Texas Workers' Compensation Insurance Carrier--Bias Re: Injured Employees

Is there any neutrality with your Texas Workers’ Compensation Insurance Carrier when resolving a disputed claim between you and your employer? If your employer’s insurance carrier is allowed to choose an attorney, then why wouldn’t an injured worker also want to choose an attorney?

The Texas Department of Insurance, Division of Workers’ Compensation or TDI-DWC has helpful information for Texas citizens who are injured on the job. Under TDI-DWC’s “Employee Frequently-Asked Questions," the following question and answer is posed:

Do I need an attorney to assist me with my workers' compensation claim?
You are not required to have assistance from an attorney; however, you do have the right to obtain the services of one at any time. The attorney may attend dispute resolution proceedings with you and may present your evidence and your side of the dispute.

But the real question is if your employer is allowed to hire an attorney, should you (the injured employee) also hire an attorney to represent you? When you begin working for a company that carries workers’ compensation insurance, you would normally feel protected because you have insurance for work-related injuries. You might initially feel safe under your employer’s coverage and have a sense of comfort that your employer is looking out for you.

But do you still feel this way when 6 months after you’re injured at work, the following happens: you’re struggling to make ends meet because your employer’s carrier won’t pay out all or most of your benefits; your doctor releases you to work with limited restrictions but your employer won’t allow you come to work under those restrictions; and you find out later that the benefits you were being paid are completely suspended because your employer now believes you weren’t injured on the job.

So, again, do you still think your employer’s insurance carrier is on your side?

If you had any remaining doubt about the devastating impact of workers' compensation reform on the representation of injured workers, look no further than the current Texas workers' compensation system. According to the Texas Monitor, attorney representation of injured workers has decreased significantly. Under previous law, over 90 percent of injured workers were represented by attorneys in pre-hearing conferences. While in 1997, only 35 percent of injured workers at the BRC dispute level had attorney representation and 61 percent had ombudsman assistance.

Attorney representation is still high for insurance carriers, however. Even this is an understatement. In 1997 at the BRC level, 54 percent of insurance carriers were represented by counsel and at the CCH level, 85 percent of insurance carriers were represented by counsel. Injured workers by and large go unrepresented. (Note: For additional information see the Texas Monitor, vol. 3 no. 3, Fall 1998.

Will you still feel that your employer is protecting your interests when you find that not only has their workers’ compensation insurance carrier denied you the necessary workers’ compensation benefits, but that they’ve also hired a big corporate law firm to ensure that outcome? When your employer has a right to dictate their counsel, you should also have your own attorney to ensure an outcome that’s in your best interest.

The More You Know about Texas Workers Compensation Law:
As an after thought, did you know that under the Texas Labor Code Annotated, if person (i.e., Insurance Carrier) denies payments of workers' compensation benefits, the penalties range from a Class A misdemeanor to a state jail felony when person knowingly or intentionally: (1) makes a false or misleading statement; (2) misrepresents or conceals a material fact; or (3) fabricates, alters, conceals, or destroys a document. Restitution may also be ordered. [Tex. Labor Code Ann. §§ 418.001; 418.002]

Texas Fights over State-Created Firm, Texas Mutual Insurance Company

              In 1991, Texas employers sought policy writers to create polices covering employees injured on the job. To fuel this need, the Texas legislature created the Texas Workers’ Compensation Insurance Fund, the largest writer of workers’ compensation insurance. In 2001, the state changed the fund's name to Texas Mutual Insurance Company (TMIC) but maintained the same goal: to stabilize the state’s workers’ compensation system. Since its creation, TMIC has accomplished just that, consuming 40% of Texas’s workers’ compensation insurance market. Today, TMIC insures over 60,000 employers and their 1.4 million employees. Despite its success, TMIC recently announced its desire to cut ties with the state. The purpose of this blog is to explain some of the pros and cons associated with converting the state fund into a private company.  

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TX DWC Announces September Workers' Compensation Violations

         On October 20, 2014, Texas's Division of Workers’ Compensation (DWC) announced final disciplinary actions against insurance carriers, health care providers, and employers for violating the state's workers' compensation laws. Division of Workers' Compensation Announces Recent Enforcement Action, Tex. Dep’t Ins. (Oct. 20, 2014), available at http://www.tdi.texas.gov/news/2014/dwc---10---20.html.

           Since January 1, 2014, administrative penalties for these violations total $1,774,345, including $1,658,245 against insurance carriers, $65,600 against health care providers, and $1,000 against employers.

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New Study Shows Major Deficiencies in Texas Workers' Compensation

 A new study by the Cambridge, Mass. based Workers Compensation Research Institute (WCRI) shows that Texas has major deficiencies in the amount of benefit payments and the overutilization of insurance carriers on cost containment efforts.

Medical costs per workers’ compensation claim in Texas were stable in 2007, following several years of dramatic decreases. However, in several key areas Texas showed key areas of poor performance in workers compensation, according to a new study by WCRI.

The study, Monitoring the Impact of Reforms in Texas: CompScope™ Benchmarks, 10th Edition, said that afte 2006, Texas medical costs per claim were 19 percent lower than the typical study state for claims with more than seven days of lost time. Fee schedule decreases combined with increased management of medical care by payors through utilization review and other means were behind the decline.

At the same time, though, WCRI reported that medical cost containment expenses per claim continued to grow rapidly in Texas, even after medical costs began to decline. At an average of $2,818, Texas had the highest medical cost containment expenses per claim among the study states in 2007/2008, 37 percent higher than typical. This means that even though the state legislature enacted reforms to contain costs, insurance carriers were aggressively seeking to reduce legitimate costs even further.

The study noted that indemnity benefits per claim rose ten percent in 2007, largely due to a nearly 25 percent increase in the maximum benefit for statutory weekly temporary total disability. But, despite this significant increase in the maximum benefit, the percentage of workers whose benefits were limited by the maximum was 17 percent, more than double the percentage in the typical study state. Thus, Texas lags far behind other states in calculating the maximum benefit paid under workers comp.

The study also found that from 2002 to 2006 indemnity benefits per claim decreased 9 percent overall, largely the result of a decrease in the duration of temporary disability. Since 2002, WCRI said the average duration of temporary disability for injured workers in Texas declined by more than three weeks for claims at an average of 36 months of experience, likely related to the decrease in medical utilization under HB 2600 and payor focus on managing medical care.

In addition, the study said Texas had lower permanent partial disability/lump-sum payments compared to the typical study state.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care, and disability issues. Its members include employers, insurers, governmental entities, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand, as well as several state labor organizations.

 

While Large Insurers Fail, State Workers Comp Carrier Enjoying Great Success

While large, multi-national insurance companies like AIG are struggling to stay solvent, one workers compensation carrier in Texas is doing quite well. Texas Mutual Insurance Company is the largest workers compensation insurer in the state. It was created in 1991 by the Texas Legislature because of the lack of insurers doing business in Texas. In 2001 the Texas Legislature redesigned their charter and they became a mutual insurance company. What this means is that the company is owned by the policy holders rather than being a publicly held corporation. What this also means is that instead of paying dividends to stock holders, it pays dividends to its policy holders.

Yesterday, Texas Mutual Insurance Company announced they were paying $818,000 in dividends to policy holders in the retail and construction purchasing groups. What this means is that retailers like Walmart or construction companies like Linbeck Construction, if they have workers compensation insurance with Texas Mutual, enjoyed a rebate check from Texas Mutual for the financial success Texas Mutual is experiencing. This announcement comes on the heels of a $446,000 dividend payment in November to policyholders in the manufacturing group.

Even more significant was the announcement by Texas Mutual that in the past ten years they have paid policyholders more than half a billion dollars in dividends. Those familiar with Texas politics are aware that the favorite whipping boy of the insurance industry and the Texas Legislature is the workers compensation industry. While Texas Mutual is enjoying healthy profits, in the last ten years claimants have seen increasing restrictions to their right to recover benefits.