July 2000 FOLFOL FOLIO - FOL Attorneys Austin · FOLIO July 2000 ©2000 - Flahive, Ogden & Latson Volume 5, No. 7 TWCC Adopts Amendment to Rule 129.5 p.2 WC Area Costs Rise p.6 How

FOLFOLFOLFOLFOLFOLClient Newsletter by Flahive, Ogden & Latson

FOLIO©2000 - Flahive, Ogden & LatsonJuly 2000 Volume 5, No. 7

TWCC Adopts Amendment to Rule 129.5 p.2WC Area Costs Rise p.6How A Premium Is Calculated p. 9

In this issue. . .

continued on p. 12

The Commission has adoptedRule 133.100 (“Required MedicalReports”) and repealed Rules133.101 – 133.103 (“Initial MedicalReport,” “Subsequent MedicalReport,” and “Specific MedicalReports”). Both the adopted ruleand the repeals are effective July15, 2000. Because TWCC Forms61 and 64, previously mandated byRules 133.101 - 133.103, are largelyredundant to new Rules 129.5(“Work Status Reports”) and 133.1(“Definitions for Chapter 133,Benefits – Medical Benefits”),these rules were repealed. Thisrule requires that any medicalreports prescribed by any rule ofthe Commission be faxed or emailedto the recipients if the number or e-mail address is known.

Rule 129.5, effectiveDecember 26, 1999, and recentlyamended, provides for the use ofForm TWCC-73, dealing with returnto work restrictions. New Rule133.1, also effective July 15, 2000,provides a definition of “completemedical bill,” which requires legiblesupporting documentation wherespecified by rules or fee guidelines.Rule 133.1 indicates that failure to

Say Goodbye to Mandatory Forms 61 and 64provide such documentation(including progress notes containingspecific information, operativereports, and reports of test results)renders the medical bill incomplete.A carrier is not liable for paymentfor a service until the documentationrequired is provided.

Previously it could be arguedthat a health care provider thatprovided the TWCC-61 or 64 form,

would not be required to provideadditional documentation. Now,rather than requiring the use ofspecific forms (except for theTWCC-73), Rule 133.100 providesthat the supporting documentationto a medical bill must be supplied tothe carrier, which will allow thecarrier to have more completemedical files on claimants.

Several new rules andamendments to existing rulesregarding medical bills becameeffective on July 15, 2000. Theserules alter the obligation ofproviders, carriers, and third partyadministrators. They affect billsubmission, bill payment, audits andretrospective review. The changeshave been in the offing since lastfall. (See “Proposed Medical BillPayment Revisions” FOLIO,September 1999)

The new rules are: Rules 133.1(“Definitions”), 133.300 – 133.305(“Carrier Receipt of Medical Bills,”“Retrospective Review of MedicalBills,” “Preparation for an OnsiteAudit,” “Onsite Audits,” “MedicalPayments and Denials,” and“Medical Dispute Resolution”), and134.800 – 134.803 (“RequiredBilling Forms and Information,”“Submitting Medical Bills forPayment,” “Carrier’s Submissionof Medical Bills,” and “CalculatingInterest for Late Payment”).

Rule 133.1 defines “completemedical bill,” and requires legiblesupporting documentation wherespecified by rules or fee guidelines.

Medical Billing Rules Take Effect

FOLIO

CLIENT NEWSLETTER BY FLAHIVE, OGDEN & LATSON

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Rule 129.5 was adopted inDecember of 1999. It was intendedto preclude the use of unspecific“light duty” releases, to promotecommunication between employersand treating doctors regardingmodified duty opportunities, and toassist employers in providingmodified duty to claimants that isactually within their ability. Therule also created a new form(TWCC-73) to standardizerestricted releases and enable theemployer to offer a modified dutyposition consistent with theemployee’s ability to work. Aftera short period of implantation,however, the Commission receivednumerous questions and complaintsregarding the rule and the TWCC-73 form. Therefore it suspendedthe use of the form until a new formwas adopted and proposedamending the rule.

On June 20, 2000, theCommission adopted numerousamendments to the rule andimplemented a new Form TWCC-73. The amendments are effective

July 16, 2000. Although it willultimately be a mandatory form, theTWCC-73 may be substituted by aprovider’s own form until February1, 2001, provided that the formcomports with all of the elements ofthe rule.

The report is to be completedby the treating doctor, a referraldoctor, or a required medicalexamination (RME) doctor thatbelieves the claimant can return tosome type of employment. TheCommission expects that theTWCC-73 form will often serve asthe carrier’s first written notice ofinjury.

The original rule required thatthe report be issued with everyexamination regardless of a changein condition. The amendments tothe rule require that the report mustbe completed by the doctor only atthe initial examination, when thereis a change in work status, whenthere is a substantial change inrestrictions, and up to once everytwo weeks if requested by thecarrier or its agent. The report must

TWCC Adopts Amendments to Rule 129.5also be completed upon receipt of amodified duty description from theemployer or a TWCC-73 from anRME indicating that the claimantcan return to work at some level. Ifthe report is issued in response toan employer’s presentation offunctional job requirements or aTWCC-73 from an RME doctor, aseparate examination of theclaimant is not required; however,the doctor must provide a copy ofthe response report to the claimantby mail or fax if the number isknown.

If the doctor writes that theclaimant is unable to return to work,or only able to return to restrictedwork, the doctor must provide anestimated date that the restrictionsare to expire. The intention is topromote return to work by makingthe evaluation of the length of timethat restrictions are expected tolast part of the process of makingthe restriction. The preamble tothe original rule stated that thedoctor was prohibited from simplyputting “unknown” as theexpectation date the restrictionswill end. The amendments to therule clearly provide that a doctor’sfailure to list specific dates rendersthe form incomplete. Carriers arenot required to reimburse doctorsfor incomplete forms. Further,failure to provide a complete formwhen required constitutes anadministrative violation and subjectsthe doctor to a potential penalty ofup to $500 pursuant to Section415.0035 of the Texas Labor Code.Continued noncompliance by thedoctor can lead to penalties of up to$10,000 and removal from theapproved doctor’s list. Additionally,the preamble to the amendment

Our regular office hours are 8:15 a.m. to 4:45 p.m.. If you needto call after 4:45, please call Patsy Shelton at (512) 435-2234. She willbe on duty until 6:00 p.m. daily.

DON’T WAIT UNTIL THE LAST HOUR OF THE DAY FORDON’T WAIT UNTIL THE LAST HOUR OF THE DAY FORDON’T WAIT UNTIL THE LAST HOUR OF THE DAY FORDON’T WAIT UNTIL THE LAST HOUR OF THE DAY FORDON’T WAIT UNTIL THE LAST HOUR OF THE DAY FORDEADLINE FILING. ANY FAXES WITH INFORMATION DUEDEADLINE FILING. ANY FAXES WITH INFORMATION DUEDEADLINE FILING. ANY FAXES WITH INFORMATION DUEDEADLINE FILING. ANY FAXES WITH INFORMATION DUEDEADLINE FILING. ANY FAXES WITH INFORMATION DUEMUST BE RECEIVED BY 3:30 p.m.MUST BE RECEIVED BY 3:30 p.m.MUST BE RECEIVED BY 3:30 p.m.MUST BE RECEIVED BY 3:30 p.m.MUST BE RECEIVED BY 3:30 p.m. for any deadline handling forsame day delivery to the Commission, and faxed according to the faxdirectory listed on the last page of FOLIO. Furthermore, if you have alast minute deadline call our office by 3:00 p.m. and speak with JoyceReagan, Tillie Aguirre, or Patsy Shelton to advise that a last minutefiling is necessary to meet a deadline. We will be watching and waitingfor the fax. Otherwise, last minute faxes could delay receipt. Our lastdaily run to the Commission will be at 4:15 p.m., in order to get acrosstown to meet their 5:00 closing time.

FO&L OFFICE HOURS

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The new Bonafide Offer ofEmployment rule is in place andapplies to claims you are currentlyadministering. The rule nowrequires a written offer in all cases.(See “Bonafide Offers ofEmployment Under New Rule

[EMPLOYER LETTERHEAD]

[DATE]

[CLAIMANT ADDRESS]

Dear [CLAIMANT]:

[EMPLOYER] is in receipt of a report dated __________ from Dr. ____________ relating to your current medicalcondition and your ability to work. A copy of that report is enclosed with this letter. [EMPLOYER] has used guidelinesprovided by the physician to identify an appropriate modified duty position for you. [EMPLOYER] hereby extendsto you a bona fide offer of employment pursuant to TWCC Rule 129.6.

You will be expected to return to work on [DATE EMPLOYMENT IS TO BEGIN] at [ADDRESS AND LOCATIONOF EMPLOYMENT, WHICH SHOULD BE GEOGRAPHICALLY ACCESSIBLE TO EMPLOYEE]. Your work schedulewill be as follows: [DETAIL DAILY/WEEKLY HOURS OF WORK]. Your wages will be as follows: [DETAIL HOURLY/WEEKLY WAGES OR SALARY].

This position will entail these specific physical and time requirements: [SPECIFY IN DETAIL THE PHYSICALREQUIREMENTS OF THE JOB, THE AMOUNT OF TIME TO BE SPENT DOING EACH, SCHEDULED BREAKS,ETC.]

Please be assured that [EMPLOYER] will only assign you tasks consistent with your physical abilities, knowledge,and skills and will provide you training if necessary.

If you accept this offer, please indicate by signing and dating your name below and returning this to the undersigned.If [EMPLOYER] does not receive this back from you within seven (7) days of receipt, [EMPLOYER] will assume youhave rejected this offer.

______________________________________ ________________NAME DATE

Please contact the undersigned with any questions you might have.

Sincerely,

[EMPLOYER]

Enclosure: medical report of Dr. ___________ dated ___________

Bonafide Offers Must Be Written129.6” FOLIO, February 2000)

Our firm has created a formletter that tracks the requirementsof the new rule. The employer, notthe carrier, should send the letter.The letter should be sent in everycase, even where the claimant has

returned to work after a verbaloffer of employment. Moreover,the employer should obtain proof ofdelivery of the letter. Werecommend that any offer ofemployment be mailed by bothregular and certified mail.


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The National Council onCompensation Insurance isprojecting the 1999 Accident Yearcombined ratio to be 134.6% — asubstantial upward adjustment froman already very negative outlookfor workers compensationprofitability in 1999. Based on new,more complete data, the NCCIreleased revised projections of itsestimated 1999 nationwideCalendar Year and Accident Yearresults for the Workers'Compensation industry. Apreliminary April 2000 estimateprojected the 1999 Accident Yearcombined ratio to be 130%. Sincethen, data reporting has beencompleted, 1999 expenses areavailable, and some companies haverevised their data.

“Based on the 130% combinedratio for 1999, we estimated thatindustry returns on their in-forcebook of business wereapproximately -5% in 1999. Withthese new numbers, the loss onsurplus is in the range of 8%,” saidNCCI President and CEO BillSchrempf.

NCCI also initially estimatedthat reserve deficiencies forworkers' compensation wereapproximately $16.9 billion as ofDecember 31, 1999 — a deficiencyof 26% of total reserves. Withthese revisions to the accident yearcombined ratio, NCCI’s estimateof the national reserve deficiencyhas risen to $18.3 billion — about28% of total workers compensationreserves. Moreover, earlierprojections estimated the 1999Calendar Year combined ratio forworkers' compensation to be 115%.With the current information anddata now available, NCCI is

projecting the 1999 Calendar Yearcombined ratio to be 116.8%.

Clearly, both the updatedCalendar and Accident Yearfigures reflect continued andsignificant competition in theworkers' compensation market aswell as a more rapid escalation inclaim costs.

“We were very clear in April,stating that market conditions weredeteriorating and that the CalendarYear and Accident Year numberswere experiencing upwardpressure,” said Mr. Schrempf.“The announcement of these newnumbers only reemphasizes thespeed at which the market isdeclining. The negativedevelopments that we are seeingsuggest that the final numbers forAccident Year 1999 could be evenworse than these estimates. Wedo not yet see any forces at workthat we believe are likely tomaterially change the currentprofitability and returnenvironment.”

In announcing the new figures,NCCI pointed to a number offactors that are having a negativeimpact on the market. Among theseare:• Excess capacity driving a very

competitive pricingenvironment

• Rapid rise in surplus andinvested assets — limitingreturns on surplus

• Assigned risk applicationssubmitted to NCCI forcoverage have increased over10% from the first quarter of1999 to the first quarter of2000

• Claim costs that are beginning

to rise at more rapid rates thanin previous years

• Pending proposals for benefitincreases

• Challenges to workers'compensation as an exclusiveworker remedy for workplaceinjury

• Recent federal initiatives thatthreaten to increase claim costs,broaden compensabilitydefinitions and could createduplicate remedies

• Reform rollback proposals in2001 state legislative sessions“There is one favorable

development among the negatives,”Mr. Schrempf said. “The incidenceor frequency of workplace injuries,a critical driver of employee safetyand workers' comp costs has fallensharply for the last 10 years — adecline of 24% since 1990. Thismeans that we have had 24% fewerinjured workers, about the mostvaluable outcome imaginable forworkers and their families as wellas for employers. Looking forward,however, it seems unlikely thatfrequency can continue to dropindefinitely.” Problems will increase,Mr. Schrempf said, “if the declinein claim frequency begins to leveloff or begins to rise.” Under thosecircumstances, “it is possible thatclaim costs could rise far faster —even without changes to benefitsor reform rollbacks. If that happens,workers’ injuries and employers’costs could rise substantially in thenext few years.”

“Obviously, both the abovedocumented deterioration of marketconditions and the broad continuedpressures on the marketplace are acause for significant concern,” saidMr. Schrempf. “Overcapacity

1999 Combined Ratio Soars

continued on next page

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appears to be the key driver thatwill shape the future of the property-casualty insurance market over thenext few years. And while workers'compensation is just one of manyP/C lines experiencing similarissues, the difference may be thatcomp results could deteriorate muchmore rapidly than other lines duringthe coming months and years. Andany significant legislative impactson loss costs will only make theprognosis worse.”

The NCCI is a shared-servicesorganization serving the workers'compensation industry. Theorganization offers acomprehensive array of productsand services that enable insurersand other stakeholders to accessand use workers' compensationdata to establish accurate loss costs,calculate experience ratingmodifications, manage residualmarket mechanisms and reduceoverall costs.

Combined ratios aresynonymous with underwritingresults, and represent losses andexpenses (including policyholderdividends) relative to premium.They do NOT reflect investmentincome. A ratio (or underwritingresult) of 100 is an underwritingbreak even — losses and expensesexactly equal premium. A ratio of120 indicates losses and expenses(combined) exceeded premium by20%. Investment income helpsoffset this loss.

Calendar year numbers reflectall financial transactions thatoccurred during that calendar year,regardless of when the policy waswritten or when the accidentoccurred. Thus, if reserves wereraised or lowered in 1999 becauseof an accident that occurred manyyears prior, that would impactcalendar year 1999. Because suchchanges in reserves (for oldaccidents) obscure the “actual”1999 conditions (i.e. the experienceof policies that were in force in1999), actuaries generally do notuse calendar year data in “long-tailed” lines such as workerscompensation. However, calendar

year data is widely circulated andreferenced so it is important to befamiliar with the results.

Accident year statistics, onthe other hand, assign claimactivity to the year of accident -regardless of when the claimpayment was made or when thereserve was changed. Becauseof this, accident year dataprovides a fairly accurate pictureof the results for any given year.This is also the reason accidentyear statistics “develop”, orchange, over time. Newtransactions (claim payments,reserve changes) are continuallyallocated back to the year in whichthe accident occurred. It is many,many years before an accidentyear can be considered “closed”.

The data used in NCCIestimates is NAIC countrywideprivate carrier data. TheInsurance Expense Exhibit(supplement to Annual Statement)is used for the calendar yearestimates while Annual StatementSchedule P data, developed byNCCI, is used for the accidentyear estimates. This data is net ofreinsurance.

How are Combined RatiosCalculated?

Combined RatioCont'd

Electronic signatures are set tobecome valid and bindingnationwide, effective October 1 of2000. By a unanimous vote in theSenate and a 426-4 vote in theHouse, Congress recently passedthe “Electronic Signatures in Globaland National Commerce Act” inan effort to encourage electroniccommerce. President Clintonsigned the bill shortly after passage.

The act does not forcecompanies or consumers to dobusiness electronically, but it

National Electronic Signature Law a Realityremoves hurdles to electroniccommerce by explicitly stating thatelectronic contracts areenforceable and by eliminating anyconflicting state requirements.

The business of insurance,typically exempt from federal lawsand regulated solely by states, isexpressly subject to the new law.As a result, carriers and insureds

that choose to do so will be able toenter into insurance policies onlinein completely paperlesstransactions.

Incorporating the principle oftechnological neutrality, the act doesnot specify a particular technologyfor creating valid electronicdocuments or signatures.

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Dallas-Fort Worth companiesspend more on injured workers’medical and income benefits thanemployers in all but one Texasmetro area, according to a study bythe Workers' CompensationResearch Institute. Dallasemployers spend an average of$5,210 for each workers’compensation claim. Only El Pasoemployers paid more – $5,281 perinjured worker. Austin-San Antoniocompanies had the state’s lowestworkers’ compensation costs,$3,551 apiece.

Observers speculate that thedisparity is because of widelyvarying medical costs and treatmentpractices. “Some of the intrastatedifferences are extraordinary,” saidGlenn Gotz, a researcher at theMassachusetts-based institute. Mr.Gotz – whose nonprofit group ispaid by employers, insurers andstate regulatory agencies to studyworkers’ comp issues – told theDallas Morning News that theDallas-Fort Worth costs are highfor all professions. “Even when welook at just clerical and professionalworkers, it’s the same way,” hesaid.

The average cost per claim inthe Houston area was $5,202.Looking at the state by region, theEast Texas average was $4,617,the West Texas average was$4,811, and the South Texasaverage was $4,679. The overallNorth Texas area was notsurveyed. The institute found theintrastate differences in a recentstudy that compared Texas withseven other states known to havehigh workers’ comp claims –California, Connecticut, Florida,Georgia, Massachusetts, Minnesotaand Pennsylvania.

Study Shows Statewide Claim CostsVary Widely

continued on p. 12

The WCRI announced theresults of its Multistate Study inJuly. The survey gives a preliminarylook at the institute’s Anatomy ofMedical Costs and Utilizationscheduled for a Novemberpublication. Commission ExecutiveDirector, Len Riley, applauded theWCRI reports and noted that thisresearch will enable data-baseddiscussions of major workers’compensation issues. He describedthe data as “invaluable” going intonext year’s legislative session. Mr.Riley also announced that WCRIwill make a major presentation atthe Commission’s annualeducational conference scheduledfor August 30 through September1, 2000.

Using a broader measure thanit employed in the intrastate study,the institute found that Texasemployers’ costs averaged $11,406for every employee who spent morethan seven days away from workbecause of injury. (The multi-statestudy included costs such asattorney’s fees and medicaladministrative expenses thatweren’t included in the Texas-onlycomparison.)

The Texas total was 29 percenthigher than the average in the otherseven states, institute researcherssaid. Businesses and insurers saythe Texas costs are high becausethe Act’s “free choice of doctor”provision allows employees tochoose their own doctors. In moststates, the agency, employer and

An Arlington doctor convictedof insurance fraud in Federal courtin February died earlier this yearfrom an apparent suicide. Dr.Hubert Cameron Gibson III, 42,was found dead early Eastermorning, suffocated with a plasticbag. The Tarrant County MedicalExaminer’s Office issued apreliminary ruling of suicide.

Dr. Gibson had an activepractice and was frequently atreating doctor in North Texasworkers’ compensation cases. AFort Worth Federal jury convictedDr. Gibson on Feb. 25 on ninecounts of mail fraud and one countof tax evasion. After almost eighthours of deliberation, jurors in U.S.

District Judge John McBryde’scourt found that Gibson haddefrauded insurance companies foralmost two years by billing themfor procedures that were notperformed and then tried to evadetaxes by claiming personalexpenses as business expenses.

After the trial, Dr. Gibson wasjailed until March 2, when he wasallowed to return to home pendinga June 9 sentencing date. He couldhave faced a 50-year prisonsentence and more than $2 millionin fines. He operated NewBeginnings Rehabilitation hadoffices in Arlington, Bedford andBurleson.

Dallas Doctor Dies; anApparent Suicide


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TWCC No.__________________________

Claimant:___________________________

PAYMENTS BY ELECTRONIC TRANSFER

In the event you are reasonably expected to be entitled to receive income benefits for a periodof eight weeks or more, you may be entitled to have those benefits paid by electronic transferor direct deposit to your bank account. To become entitled to a direct deposit, you must:

1. Request in writing that [Name of Carrier] pay your weekly benefits by electronictransfer;

2. Cooperate with [Name of Carrier] by providing in writing the identity and routinginformation of the bank to which the funds will be deposited (we will need a voidedcheck or deposit slip as a part of this information); and

3. [Name of Carrier] must be able to independently determine, based upon medicalrecords or other evidence, that you will be entitled to benefits for eight weeks or morefrom the date that we receive your request.

Upon receipt of a written request complying with all of these requirements [Name of Carrier]will begin to process your request, and within twenty-one days of receipt of your request,will pay all benefits after that date by electronic transfer. Until the electronic transfer is ineffect, you will continue to receive payments by check.

If you later decide that you prefer payment by check, and wish to discontinue electronictransfer, [Name of Carrier] will begin the delivery of further benefits by check seven days afterreceiving your written request.

ELECTRONIC TRANSFER REQUEST

I hereby request that [Name of Carrier] begin the payment of my benefits by electronic transferto my _________________________ account (identify type of account checking/savings)at ________________________(name of bank).I have enclosed a voided check or voided deposit slip with this request. I understand thatit will not be possible for [Name of Carrier] to begin my benefits by direct deposit if I do notprovide a voided check or voided deposit slip containing legible information regarding thename of my bank, account numbers, and routing information.

SignaturePrinted Name:SSN:_____________________________

Don’t forget to prepare forelectronic funds transfer. TheCommission has issued amemorandum reminding all carriersof the need to offer electronic fundstransfer beginning September 1,2000.

Brent Hatch, Director ofCustomer Services, says that theCommission will not promulgate a

form to be used by carriers to notifyclaimants of the availability ofelectronic funds transfer. Eachcarrier is free to develop its ownlanguage until this language isspecified by Commission rule.

To assist you in developing thisnotice, Flahive, Ogden and Latsonhas drafted a proposed notice.Because the Commission does not

prescribe this notice, you are freeto use or disregard it. If youdisregard it, and develop your ownnotice, be sure that the languagecomplies with Texas Labor Code,Sec. 409.0231 and Rule 124.5. Wewill be happy to assist you with thisprocess.

Note that the Commissioncontemplates two communications.

Carriers are requiredto send a notice of aclaimant’s right torequest electronictransfer. Within sevendays of receiving thatelection, the carriermust provide a “form”for the claimant toc o m m u n i c a t einformation necessaryto establish theaccount. The noticethat our firm hassuggested combinesboth communications.That relieves you ofthe obligation to send aform within sevendays of receiving therequest by theclaimant. You maychoose instead tonotify a claimant of thegeneral availability ofthis option, and thenupon receipt of herrequest provide a formto transmit thenecessary infor-mation.Questions regardingthe electronic fundstransfer process shouldbe directed to JackLatson at (512) 435-2156.

Electronic Funds Transfer Coming Soon


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For the time being, theCommission has reversed its acontroversial policy of enforcingthe holding in Downs v. ContinentalCas. Co., No. 04-99-00111-CV(Tex. App. – San Antonio January26, 2000), while that case is pendingbefore the San Antonio Court ofAppeals. Downs holds that a carrierwaives its right to contestcompensability in any case whereit fails to pay benefits or file adispute within seven days from firstwritten notice of the injury. Thedecision sparked immediate industrycriticism and is pending on motionfor rehearing before the appellatecourt.

Our firm has learned that theCommission has instructed hearingpersonnel not to apply the 7-daywaiver deadline while the caseawaits the decision on rehearing.The instruction applies statewide;including cases arising out ofcounties that would ordinarily beappealed to the San Antonio Courtof Appeals.

A panel of the Texas Workers’Compensation CommissionAppeals Panel has applied Downs

while the case is pending at theCourt of Appeals. In TexasWorkers’ CompensationCommission Appeal No. 000433, athree-judge Commission panel alsoruled that a carrier has only sevendays to pay or dispute a claim, or itwaives its defenses tocompensability under the Act. Sincethat decision, many attorneys andsome ombudsmen have argued theDowns rationale in hearings beforethe Commission.

Our firm continues to believethat the original judgment of theCourt of Appeals was incorrectlydecided, and that it was supportedby a poorly reasoned opinion. Webelieve that the San Antonio courtis likely to rule on the carrier’smotions soon. Both the carrier andthe Commission asked the court toreview the decision. The carrierhas also requested that the fullseven-member court consider thecase on rehearing. Ultimately, thelosing party at the Court of Appealslevel will likely request review ofthe case by the Texas SupremeCourt.

Some Downs Relief From theCommission

The National Conference ofCompensation Insurers hasreleased a “Texas Snapshot”summarizing current andprospective economic conditionsand their related implications forworkers compensation. The studyprojects that Texas marketconditions will continue to presenta challenge to carriers andemployers.

Job growth in Texasdecelerated in 1999 (from 3.9% in

1998 to 2.4% in 1999) with slowergrowth posted in all major industriesexcept government. Employmentdeclines were seen in mining andmanufacturing reflecting weaknessin the oil, electrical equipment,industrial machinery, apparel, andtextile sectors. However, the statecontinues to be a strong performer,and economic indicators suggestimproving prospects outside thestate’s commodity-relatedindustries. Regional Financial

Associates, a major economicforecasting company, expectsabove-average growth in Texasthrough 2002, reflecting its strategiclocation, business-friendlygovernment, low business costs,and competitive industrial base. Thestate’s major downside risks are itsdependence on the volatile energyindustry and exposure to the ongoingdifficulties in agriculture.

Determining how changes inTexas’ economy impact workerscompensation in the state ischallenging and requires statisticalanalysis. The study projects thatprospective economicdevelopments in Texas will beaccompanied by increases in bothstatewide losses and premiums.Those prospective economicdevelopments include:

· Continued growth in overalloutput, employment andearnings (including increasesin employment in the more riskymanufacturing andconstruction industries)

· Tight labor markets in a numberof cities in the state, which willbring less experienced peopleinto the workforce

· Continuing price increases formedical careNCCI compiles and analyzes

data from a large database ofprivate and governmental workers’compensation information. Thestate snapshots are executivesummaries of NCCI’s moredetailed state-specific EconomicConditions Reports. The full reportsprovide an in-depth review of astate’s economy. In addition todisclosing more statistics, thereports include an extensiveappendix, including a wide range of

Texas Market Predicted to Remain Tight



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state and national economicindicators as well as a wealth ofinformation specific to the workerscompensation industry (e.g., dataon workplace injuries, workerscompensation costs and benefits,and workers compensation marketcompetition). Copies of NCCI’sstate-specific Economic ConditionReports are available through theorganization’s Customer ServiceCenter at 800-NCCI 1-2-3 (800-622-4123) or via e-mail [email protected].

Tx Market Cont'd

Premium calculation is theheart of successful claimsadministration. Parties practicingon the “claims side” of the businessrarely consider the computation ofpremium. In fact, the process iscomplex, with a rich and evolvinghistory. In a series of articles,FOLIO will review argumentssurrounding whether premiumsshould be assessed based on payrollor hours worked. The articles rely,in large part, on a study performedby the National Council onCompensation Insurance. Thismonth, the series kicks off with areview of the background andhistory of premium calculation.

Payroll, in one form or another,has been the basis of premiumsince the beginning of the workerscompensation system. Until shortlyafter World War II, premium wasalmost exclusively based on theentire payroll of an employer’soperation. An exception is thelimitation of payroll for executiveofficers of corporations. Theirsalaries are limited to a fixed range

How are Comp Premiums Calculated?

for the purpose of determiningpremium. The use of limited payrollswas expanded after WW II withthe establishment of a specificpayroll limitation of $100 peremployee per week.

Payroll limitations serve torealign highly paid workers withthe average weekly wage levels.The result is that smaller payrollnumbers are used in the premiumbase, and higher rates are chargedto every employer. Premium isredistributed from high-wage payingemployers to low-wage payingemployers without regard to theloss experience of the individualemployer. Payroll limitation, likehours worked, does not alter thetotal premium needed; it merelyreapportions it to lower wage payingemployers.

By the late 1950s, it becamemore common for workers to earnmore than $100 per week. Becauseof the $100 limitation, the increasingsalaries had eroded the premiumbase into little more than a headcount as a measure of risk. To dealwith the problems associated withthe erosion of the premium base,the $100 limitation was increasedto $300. Obviously, throughhindsight, we know that was only astopgap measure, not a solution.

To deal with ever-increasingsalaries, and to provide a fairmeasure of risk, most states adopted“total” payroll as the basis ofpremium in the 70s.

Limited payroll is a compromisebetween total payroll, which is ameasure of hazard, and head count,which is not. Limited payroll is nolonger appropriate because itrequires employers to maintain

records they need for no otherpurpose than workerscompensation coverage. It cannotrespond to actual businessenvironments and, most importantto employers, it requires that thebase rates be increased to offsetthe loss of premium as wagesincrease. Under a limited payrollsystem, 80% of small to mediumsize employers pay higher baserates.

Washington, an exclusive statefund state, is the only jurisdictionthat uses hours worked as the basisfor premium. Washington adoptedhours worked in 1933, apparentlybecause, during the depression,payroll was decreasing far morerapidly than the number of hoursworked. In addition, in Washington,employees contribute to the medicalaid fund, which means that thehours-worked rates do not pay forthe entire cost of the Washingtonsystem. Washington is also the onlystate in which workers directlycontribute to the cost of coverage.

Next month, the seriescontinues with an examinationof an alternative to payrollcalculation: premium based onthe number of hours worked.

Interest RatesQuarter

/Year3rd/20002nd/20001st/20004th/1999

InterestRate

9.50 %9.348.858.45

(Part One)

The United States Senate hasadopted an amendment to theLabor—Health and HumanS e r v i c e s — E d u c a t i o nAppropriations bill, H.R. 4577, toprohibit the Occupational Safety &Health Administration fromexpending any funds to“promulgate, issue, implement,administer, or enforce anyproposed, temporary, or finalstandard on ergonomic regulation”in the next fiscal year. While theHouse proposal passed largely on aparty-line vote, the Senate defeateda filibuster on the amendment andpassed the proposal with some partycrossover voting.

The bill now goes to a House-Senate Conference Committee, toresolve the differences betweenthe two versions. Since both theHouse and the Senate have passedthe same language, it is likely thatthis amendment will survive theConference Committee’s efforts.However, President Clinton hasthreatened to veto the bill if thisamendatory language remains.

The amendment is designed tohalt announcement of OSHA’sproposed rule on ergonomicsstandards until a Congressionallysponsored National Academy ofSciences study on the relationshipbetween workplace tasks andrepetitive stress injuries iscompleted. In 1998, Congress andthe President agreed to fund theNAS study, due early next year.The U.S. Chamber, NationalAssociation of Manufacturers, andother business coalitions, incomments to OSHA, havecontended that the ergonomicsproposals are not based on acceptedscientific information. They haveurged OSHA to wait for the results

Congress Set to Delay Ergonomics Rulesof the NAS study so there will be amore scientifically acceptable basisfor decisions on the need forergonomics safety standards.

The proposed OSHAergonomics rules would requireadditional employer safety effortsto prevent repetitive stress injuriesand a new compensation systemfor those injuries. The compensationprogram creates a more liberalbenefit eligibility standard andprovides greater benefits than thoseprovided by state workers'compensation systems. OSHA has

estimated that the proposedstandards could save businesses$9 billion per year, while costingbusinesses about $4 billion per year.The Small Business Administrationand the National Association ofManufacturers contend that theproposed rules will cost employerscloser to $18 billion annually.

OSHA recently concluded aseries of public hearings inWashington, Chicago, and Portlandand is expected to announce therules before the end of the year,regardless of the NAS study.

The Chairman of the HouseBanking and Financial ServicesCommittee has introducedlegislation that would establish anopt-in standard for the sharing ofhealth information, for example,between a workers' compensationinsurer and the insured employer ofthe injured worker. Rep. Jim Leach,introduced the bill, H.R. 4585. Thelegislation, known as the MedicalFinancial Privacy Protection Act,would amend and expand existingprivacy provisions to coverindividually identifiable healthinformation.

H.R. 4585 does not mentionworkers' compensation specifically.However, working in tandem withexisting provisions, it could preventa workers' compensation insurerfrom sharing medical informationabout a claimant with the employeror an outside claims reviewerwithout an express authorizationfrom the claimant. Some provisionsin the bill also would appear to give

claimants a right to examine aninsurer’s claim files or fraudinvestigation files and, in somecases, to change the information inthose files.

Supporters say the bill is notintended to affect the medicalprivacy regulations being developedby the Secretary of Health andHuman Services, but it is unclearhow those regulations will affectworkers' compensation or how thebill would work in combination withthose regulations.

Feds Review Medical PrivacyProposal


- 10 - FOLIO

Most workers’ compensationclaim disputes may not be heardin court unless the dispute hasfirst gone through theCommission’s internal disputeresolution process, and theAppeals Panel has issued adecision. Either side may ask fora court to review theCommission’s decision on thedispute.

The amendments to Rule 134.6 (“Travel ExpensesIncurred by the Injured Employee) become effectiveJuly 15, 2000 for all dates of travel on or after this date.The amendments substantially modify the claimant’srequirements for travel expenses. The Rule establishesa one-year deadline any claimant to submit her requestfor travel reimbursement, standardizes the form forrequesting such reimbursement, and clarifies thereimbursement amount. Failure of the carrier totimely issue reimbursement does not waive thecarrier’s right to contest it, but will constitute acompliance issue.

Previously the Appeals Panel held that the carriermust “insist” that the claimant treat with a doctorcloser, or waive its right to contest travelreimbursement on the basis that there were doctorscloser to the claimant. The Appeals Panel wrote thata carrier would be required to timely request a BRCand dispute the change in treating doctor. However,the amended rule provides that a claimant is simply notentitled to mileage reimbursement if medical treatmentfor the compensable injury is reasonably availablewithin 20 miles of the claimant’s residence.

The Commission’s preamble to the Rule furtherclarifies the Agency’s intent. It states that the newrule “does not hinder an injured employee’s choice ofhealth care provider; the injured employee may stillchoose his or her heath care provider but may not beentitled to travel expenses if that choice causes theinjured employee to travel when reasonable andnecessary care is reasonably available inside the 20-mile threshold. Allowing travel reimbursement whenquality medical care is reasonably available within the20-mile threshold unnecessarily adds costs to theworker’s compensation system.”

The Rule also includes the instruction that theroute shall be the shortest reasonable route, to preventmeasurements based on unreasonable travelrequirements. Additionally, it includes the instructionthat the distance traveled is measured from location tolocation, in order to clarify that it is not measured fromcity limit to city limit.

New Travel ExpenseRule Takes Effect

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 is Jack W. Latson.

FO&LFO&L

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

Practice Pointer

There have been many changes in the power ofCommission personnel to issue interlocutory orders.The changes affect the BRC and the CCH levels.(See “New Rules for Hearings Take Effect” FOLIO,May 2000) This article summarizes the changes.

The recent amendments to Rule 141.6 haveincorporated 1999 legislative amendments to Section410.032 of the Texas Labor Code. Both amendmentsremove the former references to the benefit reviewofficer’s power to issue interlocutory orders to suspendbenefits. Although the interlocutory order is effectiveon the date signed by the benefit review officer, thetime frame from compliance with the order is establishedas five days from receipt of the order. The 2000

Interlocutory Orders:A Primer

continued on p. 15


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FOLIO- 12 -


Failure to provide suchdocumentation (including progressnotes containing specificinformation, operative reports, andreports of test results) renders themedical bill incomplete. A carrier isnot liable for payment for a serviceuntil the documentation required isprovided.

The amendments to Rule134.800 provide that although healthcare providers may submit a medicalbill by facsimile or electronicsubmission, the carrier must agree.

The amendments to Rule134.801 provide that all medicalbills are to be sent to the carrierunless the employer and the healthcare provider elect to have theemployer pay the bills. If the healthcare provider submits the bill to theemployer, it must also send aninformation copy to the carrier, andit waives its right to medical disputeresolution, prompt payment, andinterest. In a change to the previousrule, the provider may not submit abill later than the first day of theeleventh month after the date theservice was provided. Failure tosubmit the bill within this time framemakes the bill uncollectible. Theamendments to the rule also allowbilling agencies to perform thestrictly administrative service ofsubmitting medical bills or collectingpayment for a provider. However,it prohibits the practice wherebyone entity pays a reduced fee to theprovider that provided the services,then bills the carrier a higher fee.Unless TWCC determines that thetreatment is noncompensable, aprovider may not submit a bill to theclaimant. Finally, a provider maynot submit a bill to the employer forcharges that a carrier has reduced,denied, or disputed. The employeris not liable for the bill even if the

Medical Bills Cont'd

carrier have some input in theselection of the treating doctor.

“We’ve seen in Texas wherepeople are getting 30 or 40[chiropractic] sessions,” Eric Glenntold the Morning News. Mr. Glennoversees governmental affairs forthe Texas Association of Businessand Chambers of Commerce inAustin. “We do more tests. We domore everything. And I think there isstill a question of whether thatbenefits the injured worker,” he said.The Texas Association of Businessand Chambers of Commerce issupporting measures to help bringdown those costs. The proposedlegislation would make workers’compensation more like managedcare by forcing injured workers toselect doctors from a preapprovedlist.

Harold Freeman, the TexasMedical Association’s associatedirector of legislative affairs, saidsuch restrictions won’t cut costs.“In workers’ comp, not only areyou dealing with the health of theinjured worker, you are dealing with

his livelihood,” he told the MorningNews. “Workers need the chance tochoose the doctor who has theirbest interests at heart.”

Despite the state’s overall highworkers’ comp costs, the institutefound that injured Texas workerswere less likely to hire attorneys topress their cases than employees inother states. Only 6 percent of theTexans hired attorneys in filingworkers’ comp claims. In Georgia,the most litigious state studied, 28percent of workers hired attorneys.Moreover, the average Texasattorneys’ fee was $1,388 per case,26 percent lower than the eight-stateaverage.

The institute also found that theaverage indemnity payment – wage-replacement benefits for lost-timeinjuries – in Texas was about 21percent higher than the eight-stateaverage.

Information about the fullreports may be obtained fromWCRI’s Publications Department bywriting 955 Massachusetts Avenue,Cambridge, MA 02139 or by calling(617) 661-9274

WC Costs Rise Cont'd

The TWCC Division ofCompliance & Practices has beguna much stricter enforcement ofnonpayment of medical bills. Forsome time now, a few of our clientshave been receiving warning lettersfor nonpayment of medical bills.(See “TWCC Turns Up the Heat”FOLIO, February 2000) As thatarticle noted the Commission hasbegun “a very definite accelerationof TWCC oversight of the timelypayment of medical costs.”

One of our clients has nowreceived a violation proposing a fineof $3,000 for nonpayment of medicalbills. One of those bills was only$260 in amount. Moreover, theCommission has threatened to assess

Pay Those Medical Bills On Timea penalty under Section 415.021 forcontinued late payment of medicalbills in the future. The agencyproposes to issue these fines underthe provisions penalizing a “patternof conduct” that violate Commissionrules. These threatened fines couldbe as much as $10,000. That is thefull limit of TWCC authority.

A delay in the payment of anymedical bill can subject you tosubstantial fine exposure. This newattention to nonpayment of medicalhas not come without warning. TheCommission has been very clearabout these increased expectations.We urge your continued closeattention to this very large potentialfor an increase in your administrativefines.

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claim is determined non-compensable.

The amendments to Rule134.802 provide that Carriers mustreport all medial bills to theCommission in order to facilitatethe Commission’s maintenance ofa database of all medical payments,pursuant to §413.007 of the TexasLabor Code. Prior to theamendments, the carrier had 15days from the date the carrier madefinal payment on a medical bill tosubmit medial billing data to theCommission. The amendmentsincrease the time frame to 30 daysfrom the date the carrier makes ordenies payment.

The amendments to Rule134.803 provide that health careproviders are liable for interest oncarrier requests for refunds paidlater than the 60th day after thedate the provider received therequest. The amendments alsoclarify the interest calculation. Theinterest rate is fixed by the rate ineffect on the date the payment ismade.

The amendments to Rule133.300 provide specific instructionon the methodology that a carriermust use when it receives a billfrom a health care provider.Specifically, the carrier must reviewthe bill for completeness pursuantto Rule 133.1 and complete orreturn incomplete bills within sevendays of receipt. When the carrierreturns a bill because it isincomplete, the Rule requires thatthe carrier include a letter thatexplains all of the specific reasonsfor the return.

The amendments to Rule133.301 define the carrier’sresponsibilities when reviewing amedical bill for reimbursement.The carrier must retrospectivelyreview all completed medical bills

for compliance with the Texas LaborCode, Commission fee andtreatment guidelines, and otherCommission rules. If theinformation provided by the healthcare provider, although otherwisecomplete, does not support the levelof service for which the providerbilled, the carrier may deny paymentfor the bill. A carrier’spreauthorization establishes themedical necessity andreasonableness of the treatment,and the carrier is not allowed toreconsider this issue retrospectively.If the carrier had preauthorized aservice that it was required topreauthorize, the carrier is liable forremitting a reasonablereimbursement for the service,assuming that the condition forwhich treatment was sought wascompensable.

The amendments to Rules133.302 and 133.303 set out theprocedure for a carrier to use whenit conducts an onsite audit of ahealth care provider.

New Rule 133.304 sets out themethodology and procedure for thepayment and denial of medical bills.It consolidates medical billprocessing and audit conceptspreviously included in Rules133.300, 133.301, and 133.304. TheRule specifies the type of healthcare provider who may provide apeer review when the carrier usesthe review to reduce or denypayment on a medical bill, andrequires that the carrier provide acopy of the report and identify thereviewer and his credentials.Additionally the concept ofreconsideration is introduced, andthe Rule sets out the procedure.The rule also provides proceduresfor requesting the refund of anoverpayment, and requires that bothcarriers and providers pay interest

on late payments. According to thepreamble to the rule, “if an insurancecarrier pays a medical bill forservices that are later finallyadjudicated to be not compensable,the insurance carrier may pursue arefund from the health careprovider, and the refund request isthen outside the scope of the timeframes in §133.304 governingrefund requests because this ruleapplies only to compensable injuriesand illnesses.”

New Rule 133.305 addressesMedical Dispute Resolution andprovides definitions of associatedterms. The Rule expedites theprocess, shortening the amount oftime required to resolve a disputeby providing a new process forsubmitting the request, andshortening the amount of timeavailable for responding to therequest. The Division will notconsider untimely responses. Thepreamble to the rule makes it clearthat the Hearings Division and notthe Medical Review Divisionadjudicates issues ofcompensability. However, wherea carrier raises a dispute as toliability for the claim,compensability, or extent of injury,“the MRD will resolve the medicaldisputes as defined in §133.305(a),regardless of other disputed issues.The parties may simultaneouslypursue resolution of other issuesthrough the HD.” Therefore, MRDwill no longer dismiss requests formedical dispute resolution thatinclude disputes pertaining toliability for the claim,compensability, or extent of injury.

Medical Bills Cont'd


FOLIO- 14 -

states that doctors who estimateexcessive periods for minor injuries“may find themselves more likelyto have their treatment reviewed”by the Commission for otherpotential violations.

According to the preamble, thesimple fact that an expectedexpiration date on a TWCC-73 hasbeen reached is generally notgrounds, in and of itself, to terminatebenefits. Rather, the carrier shouldcontact the doctor to verify that therestrictions have expired. If thecarrier disagrees with the doctor’sopinion regarding the claimant’swork status, the preamblespecifically notes that “the carriercan file a notice of dispute ofdisability in accordance with §124.2(relating to Carrier Reporting andNotification Requirements).”

The doctor is not required toperform a functional capacityexamination to complete the report.Rather, according to the preamblea doctor’s practice of performingFCEs on a regular basis is notappropriate. The preamble notesthat the Medical Fee Guidelinesallow only a maximum of threeFCEs per employee. If the doctorbelieves that the claimant is notable to work in any capacity, thedoctor must provide an explanationof how the claimant’s medicalcondition precludes the return towork. The preamble to theamendments notes that otherwisethe report could be biased. That is,if it were easier for the doctor tosimply check a box marked “unableto work” with no further explanationthan to provide further explanation,“the simplicity of the choice mightinfluence the way the report isfilled out.” If the employer has aquestion about the explanation, thepreamble to the amendments

encourages the employer to contactthe doctor to discuss it.

The Commission hasestablished a $15 charge forcompleting the report, as well asfor each additional copy requestedby the carrier. Different feemodifiers are used to distinguishwhether the charge is for a requiredreport, a requested report, or anextra copy. This is to allow theCommission to track the cost to thesystem and to determine how muchof the cost is controlled by thecarrier. As noted, the carrier mayrequest an increased frequency ofreporting, and the doctor is requiredto comply. However, since thedoctor may charge $15 for eachsubsequent report, the Commissionbelieves that carriers shouldevaluate their claims and determinewhether the additional reports areworth paying for. Any filings issued

by the doctor beyond the minimumrequired level, or at the request ofthe carrier or employer, will not bereimbursed.

The doctor must file theTWCC-73 by fax or electronicsubmission with both the carrierand the employer within twoworking days of the examinationand provide a copy to the employeeat the time of the examination. Theoriginal rule only allowed one dayto provide the report to the carrierand the employer. The Commissionencourages doctors to documentdifficulties they have in obtainingcorrect facsimile numberinformation from carriers.Employers and carriers should,therefore, be very proactive inproviding transmission informationto the doctor to ensure that thereport is received as early aspossible.

Rule 129 Cont'd

The Commission continues toclean up the approved doctor’s list.On June 23, 2000 the Division ofCompliance and Practicesannounced that 63 more doctorshad been removed from the list.The Commission removed 23chiropractors and 40 medicaldoctors and osteopaths.

By order of deletion, eachdoctor was notified that a carrierwould not compensate the doctorfor medical treatment afforded toan injured worker after June 20,2000. As reported in the May 2000issue of FOLIO (“Regulating theApproved Doctor List”) theAgency began aggressively

More Docs and Chiros RemovedFrom List

removing doctors from the list inthe spring of 1999. Since thehousecleaning began, more than500 doctors have been removedfrom the list. Of that number, 7providers appealed the removal tothe State Office of AdministrativeHearings. Four of those cases arestill active before the State Officeof Administrative Hearings.

Flahive, Ogden & Latson clientscan obtain a list of the doctorsremoved by the Commission bylogging on to the FO&L website,www.fol.com and clicking thehyperlink found in the passwordprotected resource center.

amendments also remove specificlanguage regarding enforcement andviolations, whereas previously,failure to comply with aninterlocutory order was a Class Aadministrative violation, with apenalty of up to $10,000.

The Preamble to the Ruleamendment acknowledges a disputeover whether the Legislature intendedto remove the benefit review officer’spower to suspend benefits byinterlocutory order. However,finding no legislative history thatshowed intent to continue to allowthe officer to issue an interlocutoryorder not to pay benefits, theCommission indicated that it wouldbe inappropriate to grant suchauthority by rule. Becausesubsection (a)(2) of the rule providesthat the interlocutory order may besuperseded by another interlocutoryorder, it would appear that a benefitreview officer may be able to suspenda previously issued interlocutoryorder if subsequent informationindicated that the interlocutory orderwas improperly granted.

These recent amendments donot affect a carrier’s authority tosuspend benefits under certainsituations, including abandonmentof medical treatment. A carrier maysuspend benefits if it feels it hasreasonable grounds to do so in

Practice Pointer

conformity with Texas Labor CodeSec. 409.022 and Commission Rule130.4.

Moreover, the Labor Code nowauthorizes a Benefit Contested CaseHearing Officer to issue aninterlocutory order. Typically thiswill be for partial payment of benefitsto reduce the potential liability of theSIF. However the preamble to therule also contemplates that theBenefit Contested Case HearingOfficer could use an interlocutoryorder to expedite the payment ofbenefits.

Rule 142.16 provides thatpayment based upon a decision of aBenefit Contested Case HearingOfficer must be made within fivedays of the date that the decision isappealed, or within 36 days of thedate that the decision was receivedby the carrier, if not appealed. Undersome circumstances, a hearingofficer might believe that expeditedpayment is warranted, and issues aninterlocutory order accordingly.Under this scenario, a carrier willnot have 36 days or 21 days, but willonly have five days to issue paymentfrom the date that the decision andorder is issued. Therefore, partiesmust carefully review the actuallanguage of the decision and order todetermine the time frame forcompliance.

IOs and Suspension Cont'd

Texas Labor Code Sec.408.004(f)(3) permits anabbreviated contested case hearingby telephone to dispute theoverpayment of benefits paid underan interlocutory order issued perTWCC Rule 126.7. The rule israrely used; but should be usedmore often than it is. This article

CCHs to Recoup from the SIFdemonstrates how to takeadvantage of the abbreviatedCCHs.

Assume that the telephonicBRC to suspend TIBs is held 7/01/00, and an I/O is issued overridingthe carrier’s RME’s certificationof MMI on 6/01/00 with animpairment rating of 0%. Assume

also that a designated doctor’sappointment is coordinated for 7/10/00, and the doctor then certifiesan MMI date of 6/01/00 with an IRof 0%, vindicating the carrier’sposition. The carrier is permitted toapply to the Subsequent Injury Fundto be paid for the overpayment ofbenefits because it cannot otherwiserecoup its over payments.However, Sec. 410.209 providesthat the I/O must be “reversed” bysettlement or judicial decision beforethe SIF is required to pay.Commission staff has advised ourfirm that the SIF will probably denythe carrier’s request forreimbursement if the I/O was neverreversed by a decision.

How do you get your moneyback from the SIF? The answer isthat you take advantage of theabbreviated CCH provision of Sec.408.004(f)(3) before requestingpayment from the SIF. Theabbreviated CCH will in alllikelihood reverse the I/O based onthe presumptive weight of the DD’sreport and this will perfect thecarrier’s right to reimbursement.

What about the cost of anabbreviated CCH? It isabbreviated, and although specificcosts would be difficult to giveahead of the particular situation,they should also be reduced. Thehearing officer’s Decision ad Orderwill usually be based on a fewmedical documents and the timespent preparing for the CCH andactually conducting the CCH overthe phone should be limited.

So, if you can recoupoverpayments from future IIBspayments, do so. If you cannotrecoup the overpayment you havethe option to request an abbreviatedCCH as a prelude to recovery ofyour money from the SIF.

FOLIO


- 15 -

Q CornerG

Here are several of the mostsignificant questions (andanswers) asked of FO&Lattorneys this month.

- 16 - FOLIO


Q: I have a claim filed by aninjured employee who earnssalary of $1,020.00 weekly. Heis receiving comp of $531.00.Wants to use his vacation daysand return the $531.00 back tous. Can he do this and be out hisearned vacation/benefit?A: I think you can do it if the partiesagree in writing on a TWCC-24and the TWCC approves it. Theissue would be “disability” and theresolution would be that partiesagree that the claimant is notdisabled for the period of time inquestion because the employer hascontinued to pay his full pre-injuryaverage weekly wage. If theclaimant receives his full pre-injuryAWW for the time period inquestion, then he has no disabilityand no TIBs are due. However,claimant is not required to give uphis vacation days. If he voluntarilychooses to deplete his vacationdays, I think that is a matter betweenhim and the employer.

Q: Does the new amended ruleon mileage apply to “old law”claims as well or just to “newlaw”?A: No this rule only applies to “newlaw” claims

Q: I have an injured worker thatmissed her 5/31/00 RME w/out

good cause or notice so westopped TIBs. She rescheduledfor 7/5/00 and missed thatappointment also. In themeantime the TWCC set her upwith a Designated Doctor for 7/3/00 and she did show for thatappt. The Designated Doctorgave her MMI 7/3/00-0%. WouldI owe any additional TIBs? I wasthinking that once she showedfor the appointment, TIBs wouldstart up if she was not at MMI.Thanks for your help.A: You would not owe anyadditional TIBs. Rule 126.6(h)(2)states that you don’t owe TIBsduring the period between thescheduled RME appointment andthe date the claimant submitted tothe appointment. If the DesignatedDoctor said she was not at MMI,you would arguably owe TIBs fromthe date of that appointmentforward. However, since theDesignated Doctor said MMI and0%, the claimant is not entitled toany additional income benefits.

Q: The designated doctor in mycase has included a newdiagnosis to a different andunrelated body part. We filed aTWCC-21 to dispute thisdiagnosis, but he has included itin his impairment rating. Whatdo we do? File TWCC-32 andrequest BRC?A: Unfortunately, the TWCC hastaken the position (in prior QRLs)that you must pay in accordancewith the DDr rating until a finaldecision has been made on theextent of injury. I assume by yourquestion this new diagnosis extendsthe injury to a new body part. QRLsare not official authority, but giveus an idea how C&P would react toanything other than paying in

accordance with the IR until theissue is resolved.-Yes, file a TWCC-32 and a TWCC-45. The issuesare IR and extent of injury.

Q: In the June 2000 edition ofthe Folio, there is an article onpage 7 titled C&P Shifts Focus.In this article, it states “Thestatute states that a carrier thatdisputes the amount of paymentshall send to the Commission, theprovider and the employee areport that sufficiently explainsthe reasons for the reduction ofpayment.” Currently, we send acopy of the EOB to theCommission electronically. TheEOB states why the payment wasreduced or denied. Is this“sufficient” to meet thisrequirement or do we need tosend a copy of the peer review tothe Commission? If so, shouldwe attach it to a paper copy ofthe EOB and mail it to theCommission? If the Commissionmight be mandated to reducetheir paper by 60%, this may becounter productive for them. Wewant to do it right and appreciateyour response.A: I strongly recommend youprovide a copy of the peer review,and make certain that it be signedby the peer reviewer. That way,C&P cannot argue you did notprovide a report sufficientlyexplaining the reasons for thereduction in payment. Sending itwith a hard copy of the EOB is agood idea as well. This can be donein addition to your electronic filingof the EOB. Although I agree thisgoes against the TWCC’s desire tocut down on paperwork, I am moreconcerned with complying withC&P requirements.


FOLIO - 17 -


Q: Can we agree to commute theremaining impairment incomebenefits under the followingcircumstances? 1) The firstTWCC-69 is disputed by eitherthe claimant or the carrier. 2)Designated doctor is assignedand gives an impairment ratingthat neither party disputes. 3)Claimant has returned to workfor 3 months or more. 4) Theclaimant is earning at least 80%of the preinjury average weeklywage. The only detail thatconcerns me is the first item listedabove. The commutation formaddresses this issue. By the way,this is for a claim where theimpairment rating is not 15%and above.A: Pursuant to Rule 147.10, I seeno problem in your agreeing tocommute the remaining IIBs underthe fact scenario you have provided.

Q: I received a claim on 7/7/00where the claimant reports hewas bending over and picked upa typewriter, which caused ahernia/groin strain. Wecontacted his doctor during ourinitial investigation. Thedoctor’s office reports that theclaimant did not tell them thiswas a work-related injury andhave filed their bills under thegroup carrier. They do not acceptworkers’ comp insurance. Thesurgeon he was referred to doesnot take workers’ comp either.The claimant now wants towithdraw his workers’ compclaim because he wants tocontinue treatment with thesedoctors. My question is, can hedo this and if so, what would we/

GQ Corner Cont'd he need to file or obtain? He hasnot lost any time from work atthis point.A: He can withdraw the claim. Heneeds to sign a TWCC-24 and getit approved by the Commission.The easiest way to do this is torequest a BRC and sign theTWCC-24 at the BRC. If hedoesn’t want to do that, he can getin touch with an ombudsman,explain the situation, and have theombudsman draft the TWCC-24.You or one of us will need to signit, as well.

Q: What form do you use todispute mileage?A: TWCC-21

Q: An employee was terminatedfor violating company policyaround 9:30 a.m. As he wasexiting the premises, he claimsthat he sustained an injuryaround 10:00 a.m. Since theclaimant was no longer anemployee of the insured, wouldthis injury be covered under theinsured’s workers’compensation policy or shouldthe claimant file a claim with theinsured’s liability carrier?A: This is not automaticallycompensable. This will be a factualdetermination to be made by ahearing officer. The general rule isthat if a claimant is terminated in aplace of safety, she no longer is anemployee and loses coverage forany injury that might otherwise becompensable. Appeal No. 93972.However, this holding has beenlimited by Appeal 992063. Thatcase holds that, when an employeeis directed or reasonably believesfrom the circumstances she is

required by the employer to returnto the place of her employment topick up her pay after terminationand an otherwise compensableinjury occurs, then such injury isreasonably incident to heremployment and is incurred infurtherance of the employer’saffairs. As you can see, the resultsclosely depend on the facts of yourcase. I had a case like this go toCCH and we won it. Claimant wasterminated and then, before leavingthe premises, had a fistfight withhis former supervisor. The HOfound that he not an employee atthe time.

Q: Am I required to give a copyof a peer review report to thetreating doctor?A: No, but you will be required toexchange it prior to any CCH. Thus,all things being equal, you maywant to give it to him now so thatyou’ll know what he’s going to sayin advance and your RME/peercan respond timely for use at theCCH.

Q: I have a claim where theclaimant had a heart attack athis desk, he fell and hit his head.I believe that the heart attack isnot compensable, however,would the injury to the head orthe result of the fall, becompensable?A: In all likelihood, the TWCCwould rule that the head injury iscompensable. The desk isconsidered an “instrumentality ofthe employer” and hitting is anaccident in the course and scope ofemployment.

9.50%

12

3

4

5

"X" Value Weeks "X" Value Weeks "Y" Value Weeks "Y" Value0.0023 27 0.6892 1 0.0018 27 0.04930.0060 28 0.7402 2 0.0037 28 0.05120.0114 29 0.7930 3 0.0055 29 0.05300.0187 30 0.8477 4 0.0073 30 0.05480.0278 31 0.9042 5 0.0091 31 0.05660.0388 32 0.9625 6 0.0110 32 0.05850.0515 33 1.0226 7 0.0128 33 0.06030.0661 34 1.0845 8 0.0146 34 0.06210.0825 35 1.1483 9 0.0164 35 0.06390.1007 36 1.2139 10 0.0183 36 0.06580.1207 37 1.2813 11 0.0201 37 0.06760.1426 38 1.3505 12 0.0219 38 0.06940.1663 39 1.4216 13 0.0238 39 0.07130.1918 40 1.4945 14 0.0256 40 0.07310.2191 41 1.5692 15 0.0274 41 0.07490.2483 42 1.6457 16 0.0292 42 0.07670.2793 43 1.7240 17 0.0311 43 0.07860.3120 44 1.8042 18 0.0329 44 0.08040.3467 45 1.8862 19 0.0347 45 0.08220.3831 46 1.9700 20 0.0365 46 0.08400.4214 47 2.0556 21 0.0384 47 0.08590.4614 48 2.1431 22 0.0402 48 0.08770.5033 49 2.2323 23 0.0420 49 0.08950.5471 50 2.3234 24 0.0438 50 0.09130.5926 51 2.4164 25 0.0457 51 0.09320.6400 52 2.5111 26 0.0475 52 0.0950

Weeks1

Accumulated Interest from Beginning to End of Continuous Payment

Accumulated Interest from End of Payment Period to Date Paid

4

23

181920

5

14151617

212223242526

6789

10111213

Interest Rate Effective from 7/1/2000 through 9/30/2000:

Determine total benefits plus interest owed by adding interest from steps 2 and 4, and adding total benefits to be paid.

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

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

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

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

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

TIBs: Calculate interest from the 7th day after first day benefits began, or the 7th day after the first notice, whichever is LATER .

Calculate interest from the 5th day after notice of the certification of MMI and impairment, or the date of a CARRIER dispute of MMI or impairment, whichever is EARLIER .

IIBs:

Interest CalculatorThird Quarter

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Admin. Violations Patsy Shelton 435-2234 867-1724 PGS

BRC Settings (FO&L - Req. For Evid.) Cindi Friedel 435-2244 477-4987 CAF

Disputed Claims (TWCC-21) Phyllis Devine 435-2271 477-4996 PAD

General Questions Receptionist 477-4405 867-1700 GQS

Insurance Coverage (TWCC-20) Phyllis Devine 435-2267 477-4996 PAD

Med Review Disputes Annette Moffett 435-2266 867-1733 AMM

Records Request/Photostats Phyllis Devine 435-2267 477-4996 PAD

Request for BRC (TWCC-45) Kathy McFerrin 435-2217 477-4862 KLM

Spinal Surgery Dianne Townsend 435-2251 479-5319 DLT

TWCC Manual Sales Joel Ogden 435-2256 472-9160 JMO

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Allain Collins 435-2170 867-1715 APC Raina Walpole 435-2231

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

Carlos Acosta 435-2177 867-1712 CA1 Sally Stephens 435-2236

Chuck Finch 435-2158 867-1713 CCF Dayna Dixon 435-2223

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

Doug Pruett 435-2182 867-1721 HDP Christel Green 435-2238

Erin Allen 435-2181 867-1728 EMA Lori Goebel 435-2225

Greg Solcher 435-2175 867-1718 GDS Lisa Black 435-2260

Jack Latson 435-2156 867-1724 JWL Patsy Shelton 435-2234

James Sheffield 435-2169 867-1703 JRS Sharissa Karol 435-2224

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Lynette Phillips 435-2165 867-1708 LLP Karen Vanloo 435-2240

Pamela Peavy 435-2163 867-1736 PEP Lisa Anderson 435-2250

Paul Stone 435-2157 867-1716 PBS Bronna Sanders 435-2269

Paul Warren 435-2159 867-1719 PDW Debbie Garza 435-2281

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Rob Dollars 435-2164 867-1707 RAD Eva Hernandez 435-2233

Ron Johnson 435-2178 867-1722 RMJ Dayna Dixon 435-2223

Roy Leatherberry 435-2179 867-1714 RJL Kim Harrington 435-2228

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Texas Workers' CompensationCommission Question/Resolution Log

This is a reprint of selected portions of an internal log utilized by the Texas Workers' Compensation Commission tomemorialize informal opinions given by the Commission in response to questions from the field. It is a training tool forTWCC personnel. Although these opinions are not binding, they do state current TWCC interpretations and representCommission policy.

DateReceived Question/Problem Resolution

E&M GROUND RULESDo the E&M ground rules for new andestablished patients apply to an evaluationconducted by a physical therapist in thesame doctor group or clinic as thereferring doctor?Or, do the Physical Medicine groundrules for PT evaluations apply?

12/14/9931

E&M Ground Rule I(B), p.7 of the MedicalFee Guideline, describes an establishedpatient as “one who has received professionalservices from the doctor, or another specialistwithin the same group practice, within thepast three years, and whose medical andadministrative records are available to thedoctor.” This ground rule refers to doctorspecialties. Physical therapists andoccupational therapists are not doctors, sothey are not specialists. Therefore, thisground rule does not apply to their services.Also, E&M ground rules apply to E&Mservices, not to physical medicine services.

Physical therapists are governed by theMedicine Ground Rules. MGR (I)(A)(7), p.31, instructs PTs to bill codes 99202, 99203,or 99204 for an initial evaluation. The groundrule does not qualify the instruction bydistinguishing between new and establishedpatients as defined in E&MGR (I)(A) & (B),p. 7. Therefore, PTs must use codes 99203,99204, or 99204 when billing for an initialevaluation, regardless of whether the patientis a new or established patient according tothe E&M Ground Rule.

OVERPAYMENT DURING IIBsOR SIBs PERIODCan an insurance carrier take credit forany overpayment in full during an IIBsor SIBs period?

12/9/9932

A carrier’s options for recouping anoverpayment depend what caused theoverpayment to occur.

In the case of an overpayment made pursuantto an order of the Commission that wasoverturned or modified, Rule 116.11 (relatingto Request for Reimbursement or Refundfrom the Subsequent Injury Fund) wasrecently clarified to provide that a carrier isentitled to reimbursement from the


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DateReceived Question/Problem Resolution

Subsequent Injury Fund for any amountwhich is unrecoupable and which was notpaid voluntarily by the carrier or as a resultof its own errors.

In other cases, Appeals Panel Decisionshave consistently held that:(1) carriers are not entitled to unilaterallyrecoup an overpayment of temporary incomebenefits (TIBs) from supplemental incomebenefits (SIBs) (APD 951962) or fromcurrent or future TIBs (APD 92291);(2) carriers are not permitted to unilaterallyrecoup overpayment of SIBs from futureSIBs (APD 941544); and(3) carriers are not permitted to unilaterallyoffset overpaid SIBs against accrued andunpaid TIBs and SIBs (APD 960303).

However, the Appeals Panel has allowedadjustments in impairment income benefits(IIBs) for overpayment of TIBs. Credit foroverpayment will depend on the facts of theindividual case.

Carriers wishing to recoup suchoverpayments (particularly those that don’tinvolve recouping from IIBs) need to attemptto seek the express agreement of theclaimant. If such an agreement is not reached,the carrier may request a BRC.

Cont'd Cont'd

INTERESTRule 126.12....does the insurancecarrier owe interest in the followingscenario:

Treating doctor certifies MMI as beingreached on 10/11/99 with a 10%IR.The TWCC-69 is received by theinsurance carrier on 2/1/00 andpayment is made on 2/6/00 is theinsurance carrier required to payinterest?

3/1/200001

No. The intent of the rule and the statuteupon which it is based is to require thepayment of interest by the insurance carrierwhen the insurance carrier’s action delaysthe payment of benefits.

Therefore, interest is only due when apayment is late because of the insurancecarrier’s actions. There are two conditionsunder which Rule 126.12 requires theinsurance carrier has to pay interest: 1)when the insurance carrier has refusedpayment due to a denial of a claim or disputeof entitlement to benefits and the insurancecarrier loses the denial/dispute or 2) when

the insurance carrier does not timely makethe payment.

The delay in payment in this example (10/11 to 2/6) is based upon either a backdateddate of MMI or a very late TWCC-69.The insurance carrier received the reporton 2/1/00 and timely initiated the paymentwithin 5 days. Therefore, no interest isowed. If the insurance carrier had madethe initial payment 2 days late, then theinsurance carrier would be required to payinterest on the 2 days the insurance carrierwas late.

NOTE: If receipt of the TWCC-69 wasdue to the late filing by the doctor, aviolation should be referred to Compliance& Practices Division.

DateQuestion/Problem Resolution

Cont'd Cont'd

3/2/200002

RULE 129.2(4)The question has been raised by injuredemployees and employers of whether ornot the injured employee can use just aportion of their accrued sick leave andaccrued annual leave before they canbecome entitled to TIBs? In other words,if an employee voluntarily uses sick leaveor annual leave is the employee requiredto use all accrued leave?

The answer depends upon whether theemployee is an employee of a public entity(i.e. a state agency, UT, A&M, TxDOT, oranother political subdivision) or whether theemployee is an employee of a private employer.

Use of sick leave and annual leave by anemployee of a public entity is governed byTexas Labor Code Chapters 501 to 505.

Employees of private employers mayvoluntarily use all or part of their sick leave orannual prior to receiving TIBs.

However it should be noted that the voluntaryuse of sick leave or annual leave is merely aform of post-injury earnings and that anemployee who is receiving sick or annualleave may still be entitled to TIBs based uponthe difference between the employee’s AWWand their post-injury earnings.

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CASE DECISIONSTEXAS COURTS OF APPEALS

Waldrep v. Texas Employers Ins. Assoc. No. 03-98-00053-CV (Tex. App. - Austin, 2000)Under worker’s compensation law, a recipient of financial aid from a university is not an employeesolely by agreeing to participate in a university-sponsored program and is not entitled to compensation.

Facts: Waldrep attended Texas Christian University on a football scholarship. He signed twodocuments prior to entering TCU: a pre-enrollment form which demonstrated his formal desire to play footballfor TCU and penalized him if he decided to enter a different school within the Southwest Conference. He alsosigned a financial aid agreement ensuring that Waldrep’s room, board, and tuition would be paid while attendingTCU and that he would receive ten dollars per month for incidentals.

Waldrep was injured during a football game while playing for TCU in 1974. He suffered a severe injuryto the spinal cord and was paralyzed below the neck. Today, he has no sensation below his upper chest. In1991, Waldrep filed a worker’s compensation claim for his injury and the Commission entered an award in hisfavor.

Texas Employers Insurance Association (TEIA) appealed the decision to district court. In a trial denovo, the jury found that Waldrop was not an employee of TCU at the time of his injury. Waldrep appealedclaiming that at the time of his injury he was, as a matter of law, an employee of TCU. He also challengedvarious evidentiary rulings made by the court.

Holding: Affirmed. The court addressed two issues: whether a contract of hire existed and whetherTCU controlled the means or details of Waldrep’s work. Case law supports the proposition that one mayreceive a benefit from another in return for services and not be an employee. Under worker’s compensationlaw, the employer-employee relationship may be created only by a contract. In this instance, the Letter of Intentand Financial Aid Agreement are not express contracts of hire that set forth the terms of employment. Theyonly partially set forth the relationship between TCU and Waldrep. Additionally, TCU and Waldrep did nottreat financial aid as pay. TCU never put Waldrep on its payroll and neither social security nor income taxeswere withheld from his grant-in-aid. There was further evidence that Waldrep and TCU intended that heparticipate as a student and not as an employee.

The second issue was whether TCU had the right to direct the means or details of Waldrep’s work.TCU exercised direction and control over all of the athletes in its football program while they were participatingin the program. However, TCU did not have the right to direct or control all of Waldrep’s activities during histenure at the school. Waldrep was not an employee of TCU under workers’ compensation law. However,the court did qualify its holding. This case is based upon facts that occurred over twenty years ago and thecourt said that the result might differ today.

Carl Battin, Ernesto Cisneros, Jose De La Cruz, Fred Flores, et al v. Sheriff Leo Samaniego, et al,No. 08-98-00410-CV (Tex.App. —El Paso 2000).Trial court erred in granting summary judgment favoring defendants, El Paso County and CountySheriff, when defendants allegedly retaliated against plaintiffs for filing workers’ compensationclaims.

Facts: Plaintiffs, former sheriff’s deputies, suffered lost-time injuries for which they had to fileworkers’ compensation claims. Subsequently, Defendant/Sheriff reviewed all employees to decide whom todeputize for his new term of office. The Sheriff chose not to reappoint the eight plaintiffs; the plaintiffs allegedviolations of Texas Labor Code Section 450.001, which states a person may not discriminate against anemployee because that employee has filed a workers’ compensation claim in good faith. Defendants filed forsummary judgment, which the trial court granted.

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Holding: Reversed and remanded. The trial court did not specify the grounds upon which summaryjudgment was granted. The Appeals Court first concluded that summary judgment cannot be based onsovereign immunity because the legislature has waived sovereign immunity for its political subdivisions; thePolitical Subdivisions Law requires governmental entities, including counties, to provide workers’ compensationbenefits for its employees and waived immunity for such claims.

Second, summary judgment cannot be based on official immunity because official immunity is anaffirmative defense available only for an individual. In an anti-retaliation case, the supervisor cannot be suedas an individual, thus official immunity does not apply.

Third, summary judgment cannot be based on at-will employment because at-will employment doesnot preclude a claim of retaliation. Finally, assuming plaintiffs were not “discharged” (rather, they were simplynot re-appointed) they still created a cause of action for failure to reappoint under Texas Labor Code Section451.001. Furthermore, the trial court erred if it intended to award attorney’s fees to defendants. Thus, theAppeals Court reversed and remanded for trial.

Texas Dept. of Transportation v. Tony R. Anderson, et al, No. 2-98-383-CV (Tex.App. —Ft. Worth2000).Trial court properly apportioned the settlement proceeds to nonbeneficiary plaintiffs and awardedattorneys’ fees out of the workers’ compensation lien.

Facts: Dorothy Anderson, an employee of the Texas Department of Transportation (TDOT), washit and killed by a car while inspecting a high-occupancy vehicle lane. Dorothy’s husband, Tony, and two adultchildren filed a wrongful death suit and settled for $300,000. The trial court awarded 50% of the settlementto Tony and 50% to the children. When calculating Tony’s total recovery, the trial court subtracted attorneys’fees first and then subtracted the workers’ compensation lien. The carrier challenged the court’s apportionmentof the settlement proceeds as well as the method by which the court calculated the value of the compensationcarrier’s lien.

Holding: Affirmed. The Appeals Court examined three issues: 1) apportionment of settlementproceeds to the adult children; 2) method of calculating Tony’s award; 3) award of attorneys’ fees. Becausethe adult children were not workers’ compensation beneficiaries, the carrier did not have a right toreimbursement to the proceeds they received; thus, TDOT appealed.

The Appeals Court affirmed the trial court’s apportionment as fair and reasonable because evidenceshowed the adult children suffered damages. Regarding the calculation of Tony’s award, the Appeals Courtnoted that the TDOT is entitled to the “net amount recovered by claimant (Tony).” The Appeals Court thendefined “net amount recovered” as the amount beneficiary receives after attorneys’ fees and expenses. Thus,the trial court was correct in subtracting attorneys’ fees and expenses before determining TDOT’sreimbursement.

Finally, recovery of attorneys’ fees from the workers’ compensation lien was proper because thecarrier’s attorney actively participated in obtaining the recovery.

James Smith v. H. E. Butt Grocery Company No. 09-98-291 CV (Court of App.—Beaumont 2000)The trial court must stay its own proceedings and compel arbitration is an arbitration agreement hasbeen properly obtained. The Federal Arbitration Act can require arbitration of common law claimsagainst a nonsubscriber.

Facts: Employer, HEB, was a nonsubscriber under the Texas Workers’ Compensation Act. Smith,an Employee of HEB, signed an agreement to settle any disputes, including occupational heath, injury or disease,with binding arbitration under the Federal Arbitration Act. Smith was injured and filed suit. The trial courtdismissed for failure to commence arbitration by a certain date.

Smith claims the Texas Workers’ Compensation Act prohibits agreements to waive rights under theact, and this prohibition applies to nonsubscribers and agreements to arbitrate. He also contends the trial courterred by determining that the Federal Arbitration Act preempts the Texas Workers’ Compensation Act.

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APPEALS PANEL DECISIONS

Holding: Affirmed. Once it is established that there is an arbitration agreement that has been properlyobtained, the trial court must compel arbitration and stay its own proceedings. There is no authority to invalidatean arbitration agreement that has not been shown to be unconscionable or improperly obtained.

With respect to federal preemption, the trial court did not err to the extent that it held the FederalArbitration Act required arbitration of Smith’s claim. None of the authority cited by Smith deals with federalpreemption in regard to the validity of an agreement to arbitrate in the workers’ compensation context.Concurring Opinion: In some situations, public policy would preclude enforcement of an arbitration agreementin the employer/employee non-subscriber context.

Texas Workers’ Compensation Commission Appeal No. 992916The claimant, a student at the time of her injury, was entitled to an adjustment in her average weeklywage for the purpose of determining the IIB and SIB rates based upon the anticipated increase inearnings.

Facts: The claimant was a 17-year-old high school student at the time of her injury on December 15,1996. The contested case hearing involved the issue of whether or not she was entitled to an adjustment in herIIB and SIB rate under Section 408.044 of the Labor Code and Rule 128.6 because of an anticipated increasein earnings over time. The hearing officer determined that Section 408.044 and Rule 128.6 were designed onlyto adjust the wages of an individual who is in some sort of apprentice program to learn a skill, trade or art.Because the claimant was working as a cashier through a cooperative education program at her high school,the hearing officer did not believe that she qualified for an adjustment in her average weekly wage under thisstatutory provision and rule.

Holding: Reversed and remanded. The Appeals Panel disagrees with the hearing officer’s interpretationof the application of the statute and rule. The Panel determines that someone in the claimant’s position at thetime of an injury is entitled to the benefits of Section 408.044 and Rule 128.6 in the event the other criteriaestablished under those provisions are met.

Texas Workers’ Compensation Commission Appeal No. 992870The attorney seeking an attorneys’ fee approval has the initial burden of presenting a prima facie casethat the fees requested were reasonable and necessary and that the services itemized had actually beenperformed. Thereafter, the party contesting the fee request has the burden of proving that the feesrequested were not reasonable and necessary attorneys’ fees.

Facts: This hearing resulted from a remand from the Appeals Panel on a prior decision involving aclaimant’s attorney’s fee request. Specifically in issue were 3.25 hours of fees having to do with six itemsregarding communications with healthcare providers. The attorney requesting the fee approval refused toprovide the names of the providers with whom she supposedly had conversations contending that the informationwas privileged. The hearing officer determined that the attorney’s refusal to provide this information impactedon his opinion concerning her credibility. He refused to approve this portion of her fee request. The claimant’sattorney appealed raising a number of arguments.

Holding: Affirmed. The Appeals Panel states that the attorney requesting a fee approval has theburden of presenting prima facie evidence that the services were actually performed. The attorney’s refusalto provide information concerning the itemized listings in question precluded the presentation of this prima faciecase. As such, the hearing officer correctly denied this portion of the attorney’s request.

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Texas Workers’ Compensation Commission Appeal No. 992879A Benefit Dispute Agreement between two insurance carriers is enforceable regardless of the lack ofa signature from the claimant.

Facts: The claimant was injured on April 16, 1998. The employer had coverage with Carrier Aeffective April 1, 1998. The employer’s coverage with Carrier F ended on April 24, 1998. As such, duringthe period from April 1, 1998 through April 24, 1998, the employer had dual coverage with two separateinsurance carriers. Both carriers initially initiated temporary income benefits. Upon discovering the dualpayments, the carriers entered into a Benefit Dispute Agreement agreeing that Carrier A accepted liability forpayment of indemnity and medical benefits retroactive to the date of injury. Thereafter, Carrier A sought toreopen the issue contending that the agreement was not enforceable. The hearing officer determinedotherwise. Carrier A appealed.

Holding: Affirmed. The Appeals Panel rejects Carrier A’s argument that the agreement was notenforceable due to the lack of a signature from the claimant or a benefit review officer. The Appeals Panelindicates that the acceptance of this argument would place form over substance. The Panel feels that theagreement was an enforceable contract between to the two carriers making Carrier A liable for the paymentof further benefits to the claimant.

Texas Workers’ Compensation Commission Appeal No. 992654The designated doctor is without discretion to award impairment for lumbar flexion deficiencies in spiteof the fact that the straight leg raising validity test was not met.

Facts: The claimant was injured in a fall. He testified that he fell some distance landing initially onhis heels and then on his hips. Eventually, the carrier’s MEO doctor certified MMI and provided a 12%impairment rating for lumbar and thoracic injuries. The treating doctor provided a 10% impairment rating fora lumbar and thoracic injury. The treating doctor suggested that the claimant’s range of motion testing wasinvalid in all directions due to inconsistency. Neither the treating doctor nor the MEO doctor provided anyindication of an injury to the claimant’s hips.

The designated doctor provided a 43% impairment rating. The rating was attributable to thoracic,lumbar and hip injuries. A significant portion of the rating was attributable to lumbar flexion and extensiondeficiencies in spite of the fact that the straight leg raising test was not met. The designated doctor explainedthat the claimant’s inability to straight leg raise beyond 30 degrees was based upon “hip contracture”. Thedoctor was of the opinion that the claimant’s measurements were valid irregardless of the claimant’s inabilityto meet the straight leg raising validity test. The carrier appealed.

Holding: Affirmed in part and reversed and rendered in part. The Appeals Panel determines that thehearing officer’s conclusion that the claimant sustained a hip injury was contrary to the great weight of theevidence. In particular, the Appeals Panel points to the lack of any mention of a hip injury prior to the claimant’sexamination with the designated doctor.

In addition, the Appeals Panel reverses the hearing officer’s determination that the claimant’simpairment rating was 43% as determined by the designated doctor. The Appeals Panel comments specificallythat the designated doctor does not have discretion to award impairment for lumbar flexion and extensiondeficiencies, where the straight leg raising validity test has not been met. A new decision is rendered findingthe claimant’s impairment rating is 11%.

Texas Workers’ Compensation Commission Appeal No. 992765The claimant’s fractured femur sustained in a trip and fall that occurred as she was entering the commonreception area of the building a portion of which was leased by her employer was sustained in thecourse and scope of employment.

Facts: The claimant worked for a state agency. Both the agency for which she worked and anotherstate agency were located in a building leased by the two agencies. The claimant was injured as she enteredinto a common reception area at the front entrance of the building. She tripped over a mat at the front door

CITATION UPDATEThe cases below have previously been summarized in FOLIO. However, at the time of printing, they were not yetpublished in the Southwest 2d Reporter. They have now been released for publication. We have included thecitations to the Southwest 2d Reporter below. This update will appear in each edition of FOLIO.

The following cases appeared in the January 2000 issue of FOLIO .

Rodriguez et al. v. Texas Property and Casualty Insurance Guaranty Association, No. 03-98-00518-CV, 1999 WL 699828.Louisiana-Pacific Corporation v. Andrade, 43 Tex. Sup. Ct. J. 56, (Tex. 1999).

The following cases appeared in the June 2000 issue of FOLIO .

Scheffer v. Allied Assets Corp., et al, No. 01-99-00956-CV, 2000 WL 124782 (Tex. App.—Houston [1st Dist.]).Harris County v. Tullos, No. 01-99-00044, 2000 WL 210442 (Tex. App.—Hous. [1st Dist.]).

resulting in a fractured femur. The claimant’s injury was disputed based upon the contention that the accessdoctrine did not apply because the employer had no control over the common entryway to the premises. Thehearing officer determined that the claimant was injured in the course and scope of employment. The decisionwas appealed.

Holding: Affirmed. The Appeals Panel reviewed prior case law construing the access doctrine. Theynote that while those decisions consistently consider the question of whether or not the location where the injuryoccurred was open to the public, that fact alone is not controlling. The Panel comments as follows: “The instantcase does not involve an injury while going to or from work on a public street or public sidewalk or on a loadingdock attached to a building or in an employer’s parking lot. The claimant was injured as she was actually enteringthe building in which she worked through the front door of the building. In our opinion, this case falls squarelywithin the access doctrine.”.

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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 3:30 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) 867-1700 FOL All materials not listed below

(512) 867-1732 Trina DeCecco Suspension of TIBs

(512) 479-5319 Dianne Townsend ONLY Spinal Surgery Info.

(512) 867-1724 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) 867-1700 Paralegals All CCH Related Info.

(512) 477-4862 Kathy McFerrin 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 Cindi Friedel BRC & PHC HearingsRFEs, Set Notices, Hearings,Files, Set Notice Cancellations

(512) 477-4996 Phyllis Devine Insurance Coverage (TWCC-20)Notice of ControversionRequest for Record Checks & TWCC Files

(512) 477-4996 Phyllis Devine Notice of Disputed Claims (ALL TWCC-21s)

(512) 867-1733 Annette Moffett Med Review Disputes/Initial SubmissionsSOAH/Medical Review

(512) 472-9160 Joel Ogden TWC Manual Orders & Request for Info.

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

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

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FO&L Fax Directory

Documents

July 2000 FOLFOL FOLIO - FOL Attorneys Austin · FOLIO July 2000 ©2000 - Flahive, Ogden & Latson Volume 5, No. 7 TWCC Adopts Amendment to Rule 129.5 p.2 WC Area Costs Rise p.6 How