Over the past two sessions, we have observed with growing concern the Legislature’s willingness to consider and enact legislation weakening the 1989 workers’ compensation reforms that rescued the system from collapse caused by the skyrocketing costs of dispute resolution, the ad hoc nature of lumpsum settlements, and the lack of any medical cost controls. The old system, moreover, underpaid workers for supplemental income benefits and overpaid them for lifetime income benefits, thus actually disincentivizing workers from going back to work.
The key to the 1989 system overhaul was the elimination of trial de novo for claims disputes, the establishment of both informal and formal dispute resolution processes designed to reduce adversarial conflict, and the replacement of lumpsum settlements with scheduled benefits payments that were more generous than those provided by the old law. Later improvements to the 1989 reforms introduced provider networks and medical cost containment measures. As a result of these reforms, workers’ compensation coverage became affordable and accessible once again. The evidence of the success of the reforms can be found in the vast majority of Texas employers (72%) who carry workers’ compensation insurance covering the vast majority of private sector workers (82%), despite the fact that Texas is the only state in the Union that allows employers to opt-out of the system.
It is beyond dispute that workers’ compensation reform, coupled with significant tort reform in 1987, 1995, and 2003, did more to ignite the takeoff of the Texas economy than any other legislative initiatives. Fast forward more than three decades, however, and we are seeing increasing efforts, some of which have been successful, to undermine this foundational reform. Thus far these efforts have largely affected public employers, but we have feared that it was only a matter of time before they would expand to private employers as well. It now appears that 2023 is that time.
Two bills have been filed so far that compel us to raise the alarm. The first, HB 471 by Patterson (R-Frisco), amends the workers’ compensation statute (Chapter 408, Labor Code) to add the following to the conditions for which lifetime income benefits are paid to an injured employee: (1) permanent major neurocognitive disorder or psychotic disorder; (2) third degree burns on the majority of both feet, one hand and one foot, one hand or one foot and the face; or (3) a serious bodily injury sustained by the employee in the course and scope of the person’s employment or volunteer service as a first responder that permanently prevents the employee from performing any gainful work. The bill further amends §607.056, Government Code, to expand the presumption (enacted during the 2019 session) that a heart attack or stroke suffered by a first responder during the course and scope of employment is presumed to have suffered disability or death in the course and scope of employment. The amendment would no longer require the stressful or strenuous physical activity to be “nonroutine” (including a training exercise) or the heart attack or stroke to have occurred while the first responder were engaging in the stressful activity (now must be no later than 24 hours after the end of a shift in which the first responder engaged in the activity). Finally, the bill requires collective bargaining agreements to reflect these changes in the law.
The second, HB 790 by Patterson (R-Frisco), moves beyond first responders to include other public employees and all private employees. The bill:
- amends § 408.0041, Labor Code, to require the first request of the carrier, injured employee, or DWC for an examination by a designated doctor to include a request to the designated doctor to provide an opinion of the extent of the compensable injury.
- Amends § 409.021, Labor Code, to require the carrier contesting a claim to notify the injured employee and DWC of the specific reasons for the contest, including any disputes as to the cause of the injury, the extent of the injury, or the treatment;
- amends § 409.021, Labor Code, to provide that the carrier waives its right to contest or deny the extent of the specific injury claimed by the injured worker or reasonably reflected in a review of the worker’s medical records if it does not comply with the 15-day written notice of injury requirement (this change applies only to first responders and custodial officers under § 607.051, Government Code);
- amends § 409.021, Labor Code, to provide that the carrier waives its right to contest or deny the extent of the specific injury claimed by the injured worker or reasonably reflected in a review of the worker’s medical records if it does not contest or deny the extent of a compensable injury in writing by the 60th day after which the carrier had notice of the claimed injury (this change applies to all other injured workers);
- adds § 417.005, Labor Code, to make the carrier liable for the injured worker’s reasonable and necessary medical expenses if the carrier denies a claim that is later found to be compensable in an administrative hearing (a one-way loser pays rule); and
- amends § 410.156, Labor Code, to allow a party or witness to appear at an administrative hearing remotely if good cause exists and to allow an attorney who represents a party in a contested case hearing to appear remotely (no good cause requirement).
By expanding and extending the special status of first responders in the system, these bills open wide the door for adding other categories of workers with occupations that the legislature deems as particularly dangerous or stress-inducing. Instead of a system that treats all workers as equal, it creates tiers in which some workers are more equal than others. This policy cannot be sustained in the long term. And if we’re going to create an ever-growing list of presumptions that require carriers to prove a negative—that certain illnesses and injuries could not have occurred in the course and scope—then we are well on our way to a system that pays for everything but is so expensive that, even if carriers could price and provide it, employers couldn’t afford it anyway.
The process changes in HB 790 attack the system from another angle. These changes introduce new requirements and timelines that trigger liability for carriers, and, by extension, insured employers. They are also designed to make the current law’s informal process of working out compensability issues largely irrelevant. By subverting the designated doctor option, which is supposed to assist in settling the claim through the informal process rather than create another point of dispute, and requiring the carrier to state its reasons for contesting a claim or waive its right to a formal determination, the bill undermines the whole concept of the 1989 reform: to incentivize informal settlements and reduce conflict and its attendant legal and other costs.
The bill’s attempt to force the carrier’s hand, conversely, creates a disincentive to settlement and an invitation to litigate. That the bill intends to create a more litigious system is evidenced by its provision allowing an attorney to appear remotely at an administrative hearing without showing good cause. This provision is likely to have the effect of increasing litigation and, along with it, the cost of settling claims. Let’s not forget that any increase in the cost of the system will be paid by the employer, not the carrier. Any attempt to argue that this bill is designed to hold a recalcitrant carrier’s feet to the fire is bogus. The commissioner already has plenty of authority to zap carriers for unfair practices. Loading additional liability onto what already exists will merely make the system a lot more expensive, to the ultimate detriment of both employers and their employees.
