Rep. Kenneth Sheets (R-Dallas) has filed legislation to reverse the Texas Supreme Court’s ruling in a 2012 case involving the confidentiality of communications between a workers’ compensation insurance carrier and a covered employer.
In a mandamus action, In re XL Specialty Insurance Company and Cambridge Integrated Services Group, Inc. (No. 10-960, June 29, 2012), the Texas Supreme Court ruled that the attorney-client privilege (Tex.R.Evid. 503(b)) does not apply to a communication between a lawyer representing a workers’ compensation carrier and the employer regarding an administrative proceeding with respect to an employee’s workers’ compensation claim, when the employee subsequently files suit against the carrier and its third party administrator for breach of the common law duty of good faith and fair dealing and violations of the Insurance code and the Texas Deceptive Trade Practices Act. Thus, the employee could discover the prior communication between the insurer’s outside counsel and the employer.
HB 687 amends §409.011, Labor Code, to make confidential and protect from disclosure communications between an insurance carrier and a covered employer if the communication includes information regarding mental impressions, conclusions, opinions, claims handling strategies, legal theories regarding the claim, claim status, claim reserves, or proprietary business practices of the carrier or employer. In addition to the carrier and employer, confidentiality extends to the carrier’s or employer’s attorneys, consultants, sureties, third-party administrators, or other agents.
Confidentiality does not cover communications between the carrier and employer that are offered as evidence in a judicial proceeding between the carrier and employer, communications made to the carrier by the employer in violation of §415.002(6), Labor Code (carrier commits an administrative violation if it allows the employer to dictate handling or settling the claim), and public records under the Open Records Act. Moreover, the bill does not affect the requirement to exchange documentation under Chapter 410, Labor Code (adjudication of disputes), or the right of the commissioner to obtain information from the carrier or employer under Chapter 414.
Rep. Sheets filed a similar bill, HB 1468, last session. It passed the House but died in Senate committee at the end of the session. TCJL supported HB 1468 and will renew our support of HB 687 this session.