By Stuart D. Colburn, Shareholder, Downs Stanford
The 2011 Legislature considered 46 bills directly affecting and 12 (depending on how you count) bills indirectly affecting workers’ compensation. The following is a review of the 12 bills sent to the Governor for his consideration.
[An Update From LexisNexis: All of these bills were signed by the Governor. See list of bills signed by Governor.]
Summary: Authorizing and regulating Pharmacy Benefit Managers
The bill authorizes a Pharmacy Benefit Manager (PBM) to act as an informal or voluntary network allowing reimbursement at less than the DWC Fee Schedule. The PBM must register with and electronically report to DWC certain information including a list of the entities it has a contractual or business relationship. Pharmacy reimbursement is paid in accordance with the fee schedule from either DWC or the PBM pursuant to this section. A carrier, or a carrier's PBM, may reimburse pharmaceutical services at less than the DWC Fee Guideline if there is a contractual arrangement between the carrier and the healthcare provider and abide by certain notice requirements. The PBM must provide quarterly notice to the healthcare provider when a network's contractual fee arrangements are sold, leased, transferred or conveyed by or on behalf of the carrier. The insurance carrier shall provide copies of each of these contracts to the Division upon request. The contract is confidential and not subject to the Freedom of Information Act. A PBM must initially report within 30 days and thereafter report quarterly to the Division certain information, including the list of each carrier with whom the network contracts or is associated. Failure to comply with the statute's provisions (for example, failure to produce contracts requested by DWC or failure to provide required notice to the pharmacy) creates a rebuttable presumption in an enforcement action regarding notice and the DWC may order reimbursement at the DWC Fee Schedule. DWC can issue administrative penalties against the carrier, for its or its agent's acts, and against the PBM. This bill creates an ongoing reporting requirement that carriers must diligently ensure is timely and accurate.
Summary: A Staff Leasing Act client company can request claim information
A Staff Leasing Act (SLA) company must provide client companies within 60 days upon request a list of claims associated with the client company, payments made and reserves established on each claim. The SLA commits an administrative violation if it fails to timely respond. It is a defense if the SLA timely requested the information from the carrier and did not receive a response. The SLA must report to DWC the carrier's failure to timely provide the requested claim information.
Summary: OIEC Sunset Bill
This Sunset Bill extends OIEC until September 1, 2017 to correspond with the 6-year extension of the Texas Department of Insurance Division of Workers' Compensation.
The bill requires OIEC to develop and implement a policy encouraging the use of negotiated rule making procedures and the adoption of alternate dispute resolution procedures to assist the resolution of internal and external disputes conforming to the extent possible the model guidelines of the State Office of Administrative Hearings. OEIC would also maintain a system to respond to complaints filed with the office. OIEC is allowed the same access to information as the claimant or a party. OIEC can accept grant funding. Finally, OIEC's legislative report is due January 1 of odd number years, one month after DWC's.
Summary: Recoupment of overpaid income benefits
This bill overturns a line of Appeals Panel cases prohibiting an insurance carrier from recouping overpaid benefits. The bill requires the Commissioner to establish by rule procedures, timeframes and methodologies for an insurance carrier to recoup an overpayment from future income benefits. DWC's rules must consider the cause of the overpayment and financial hardship to the employee.
Summary: Regulates certain consolidated insurance programs
Prohibits a principle from requiring indemnification or listing another person as an additional insured for the indemnitee's negligence or fault, breach of contract, breach of a governmental provision in a construction contract for larger buildings. Such agreements are void and unenforceable. The Senate Bill Analysis to SB361 with identical language states, "As proposed, SB361 makes each party liable for its own negligence and prohibits transferring liability by contract or other means in actions involving property damage, bodily injury of death (with exceptions), breach of warranty or violation of statue, ordinance, government regulation or rule."
Summary: DWC Sunset
The Legislature passed, and the governor is expected to sign, House Bill 2605, the Sunset Bill. This bill largely incorporates the recommendations from Sunset Commission and primarily tweaks House Bill 7, passed in 2005. Workers' Compensation will continue as a division of the Texas Department of Insurance as opposed to a stand alone agency. The Legislature will re-evaluate the Division of Workers' Compensation in six years as opposed to the standard twelve, allowing more time for HB 7 measures to take effect.
The Legislature made significant changes to the designated doctor program, medical quality, Medical Dispute Resolution and enforcement.
Employers and carriers may expect costs to rise with greater enforcement actions and the possibility that more chiropractors might serve as designated doctors. Employers and carriers can expect costs will fall with better trained designated doctors and a focus on removing bad doctors from the workers' compensation system.
The following is a review of the major components of HB 2605.
I. Designated Doctors
Designated doctors were granted more power and influence by HB 7 in 2005. Designated doctors now provide opinions on extent of injury, disability, and return to work in addition to MMI/IR. The Division issued a controversial memo allowing designated doctors to give an opinion on whether there was an injury sustained on the job.
Many felt designated doctors were not sufficiently trained for the new powers and responsibilities. Stakeholders complained some designated doctors failed to carry out their duties.
The first significant change is the selection of a designated doctor. The Division will now appoint designated doctors based on the area of the body affected. Currently, designated doctors are selected based on the issue in dispute and the claimant's medical condition. Previously, designated doctors were selected based upon the injury. According to TWCC methodology at that time, chiropractors were often selected as designated doctors. Many felt chiropractors were improperly trained or had a bias toward injured workers. It is unclear how the Division will interpret and draft rules implementing this new language. Some believe this change from a treatment-based selection process will have the unintended consequence of expanding the number of chiropractors who serve as a designated doctor.
The second major change is the certification process. The Medical Advisor will be in charge of certifying, denying, or revoking a certification to act as a designated doctor. This new certification process will be established by rule. DWC has privately discussed a more stringent certification program.
In addition to the certification process, designated doctors must undergo more intensive training. The training may be conducted in-house or by an independent party. The Division is already working on new training procedures. The thought is less may be more: less designated doctors may strengthen the overall quality of evaluations and reports.
Many designated doctors would sign up to perform evaluations in some areas of the state and then refuse or remove themselves from service. New Division rules have attempted to address this issue. HB 2605 mandates that a designated doctor must continue to serve in that capacity for the life of a claim. The designated doctor may seek withdrawal with the Division's permission if the doctor no longer wishes to practice in the workers' compensation systems or moves/closes her practice.
A claimant may now request a post-DD evaluation by the treating doctor or doctor of the treating doctor's choice. Some carriers refuse to reimburse doctors for performing an evaluation after a designated doctor's certification of MMI/IR or on another issue. This provision allows an injured worker at least one examination to respond to the designated doctor's initial certification. The Division will pass rules implementing this procedure.
II. Medical Fee Disputes
Parties are allowed to attend a Benefit Review Conference before the Division in an attempt to mediate the fee dispute. However, parties are limited in their negotiations to the amounts in the fee guidelines. If resolution is unsuccessful, the parties can choose arbitration. Otherwise, the dispute will be handled by the State Office of Administrative Hearings (SOAH) regardless of the amount in controversy. Current law places jurisdiction with SOAH for disputes greater than $2,000. TDI or DWC may participate if it involves an interpretation of the fee guidelines but they are not considered a party to the dispute. The loser pays the SOAH fee unless the requestor is the claimant. If the fee is not paid within 45 days, the loser will be subject to administrative violation and sanction. These new procedures go into effect for all fee disputes on or after June 1, 2012.
III. Medical Necessity Disputes
All medical necessity disputes, whether preauthorization, concurrent review or retrospective review, will now be heard at a Contested Case Hearing before the DWC's Hearing Officers. The Hearing Officer shall consider the applicable treatment guidelines. These changes go into effect June 1, 2012.
HB 2605 also requires the Division to provide expedited hearings for first responders seeking medical benefits. This issue is discussed in greater detail later in this paper.
IV. Indemnity Dispute Resolution
HB 2605 requires new rules addressing Benefit Review Conferences. Requests must be in writing and provide documentation of the dispute and efforts to resolve. Motions to reschedule or cancel a Benefit Review Conference must be provided in similar format and be approved by the Division. DWC has addressed many of these provisions already by rule. HB 2605 states the failure to appear at a Benefit Review Conference may forfeit a party's right to attend a Benefit Review Conference.
There were no substantive changes to the Contested Case Hearing process. The Appeals Panel is authorized to draft decisions affirming Hearing Officer's decision and order if the issue is one of first impression, a recent change in the law, or errors at the Contested Case Hearing that need correction but don't affect the outcome of the case. These errors include findings of fact for which insufficient evidence exists, incorrect conclusions of law, findings of fact or conclusions of law regarding matters that were not properly before the Hearing Officer, and other legal errors.
V. First Responders
First responders sustaining a serious bodily injury shall receive accelerated and prioritized resolution of their disputes with the intent to secure proper medical benefits. First responders include Peace Officers, Firefighters, any emergency medical technicians or similar individuals. The term includes volunteers. First responders who receive severe bodily injury are entitled to preferential treatment by the carrier/employer, and third party administrator to resolve disputes regarding their medical benefits. The Division shall implement expedited hearings to resolve disputes of medical benefits. The Legislature specifically expressed its intent that the injured first responder's claim for medical benefits is accelerated to the full extent authorized by current law.
VI. Medical Quality
A. Medical Advisor
The Medical Advisor is charged with the designated doctor's certification process. This includes the revocation of a license, the denial of a license or the denial of a recertification. The Medical Advisor is also charged with considering the lists of doctors from other licensing boards to expand the scope and quality of doctors serving on the Medical Quality Review Panel. The Medical Advisor shall also recommend adding or limiting certain practice fields serving on the MQRP.
B. Medical Quality Review Panel
The Medical Quality Review Panel (MQRP) will assist the Division and the Medical Advisor in studying complaints of doctors who practice in the workers' compensation system. MQRP shall be strengthened by adding qualified doctors from a variety of specialists. DWC will consult with stakeholders to develop criteria for MQRP. The criteria will be posted on the DWC's website. The Commissioner will adopt rules concerning the qualifications, the number of panelists, specialists, the length of service on the MQRP and removal from the MQRP. The rules will also address conflicts of interest. The MQRP doctors will also undergo a training program to carry out the DWC's goals and ensuring quality medical care. Finally, MQRP shall consider complaint-based reviews and audits in addition to other criteria. Many of these changes have already been implemented by the Division.
C. Quality Assurance Panel
HB 2605 established by statute the Quality Assurance Panel. The QAP shall assist the Medical Advisor and the MQRP. The QAP shall evaluate and make recommendations to the Medical Advisor and the MQRP regarding enforcement actions that should be taken against doctors practicing in the workers' compensation system.
HB 2605 organizes, consolidates and strengthens both the Commissioner and the Division's enforcement powers over system stakeholders. DWC now has available its full range of administrative sanctions for every violation. The statutes were better organized to provide stakeholders one place to review DWC's enforcement powers.
Division Commissioner has the authority to issue emergency cease and desist orders, much like the authority granted to TDI's Commissioner. The party has 30 days to request a hearing or that order becomes final. The hearing will be held within 10 days of the request unless the parties mutually agree to a later date.
The Division is allowed to make announced and unannounced visits at any person regulated by the Division. Persons include agents.
HB 2605 centralized much of the enforcement language into Chapter 415. Classes of administrative violations are largely eliminated (for example, Class A, Class B, or Class C administrative violation). Statutory language removes references to "penalties" and instead the Division will issue "sanctions". Monetary fines collected will be deposited to the State's general revenue fund.
The party can request an SOAH hearing regarding an enforcement action. Previously, the SOAH Judge issued a final order. Now, SOAH will draft a proposed decision. The Commissioner is free to consider SOAH's decision and enter a final order. Judicial review of the Commissioner's order is governed by the substantial evidence rule.
Rep. Castro placed into the House Journal HB 2605's legislative intent to increase penalties against insurance carriers based on the amount of time a carrier takes to respond to a claim.
VIII. Division Complaint Procedure
The Division shall implement a complaint program documenting and analyzing formal and informal complaints including the number of complaints, sources and types of complaints, length of time to resolve, and resolution taken. The complaint program shall be in writing and subject to detailed statistical analysis. The analysis must include the ability to determine trends and assess field offices and programs.
IX. Miscellaneous Matters
The original version of HB 2605 transferred official actions from the Division to the insurance carriers. Both the insurance carrier and labor stakeholders agreed such official actions should be determined by the Division. (Some claimant attorneys predicted an increase in the number of bad faith actions based on a carrier's denial of the claimant's request to change treating doctors.) Also removed in conference committee is a proposal transferring judicial review of IRO decisions from Travis County to the venue where the injured worker resided.
Summary: Addresses prescription drug diversion by doctor shopping
The house bill analysis states, "S.B. 158 creates criminal penalties for patients who visit multiple practitioners and do not disclose that they are already receiving controlled substances. In other words, a person commits an offense if they have intent to obtain controlled substances that are not medically necessary for the person using misrepresentation, fraud, forgery, deception, subterfuge, or concealment of a material fact." This bill creates criminal penalties for a person doctor shopping and not disclosing they already received controlled substances. This legislation creates a second and third degree felony for a person with intent to obtain controlled substances that are not medically necessary or in an amount greater than is medically necessary, obtains or attempts to obtain from a practitioner by misrepresentation, fraud, forgery, deception, subterfuge, or concealment of a material fact which would include the existence of a prescription for a controlled substance issued for the same period of time by another practitioner. It is a second degree felony if the controlled substance is a schedule I or II narcotic. It is a third degree felony if it is a schedule III or schedule IV narcotic. It is a Class A misdemeanor if the controlled substance is a schedule V narcotic. Fifteen other states have similar laws.
An amendment also added restrictions on those who work in the industry and therefore have access to controlled substances (addressed by SB 159). The bill analysis to SB 159 states, "A great deal of diversion of controlled substances is committed by persons who have access to those substances by the nature of their profession or employment. This legislation is designed to address those persons who by the nature of their profession or employment, divert controlled substances for personal use or the use of another person. Furthermore, this legislation will aid in the prevention of stolen controlled substances being sold on the black market by holding those with trusted access to the controlled substances more accountable.
Finally, an amendment was added addressing and providing criminal penalties for criminal street gangs who cause the unlawful manufacture or distribution of controlled substances and dangerous drugs.
Summary: Allows DWC to enter into contracts with data collection agents
This bill allows the DWC Commissioner to designate and contract with one or more data collection agents. A data collection agent must have five years of experience. Data collection agents may collect fees directly from a reporting insurance carrier to recover the necessary and reasonable costs of collecting data. This provision does not extend to a governmental entity. The Senate's Bill Analysis states, "The bill exempts governmental entities from paying these fees, just as governmental entities are currently exempted from paying workers' compensation maintenance taxes."
Summary: Miscellaneous changes to dispute resolution
The bill matches the timeframes required by the party seeking judicial review for compensability and income benefits. The party seeking judicial review must file suit within 45 days after the decision is mailed. The decision is considered mailed five days after the decision is issued. The Senate's Bill Analysis makes clear the judicial review timeframe for appealing medical disputes as the same as income disputes: 45 days. SB 809 also authorizes Chapter 410 dispute resolution for disputes regarding 1305 notice provisions.
Summary: Authorizes hospitals in small rural counties to employ doctors with certain safeguards
This compromise bill is endorsed by the Texas Medical Association, the Texas Hospital Association and the Texas Association of Rural Community Hospitals (representing approximately 150 hospitals in small and low population areas of the state. This bill allows certain rural hospitals (designated as a critical access or sole community hospital under federal law or located in a county with less than 50,000 population) to hire physicians as employees. The bill analysis explains, "Many smaller Texas communities report that the prohibition against the hiring of physicians is a significant factor contributing to the inability to recruit and retain physicians to serve in those communities. When an individual physician is required to establish a solo practice that requires health insurance and retirement benefits, the cost and administrative burden can be a deterrent to agreeing to practice in a small community." The bill provides protections for the patient/physician privilege and requires a physician to act independently of the hospital/employer. Hospitals believe this legislation would allow it to better recruit and pay physicians from urban and suburban areas. Texas Medical Association is concerned that expanding this legislation to other areas of the state would lead to an erosion of the patient/physician privilege. Others believe the Texas Medical Association does not support extending the so-called corporate practice of medicine beyond the rural communities because it might decrease the value of physician practices when retiring doctors wish to sell. The hospital shall appoint a Chief Medical Officer (CMO) to help ensure physicians exercise their independent medical judgment when providing care. The bill creates a complaint system and a dispute resolution system between hospital management and staff. The CMO will notify the Texas Medical Board of all physicians hired under the bill provisions. The hospital must give equal consideration to physicians not employed by the hospital.
Summary: Prohibits employer offering a workers' compensation and a non-subscriber plan
The Senate Bill Analysis states, "Interested parties report that a recent federal judicial decision permits an employee covered by a non-workers' compensation occupational plan to provide a pre-injury waiver of an employee's work-related injury cause of action against the employer, so long as the employer has workers' compensation insurance in addition to an occupational plan." This case reverses a federal court decision regarding an employer with both a workers' compensation and a non-subscriber policy. The employer purchases workers' compensation coverage but entices its employees to opt out. The employer then provides a non-subscription plan and requires the employees to waive their right to sue. The employer took advantage of Texas Labor Code 406.33 which prohibits waivers if the "employer does not have workers' compensation insurance coverage." The bill analysis states, "The legislative intent is well-established that employees with nonsubscriber occupational plans cannot waive tort remedies. This bill amends the statute to focus on what the employee receives and thus reestablishes that an employee cannot waive his right to sue in an action against a nonsubscribing employer." The bill grandfathers employers who already have such a plan in place as of January 1, 2011.
Summary: Creates a civil enforcement option to curtail barratry
The House Bill Analysis states, "Interested parties contend that although barratry is a crime and has for years been considered to be against the public policy of the state, it has remained a serious problem and has become increasingly prevalent in recent years." The bill strengthens enforcement by expanding remedies against barratry and "case running". This bill allows a client unlawfully solicited to void the contract and recover actual damages, attorney fees and expenses paid. A potential client can recover $10,000 if he/she did not sign a contract plus actual damages and attorney fees. The attorney contracts are voidable. The bill also creates an innocent lawyer safe harbor but only if the lawyer reported the conduct pursuant to the disciplinary rules. The bill is to be liberally construed to protect victims of barratry.
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