space for data elements that must be completedby the insurance carrier when the form is mailed toinjured employees. The revised form and brochure forinjured employees is expected to be available soon.

Computing the SIBsQualifying PeriodNew Rules, New Dates


FOLIO - 7 -

As Published in the Texas Register/Full Text to Proposed Rule 130.3Rule 130.3. Certification of Maximum Medical Improvement by Doctor Other Than Treating orDesignated Doctor.

(a) A doctor, other than a treating or designated doctor, who certifies that an employee has reached maximummedical improvement shall complete a medical evaluation report (the report) in accordance with §130.1 ofthis title (relating to Reports of Medical Evaluation: Maximum Medical Improvement and PermanentImpairment), and send a copy of the medical evaluation report, no later than seven days after the conclusionof the examination, to the treating doctor. A copy of the report shall also be sent to the commission, theemployee, the employee’s representative (if any), and the insurance carrier no later than seven days after theconclusion of the examination.

(b) Upon receipt of the report under subsection (a), (c), or (d) the treating doctor shall:1) indicate on the report either agreement or disagreement with the certification of maximum medical

improvement and with the impairment rating assigned by the certifying doctor; and2) within seven days of receipt, send a signed copy of the report indicating agreement or disagreement to

the commission, the employee and the employee’s representative (if any), and send a copy to the carrierby facsimile transmission.

(c) If the treating doctor:1) indicates on the report agreement with the certification of maximum medical improvement, the carrier

may suspend temporary income benefits;2) indicates on the report disagreement with the certification of maximum medical improvement, the carrier

shall not suspend temporary income benefits, and the commission will consider a dispute to exist asprovided by §408.122 of the Act, which may require the assignment of a designated doctor and resolutionof the dispute by the commission.

(d) If the treating doctor has not indicated either agreement or disagreement with the certification of maximummedical improvement and the carrier intends to suspend temporary income benefits, the carrier must first sendby facsimile transmission a copy of the report to the treating doctor along with a notice of intent to suspendtemporary income benefits. The notice will contain language prescribed by the commission and will be sentto the employee and the employee’s representative (if any) on the same day as it is transmitted to the treatingdoctor. If the treating doctor then:1) timely responds to the facsimile with an agreement or disagreement, then subsection (c)(1) or (c)(2) of

this section shall apply as appropriate;2) fails to timely respond to the facsimile, the carrier may suspend temporary income benefits on the 8th

day after the date the carrier sent the facsimile to the treating doctor. Suspension pursuant to thissubsection requires the carrier to maintain copies of the facsimile and the facsimile confirmation thatindicates successful transmission to the treating doctor; or

3) responds after the carrier has suspended temporary income benefits pursuant to subsection (d)(2) and:(a) indicates disagreement with the certification of maximum medical improvement, the commission will

consider a dispute to exist as provided by §408.122 of the Act, which may require the assignmentof a designated doctor and resolution of the dispute by the commission; or

(b) indicates agreement with the certification of maximum medical improvement, then subsection (c)(1)of this section shall apply.

(e) If the injured employee fails to attend the appointment with a designated doctor selected pursuant to this sectionand fails to reschedule the appointment in accordance with §130.6(g) of this title (relating to DesignatedDoctor: General Provisions), the insurance carrier may suspend temporary income benefits.

(f) A carrier that suspends temporary income benefits pursuant to this section shall initiate impairment incomebenefits in accordance with the Act and this title.

(g) Nothing in this section prevents a carrier from suspending temporary income benefits if the injured employeeno longer has disability based on factors or conditions other than certification that the employee has reachedmaximum medical improvement.


FOLIO - 8 -

You Gotta KnowWhen To Hold'Em

The Texas Workers’ Compensation Commissionhas changed its policy regarding the filing of severalfrequently used medical reports. Several form medicalreports should no longer be filed with TWCC,according to a Commission directive from ExecutiveDirector Leonard Riley.

The Executive Director states that, effectiveimmediately, carriers should no longer submitthe TWCC-61, TWCC-62, TWCC-64, or TWCC-69 to the Commission. TWCC is no longeraccepting carrier filings of the TWCC-61, TWCC-64, or TWCC-69. Moreover, the carrier has noresponsibility to file the TWCC-69 with theCommission; that is the duty of the health careprovider. However, TWCC is not accepting TWCC-61s and TWCC-64s from health care providers, either.

The Commission is attempting to avoid multiplefilings of information. The policy is designed to permitthe agency to request medical records when it wantsto review them, rather than to serve as a repositoryfor medical reports that can better be maintained inthe carrier’s file or the doctor’s chart. Many fieldoffices’ mail rooms are so tied up with medicalreports to file that other time-sensitive documents donot make it to the claim file in a timely fashion.

As a part of this policy, carriers are now instructednot to file the TWCC-62 with the Commission unlessit is requested. Do send the TWCC-62 to the claimantand the provider if the denial or reduction in paymentis made for the following reasons: (1) Entitlement, (2)Reduction to fair and reasonable, (3) Charge notdocumented, (4) Charge unrelated to the compensableinjury, (5) Not according to treatment guidelines, or(6) Unnecessary medical treatment. If the reason fordenial or reduction is not on this short list, send theTWCC-62 to the provider only.

Also, do not submit the TWCC-1 or TWCC-21(as an A1 or A2) unless you are not filing electronically.

The following listing illustrates the forms you do file withthe Commission under its new policy:TWCC-20/205 TWCC-31 TWCC-54TWCC-20A TWCC-32 TWCC-55TWCC-21 (notice of refusal) TWCC-33 TWCC-153TWCC-22 TWCC-45 TWCC-155TWCC-24 TWCC-51 EES-1TWCC-25 TWCC-52 I-17 & RE-2If the form you are filling out is not on this list, do not sendit to the Commission

According to two studies released by the TexasWorkers’ Compensation Commission, the risk ofoccupational injury or illness for Texas workers waslower in 1997 than in any year since the state beganreporting statewide results in 1990, and statistics arenow available for fatal injuries between 1994 and1997 in several of the largest counties in the state.

A total of 351,500 nonfatal occupational injuryand illness events were identified by the 1997 survey,a reduction of seven percent from 1996 levels. Thisreduction occurred despite an increase of five percentin overall private industry employment.

The overall rate of nonfatal occupational injuriesand illnesses fell to 5.6 incidents per 100 full-timeworkers in 1997, down from a rate of 6.3 in 1996; and30 percent lower than the rate of 8.0 cases per 100full-time workers recorded in 1990. Seven of eightmajor industries experienced improvements in theirrates. The only industry to experience an increase inincidence rates was mining (up 23%). The 1997 ratefor lost time claims was 2.9 cases per 100 full-timeworkers, down from a rate of 3.1 in 1996. The rate of2.9 was also the lowest ever recorded for the state,though four industries (agriculture, manufacturing,mining and trade) recorded higher rates for thesetypes of cases.

“We applaud the commitment that Texasemployers and employees have made to safety in theworkplace. The fruit of this commitment is in theselower rates,” said Executive Director Len Riley.“The Commission will continue to offer support toemployers and employees through our many safetyprograms and services.”

Fatal work injury profiles are now available forcounties with the most fatal occupational injuries.The Texas Workers’ Compensation Commission hasdeveloped profiles of the five counties in the staterecording the highest numbers of fatal work injuriesfrom 1994 through 1997. These five counties areHarris, Dallas, Bexar, Tarrant and Galveston.

The highest number of fatalities, 283 between1994 and 1997, occurred in Harris County. DallasCounty reported 176 deaths during the same period.Bexar County reported 95, Tarrant County 94, andGalveston County 46. However, the total number forHarris County in 1997, 61 fatal work injuries, was afour-year low and represented a 25% decrease

On-Job InjuriesAt All Time Low


FOLIO - 9 -

relative to the 1994 total. Galveston County alsoreported a four-year low in 1997.

Though these five counties had the highestnumbers of fatal work injuries in the state, only one ofthe five counties had a fatality rate that was higherthan the overall state rate for the four-year period ofthe study (Galveston County). This means that despitethe high numbers of fatalities in the other four counties,workers actually faced less risk of fatal injury in thesecounties than in the state overall.

Assaults and violent acts were the leading type offatal injury in three of the five counties during theperiod studied. In Harris County, assaults and violentacts accounted for 98 fatal work injuries, or 35percent of the cases. Of the 176 occupational fatalitiesrecorded in Dallas County, 71 (40%) were the resultof assaults and violent acts. Tarrant County reported30 fatalities resulting from assaults and violent acts.Transportation-related incidents led all other types offatal events in Bexar and Galveston counties. Vehiclesand guns were the top two sources of injury in all fivecounties.

The construction industry accounted for the highestnumber of fatal work injuries in Tarrant, Bexar, andDallas counties. Retail trade recorded the highestnumber of fatal work injuries in Harris County(primarily homicides) and the transportation industry(especially water transportation services) incurredthe highest number of cases in Galveston County.

The House Committee on Business and Industryhas three new members. Speaker of the House, PeteLaney, D-Hale Center, announced committeeassignments as the 76th Legislature convened lastmonth. Most legislation affecting Texas businessesin general, and workers’ compensation specifically,will be referred to this important committee. TheBusiness and Industry Committee is chaired by Rep.Kim Brimer, R-Arlington. Rep. Dawnna Dukes, anAustin Democrat, will serve as Vice-Chair of thecommittee.

Two Republican members, Rep. Kenn George,of Dallas, and Rep. Bill Siebert, of San Antonio, willjoin Democratic Rep. Allan Ritter, of Nederland, asnew B&I Committee members. They replace

New Members ForKey Committees

outgoing Rep. Alec Rhodes, D-Dripping Springs,Rep. Kyle Janek, R-Houston, and Rep. Gary Elkins,R-Houston. The Speaker’s assignments maintain a6-Republican/ 3-Democrat balance on the committee.

House Calendars CommitteeChair: Rep.: Barry Telford Democrat DeKalbV-Chair: Rep.: Paul J. Hilbert RepublicanHoustonMembers:Rep. Kim Brimer Republican ArlingtonRep. Henry Cuellar Democrat LaredoRep. Debra Danburg Democrat HoustonRep. Harold V. Dutton, Jr.Democrat HoustonRep. Brian McCall Republican PlanoRep. Paul Sadler Democrat MarshallRep. Bill Siebert Republican San AntonioRep. Senfronia ThompsonDemocrat HoustonRep. Sylvester Turner Democrat Houston

House Committee on Business & IndustryChair: Rep.: Kim Brimer Republican ArlingtonV-Chair: Rep.: Dawnna Dukes Democrat AustinMembers:Rep. Frank Corte Republican San AntonioRep. Kenn George Republican DallasRep. Helen Giddings Democrat De SotoRep. Allan Ritter Democrat NederlandRep. Bill Siebert Republican San AntonioRep. Burt R. Solomons Republican CarrolltonRep. Beverly Woolley Republican HoustonNew members are listed in bold.

Late last year, the Committee submitted a lengthyreport outlining proposed changes in the workers’compensation system to Speaker Laney. (See FolioNov. 1998) The report included 15 recommendedchanges to the Texas Workers’ Compensation Act.Those changes followed testimony given at fourpublic hearing before the House Subcommittee onWorkers’ Compensation Insurance Carrier Behavior.

The speaker has also announced membership tothe all-important House Calendars Committee. Rep.Barry Telford, D-DeKalb, will chair the Committee.The speaker named Rep. Paul J. Hilbert, R-Houston,to serve as Vice-Chair. The Committee is comprisedof seven Democrats and four Republican membersof the House. Every House Bill must be placed on aHouse Calendar before it can reach the floor for avote. The Committee sets the Supplemental HouseCalendar and the Daily House Calendar. The latteris the primary agenda followed by the House duringits deliberations.


FOLIO - 10 -

New TWCC Form For Reporting FraudThe Texas Workers’ Compensation Commission has recently issued a new form for reporting suspected

insurance fraud. (See FO&L Advisory No. 249) This form is filed with the Texas Workers’ CompensationCommission’s Office of Investigations. The purpose of this division of the Commission is to work with otherspecial investigation units, including state and federal law enforcement as well as other regulatory agencies andinsurance carrier special units, to deter fraud.

“Benefit” fraud is one of the most common types of fraud and costs insurance carriers millions of dollarseach year. Typical instances of this type of fraud are found when an employee who is drawing benefits worksfull time at an unreported job. Ancillary culprits to this crime include health care providers or attorneys whoassist workers in fraudulent schemes, or participate in double billing, or billing for services not provided.

The Commission has enumerated the following “benefit” fraud indicators:n injuries that have no witness other than the worker;n injuries occurring late Friday or early Monday;n injuries not reported until a week or more after they occur;n injuries occurring before a strike or holiday, or in anticipation of lay off or termination;n injuries occurring where the worker would not usually work;n injuries not usually occurring in the particular job description;n worker observed in activities inconsistent with the reported injury;n worker history of workers’ compensation claims;n conflicting diagnosis from subsequent treating doctors;n any evidence of working elsewhere while drawing benefits.

The Commission’s Office of Investigations receives numerous fraud referrals a week. Each allegationis reviewed under the following analyses: (1) probable cause that the violation occurred; (2) the impact of thecase to the workers’ compensation system (including deterrence, publicity, and the amount of fraud); and (3)the cost effectiveness and likelihood of success of the investigation.

Any fraud claim involving more than $1,500 of benefits is considered a felony offense, and may beprosecuted by the local district attorney. Any fraudulent claim for less than $1,500 is a Class A misdemeanor.

Any evidence of fraudulent activity should be provided to the local district attorney as well as theCommission’s Office of Investigations at 512/440-3737. Any carrier who has contested the compensabilityof the claim should also immediately request a benefit review conference.

Wanted! Fraudulent Claimants $1000 RewardFollowing the recent lead of several law enforcement agencies, and in keeping with the philosophythat “no good deed shall go un-rewarded,” the Fund has launched a new fraud preventioncampaign. The purpose? To cut down on instances of fraud related workers’ compensationclaims. The reward? Up to $1,000 for information leading to the arrest or indictment of any personsuspected of committing fraud against the Fund.Elliot Flood, Vice-President of special investigation for the Fund, states the purpose of this newproject as being to protect Fund policy holders: “Fraud is expensive, and hurts the employer’sbottom line by causing premiums to increase.” According to Mr. Flood, the Fund already usesundercover employees as well as hires outside investigators in an effort to investigate all casesof suspected fraud. The Fund is also committed to working with local prosecutors to secureconvictions on suspected individuals.To kick off this campaign, the Fund has provided “wanted” posters to employers describing thebenefits of reporting fraudulent claims under the new reward program.


FOLIO - 11 -

PATRICIA H. BLACKSHEAR , born Houston, Texas,November 3, 1971; admitted to bar, 1997, Texas. Education:University of Texas; Baylor University (J.D. 1997). AssistantCity Attorney, City of College Station (1997-1998). Member:Brazos County Bar Association; Brazos Valley YoungLawyers Association; State Bar of Texas. Languages:Spanish, French.

RONALD M. JOHNSON , born Stamford, Connecticut,May 2, 1950; admitted to bar, 1996, Texas. Education:University of Texas (B.S., 1972); Naval Post-GraduateSchool (M.A., 1987); Southern Methodist University (J.D.,1996). Member: State Bar of Texas; Defense ResearchInstitute. [Ret. Major USAF, 1973-1993]. Assistant AirForce Attache to Italy (1987-1990); Chief of ProgramsDivision, 16th Air Force (1990-1993). Languages: Italian.

When you’re the best at what you do, you can afford to be choosy, and we are. Flahive, Ogden & Latsonis proud to announce the addition of two highly recruited attorneys, Ron Johnson and Patricia Blackshear.FO&L’s newest attorneys bring the unique experiences of a retired Air Force Major and Assistant CityAttorney with more than 100 prosecutions under her belt to our lawfirm, and to your assistance.

Your claims are important. We understand that you expect the very best representation and advice on yourcases. That’s why we are so particular about who we hire. Following a twenty year stint in the United StatesAir Force, Maj. Ron Johnson didn’t kick back his heels and retire. He graduated from law school at SMU andlaunched a new career as a Dallas insurance defense attorney. He has been active in all phases of trial practice,but still finds time to sail, camp, cross-country ski and travel. “A long time ago,” Ron says, “I was a decentgolfer, although now I’m a hacker of the lowest sort.” We are pleased to report that Ron’s experience hasstrengthened our ability to represent you in hearings across the state.

Patricia Blackshear comes to the firm from the City Attorney’s Office in College Station, Texas. She waslicensed November 1997 and jumped immediately into a heavy trial and hearing practice. In addition to reachingthe century mark in municipal prosecutions, Tricia drafted and reviewed contracts and interlocal agreements,responded to open records requests, provided advice on property issues, and answered legal questions for Citystaff members. “I also love antiques,” says Tricia. “I collect just about everything, but my favorite is a collectionof cobalt blue bottles.” Tricia’s job at FO&L will undoubtedly give her the opportunity to check out antiquesshows and shops she never would have seen otherwise.

With the addition of these two outstanding newcomers, we now have a team of 25 lawyers with over 200years cumulative experience in handling workers’ compensation claims. We are supported by a staff that hasprepared thousands of hearings. We know you are going enjoy getting to know Ron and Tricia and to receivethe benefit of their advice and counsel on your cases in the future.

Two New Members to the FO&L Team


FOLIO - 12 -

The TWCC Fort Worth field office is moving. The office on Camp Bowie Road will be closed on Friday,February 26, for the move. The office will reopen at the new location Monday, March 1st.

The new office will be located at 6900 Anderson Boulevard, Fort Worth, Texas 76120 in the WaltonBuilding. This address is located near the intersection of East Loop 820 and IH-30.

Fort Worth TWCC Field OfficeRelocates on February 26, 1999

Directions From DFW Airport1. Start by going North on N. service Rd.

towardsCrossunder No. 3 Rd.2. Turn (slightly right) onto ramp.3. Take the exit on the left towards

(TX-121N).4. Merge onto International Pkwy N.5. Take the TX-114W. exit towards

TX-121S./FT Worth.6. Merge onto SR-114W.7. Stay straight to go onto SR-121 S.8. SR-121 S. becomes SR-183W.9. Stay straight to go onto I-820S.10. Take the exit11. Stay straight to go onto E. Loop 820N.12. Turn (left) onto John T. White Rd.

13. Turn (right) onto Anderson Blvd.

Directions From Dallas (Love Field) Airport1. Start out going Southeast on Cedar Springs Rd. towards Tom Braniff Ln.2. Turn (slightly right) onto W. Mockingbird Ln.3. Turn (right) onto Harry Hines Blvd.4. Turn (left) onto Empire Central.5. Turn (right) onto E. John W. Carpenter Frwy.6. Turn (slightly left) to take the TX-183W ramp.7. Merge onto SR-183W.8. Turn (slightly left) at the intersection of SR-114W to stay on SR-183W.9. Merge onto I-820 S.10. Take the exit11. Stay straight to go onto E. Loop 820N.12. Turn (left) onto John T. White Rd.13. Turn (right) onto Anderson Blvd.


FOLIO - 13 -

Texas Workers' Compensation CommissionQuestion/Resolution Log

This is a reprint of selected portions of an internal log utilized by the Texas Workers' Compensation Commission to memorialize informalopinions, given by the Commission, in response to questions from the field. It is a training tool for TWCC personnel. Although these opinionsare not binding, they do state current TWCC interpretations and represent Commission policy.

DateReceived

Question/Problem Resolution

12/11/9870

RULE 169.1An employer has several operating entities underone workers' compensation insurance policy. DoesRule 169.1 apply to the number of employees of theparent company or is the number of employeescomputed on an individual basis for each operatingentity?

If all the operating entities are under oneFEIN, all employees are considered to beemployed by the parent company. In thiscase, if there are a total of 15 employees, awritten drug policy is required.

If each operating entity is separate, then awritten drug policy would be required foreach entity with 15 employees.

12/15/9871

Receiving Reports Over The InternetAn insurance carrier is planning on receivingreports of injury from employers over the Internetand is trying to determine whether or not to useencryption software for the transfer of data. Is theinformation contained in an employers' first reportof injury to an insurance carrier consideredconfidential prior to receipt of the information bythe Commission?

The TWCC Act does not specifically addressconfidentiality of information prior to receiptof the information by the Commission.However, employers and insurance carriersshould consult with their legal counselregarding all confidentiality issues.

The Texas Supreme Court has the opportunity toshed a little light on non-subscriber liability. Thequestion presented is whether comparative negligencecan reduce an employee’s recovery against anonsubscribing employer. Two courts of appealshave directly addressed the question – each reachingopposite results.

In Byrd v. Central Freight Lines, Inc., 976 S.W.2d257 (Tex. App.-Amarillo 1998) (Supreme CourtCause No. 98-0845), the Seventh Court of Appealsheld that an injured employee pursuing the commonlaw remedy must still prove that the employer isnegligent and that the employee was not more than 50percent negligent. In reaching the decision, the Courtrelied upon language from the Texas Supreme Court’sresolution of the constitutional challenge to the validityof the Texas Worker’s Compensation Act, TexasWorkers’ Compensation Com’n v. Garcia, 893 S.W.2d504 (Tex. 1995). The Byrd court read the Garciaopinion as expressly holding that comparativenegligence is an element of a worker’s action againsta nonsubscriber employer.

Meanwhile, in The Kroger Co. v. Keng, 976S.W.2d 882 (Tex. App.-Tyler 1998) (Supreme CourtCause No. 98-1012), the Twelfth Court of Appealsconcluded that the doctrines of contributory negligenceand assumed risk are not available as defenses toemployers outside the Workers’ Compensation Act.It construed the Garcia court’s language as simplyposing a hypothetical situation in furtherance of its OpenCourts analysis. In a footnote, the Kroger court explicitlyrejects the analysis and holding of the Byrd court.

In each case, Petitions for Review were filedwith the Texas Supreme Court in mid-October 1998.The High Court has not acted on either petition. TheSupreme Court has express jurisdiction overproceedings where the decision of a Court of Appealsis in conflict with the decision of another Court ofAppeals. Although the Court’s jurisdiction is notmandatory, conflicts between courts frequently formthe basis for the court to grant a Petition for Review.If the court grants either petition, it will likely grantboth, and set both cases for oral argument in theSpring of 1999.

Nonsubscriber Liability: Take Your Pick


FOLIO - 14 -

SUMMARIES OF PREFILED BILLSFOR THE 76TH LEGISLATURE OF THE

TEXAS HOUSE OF REPRESENTATIVES AND TEXAS SENATE

Your Eye on the 76th Legislature

ON THE LEGE

House Bill No. 739, Author: EilandThis bill relates to lifetime income benefits for workers’ compensation claimants.

Sec. 408.161 provides for the payment of lifetime income benefits (LIBs) for certain catastrophic injuriesthat occur on the job.

This bill proposes to add to the list of injuries for which LIBs are payable the following: “an injury resultingin a disabling neurological or psychiatric condition that substantially limits at least one major life activity of theemployee.”

House Bill No. 519, Author: GrayThis bill relates to the creation and operation of a telemedicine pilot program to provide certainworkers’ compensation medical benefits.

This bill would codify under Sec. 408.241 of the Labor Code the telemedicine pilot program. The term“telemedicine” is defined by the proposed statute to mean “the use of interactive audio, video, or other electronicmedia to deliver health care...the term includes the use of electronic media for diagnosis, consultation,treatment, transfer of medical data, and medical education.”

The bill would create a pilot program in the use of telemedicine within the workers’ compensation systemto be provided through “regional telemedical centers.” Each regional telemedical center would make availablea pool of specially trained doctors drawn from a range of health care specialties, including specifically specialistsin spinal injuries. The TWCC may arrange for a telemedical consultation in only two scenarios: 1) for evaluationby a designated doctor, or 2) for a second opinion on spinal surgery.

The treating doctor would, under this bill, accompany the claimant to the regional telemedical center. Theevaluation or examination would then be conducted by live, two-way teleconference. A videotape would bemade for future reference.

House Bill No. 634, Author: HochbergThis bill relates to the payment of workers’ compensation benefits to certain claimants with multipleemployment.

This bill would add a provision to the Labor Code providing a different means of calculating the averageweekly wage (AWW) of an “employee with multiple employment”. That term is defined as an employee who,at the time of the injury, earned wages from more than one employer.

The bill proposes to calculate the AWW of such an employee by dividing the amount of total wages earnedby the employee during the 12 months immediately preceding the date of the injury by 50. If the TWCCdetermines that such a method of calculation is “impractical”, it shall compute the AWW “in a manner that isfair and just to both parties.”


FOLIO - 15 -

ON THE LEGE

House Bill No. 946. Author: FarrarThis bill relates to prohibiting waiver of certain benefits by the acceptance of the payment of wages.

This bill would prevent an employer from including on any instrument used to pay wages, or on any writtencommunication accompanying such instrument, any statement that by endorsing or obtaining payment on theinstrument the employee waives the right to claim workers’ compensation benefits to which the employee mightotherwise be entitled.

Specifically included in the term “employer” in this provision is any temporary employment service.

House Bill No. 645, Author: NixonThis bill relates to the liability of the defendant in certain civil actions.

Sec. 33.011 of the Civil Practice and Remedies Code articulates portions of Texas’ comparativenegligence and comparative responsibility statutes. Such provision would be amended by this bill to makecertain that the plaintiff’s employer is included as a potential defendant, assuming the employer is a party fromwhom the employee seeks recovery, without regard to whether the employer maintained workers’ compensationinsurance coverage.

The bill further articulates, however, that if the trier of fact attributes a percentage of responsibility to theplaintiff’s employer such employer is not liable for any damages if they carried workers’ compensationinsurance.

House Bill No. 729, Author: HochbergThis bill relates to payment of benefits by electronic funds transfer.

Two provisions would be added to Chapter 409 of the Labor Code, by this bill, to provide that a carrier “shalloffer employees entitled to the payment of benefits for a period of sufficient duration the option of receivingthe payments by electronic funds transfer.” Such a payment would be considered timely if deposited in theemployee’s account on or before the benefit payment due date.

House Bill No. 1023, Author: GarciaThis bill relates to the registration of wall and ceiling contractors.

A wall and ceiling contractor is one who “engages in installing interior light-gauge framing, drywall, oracoustical ceilings”. This bill would require that such individuals hold a certificate of registration in order toreceive compensation as wall and ceiling contractors. One of the requirements in order to obtain such acertificate is proof of workers’ compensation insurance coverage or a recognized alternative to such coverage.

House Bill No. 817, Author: JonesThis bill relates to the regulation of cemeteries and places of burial.

Chapter 711 of the Health and Safety Code would be amended by this bill to provide that the governingbody of a county or municipality may adopt regulations to preserve and protect cemeteries and to providestandards of operation and maintenance. Such governing body may specifically appoint a cemetery advisoryboard to oversee such operation and maintenance.

Of the powers specifically granted such a board by this bill is the power to require that persons installingheadstones or markers provide proof of adequate general liability and workers’ compensation insurancecoverage.


FOLIO - 16 -

þ January 12, 1999 76th Legislature convenesþ January 19, 1999 Inauguration of Governor and Lieutenant Governoro March 12, 1999 Deadline for filing non-local, non-emergency billso May 31, 1999 Last day of 76th Regular Sessiono June 20, 1999 Last day governor can sign or veto bills passed during the 76th Regular Sessiono August 30, 1999 Date that bills without specific effective dates become law

Legislative Calendar

Bill Author Description FOLIOSummary

Legislative Status

HB 27 Goolsby Relates to the providing of medical records tosubsequent or consulting physicians

January ‘99 In Committee (Public Health)

HB 38 Corte Relates to providing personal leave for publicschool employees who are assaulted at work

January ‘99 In Committee (PublicEducation)

HB 85 Goolsby Requires plastering contractors to carry workers’compensation or related coverage

January ‘99 In Committee (Licensing &Administrative Procedures)

HB 170 Garcia Prohibits non-subscribing employers fromengaging in certain discriminatory acts andpractices

January ‘99 In Committee (Business &Industry)

HB 210 Hochberg &Gutierrez

Re-defines the term “intoxicated” by reducingstatutory level of alcohol concentration to “0.08 ormore”

January ‘99 In Committee (CriminalJurisprudence)

HB 328 Garcia Creates liability under Labor Code Section 451.001(discriminatory discharge) for non-subscribingemployers

January ‘99 In Committee (Business &Industry)

HB 432 Turner, Bob& Madden

Relates to legislative review and gubernatorialsuspension of certain rules of state agencies.

January ‘99 In Committee (State Affairs)

HB 452 Gutierrez Requires that certain entities licensed by the TexasBoard of Private Investigators and Private SecurityAgencies have workers’ compensation coverage

January ‘99 In Committee (Public Safety)

HB 459 McClendon Provides that information on a workers’compensation claim may be released to “a litigantin a subsequent lawsuit in which the employee’sprior injury information may be relevant”

January ‘99 In Committee (Public Safety)

Bills On The HillPreviously Summarized Legislation And Current Status


FOLIO - 17 -

ON THE LEGE

CAPITOL FOCUS

State Rep. Kim Brimer has introduced only one bill in the 76thLegislature relating to workers’ compensation. But in 1999, he will haveas much power over workers’ compensation issues as any member to theHouse. It is fair to say that any House Bill regarding workers’ compensationmust come through Rep. Brimer’s office to get to the floor. Carefullypositioned on three of the most important House committees, Rep. Brimerstands able to choke off, or expedite consideration of any House Bill thatattracts his interest. And, Mr. Brimer is interested in workers’ compensation.

The Arlington Republican, and insurance agent, spearheaded a year-long review of the TWCC, its rules, and the process by which benefits aredelivered or disputed. As Chairman of the House Committee on Business& Industry, Rep. Brimer supervised the drafting of a report outliningproposed changes in the workers’ compensation system. The report wassubmitted to the Speaker of the Texas House of Representatives, Rep.

Pete Laney, D-Hale Center, in late October 1998. The report included 15 recommended changes to the TexasWorkers’ Compensation Act.

Rep. Brimer has taken an abiding interest in the review of the Texas system. He chairs the 9-memberResearch & Oversight Council on Workers' Compensation. He signaled his interest in the subject by appointingthe Subcommittee on Workers’ Compensation Insurance Carrier Behavior. The subcommittee heardtestimony from industry representatives, injured workers, health care providers and state officials in fourhearings during the first half of 1998. That testimony has formed the basis for several bills filed in the House.

In addition to chairing the House Committee on Business & Industry, Rep. Brimer serves on the highlyinfluential House Calendars Committee. Near the end of the regular session, when calendars becomeespecially lengthy, the committee’s work becomes especially critical. The Calendars Committee decides whichlegislation will reach the floor for a vote. Rep. Brimer’s membership on the Calendars Committee positions himto broker passage to the floor of any House Bill.

The Calendars Committee prepares the Supplemental House Calendar which must be distributed twohours before the house convenes. The Supplemental House Calendar, because it includes the measures listedon the Daily House Calendar, is the primary agenda followed by the house during its deliberations. It mayconsist of: (a) measures passed to third reading on the previous day; (b) measures on the Daily House Calendarfor a previous day that were not reached for consideration; (c) measures on the Daily House Calendar for thecurrent day; (d) postponed business from a previous day; and (e) notice to call from the table a measure laidon the table subject to call on a previous day. Rep. Brimer also serves on the House State Affairs Committee.

First elected to the House in 1988, Rep. Brimer was unopposed for re-election in District 96 during the 1998campaign.

House Dominion

Rep. Kim Brimer


FOLIO - 18 -

APPEALS PANEL DECISIONS

Texas Worker’s Compensation Appeals Panel Decision No. 982303A TWCC finding of zero percent impairment in a prior workers’ compensation claim is binding againsta subsequent carrier in a request for contribution.

The claimant had a previous compensable injury. His treating doctor had originally certified a zero percentimpairment rating, which the claimant did not dispute within 90 days. The doctor subsequently issued anothercertification of 14%. A contested case hearing was held, and the claimant’s first impairment rating wasdetermined by the Commission to have become final. The claimant suffered a second compensable injury andthe carrier for that claim requested contribution based upon documented impairment from the first compensableinjury. The hearing officer determined that the carrier could not meet its burden of proof, and found nocontribution.

The Appeals Panel affirmed. They stated that TWCC hearings decisions on the issue of impairment donot have advisory effect only. Where the hearing officer or Appeals Panel has held, that an impairment ratingfor an injury is a specific percentage, the Panel could not “endorse a means by which collateral attacks canbe made by either party for purposes not only of qualifying for contribution, but, for example, for seeking SIBS.”Therefore, “a final adjudication of an IR by the Commission is binding on other proceedings over which theCommission maintains a continuing jurisdiction or in related proceedings where the early decision is animportant factor.”

The Panel acknowledged that the claimant’s first impairment rating in the previous claim became finalpursuant to the 90 day rule. Therefore, his “actual” impairment rating was not determined through thedesignated doctor process. The Appeals Panel, however, failed to distinguish between the concepts of“impairment” (which is relevant for contribution purposes), and “impairment rating” (which is not relevant forcontribution purposes). In the SIBS context, for example, the Appeals Panel has indicated that it is the“impairment” and not the “impairment rating” from a compensable injury that directly results in the claimant’sunder- or unemployment. Similar considerations should apply in the contribution context. An injury may resultin “impairment” regardless of whether it results in an “impairment rating.”

Texas Worker’s Compensation Appeals Panel Decision No. 982415A claimant may not enter self employment and not draw a salary as a subterfuge to draw further TIBS.

The claimant suffered a compensable injury. The claimant testified that his job when injured was drivinga truck but that he also worked in shipping and receiving and had to lift heavy objects; that he can no longerlift heavy objects nor bend down although he can drive; and that no treating doctor has said he can return tohis regular work. The claimant further testified that, using $4,000.00 in savings, he and another person formeda towing business on June 10, 1997, but that the other person “left the business after six months because hewas stealing” and that he, claimant, took over the assets and continued the business. The claimant testifiedthat he does not drive the tow trucks on towing jobs, does not otherwise work at the business, nor spend morethan one hour at a time at the business premises; that he does not perform mechanical or maintenance workon the fleet; that he has had no income from the business which, he said, operates on a cash basis for the mostpart, although some checks are written which he signs; and that the business income is spent on wages andother expenses. Rather, he has hired employees to perform all of these activities.

During the course of the hearing the hearing officer stated that he would have to determine whetherclaimant was “just monitoring” the business or actively operating it. The hearing officer found that claimant’sinability to obtain and retain employment at wages equivalent to his preinjury wages from January 15, 1997,to the date of the CCH, September 15, 1998, is because of the compensable injury. In his discussion of theevidence, the hearing officer states that while claimant’s operation of a cash business may be questionable asto accounting principles and may be subject to scrutiny by taxing authorities, “[c]laimant is persuasive that he


FOLIO - 19 -

was not receiving wages and did not perform personal services for the business constituting employment withinthe definition of disability under the Act.”

The Appeals Panel affirmed with respect to the period from January 15, 1997, to June 10, 1997, andreversed and a new decision rendered that claimant did not have disability from June 10, 1997, through the dateof the CCH.

The Appeals Panel noted that under the 1989 Act disability is essentially an economic concept and doesnot depend on the ability of the injured employee to return to his exact preinjury job at the same wages and thatthe evidence must establish that it is the compensable injury that causes the diminished wages. Where injuredemployees do not return to former employment but rather to self-employment, the carrier may demonstrateby the claimant’s business activities, an ability, rather than an inability, to earn preinjury wages. The Panelstated: “[s]elf-employment or going into business and not drawing a salary cannot be used as a subterfuge toqualify for full temporary income benefits if indeed there are some wages as defined in the 1989 Act earnedor being generated and which inured to the benefit of the claimant.”

The Appeals Panel stated that the claimant not only failed to prove what his preinjury wage was, an obviouselement of disability, but further failed to prove that, after commencing his self-employment as the owner ofa towing business, his inability to obtain and retain employment at his preinjury wage equivalent resulted fromhis compensable injury rather than from other factors. Further, it also did not find persuasive the notion thatsince the claimant only “monitored” his business, he was not performing any service or employment for thebusiness.

Texas Worker’s Compensation Appeals Panel Decision No. 981773Designated doctor’s MMI and IR amendment that came 23 months after original certification was notdone within reasonable time.

The claimant sustained injuries to her left hand/wrist, left knee, and lower back. She was given a diagnosisof lumbar disc bulging with spinal encroachment and spondylolisthesis. Her doctor recommended spinalsurgery; however, the second opinion spinal surgery process did not result in any concurrence and the claimantwas treated conservatively. At carrier’s request, the claimant was examined by a doctor who certified MMIwith an eight percent IR for specific disorders of the spine. He stated that range of motion (ROM)measurements were invalidated and the only IR would be due to her spondylolisthesis.

The claimant was examined by the designated doctor who assessed an 11% IR composed of seven percentfor unoperated intervertebral disc with medically documented injury and a minimum of six months medicallydocumented pain under Table 49, II-C of the AMA Guides as well as other components. This examination occurredin February 1996. Thereafter, surgery was approved for the claimant and performed in July 1997. The Commissionsent the claimant back to the designated doctor in January 1998, at which time he disagreed with the statutory MMIdate (February 18, 1997) and felt January 9, 1998, was the MMI date. He assessed a 13% IR consisting of 12%from Table 49, IV.B, and 1% for a second level. He invalidated ROM measurements.

The Benefit Contested Case Hearing Officer found that the claimant had reached MMI with an IR inaccordance with the designated doctor’s first report. The Appeals Panel agreed, noting that the recommendationand the dispute over the need for surgery was well documented and known at the time of the original MMI/IR certification by the designated doctor. It also concluded that there was sufficient evidence that theclaimant’s back condition had not materially changed from December 1995 to July 1997, although surgery wasultimately approved and performed.

The Panel then held that there was no proper reason shown for the amendment to the designated doctor’soriginal report nor that it was done within a reasonable period of time. While an amendment by a designateddoctor can be appropriate, an amendment to an MMI/IR certification must be for a proper reason and donewithin a reasonable period of time. Surgery, in and of itself, particularly following statutory MMI is notnecessarily a proper justification for amending a certification. Essentially, whether a proper reason is shownfor an amendment is a question of fact for the hearing officer. The Appeals Panel did reform a portion of thefirst IR to correct an error in calculation by the designated doctor, but otherwise affirmed the decision and orderof the Benefit Contested Case Hearing Officer.


FOLIO - 20 -

CASE DECISIONSTEXAS COURTS OF APPEALS

Wagner v. Hughes Wood Products, Inc., 979 S.W.2d 84 (Tex.App.-Beaumont 1998).The exclusive remedy provision of the Texas workers’ compensation statute does not apply tononsubscribing companies in a personal injury action against them.

Facts: Wagner brought a personal injury action against Hughes Wood Products, Inc. (Hughes) for aninjury he sustained while logging in Louisiana when a tree crushed his foot. Wagner lived in Texas and wasrecruited in Texas to haul logs from Louisiana to Texas. Hughes is incorporated in Texas and its principal placeof business is Texas. Hughes moved for summary judgment on two bases: (1) that under Louisiana law it isimmune; and (2) under Texas law, workers’ compensation is Wagner’s exclusive remedy. The trial courtgranted summary judgment in favor of Hughes.

Holding: The trial court is reversed and the case is remanded. Under the “most significant relationshiptest” Texas law governs. Policy factors and the parties’ contacts with Texas both favor applying Texas law.In addition, Hughes failed to establish as a matter of law that it is entitled to an exclusive remedy defense underthe Texas workers’ compensation statute. There was no summary judgment evidence establishing employerstatus. Furthermore, Hughes does not carry Texas workers’ compensation insurance and it did not provideany authority for the proposition that the exclusive remedy provision is applicable to nonsubscribers. Summaryjudgment in favor of Hughes is reversed.

Estrada v. Wausau Ins. Co., No. 04-98-00207-CV (Tex.App.-San Antonio 1998).Subrogation rights entail that when an injured employee has filed a workers’ compensation claim andthen recovers in a suit against the third-party tortfeasor, the first money recovered by the employeebelongs to the compensation carrier until the carrier is reimbursed in full.

Facts: Estrada was retained to represent Joseph Garcia (Garcia) in a claim against a third-party tortfeasorfor personal injuries. The third-party tortfeasor was insured by Allstate Insurance. Garcia also filed a workers’compensation claim and Wausau was the workers’ compensation insurance carrier. Wausau had paid at least$40,000 in medical bills on Garcia’s behalf. Allstate sent a settlement check of $20,000 to Estrada and Garcia.Estrada received $8,000, or %40, and Garcia retained the remaining $12,000. The settlement failed to takeWausau’s subrogation rights into account. Wausau informed Allstate of this fact and Allstate then paid Wausau$20,000. Wausau released Allstate from further liability but did not waive its claim for reimbursement. Wausauthen brought action against Estrada and Garcia jointly and severally. The trial court awarded Wausau $17,000and Estrada filed this appeal.

Holding: The trial court’s award to Wausau of $17,000 is affirmed. The court correctly calculated theaward by subtracting from the $20,000 converted settlement amount, a reasonable attorney’s fee of $3,000 toEstrada for obtaining the Allstate settlement. Estrada’s argument that Wausau already recovered $20,000from Allstate in full satisfaction of its subrogation lien is without merit. The net amount recovered by the injuredparty in a third-party action must be used to reimburse the workers’ compensation carrier for benefits it haspreviously paid. The injured employee is entitled to additional payment only if the recovery in the third-partyaction exceeds the benefits and costs paid by the carrier. Any person who benefits from the proceeds of athird-party action, while having notice of a workers’ compensation lien, is subject to a cause of action forconversion. If an attorney accepts settlement funds in violation of the carrier’s subrogation rights, the attorneyis also liable to the carrier.


FOLIO - 21 -

Harris Co. v. Williams, No. 01-97-01320-CV (Tex.App.-Houston [1st Dist.], 1998).A self-insured governmental entity is not entitled to subrogation against funds received by a workers’compensation claimant from the Texas Property and Casualty Insurance Guaranty Association

Facts: Robert Williams, a Harris County constable, was seriously injured when he was struck by a cartowed by a wrecker while he was issuing a traffic citation. Williams received approximately $268,828 fromHarris County and eventually returned to work. He sued the wrecker service and its insurance company,International Underwriter’s Ins. Co. Harris County intervened for workers’ compensation subrogation.International Underwriter’s went into receivership and Williams filed a claim with the Texas Guaranty Fund(the Fund). The Fund determined Williams had damages in excess of its maximum limit of $100,000 andawarded Williams $100,000. Williams did not receive any payment from either the wrecker service or thereceiver of International Underwriter’s and he continued to receive workers’ compensation benefits afterpayment from the Fund. About three years following the accident, a doctor determined Williams had a wholebody impairment and he was awarded impairment benefits. Harris County refused to pay these benefits,asserting that it was taking an offset from the $100,000 awarded Williams from the Fund. A BRC found infavor of Williams and the CCH officer reversed and found in favor of Harris County. An Appeals Panelaffirmed that Harris County was entitled to subrogation from the Fund. Williams then sued in district courtwhere the Appeals Panel decision was reversed and Harris County was ordered to pay Williams workers’compensation benefits.

Holding: The district court decision is affirmed and Harris County is ordered to pay impairment benefitsto Williams. Harris County provides no support for its contention that the Guaranty Act’s exclusion ofsubrogation claims conflicts with its statutory right of subrogation provided by the Texas Workers’Compensation Act. The Guaranty Act’s purpose is to provide additional protection to insureds and liabilityclaimants of impaired insurers. This purpose would be frustrated if a statutory right of subrogation were allowedto deplete the Fund’s resources. The Legislature did not exempt statutory subrogation claims from thosesubrogation claims excluded by the Guaranty Act. Harris County’s further contention that the term “insurer”as used in the Guaranty Act refers only to for-profit insurance companies and not to self-insured governmentalentities is also without merit. A political subdivision is required to extend workers’ compensation benefits toits employees by either becoming a self-insurer, providing insurance under a workers’ compensation insurancepolicy, or entering into an agreement with other political subdivisions providing for self-insurance. For thepurposes of the Guaranty Act, there is no distinction between governmental entities that self-insure and thosegovernmental entities that provide workers’ compensation coverage under an insurance policy. Harris Countyis not entitled to subrogation from the Fund and is required to pay impairment benefits to Williams.

Texas Workers’ Compensation Ins. Fund v. Serrano & Chairez, et al., No. 13-95-482-CV(Tex.App.-Corpus Christi 1999).A settlement may not be structured so as to compromise a workers’ compensation insurance carrier’ssubrogation right.

Facts: This is a case on remand from the Texas Supreme Court which reversed this court’s decision thatthe Texas Workers’ Compensation Insurance Fund (the Fund) did not establish a subrogation interest in medicalexpenses paid to Jose Serrano. In this remand, the court must determine whether there was sufficient evidenceto support the trial court’s apportionment of settlement proceeds. Serrano was severely injured while workingas a migrant farm worker in Texas when a truck backed into him and pinned him between the truck and thetrailer where he was standing. He was hospitalized for over one month and as a result of the accident isparalyzed from the waist down. His accident was covered by workers’ compensation insurance with the Fundwhich paid $247,602.20 in medical bills and $3,200.14 for lost wages. Serrano and his wife Graciela Chairezand their three minor children sued the driver of the truck, the owner of the truck, and the owner of the trailer.The truck driver and the truck owner settled for $750,000 and the Fund intervened seeking subrogation. Thetrial judge approved the settlement and apportioned the proceeds as $250,000 for Serrano, $200,000 for his wife,


FOLIO - 22 -

and $100,000 for each of the three minor children. The Fund argues that there is insufficient evidence to supportthe apportionment which gave twice as much money to Serrano’s family as it did to Serrano himself.

Holding: The evidence is legally and factually sufficient to support the trial court’s apportionment of theproceeds. The Fund is entitled to a subrogation right only to the $250,000 apportioned to Serrano. Serrano’swife and children were living in their home in rural Mexico when the accident occurred and traveled to the U.S.when they learned of it. None of them spoke English. His wife and infant daughter stayed in the hospital withSerrano while the two sons lived with an aunt in Amarillo. The two boys were detained at the border for oneweek due to their inability to provide birth certificates to the immigration officials. A workers’ compensationcarrier has a statutory right to reimbursement from money paid by a third-party tortfeasor to an injuredemployee. However, the carrier’s right to subrogation extends only over that portion which is awardedspecifically to the injured employee. A settlement may not be structured so as to compromise the carrier’ssubrogation right. In this case, however, the need for Serrano’s wife and three children to travel to the UnitedStates was a great hardship on the family. In addition, the two boys had significant responsibilities in caringfor their father. There was sufficient evidence to support the court’s apportionment and the Fund is entitledto a subrogation right only in the $250,000 allocated to Serrano himself.

Byrd v. Central Freight Lines, Inc., 976 S.W.2d 257 (Tex.App.-Amarillo 1998).Comparative negligence is an element of an employee’s nonsubscriber action against an employeroutside the Workers’ Compensation Act. [Note: The court in Kroger v. Keng, below, arrives at theopposite conclusion.]

Facts: While employed by Central Freight Lines (Central), Stephen Byrd was allegedly struck by a forkliftoperated by a co-worker. Central did not have workers’ compensation insurance at the time but did place Byrdin its own program for work injuries and paid for his medical expenses for three years. Central also paid Byrdsix months of full pay, six months of pay at 85%, and two years of half pay. Byrd did not return to work andhe sued Central for negligence. The jury at trial allocated 50% negligence to Byrd and 50% to Central. Theyawarded $30,000 for future medical care and $20,000 for loss of future earning capacity. They awarded nothingfor past and future physical impairment, physical pain and mental anguish, and disfigurement. Byrd moved thetrial court to accept the verdict and the court rendered a take nothing judgment for Byrd after offsetting creditsof $104,698.85. Byrd appeals.

Holding: The judgment is affirmed. Byrd waived his right to contest the jury’s award of damages bymoving the trial court to accept the jury’s verdict. By moving the trial court to render judgment on the verdict,a party is prohibited from taking a position inconsistent with the verdict on appeal. Byrd did not move to acceptonly the form of the judgment or only that part that he found acceptable. He has therefore waived his rightto challenge the factual sufficiency of the verdict. In addition, Byrd offers no support for his contention thatcomparative negligence concepts are barred by the Workers’ Compensation Act when the employer is not aworkers’ compensation carrier. The Texas Supreme Court in Texas Workers’ Compensation Com’n v.Garcia, 893 S.W.2d 504, 521 (Tex. 1995) asserted that comparative negligence is an element of a worker’snon-subscriber action against an employer outside the Act with the following language: “Although theLegislature has softened the defense of contributory negligence by adopting comparative responsibility . . . andthis Court has abolished the defense of assumption of the risk . . . an injured employee pursuing the commonlaw remedy must still prove that the employer was negligent and that [the employee] was not more than 50percent negligent.” Whether this language is dicta is irrelevant in that it is a clear statement from the TexasSupreme Court asserting that comparative negligence is an element of a worker’s nonsubscriber action againstthe employer outside the Act.


FOLIO - 23 -

The Kroger Co. v. Keng, 976 S.W.2d 882 (Tex.App.-Tyler 1998).Contributory negligence and assumed risk are not available as defenses to employers outside theWorkers’ Compensation Act.

Facts: Sonja Keng was injured while employed by Kroger, a nonsubscriber to the Texas Workers’Compensation system. Keng worked in the deli department of Kroger for approximately two and a half yearsbefore she was injured. She was ordered to move frozen pie boxes and while on a ladder doing so, severalboxes fell and knocked her off the ladder. Moving pie boxes was not part of her normal duties. Kroger arguedthat Keng was contributorily negligent.

Holding: If an employee is injured on-the-job and the employer is a nonsubscriber to workers’compensation, an employee must prove actionable negligence to recover damages. The Texas Workers’Compensation Act (the Act) expressly abolishes an employer’s common law defenses of contributorynegligence and assumption of risk as a penalty to the employer for failure to carry workers’ compensationinsurance. (See Section 406.033 of the Texas Labor Code.) All employers are governed by the TexasWorkers’ Compensation Act, whether they subscribe or not. Section 406.033(a) of the Labor Code rendersimmaterial any comparative finding against the plaintiff in a nonsubscriber case because there can be nocontributory negligence to serve as a predicate for the comparative question. Kroger’s assertion that TexasWorkers’ Compensation Com’n v. Garcia, 893 S.W.2d 504, 521 (Tex. 1995) stands for the proposition thatcomparative negligence is a defense available to nonsubscribing employers is erroneous. The Garcia court wasposing a hypothetical situation so as to compare the new Texas Workers’ Compensation Act with remediesavailable under common law. The Court was interested solely in an analysis of an open courts challenge andwas not attempting to carve new policy regarding the interpretation of the Texas Workers’ Compensation Act.However, even if this reading of Garcia is incorrect, that case is not dispositive of the issues here. Comparativenegligence was not even an issue in Garcia and any dicta regarding it is not controlling here. The trial courtwas correct in its refusal to submit the comparative responsibility issue to the jury.

[Note: In a footnote, the Kroger court explicitly rejects the analysis and holding of the Byrd court,above.]

CITATION UPDATEThe case below has previously been summarized in FOLIO. However, at the time of printing, it was notyet published in the Southwest 2d Reporter. It has now been released for publication. We have includedthe citation to the Southwest 2d Reporter below. This update will appear in each edition of FOLIO.

Bomar v. Walls Regional Hosp., 971 S.W.2d 670 (Tex.App.-Waco 1998).Appeared in FOLIO - January 1999


FOLIO - 24 -

To help expedite your faxed information to the correct area within FO&L and get it to the responsible person at the earliest time, usethe following fax directory. Please remember the 4:00 p.m. receipt deadline for material required to be date stamped at theCommission. Material received after 4:00 does not permit time to deliver across town prior to the commission close.

Fax Number Attention To: Subject Matter:(512) 479-5320 Stacie Allen All materials not listed below

(512) 479-5319 Barbara Simon Elzey ONLY Spinal Surgery Info.

(512) 479-5320 Patsy Shelton Advisory Info., APA-Admin.ViolationsCompliance & PracticeExtra Hazardous

(512) 477-4862 Tillie Aguirre Billing InquiriesRequest for Treating Doctor (TWCC-53)

(512) 477-4862 Kathy McFerrin Status of BRC Requests

(512) 479-5320 Paralegals All CCH Related Info.

(512) 477-4862 Joyce Reagan Request for BRCs (TWCC-45)SIBs Applications (TWCC-52)Notice of MMI/IR Dispute (TWCC-32)Req. for Reduction due to Contribution (TWCC-33)

(512) 477-4987 Ann Weersing BRC & PHC HearingsRFEs, Set Notices, Hearings,Files, Set Notice Cancelations

(512) 477-4996 Phyllis Devine Insurance Coverage (TWCC-20)

(512) 477-4996 Margo Davis Notice of Disputed Claims (ALL TWCC-21s)Notice of ControversionRequest for Record & Photostat Checks

(512) 480-9633 Frank Clary/ Med Review Disputes/Initial SubmissionsAthena Clawson SOAH/Medical Review

(512) 472-9160 Paul Williams TWC Manual Orders & Request for Info.

Note: Time sensitive fax numbers are highlighted in bold face.

FO&L Fax Directory

Flahive, Ogden & LatsonP.O. Box 13367Austin, Texas 78711

FOLIO

Documents

February 1999 Volume 4, No. 2 ©1999 - Flahive, Ogden & Latson … · 2015-03-27 · FOLFOL Client Newsletter by Flahive, Ogden & Latson FOLIO February 1999 Volume 4, No. 2©1999