The Texas Blueprint for How to Lower Workers’ Comp Costs

After continued implementation of the 2005 reforms to the Texas workers’ compensation system, and legislative review of the system in 2011, 2013 was a year in which system stakeholders and other interested parties were able to step back and evaluate the current state of the Texas system and better assess the impact of changes over the last few years. The Texas workers’ compensation system in 2013 had something for everybody. A legislative session, significant court decisions, several rule developments and the full implementation of the closed formulary were just some of the year’s developments. The results in Texas are seen by many as a blueprint on how states can lower their workers’ compensation costs. For example, based on early reports, the adoption of a closed formulary lowered pharmaceutical costs even before full implementation. Health care networks are credited with better return to work outcomes. Most importantly, treatment guidelines have significantly reduced medical costs per claim. Claim ratios and loss ratios have improved dramatically making workers’ compensation premium more affordable for employers. Texas has experienced a 50% reduction in premiums over the last few years. Health care providers are receiving more reimbursement per medical services. As a result, there are fewer complaints and concerns about problems with injured workers’ access to medical care.

Despite these successes, there are some who have opined that the system is broken and needs another reform. The Office of Injured Employee (OIEC) has distributed information critical of the number of medical disputes in the Texas system and how medical evidence is being evaluated in dispute proceedings. The OIEC has also suggested that Texans would be better served with a 24/7 health care system for workers’ compensation. Part of the argument is that health insurance would provide medical services at a lower rate than workers’ compensation without the denials for compensability or extent. Access to care would no longer be an issue. OIEC complains judicial interpretations of causation conversely impacts injured workers’ ability to present evidence necessary to meet their burden of proof. Many attorneys representing injured workers echo the difficulties their clients have securing medical and income benefits, citing many of the same “improvements” to the system—network doctors’ reluctance to give causation opinions; treatment guidelines preventing necessary treatment; and the Division of Workers’ Compensation procedures prematurely certifying MMI. As background, the 2005 reforms required Texas to adopt treatment guidelines and in 2006 Texas adopted the Official Disability Guidelines (ODG). Under Texas law, those guidelines can only be overcome with other evidence-based medical treatment information.

There have also been some public comments made by the OIEC, warning of possible federal racketeering law (RICO) claims being brought in Texas like some other states, notably Colorado and Michigan. As of the date this was written, no such claim has been filed in Texas but interested stakeholders will be on the lookout for any such lawsuits.

The 2013 Texas Legislature passed very few bills related to workers’ compensation as there were very few introduced for consideration. There were small changes to workers’ compensation healthcare network contracting requirements, and discounted contracting was approved for home health care services and durable medical equipment under voluntary and informal networks. Efforts to privatize the workers’ compensation insurer of last resort, Texas Mutual Insurance, failed, as did efforts to create confidentiality protection for communications between insurers and their employer clients.

Despite the questions raised by the OIEC, the Texas system seems calm and there are no current significant changes anticipated in the near future. In other states there are reform efforts underway seeking to lower workers’ compensation costs, reduce medical costs, and manage litigation, including our neighbor to the north, Oklahoma, who joins Texas by creating a non-subscriber option (albeit with some key differences from the Texas system). Will any of the reform changes impact Texas? Will bad faith (recently limited by the Texas Supreme Court) be replaced by RICO actions?

The authors intend this Texas Workers’ Compensation Handbook, 2014 Edition, as a valuable, unbiased resource for all stakeholders. The Handbook incorporates updates to case law, statutes, and rules. We hope you find it useful and informative.

Albert Betts, Jr.
Stuart D. Colburn

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"I am used to the hard, cold, and usually unforgiving black letter law. This book is easy to read and is extremely informative on all areas of Texas Workers' Compensation. I feel it is a "must have" for anyone who practices in this area."
Richard Pena, Claimant's Attorney, and Past President, State Bar of Texas.

"Absolutely outstanding! The research, organization and content is a must for any practitioner contemplating the handling of a Texas workers' compensation claim."
Michael L. Sprain, Sprain Law Firm, P.C.

"This book contains everything you need to know to handle a workers' compensation case in Texas, including strategy considerations for all parties and relevant case law. Written by authors who are thought leaders in the Texas workers' compensation arena, this book is a must have for all professionals on every side of a claim."
Matt Lewis, Rogers, Booker & Lewis, P.C.

Order today: Texas Workers’ Compensation Handbook, 2014 Edition