2010 Year in Review: The Top 10 Workers’ Compensation Events in Texas

2010 Year in Review: The Top 10 Workers’ Compensation Events in Texas

   By Stuart D. Colburn, Shareholder, Downs Stanford

1. New Causation Standard

The Texas Supreme Court addressed causation for the first time since 1943.  Since that time, lower appellate courts and the Division often stated the injury need only be a producing cause and there can be more than one cause.  Using this standard, a jury found a decedent’s workers’ compensation injury (where he struck his knee) caused his death.  The decedent had numerous complicating factors: including medications he was taking as a result of a kidney transplant 25 years previous and infections.  The Supreme Court held the proper standard has always included a foreseeability or “but–for” standard, and they updated the language to include the “but-for” component.  The new standard is whether the mechanism of injury is a substantial factor and without which the injury/death would not have occurred. (In the same decision, the Texas Supreme Court also subjected the differential diagnosis to a reliability standard but in this case believed the doctor’s differential diagnosis opinion was sufficiently reliable.  They also allowed the carrier to request a jury question on attorney’s fees). Lexis.com subscribers: Click here to read Transcon. Ins. Co. v. Crump, 2010 Tex. LEXIS 616 (Tex. 2010).

2. The Coming and Going rule

The Texas Supreme Court addressed the coming and going rule as well as the dual purpose doctrine.  The claimant was a pharmaceutical sales representative who left a company sponsored dinner with clients in a company vehicle and was injured in an MVA while driving to a storage facility adjacent to her apartment which also served as her home office.  The Court of Appeals felt the dual purpose doctrine applied and therefore the injury was not compensable.  The Texas Supreme Court held the dual purpose doctrine only applies to travel between work and some other location aside from home.  The coming and going rule applies to travel between home and business.  Since the claimant was traveling from a company sponsored event to a storage unit for work purposes, she was in the course and scope of her employment at the time of the MVA. Lexis.com subscribers: Click here to read Leordeanu v. Am. Prot. Ins. Co., 2010 Tex. LEXIS 894 (Tex. Dec. 3, 2010). 

3. The January 1, 2011 deadline of informal network/silent PPO

In 2005, the Legislature accepted the Texas Medical Association’s recommendations to eliminate silent PPO discounts (also known as informal networks).  After January 1, 2011, silent PPO/voluntary networks could only exist as a formal workers’ compensation healthcare network.  Many workers’ compensation HCNs are marketing their networks in light of the expiration of silent PPO/informal network despite Division statistics showing networks are more expensive than non-network medical care.

4. The State Auditors assessment of the Division’s Medical Quality Review Panel (MQRP)

The statute requires DWC to investigate and remove doctors from the system that are causing harm to patients. The MQRP performed this function. The MQRP was investigating several doctors, including a pain management doctor with political connections. A State representative contacted DWC about perceived problems with the investigation. The Commissioner investigated and felt DWC was not following its own procedures. The Commissioner ceased all investigations and enforcement actions.  Several employees involved in the investigations were fired for “clandestine activities”. The Legislature conducted a hearing igniting passions of the former employees and the current management.  Some members of the Legislature believe the Division’s MQRP was ineffective and its intent was perhaps thwarted by political motives of some of its members.  The state auditor investigated the MQRP process and found it lacking in several areas including standards and documentation. Thus, in 2010, the Division has taken enforcement actions against more doctors than it has previously. The controversy still simmers as the Legislature begins session early next year.

5. Letters of Clarification to Designated Doctors

In response to a clear problem of too many letters of clarification (LOC) being issued to designated doctors, the Division informally changed internal procedures eliminating inappropriate requests for an LOC.  Many stakeholders now complain DWC inappropriately denies valid LOC requests. Parties are now instructed to request hearings to determine if a LOC is appropriate, even when both parties agree to the LOC. Until a new formal rule is adopted, many stakeholders will continue to complain about the unwritten and evolving process.

6. New Benefit Review Conference Rules

The Division adopted new BRC rules in an attempt to reduce the number of hearings conducted when the parties were not sufficiently prepared. DWC is requiring parties to communicate with each other before a BRC request will be granted.  Parties must exchange all pertinent information before requesting a BRC.  The requestor must contact the other party in an attempt to resolve the dispute before filing a BRC request.  The BRC request must include documentation the requestor attempted to resolve the dispute informally before filing a request for a BRC.  Within 10 days of receiving a BRC request, a respondent must exchange all pertinent information.   Some believe the new rules restrict due process and create unneeded obstacles to parties with legitimate dispute resolution needs.

7. House Bill 7 Reform Impact

Prior to HB 7 in 2005, Texas had some of the highest overall costs and highest medical costs in the country.  Recent studies show premiums are down and medical costs are significantly below averages of other states.  Although Texas still ranks above average in utilization and pharmaceutical costs, there is a clear improvement in the performance of the workers’ compensation system.

8. Bad Faith Litigation

Plaintiff attorneys continue to win significant jury awards for workers’ compensation bad faith.  In December 2009, one of the 10 largest jury verdicts (in excess of $70 million) in the United States involved a bad faith action for the denial of less than $10,000 of income benefits.  Appellate courts have reigned in some of the jury verdicts holding that plaintiffs did not exhaust their administrative remedies.  Many carriers choose to settle bad faith cases instead of risking a jury verdict believing they may not get a fair trial.  The Texas Supreme Court heard oral arguments but as of the date of this article has not issued a decision in a seminal bad faith case.  The Supreme Court could choose to keep, eliminate, or make modifications to the workers’ compensation bad faith case law. Click here to read Will Common Law Bad Faith Survive in Texas? Texas Mutual Insurance Co. v. Ruttiger.

9. Non-Subscription

Texas continues to be the only state that allows private employers the option of providing workers’ compensation insurance for its employees.  Some employers chose no insurance coverage at all for its employees.  Many employers, especially large employers, choose to provide benefits to their injured employers through an ERISA plan.  Some call such plans “workers’ compensation done right”.  Others complain the benefit levels do not equal workers’ compensation benefits and provides little protection to injured workers.  A recent survey showed more employees and more employers are covered by workers’ compensation insurance than two years ago.  One explanation is lower workers’ compensation premiums resulting from the HB 7 reforms discussed above.

10. National Issues

Stakeholders are not allowed to settle workers’ compensation cases and therefore the CMS’s MSA and reporting issues are not an issue as it is in other states.  The first federal hearings regarding workers’ compensation since the early 1970s was initially a concern for some stakeholders, especially non-subscribers.  However, recent election results diminish the prospect for significant changes to the current state-run workers’ compensation system.

This article is reprinted with permission from Downs Stanford.