TITLE insurance

Part I. Texas Department of Insurance

Chapter 9. Title Insurance

Subchapter A. Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas

28 TAC §9.1

The Texas Department of Insurance proposes an amendment to §9.1 which concerns the adoption by reference of certain amendments to the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (the Basic Manual).

The amendment is necessary to reflect changes to the Basic Manual which the amended section will adopt by reference. Adopting new rules and forms and modifying or replacing currently existing rules and forms in the Basic Manual are necessary to facilitate the administration and regulation of title insurance in this state. The amendments to the Basic Manual will produce clarification and standardization of rules and forms in the regulation of title insurance. The proposed amendments to the Basic Manual are identified by item number below. The items listed below are a republication of those items published for consideration at the 1998 Texas Title Insurance Biennial Hearing, Rulemaking Phase, held on August 10, 1999, for which the department received no opposition. Republication is necessary to incorporate these items into the Basic Manual, to give notice of the withdrawal of Items 98-12 and 98-13, and to give notice of the corrective and clarifying changes to Items 98-4, 98-10, and 98-15. A republication will occur at a later date concerning those items published for consideration at the 1998 Texas Title Insurance Biennial Hearing, Rulemaking Phase, for which the department received comments in opposition. The proposed items which are the subject of this proposal are as follows:

Item 98-1 Submission by Texas Land Title Association to amend the Facultative Reinsurance Agreement (Form T-18.1). This proposal updates the current reinsurance agreement form in three areas. It inserts clarifying language in paragraph 3 entitled "Direct Access" by expressly stating that a reinsurer has the burden to establish that it was prejudiced by the failure of the insured to give reinsurer notice of any claim in a reasonable time in order to use failure of notice as a defense. It adds new paragraph 10 entitled "Action by or on Behalf of Ceder" that applies when the reinsurer is not licensed or accredited in the state of domicile of the ceder and jurisdiction or service of process is at issue. In the event the reinsurer fails to perform its obligations under the terms of the facultative reinsurance agreement, the reinsurer agrees to submit to the jurisdiction of any court or alternative dispute resolution panel in the United States requested by the ceder. The reinsurer further agrees to designate the appropriate regulatory authority or an attorney in fact as its lawful agent for service of any lawful process. The third area is a severability clause in new paragraph 11. Stewart Title Guaranty Company (Stewart Title) and Texas Land Title Association (TLTA) spoke in support of this item at the 1998 Texas Title Insurance Biennial Hearing, Rulemaking Phase (rulemaking hearing), and TLTA submitted written testimony. No opposition was made to this item at the rulemaking hearing.

Item 98-2 Submission by Texas Land Title Association to repeal the existing Tertiary Facultative Reinsurance Agreement (Form T-21) and substitute a new Tertiary Facultative Reinsurance Agreement (Form T-21.1). This proposal replaces the current reinsurance agreement for secondary and tertiary losses entered into among title insurance companies. This new form, which is referred to as a Type I tertiary facultative reinsurance agreement, contains a severability clause and provides direct access to the reinsurer in the event of a claim that exceeds the ceder's primary loss risk. Stewart Title and TLTA spoke in support of this item at the rulemaking hearing, and TLTA submitted written testimony. No opposition was made to this item at the rulemaking hearing.

Item 98-3 Submission by Texas Land Title Association to adopt a new Tertiary Facultative Reinsurance Agreement - Type II (Form T-21.2). This proposal is a new reinsurance agreement whereby a reinsurer cedes its risk of loss to a third level of reinsurers. This new form, which is referred to as a Type II tertiary facultative reinsurance agreement, is designed for execution by a ceder that has assumed liability as a reinsurer pursuant to a separate reinsurance agreement. Under the new Type II agreement, the ceder retains a portion of the secondary loss risk pursuant to the separate reinsurance agreement and cedes or reinsures all or part of the secondary loss risk (also known as the tertiary loss risk) with tertiary reinsurers. The new Type II agreement contains a severability clause; provides for direct access between the reinsurer and the insured; contains a jurisdictional provision for reinsurers not licensed or accredited in the state of domicile of the ceder; and contains contractual provisions in the event the ceder is insolvent. Stewart Title and TLTA spoke in support of this item at the rulemaking hearing, and TLTA submitted written testimony. No opposition was made to this item at the rulemaking hearing.

Item 98-4 Submission by Texas Department of Insurance to amend Procedural Rule P-10 - Facultative Reinsurance, consistent with proposed new and revised reinsurance forms. The current procedural rule refers to the existing reinsurance agreement form; therefore, if the proposed amended and new reinsurance forms cited above are adopted, this procedural rule needs to be amended to refer to the newly adopted forms and updated to reflect the change from "Board" to "commissioner." The department has made corrective changes to the proposed item by underlining and striking through the new and deleted language. Stewart Title and TLTA spoke in support of this item at the rulemaking hearing, and TLTA submitted written testimony. No opposition was made to this item at the rulemaking hearing.

Item 98-8 Submission by Texas Department of Insurance to adopt new Procedural Rule P-48, to update the dates used in title insurance forms promulgated by the Commissioner of Insurance. This proposal updates promulgated title forms to reflect the correct calendar year. As noted in the text of the proposed procedural rule, "Any date in any promulgated form adopted as '19__' shall on and after January 1, 2000, be changed to reflect the correct calendar year." No opposition was made to this item at the rulemaking hearing.

Item 98-9 Submission by Texas Department of Insurance to amend Procedural Rule P-28, Continuing Education Requirements, to be consistent with rules previously adopted for staggered renewal dates of title agent, direct operation and escrow officer licenses. This proposal updates the continuing education requirements for title agents and escrow officers to conform to the now staggered license renewal system. No opposition was made to this item at the rulemaking hearing.

Item 98-10 Submission by Texas Department of Insurance to amend the Administrative Rules in Section VI of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas to reflect completion of staggering renewal dates for title agent, direct operation and escrow officer licenses. This proposal deletes references to the staggered renewal dates for licenses (the system is now fully implemented), and the Administrative Rules are updated to reflect new forms of entities such as limited liability companies. The department made a clarifying change in Section V. A. 7. of the Administrative Rules to describe more accurately a corporate ownership change when a person ceases to be a stockholder due to a transfer or sale of all of that person's shares of stock. No opposition was made to this item at the rulemaking hearing.

Item 98-12 Submission by Texas Department of Insurance as requested by the United States Department of Justice to repeal in its entirety Form T-11, Policy of Title Insurance (USA) and to adopt instead proposed Form T-11, United States of America Policy of Title Insurance. The proposed new policy form for insuring real estate titles to the United States of America and the United States Postal Service was requested by the Department of Justice to conform the Texas policy with other states. The Department of Justice has since requested that this item be withdrawn pending further study by the Department of Justice; therefore, the department withdrew this item at the rulemaking hearing, and it will receive no further consideration in this proposal.

Item 98-13 Submission by Texas Department of Insurance to amend Procedural Rule P-33, necessary to make this rule consistent with the proposed Form T-11, United States of America Policy of Title Insurance. An amended procedural rule would be necessary in the event a new USA policy is adopted; however, since the Department of Justice has requested that it be allowed further study of the proposed policy, the department withdrew this item at the rulemaking hearing, and it will receive no further consideration in this proposal.

Item 98-15 Submission by Texas Department of Insurance to repeal Form T-19, Company Report of Agents Audit Report. This proposal was initially to update the form for the title insurance company's analysis report of title agents' audit reports. Senate Bill 105, 76th legislature has eliminated this reporting duty of a title company; therefore, the Form T-19 is no longer necessary. TLTA submitted comments to this item suggesting the repeal of Form T-19. The department agrees and has amended this item as a proposal to repeal, rather than amend, Form T-19. No opposition was made to this item at the rulemaking hearing.

Item 98-19 Submission by Texas Department of Insurance to amend the Limited Pre-Foreclosure Policy (Form T-40) to correct a typographical error. This policy form is proposed to be corrected by adding a word that was inadvertently omitted from the promulgated form. No opposition was made to this item at the rulemaking hearing.

The department has filed a copy of each of the proposed items with the Secretary of State's Texas Register section. Persons desiring copies of the proposed items can obtain them from the Office of the Chief Clerk, Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. To request copies, please contact Angela Arizpe at (512) 322-4147.

Robert R. Carter, Jr., deputy commissioner for the title insurance division, has determined that, for each year of the first five years the amendment is in effect, there will be no fiscal impact on state or local government as a result of enforcing or administering the amendment. Mr. Carter has also determined that there will be no effect on local employment or the local economy.

Mr. Carter has also determined that for each year of the first five years the proposed amendment is in effect there will be a number of public benefits anticipated as a result of the amendments to the manual rules and changes to the insuring forms. The updating of the reinsurance agreements and the promulgating of a new tertiary facultative reinsurance agreement will better facilitate insurance agreements between title companies. This will allow for more efficient closing of transactions in which a title insurance company must seek reinsurance pursuant to the provisions of Article 9.19 of the Insurance Code. The new procedural rule P-48 will allow a transition for all promulgated forms after the year 2000 whereby appropriate blanks are available for the correct calendar year. The updating of the continuing legal education requirements and the administrative rules allows for consistent administration with the staggered renewal process for license issuance and renewal thus facilitating the efficiency of this program for title agents and escrow officers. The updating also recognizes new entities such as limited liability companies which enables the administrative rules to be consistent with changing business practices. The elimination of Form T-19 regarding a title insurance company's annual report and analysis of audit reports of title agents which conforms to the new legislation passed through Senate Bill 105 in the 76th legislature and the correction of the typographical error in the limited pre-foreclosure policy, Form T-40, are housekeeping matters that will improve the practices of the title industry thus contributing to the ease of buying, selling, and refinancing real estate in Texas. There are no anticipated additional costs to persons required to comply with these manual rule changes. Most of the changes are housekeeping matters or updating of forms that will improve and facilitate the practices of the title industry. Substituting the updated promulgated forms will impose no additional regulatory costs on companies that decide to participate in the market, and the costs of reproducing such forms should be fully compensated by the existing premium schedule. Furthermore, the department anticipates that the existing premium schedule will fully compensate both small and large businesses, and therefore, expects no differential impact between small and large businesses that decide to participate in the market. Accordingly, there is no anticipated additional economic cost to individuals or business entities who are required to comply with the section as amended.

Comments on the proposal to be considered by the department must be submitted within 30 days after publication of the proposed section in the Texas Register to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Texas Department of Insurance, Mail Code 113-2A, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment should be submitted to Robert R. Carter, Jr., Deputy Commissioner for the Title Insurance Division, Mail Code 106-2T, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. Request for a public hearing should be submitted separately to the Chief Clerk's office.

This amended section is proposed pursuant to the Insurance Code, Articles 9.07, 9.21, and 1.03A and in accord with the Government Code, §§2001.004-2001.038. Article 9.07 authorizes and requires the commissioner to hold a biennial hearing to promulgate or approve rules and policy forms of title insurance and otherwise to provide for the regulation of the business of title insurance. Article 9.21 authorizes the commissioner to promulgate and enforce rules and regulations prescribing underwriting standards and practices, and to promulgate and enforce all other rules and regulations necessary to accomplish the purposes of Chapter 9, concerning regulation of title insurance. Article 1.03A authorizes the commissioner to adopt rules and regulations for the conduct and execution of the duties and functions of the department as authorized by statute. The Government Code, §§2001.004-2001.038 et seq. (Administrative Procedure Act) authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedure for adoption of rules by a state administrative agency.

The following statutes are affected by this proposal: Insurance Code, Articles 9.07 and 9.21.

§9.1. Basic Manual Of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas.

The Texas Department of Insurance adopts by reference the Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas as amended effective November 1, 1999 [ October 1, 1998 ]. The document is available from and on file at the Texas Department of Insurance, Title Division, Mail Code 106-2T, 333 Guadalupe Street, Austin, Texas 78701-1998.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905121

Lynda H. Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 463-6327

Part II. Texas Workers' Compensation Commission

Chapter 120. Employers

28 TAC §120.3

The Texas Workers' Compensation Commission (the Commission) proposes an amendment to §120.3 concerning Employer's Supplemental Report of Injury.

The amendment is proposed to address new legislation enacted by the 76th Texas Legislature. Specifically, House Bill 2842 amended the Texas Labor Code to clarify salary continuation. In addition, House Bill 2511 amended Texas Labor Code, §401.024, authorizing the Commission to adopt rules to require electronic transmission of information by means such as facsimile, email, and electronic data interchange. This authorization is utilized in the proposed amendments to achieve a legislative goal of reducing paper communication requirements in the workers' compensation system while ensuring timely and effective communication between system participants.

At the same time, amendments are proposed to include in the rule, some of the Commission's long standing policies and to address problems with the rule that were identified by the Claims Service Task Force (a group of representatives from the system appointed by the Commission to serve as a sounding board for ideas regarding rule development), other system participants, and Commission staff. Other changes include formatting and consistency issues designed to simplify and shorten rule construction. Finally, the structure of the rule was changed to be more prescriptive and to eliminate or significantly reduce ambiguity. The proposals are designed to more clearly lay out expectations so that all system participants will understand the requirements that the Act and rule place on them. It is expected that together, these changes will improve benefit delivery, reduce disputes, make dispute resolution easier, reduce violations, and make it easier to hold system participants accountable for their actions and inactions.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Amendment of §120.3 - Employer's Supplemental Report of Injury.

Amendments to subsection (a) are proposed to clarify that the requirements of the rule no longer apply once the employee reaches maximum medical improvement or is no longer employed by the employer.

Amendments to subsection (b) and (c) are proposed to move some of the specific filing requirements to subsection (d). In addition, proposed subsection (b) clarifies that existing requirements to report changes in post-injury earnings include reporting post-injury earnings such as salary continuation. Specific instructions will be added to the Supplemental Report of Injury to further clarify this issue.

Current language in subsection (d) is proposed to be deleted and replaced with new language relating to the means of filing the Supplemental Report of Injury. The new language emphasizes use of "instant" communication such as electronic transmission through fax or email to reduce the delay in providing critical information for benefit delivery and reduce the use of paper as required by House Bill 2511. The language is written to make use of traditional postal mail the last resort for filing the report. By using this language, as use of email and other forms of instant communication by employers and employees expands, the rules will reduce the reliance on mail.

Language currently in subsection (f) regarding enforcement and violations was removed because it is redundant to the statute. Removal of the enforcement language is not intended to limit the Commission's authority to take enforcement action for violations of this or any other rule. Rather, the existing language did not address all of the methods of enforcement that the Commission has at its disposal for these violations and could be interpreted as limiting the Commission's authority. The Commission's authority to enforce the statute and rules is granted in multiple provisions of the statute and duplicate language in rules is redundant and unnecessary.

Victor Rodriguez, Chief Finance Officer, has determined that for the first five-year period the proposed rules are in effect there will be fiscal implications for state or local governments as a result of enforcing or administering the rules. The Commission should ultimately see a reduction in costs due to reduced dispute resolution and information service expenses. Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rule will be:

Injured employees should benefit by an increase in the accuracy and timeliness of temporary income benefits payments.

Employers should benefit because the amended rule allows reporting of information to carriers by telephone which is currently a preferred but prohibited method.

Carriers should benefit from more timely provision of information necessary to ensure the timely and accurate delivery of benefits.

The Commission should see a number of benefits because of the changed rule. First, disputes may be reduced because the proposed amendments to this rule along with the proposed changes in Chapter 129 (relating to Income Benefits - Temporary Income Benefits) will provide a consistent methodology to deal with salary continuation. Also it will be easier to hold system participants accountable for their actions and inactions because the requirements of the law will be clarified.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the requirements to comply with the rules will have the following affects on costs of system participants:

Claimants will probably not see either an increase or decrease in costs.

Employers will probably not see either an increase or decrease in costs because the proposed amendments simply clarify current requirements. There is a potential that employer costs could decrease to the extent that timely reporting of information helps prevent overpayments and may positively influence premium amounts.

Health care providers are not likely to see either an increase or decrease in costs associated with this rule.

Carriers should see a reduction in costs associated with claims administration, overpayments, and may also experience a reduction in penalty exposure because of the clarification of the rule and the emphasis on "instant communication."

The requirements of these rules are not expected to affect costs for small businesses except that by helping to reduce overpayments by more timely reporting of information, the employer's premiums may be positively affected. There will be no difference in the cost of compliance for small businesses as compared to large businesses and there is no anticipated adverse economic impact on small businesses or micro-businesses because the proposed amendments to the rule primarily add options and clarify existing requirements.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

The proposed amendment is proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the average weekly wage for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of Average Weekly Wage; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.005, which requires employer to file subsequent reports as provided by Commission rule; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; and Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue.

The proposed amendment affects the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the average weekly wage for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of Average Weekly Wage; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.005, which requires employer to file subsequent reports as provided by Commission rule; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; and Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue.

§120.3.Employer's Supplemental Report of Injury.

(a)

As used in this section, the term "employer" means the employer for whom the injured employee was working when injured and the filing requirements apply during the time the employee is entitled to temporary income benefits. The employer's duty to file reports required by subsections (b) and (c) of this section continues until the employee reaches maximum medical improvement or is no longer employed by the employer.

(b)

As provided in §129.4 of this title (relating to Adjustment of Temporary Income Benefit Amount), the employer shall file the Supplemental Report of Injury, in the form, format and manner prescribed by the Commission. The report shall [ may ] be filed [ in writing, by electronic data interchange, or facsimile (fax). The report shall be filed ] with the employer's insurance carrier and provided to the employee within ten days after the end of each pay period in which the employee has a change in earnings as a result of the injury or within ten days after the employee resigns or is terminated. The requirement to report a change of earnings under this subsection includes reporting all post-injury earnings as that term is used in Chapter 129 of this title (relating to Temporary Income Benefits).

(c)

For injuries requiring a first report of injury to be filed, the employer shall file the Supplemental Report of Injury with the employer's [ insurance ] carrier and provide a copy to the employee within three days after:

(1)

the employee returns to work; or

(2)

the employee, after returning to work, experiences an additional day(s) of disability as a result of the injury.

(d)

The employer shall file the supplemental report of injury with the carrier by personal delivery, telephone, facsimile or electronic transmission. If the employee has returned to work, the employer shall provide a copy of the supplemental report of injury to the employee by personal delivery. If the employee has not returned to work, the employer shall provide the supplemental report of injury to the employee by facsimile or electronic transmission unless the employee does not have a means of receiving the transmission or the employer does not have a means of sending one, in which case the report shall be sent by mail. [ For purposes of this section, a report is filed with the insurance carrier when personally delivered, mailed, reported via facsimile (fax), or electronically submitted. A report is provided to the employee when personally delivered or mailed. ]

(e)

The employer shall maintain a record of the date the supplemental report of injury is filed with the [ insurance ] carrier and provided to the employee. If a report required by this section has not been received by the [ insurance ] carrier, the employer has the burden of proving that the report was filed within the required time frame. The employer has the burden of proving that good cause exists if the employer failed to file the report.

[ (f)

Failure to comply with the requirements of this section, without good cause, is a Class D administrative violation, subject to a penalty not to exceed $500, pursuant to Texas Labor Code, §409.005, and may be subject to a penalty not to exceed $10,000 pursuant to Texas Labor Code, §415.021, for repeated violation.]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 16, 1999.

TRD-9905177

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512)707-5829

Chapter 126. General Provisions Applicable to All Benefits

28 TAC §§126.1, 126.4-126.7, 126.12, 126.13

The Texas Workers' Compensation Commission (the Commission) proposes amendments to §126.4 concerning Advance of Benefits Based on Financial Hardship; §126.5 concerning Procedure for Requesting Required Medical Examinations; and §126.6 concerning Order for Required Medical Examinations. In addition, the Commission proposes new §126.1 concerning Definitions Applicable to All Benefits; §126.7 concerning Effect of an Opinion by a Carrier Selected Required Medical Examination Doctor; §126.12 concerning Payment of Interest on Accrued but Unpaid Income Benefits; and §126.13 concerning Employer Initiation of Benefits and Reimbursement.

The amendments and additions are proposed to address new legislation enacted by the 76th Texas Legislature. At the same time, these actions are also proposed to include in the rules, some of the Commission's long standing policies and to address problems with the rules that were identified by the Claims Service Task Force (a group of representatives from the system appointed by the Commission to serve as a sounding board for ideas regarding rule development in the area of claims service), other system participants, and Commission staff. The proposed rules simplify and shorten the rule construction and are designed to be more prescriptive and to eliminate or significantly reduce ambiguity. The proposals are designed to more clearly lay out expectations so that all system participants will understand the requirements that the Act and rules place on them. It is expected that together, these changes will improve benefit delivery, reduce disputes, make dispute resolution easier, reduce violations, and make it easier to hold system participants accountable for their actions and inactions.

Specifically, House Bill 1826 limited the carrier's entitlement to require an injured employee to attend required medical examinations (RMEs) after the second year of entitlement to supplemental income benefits (SIBs); House Bill 2510 made other changes to address required medical examinations and payment of interest on accrued but unpaid benefits; House Bill 2513 required the Commission to promote communication to enhance return to work; and House Bill 2842 amended the Texas Labor Code to clarify salary continuation. In addition, House Bill 2511 amended Texas Labor Code, §401.024, authorizing the Commission to adopt rules to require electronic transmission of information by means such as facsimile, email, and electronic data interchange. This authorization is utilized in the proposed rules and amendments to achieve a legislative goal of reducing paper communication requirements in the workers' compensation system while ensuring timely and effective communication between system participants. The amendments and additions to Chapter 126 (relating to Benefits - General Provision Applicable to All Benefits) are intended to address this legislation as well as the other issues raised above.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

New §126.1 - Definitions Applicable to All Benefits

Current agency practice is to structure rule chapters and subchapters with a list of definitions as the first rule. Chapter 126 does not currently have a set of definitions and this rule is proposed to rectify that. The proposed rule contains four definitions. The first one helps to differentiate between salary continuation and employer initiation of benefits and helps implement legislation addressing salary continuation. The next two definitions address pecuniary and non-pecuniary wages. These definitions are important because statutorily they affect the calculation of the Average Weekly Wage (AWW) and the amount of income or death benefits to be paid but have never been adequately defined. The final definition addresses overpayments by defining unrecoupable overpayments.

Amendment of §126.4 - Advance of Benefits Based on Financial Hardship

Simple amendments are proposed for this rule to correct a citation to the Texas Labor Code rather than the uncodified workers' compensation act and to make formatting changes. In addition, an amendment is proposed for subsection (a) to delete language requiring injured employees seeking advances on income benefits while receiving impairment income benefits (IIBs) to first request an acceleration of those benefits prior to seeking the advance. Commission experience is that the amount of money that an acceleration provides to the employee is rarely enough to address the employee's financial hardship and simply represents another hurdle to financial relief.

Amendment of §126.5 - Procedure for Requesting Required Medical Examinations

Amendments to this rule are proposed to address legislative changes made by House Bill1826 relating to the carrier's entitlement to require an employee who has been receiving SIBs to attend an RME and to make formatting changes.

Amendments are proposed to subsection (f) to address the legislative change that reduces the carrier's ability to require an employee to attend a required medical examination to once per year if the employee has been entitled to supplemental income benefits (SIBs) for two years and has a medical condition which has not improved sufficiently in the prior year to allow employee to return to work.

Subsection (i) is proposed to be amended to have enforcement language removed because it is redundant to the statute. Removal of the enforcement language is not intended to limit the Commission's authority to take enforcement action for violations of this or any other rule. Rather, the existing language did not address all of the methods of enforcement that the Commission has at its disposal for these violations. The Commission's authority to enforce the statute and rules is granted in multiple provisions of the statute and duplicate language in rules is redundant. In its place, proposed amendments to subsection (i) would specify the method by which a request for a medical examination must be sent to the employee or the employee's representative to emphasize "instant communication" rather than traditional reliance on mail. In addition, new subsection (j) is proposed to be added to require the carrier to maintain a copy of the request for a medical examination order as well as documentation of its successful transmission.

Amendment of §126.6 - Order for Required Medical Examinations

Amendments to this rule are proposed to address legislative changes made by House Bill 2510 relating to failing to attend an RME and the effect of a carrier-selected RME doctor's opinion as well as to make formatting changes. Subsection (a) is proposed to be amended to ensure that an order to attend an RME contain language explaining that in addition to a penalty, failure to attend an RME without good cause could result in a loss of entitlement to temporary income benefits (TIBs) and that a missed appointment needs to be rescheduled.

Subsection (b) is proposed to be amended to clarify that the requirement to reschedule the examination "within seven days" means "within seven days of the date the exam was initially scheduled to occur." In addition it is proposed that the subsection be clarified to explain that the requirement for 10 days notice of an examination does not apply to the rescheduled appointment. In addition, subsection (c) is proposed to be amended to limit the treating doctor's attendance to examinations by carrier-selected doctors.

Subsection (f) is proposed to be amended to remove the current language regarding scheduling a benefit review conference (BRC) within 30 days if the RME doctor believes that the employee can return to work and this language be replaced to require the RME doctor to file a report of his/her finding of an employee's ability to return to work with the treating doctor, carrier, and employee or employee's representative. The effect of this decision on the carrier's duty to pay TIBs is proposed to be addressed by the addition of a new §126.7 relating to Affect of an Opinion by a Carrier-Selected Required Medical Examination Doctor. Subsection (f) now specifies that the RME doctor must file a Work Status Report if the RME doctor believes that the employee can return to work. This is a new report which is being introduced simultaneously in Chapter 129 relating to Income Benefits - Temporary Income Benefits.

A new subsection (h) is proposed to be added to address when a carrier can suspend TIBs based upon the employee's failure to attend the RME as originally scheduled and failure to reschedule and attend that examination. The proposed language would require a carrier who has suspended TIBs based upon this section to reinitiate TIBs once the employee attends the examination.

Subsection (i) is proposed to be amended to clarify that if a carrier-selected RME doctor does not allow the employee's treating doctor into the examination and the employee fails to submit to the examination as a result, that this is not a violation and it is not grounds for suspending TIBs.

New §126.7 - Affect of an Opinion by a Carrier-Selected Required Medical Examination Doctor

Rule 126.7 is proposed to be added to address legislative changes made by House Bill2510 relating to suspension of TIBs based upon an carrier selected RME doctor's finding that an employee has reached MMI or is able to return to work. The development of this rule was based upon several premises. First was that intent of the legislation was to introduce balancing elements into a situation which previously did not allow for such balance. The issue relates to whether a carrier can suspend income benefits based upon a carrier-selected RME doctor's opinion. In the past, the Commission's position has been that the carrier can not do so prior to the Commission's approval. The new legislation sets up a process which allows the carrier to suspend if certain conditions are met but delays that suspension until after the Commission has the opportunity to review the case through a BRC. Depending on the results of a BRC, the Commission can order the carrier to continue paying TIBs or allow the carrier to suspend TIBs.

Central to this new process are two goals. The first is to minimize periods in which an employee does not receive income benefits that they will be ultimately found to be entitled. The second is to minimize carriers' payment of benefits which an employee will ultimately be found to not be entitled to because the carrier's doctor was correct. Further, if carriers do pay benefits that the employee is ultimately not entitled to, the goal is to allow carriers to receive reimbursement for unrecoupable overpayments from the Subsequent Injury Fund.

Given these premises, certain conclusions were drawn which were considered in the rule development process. First is that there is no need for the carrier to utilize the notice of intent to suspend TIBs process provided in the legislation if the amount of TIBs that would be paid by the carrier pending the resolution of a dispute of a RME doctor's certification of MMI would not exceed the amount of IIBs that would be paid based upon that certification or the carrier's reasonable assessment of impairment (e.g. if the assessment was 5.0%, then the employee would be entitled to 15 weeks of IIBs which would more than cover TIBs continued pending resolution of a dispute).

Resolution of a dispute of an RME doctor's certification of MMI and assignment of an impairment rating involves use of a designated doctor. For the purpose of this process it was assumed that it would take less than six weeks from the date a request for a designated doctor was received by the Commission to schedule and hold the examination and get the report. Therefore given that the intent of the legislation is to prevent carriers from making payments they cannot recoup, if by a carrier's own calculations, the amount that would be paid if TIBs were continued pending receipt of a designated doctor's report would not exceed the amount that the employee would be entitled to in IIBs, there is no reason to go through the new legislative process. By limiting access to the new process to those cases where it appears that continued payment of TIBs would cause an unrecoupable overpayment, the hope is that it will ensure that the Commission is able to provide quickly dispute resolution on those cases and not spend time on cases where neither the carrier nor the employee are in jeopardy of unrecoupable overpayments or suspension of income benefits respectively.

Subsection (a) is proposed to ensure that there is no confusion about what types of opinions that this rule governs which are carrier-selected RME doctors' opinions. In addition, the subsection gives a different name to the "notice of suspension" described in Texas Labor Code, §408.004(f), because traditionally in the workers' compensation system, a "notice of suspension" or termination is a notice that explains an action already taken while the notice being sent pursuant to the new legislation and this rule is more of a notice of intent to suspend benefits.

Subsection (b) is proposed to protect the right of the carrier to suspend or adjust TIBs based upon factors other than the RME doctor's opinion. For example if an RME doctor certifies MMI and then several weeks later the employee returns to work with no lost wages, the carrier would be able to suspend TIBs based upon the fact that there are no lost wages.

Subsection (c) requires the carrier to send the notice of intent to suspend to the treating doctor, the employee, and the employee's representative if the carrier intends to use the opinion of an RME doctor to suspend or reduce TIBs. It also instructs the carrier to not send it to the Commission except as provided in subsection (i). Subsection (d) is proposed to emphasize the importance of a treating doctor's agreement with the carrier-selected doctor's opinion in that the carrier is required to pay benefits in accordance with the treating doctor's opinion if the treating doctor indicates agreement with the RME doctor's opinion.

Subsection (e) provides that subsections (f), (g), and (h) only apply to an RME doctor opinion that the employee has reached MMI.

Recognizing that sometimes the treating doctor will fail to respond to the RME doctor's report or the carrier's notice or will respond but will disagree with the RME doctor's opinion, subsection (f) requires the carrier to evaluate the potential for an overpayment by reviewing the employee's current income benefit status, the RME doctor's opinion and determining whether continuing to pay TIBs for an additional eight weeks would cause an overpayment. Eight weeks was chosen as the standard because it is believed that in nearly all cases it should take less than eight weeks to request, schedule, and hold a designated doctor appointment as well as to receive the report. Eight weeks allows for a "worst case scenario" of a delay in the carrier's sending the request for a designated doctor to the Commission, for a rescheduled appointment, for outside testing, for a late report, etc. Using eight weeks is expected to protect carriers from making unrecoupable overpayments since in most cases the report should be received in five to six weeks.

Subsection (g) provides that if the carrier does not believe that an overpayment is likely, the carrier is to request a designated doctor and continue paying TIBs pending the receipt of the report, or the treating doctor's agreement (if the treating doctor's agreement is received late), or until the employee fails to attend the designated doctor examination. The Commission has long considered a designated doctor examination to be a type of RME since employees are required to attend them and they are Commission requested/ordered examinations under §408.004, used for resolution of disputes on several types of issues. Therefore the legislative changes that allow for the termination of TIBs based upon failure to attend the RME apply to failure to attend designated doctor examinations as well. Further, allowing the carrier to suspend based upon a failure to attend the designated doctor's examination reduces the potential for unrecoupable overpayments by the carrier and serves as an incentive for the employee to attend examination as required.

Subsection (h) requires a carrier to notify the Commission if it has continued to pay TIBs and does not receive the report of a designated doctor by the 35th day after the day the carrier notified the Commission of the need for the assignment of a designated doctor. By the 35th day, the carrier should have paid five additional weeks of TIBs pursuant to subsection (g). Requiring the carrier to notify the Commission of the fact that the report has not been received will help ensure that the carrier does not make an unrecoupable overpayment and will allow the Commission to better monitor the designated doctor process to try to timely obtain the report in order to prevent the unrecoupable overpayment. Subsection (i) has similar features to prevent overpayments during the continuation of TIBs under subsection (g).

Subsection (i) specifies the circumstance in which a carrier is permitted to file the notice of intent to suspend with the Commission. Specifically the carrier is allowed to file the notice if the RME opinion was a release to return to work without restriction; if paying an additional eight weeks of TIBs would cause an overpayment; or if the carrier had continued to pay TIBs under subsection (g) and the carrier has not received the designated doctor's report by the 42nd day after the request for a designated doctor was made with to Commission. The intent of allowing the carrier to file the notice when the carrier has not received the report by the 42nd day is again intended to protect against unrecoupable overpayments since subsection (g) otherwise requires the carrier to continue TIBs until receipt of the designated doctor's report and assumably at this point the Commission will have been unable to obtain the report from the designated doctor pursuant to the carrier's reporting it on the 35th day. The ability of the carrier to file the notice with the Commission under these circumstances will allow the Commission to hold a BRC in order to possibly prevent an unrecoupable overpayment.

Subsection (j) provides that submission of the notice as permitted by subsection (i) will allow the carrier to reduce or suspend TIBs on the fourteenth day after the notice is filed with the Commission unless an interlocutory order is entered by the Commission. Subsection (k) requires the Commission to try to obtain the treating doctor's opinion regarding the RME doctor's opinion before rending a decision on whether to issue an interlocutory order through a BRC. The subsection also provides an exception to the requirement in §141.1 (relating to Requesting and Setting a Benefit Review Conference) to provide at least 10 days notice prior to holding a BRC since the legislative amendments to §408.004(f) require the Commission to hold the BRC within 10 days of receiving the notice of intent to suspend.

Subsection (l) provides that an interlocutory order that is "automatically entered" is dissolved upon receipt of the designated doctor's report, the holding of a BRC or the failure to the employee to attend or reschedule and attend the designated doctor examination.

Subsection (m) requires a carrier who suspends TIBs based upon an RME doctor's certification of MMI to initiate IIBs in accordance with the requirements of the statute and other rules. Subsection (n) specifies that a carrier is entitled to reimbursement from the Subsequent Injury Fund if the carrier makes an unrecoupable overpayment. The amount that can be recouped is only the amount that cannot be recouped from the employee's income benefits. Subsection (o) requires a carrier to maintain copies of the notice of intent to suspend and the RME doctor's report as well as documentation of their successful transmission as required by the rule.

New §126.12 - Payment of Interest on Accrued but Unpaid Income Benefits

House Bill 2510 amended the statute to require carriers to pay interest on accrued but unpaid income benefits. Section 126.12 is proposed to be added to define what "accrued but unpaid income benefits" are and to specify the means to calculate the amount of interest to pay. Subsection (a) defines accrued but unpaid income benefits in two ways: those that accrue but are not paid during the course of a dispute and late payments. Subsection (b) specifies that the "simple interest" method is to be used to calculate the amount of interest to pay. Subsection (c) explains that income benefits accrue in either weekly or monthly pay periods and interest is to be calculated separately for each pay period. The subsection also lays out how to calculate the number of days of interest that are due depending on how the benefits became accrued but unpaid. Subsection (d) references the source of the interest rate to use in this rule.

Subsection (e) addresses the variability in interest rates from quarter to quarter. Under Texas Labor Code, §401.023, the interest rate is calculated quarterly. Therefore, if a carrier owes benefits towards the end of one quarter but does not pay until the next quarter and if the interest rate changed from one quarter to the next, the amount of interest to pay must be calculated separately for each quarter. Simply picking one rate and using it for the whole interest rate calculation will result in over or underpayments in interest. Therefore, interest must be calculated by determining the number of days due for each quarter. Subsection (f) then lays out the "step-by-step" mechanism to be used to calculate the interest owed.

Calculation of interest is a relatively difficult task to accomplish by hand and use of spreadsheets or other computer programs will simplify the process of determining and accurately paying interest as required by the statute. Accurate payment of interest will require carriers to know exactly what day payments are being made in order to determine the number of days of interest that are due. Carriers may want to accomplish this by building automation that automatically calculates and adds interest to a payment if it is late.

New §126.13 - Employer Initiation of Benefits and Reimbursable Employer Payments

This rule is proposed to be added to clarify the provisions of Texas Labor Code, §408.003 and §408.127, which allow an employer to initiate "benefits" during a period in which the carrier has not yet accepted a claim and to receive reimbursement from the carrier for those benefits which are initiated. This rule is a companion to other rules being amended or proposed simultaneously in Chapter 129 which address the salary continuation portions of §408.003 which were added by the legislature through House Bill 2842.

Subsection (a) specifies that an employer may initiate benefits to an employee during a period in which the carrier has not accepted liability for the claim. Subsection (b) specifies that an employer who initiates benefits under subsection (a) is entitled to reimbursement. Texas Labor Code, §408.003, requires an employer is to report any benefits it initiates to the carrier and subsection (c) specifies how this is to be done. The statute has always required employers to notify the carrier of what benefits the employer has initiated but the Commission has not previously adopted rules to address how or when the employer is to do this.

Subsection (d) specifies the time frames in which the carrier must reimburse the employer for the benefits the employer initiated. Subsection (e) explains how benefits that were not otherwise reimbursable under subsection (d) are to be reimbursed and subsection (f) prohibits an employer from seeking reimbursement from the employee for amounts paid the employer which are not otherwise reimbursable.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rules are in effect there will be fiscal implications for state or local governments as a result of enforcing or administering the rules. The Commission should see a number of benefits because of the changed rules after an introductory period. The changes in the rules that allow a carrier to suspend TIBs based upon the employee's failure to attend an RME or designated doctor appointment should reduce overpayments and provide incentives for the employee to attend examinations. In addition, the proposed rules will provide a "self-correcting" process that should lessen the need for the Commission to get involved when an injured employee fails to attend an examination. In addition, the new definitions for pecuniary and nonpecuniary wages should help reduce and resolve disputes. The changes to the advances process could reduce costs by simplifying the process. Also it will be easier to hold system participants accountable for their actions or inactions because the requirements of the law and rules will be clarified. The statutory changes relating to RME doctor's opinions and the additional BRCs that will be required may cause an increase in costs to the Commission. These anticipated fiscal implications cannot be quantified.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rule will be:

Injured employees should benefit by receiving interest on accrued but unpaid income benefits. They should also benefit by having a process that ensures that their treating doctor has the opportunity to review a carrier-selected doctor's opinion regarding MMI and return toward prior the carrier being allowed to suspend or reduce TIBs. In addition the new definitions for pecuniary and nonpecuniary wages should help ensure that employees receive the proper amount of income benefits. Employees should also benefit from the simplification in the process regarding advances. The clarification on employer reimbursement should benefit employees because it specifies that benefits to be reimbursed to the employer out of the employee's IIBs have to apportioned across all the benefits. The lack of specificity now can result in the carrier simply paying the money in a lump sum and not paying the employee IIBs until the lump sum is fully credited. The changes to the rules dealing with the affect of an RME doctor's opinion should keep employees better informed about potential changes in their benefits.

Employers should benefit from having clear guidance on how and when benefits that they paid to the employee are to be reimbursed because there are currently no rules on the subject. Also, to the extent that the these rules prevent unrecoupable overpayments, premiums may be positively impacted.

Health care providers should benefit from these rules because there will be more structure to the RME processes particularly how and when the RME doctors are to report their opinions regarding return to work and how the treating doctors are to respond to those opinions.

Carriers should benefit because many of the uncertainties about existing processes should be eliminated with the new rules. Carriers should also benefit by having a process that clarifies how an RME doctor's opinion affects benefit delivery and by having mechanisms in place to prevent unrecoupable overpayments. In addition the new definitions for pecuniary and nonpecuniary wages should help ensure that carriers pay the proper amount of income benefits. The simplification in the process regarding advances could also reduce the carrier's administrative burden by not requiring accelerations of IIBs prior to payments of advances. The changes in the rules that allow a carrier to suspend TIBs based upon the employee's failure to attend an RME or designated doctor appointment should also reduce overpayments and provide incentives for the employee to attend examinations that are required.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the requirements to comply with the rules will have the following affects on costs to system participants:

Claimants will probably not see either an increase or decrease in costs.

Some employers may experience a drop in costs to the extent that the rules prevent unrecoupable overpayments and that this allows carriers to reduce or slow the rise of insurance premiums because of the reduced costs of indemnity claims. Otherwise, employers will probably not see either an increase or decrease in costs.

Health care providers are not likely to see either an increase or decrease in costs associated with these rules as most of the health care providers' requirements currently exist in one form or another.

Carriers should see a reduction in costs associated with the changes designed to eliminate unrecoupable overpayments caused by continuing to pay TIBs during pendency of a dispute on an RME doctor's opinion. However, the legislative changes that require carriers to pay interest on accrued but unpaid benefits will cause increases in costs.

The requirements of these rules should reduce costs for small businesses as described above. The cost of compliance for small businesses as compare to large businesses will be identical and there is no anticipated adverse economic impact on small businesses or micro-businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

The amendments and new rules are proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits and receive reimbursement and requires the employer to report to the carrier any benefits it has initiated; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.081, which provides that the carrier must pay interest on accrued but unpaid income benefits; Texas Labor Code, §408.101 and §408.102, which cut off entitlement to TIBs upon the employee reaching MMI; Texas Labor Code, §408.121, which states that entitlement to IIBs begins on the day after MMI; Texas Labor Code, §408.122, which establishes eligibility for IIBs and provides for use of designated doctors when a dispute exists regarding the certification of MMI; Texas Labor Code, §408.123, which requires a doctor certifying MMI to file a report and which requires a certification of MMI and assignment of an impairment rating by a doctor other than the treating doctor, to be sent to the treating doctor who must indicate either agreement of disagreement with the certification and evaluation; Texas Labor Code, §408.124, which prescribes the guides to be used for assigning impairment ratings; Texas Labor Code, §408.125, which addresses use of a designated doctor to resolve impairment rating disputes; and Texas Labor Code, §408.127, which provides for employer reimbursement out of IIBs of benefits initiated by the employer which are not reimbursable under Texas Labor Code, §408.003, and requires the Commission to adopt rules and forms to ensure full reporting and accuracy of reductions and reimbursements.

The proposed amendments and new rules affect the following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003 as amended by the 76th Texas Legislature, which allows an employer to initiate benefits and receive reimbursement and requires the employer to report to the carrier any benefits it has initiated; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.081, which provides that the carrier must pay interest on accrued but unpaid income benefits; Texas Labor Code, §408.101 and §408.102, which cut off entitlement to TIBs upon the employee reaching MMI; Texas Labor Code §408.121, which states that entitlement to IIBs begins on the day after MMI; Texas Labor Code, §408.122, which establishes eligibility for IIBs and provides for use of designated doctors when a dispute exists regarding the certification of MMI; Texas Labor Code, §408.123, which requires a doctor certifying MMI to file a report and which requires a certification of MMI and assignment of an impairment rating by a doctor other than the treating doctor, to be sent to the treating doctor who must indicate either agreement of disagreement with the certification and evaluation; Texas Labor Code, §408.124, which prescribes the guides to be used for assigning impairment ratings; Texas Labor Code, §408.125, which addresses use of a designated doctor to resolve impairment rating disputes; and Texas Labor Code, §408.127, which provides for employer reimbursement out of IIBs of benefits initiated by the employer which are not reimbursable under Texas Labor Code, §408.003, and requires the Commission to adopt rules and forms to ensure full reporting and accuracy of reductions and reimbursements.

§126.1.Definitions Applicable to All Benefits.

The following terms shall have the following meanings unless the context clearly indicates otherwise:

(1)

Employer Initiation of Benefits - Money paid by an employer to the employee to compensate the employee for lost wages or paid by the employer for medical expenses during a period in which the carrier has either:

(A)

contested compensability of the injury;

(B)

contested liability for the injury; or

(C)

has not completed its initial investigation of the injury which is limited to seven days after the carrier receives first written notice of the injury as defined in §124.1 of this title (relating to Notice of Injury).

(2)

Nonpecuniary Wages - Wages paid to an employee in a form other than money. Examples of nonpecuniary wages include but are not limited to:

(A)

Health insurance premiums;

(B)

Laundry/cleaning;

(C)

Clothing/uniforms;

(D)

Lodging/housing/rent;

(E)

Payment of professional license fees;

(F)

Food/Meals; and

(G)

Provision of a vehicle/fuel.

(3)

Pecuniary Wages - Wages paid to an employee in the form of money. Examples of pecuniary wages include, but are not limited to:

(A)

Hourly, weekly, biweekly, monthly (etc.) wages;

(B)

Salary;

(C)

Piecework compensation;

(D)

Any monetary allowance such as for health insurance premiums, vehicle/fuel, food/meals, clothing/uniforms, laundry/cleaning, or lodging/housing/rent;

(E)

Monetary bonuses earned or accrued by the employee; and

(F)

Commissions.

(4)

Unrecoupable overpayment - The amount of benefits paid by the carrier to the claimant which were not owed and which were not recoverable or convertible from other income benefits.

§126.4.Advance of Benefits Based on Financial Hardship.

(a)

An injured employee seeking an advance of income benefits based on financial hardship shall submit a written application in the form and manner prescribed by the Commission [ . Form TWCC-47 ]that states the basis for the hardship to the Commission [ commission ]. The application must state the employee understands that if an advance is granted the amount of future weekly benefit payments will be reduced. [ An employee receiving impairment income benefits must request acceleration of those benefits under the Act, §4.321, before seeking an advance of benefits. ]

(b)

The Commission [ commission ] shall forward a copy of the employee's application to the insurance carrier and shall consider the employee's application and may order an advance if it determines that both a hardship exists for the employee and the employee is likely to be entitled to income benefits sufficient to cover the amount of the advance.

(c)

An advance will not be granted to an employee who is receiving income benefits under this Act of at least 90% of the employee's net pre-injury wage. The net pre-injury wage of an employee is 85% of the average weekly wage, for this section.

(d)

The Commission [ commission ] shall notify the [ insurance ] carrier and the [ injured ] employee in writing when an advance is ordered. The notice shall include the amount of the advance to be paid; this amount shall not exceed four times the maximum weekly benefit for temporary income benefits as computed under the Act, §408.061(a) [ §4.11 ]. The [ insurance ] carrier shall pay an advance ordered by the Commission [ commission ] within seven days of the receipt of notice from the Commission [ commission ] by the carrier's Austin representative.

(e)

After the carrier has paid an advance, it shall reduce the amount of the weekly income benefits in an amount set by the Commission [ commission ], which takes into account the amount advanced and the number of weeks that benefits are likely to be paid in the future. The weekly benefits may be paid in this reduced amount until the carrier has recouped the amount advanced.

(f)

The total amount of benefits paid to the employee through weekly payments and advances based on hardship shall not exceed the amount the employee would have received under a normal payment schedule. No more than three advances shall be granted based on the same injury.

§126.5.Procedure for Requesting Required Medical Examinations.

(a)

The Commission [ commission ] may authorize a required medical examination for any reason set forth in the Texas Workers' Compensation Act (the Act), Texas Labor Code, §408.004, whether the request for the examination is made by the insurance carrier or a division of the Commission [ commission ]. The request shall be made in the form and manner prescribed by the Commission

(b)

The Commission [ commission ] shall not require an injured employee to submit to a medical examination at the [ insurance ] carrier's request until the [ insurance ] carrier has made an attempt to obtain the agreement of the [ injured ] employee for the examination. The [ insurance ] carrier shall notify the Commission [ commission ] in the form and manner prescribed by the Commission [ commission ] about any agreement or non-agreement of the [ injured ] employee regarding the requested examinations. If an agreement is secured for [ an additional ] RME [ required medical examination ] beyond that which the carrier is entitled to require the employee to attend as provided in [ within a 180-day period pursuant to ] subsections (c), (d) , [ and ] (e) , and (f) of this section, the written notification must also include an explanation of why good cause exists for the additional RME [ required medical examination ].

(c)

A [ An insurance ] carrier's request for a medical examination order shall be delivered to the Commission [ commission ] office managing the claim, and be sent [ by certified mail ] to the [ injured ] employee, and [ or ] the employee's representative on the same day in the manner prescribed by subsection (j) of this section . A carrier is entitled to only one RME [ required medical examination ], as allowed by the Act, §408.004, every 180 days, except as provided [ permitted ] in subsections [ subsection ] (d) , [ and ] (e) , and (g) of this section.

(d)

For dates of injury on or after September 1, 1997, the Commission [ commission ] may approve additional RMEs [ required medical examinations ] at the [ insurance ] carrier's request before the expiration of 180 days in the event that a medical opinion is needed to determine if:

(1)

there has been a change in the [ injured ] employee's condition;

(2)

there is a need to change the [ injured ] employee's diagnosis;

(3)

the treatment should be extended to another body part or system, or if the extent of injury has changed;

(4)

the compensable injury is a producing cause of additional problems or conditions;

(5)

disability exists, because of newly discovered information;

(6)

proposed surgery, other than spinal surgery, is necessary to treat the compensable injury; or

(7)

the [ injured ] employee has reached maximum medical improvement and to determine the impairment rating when the examination relates to a body part or system that is outside the expertise of the [ insurance ] carrier's required medical examination doctor selected under subsection (c) of this section.

(e)

Except for the reason listed in subsection (d)(7) of this section, any request by a [ an insurance ] carrier for an additional RME [ required medical examination shall ] be submitted only after the [ insurance ] carrier has previously had an examination under subsection (c) of this section. Unless good cause exists, a request for an additional RME [ required medical examination ] under subsection (d) of this section will not be approved during a 180 day period for the same reason or rationale.

(f)

Notwithstanding subsections (c) and (d) of this section, on or after the second anniversary of the date the Commission makes the initial award of supplemental income benefit, the carrier's entitlement to require an employee to submit to an RME is limited to one examination per year if after that date:

(1)

the employee is receiving supplemental income benefits; and

(2)

if, in the preceding year, the employee's medical condition resulting from the compensable injury had not improved sufficiently to allow the employee to return to work during that year. [ The injured employee shall not be required to submit to more than three required medical examinations at the request of the insurance carrier under this section within any 180 consecutive day period. ]

(g)

The Commission [ commission ]shall monitor all [ insurance ] carrier requests for medical examinations that are requested before the expiration of the 180-day period under subsections (d) and (e) of this section through statistical analysis, audits, or other appropriate means.

(h)

An unreasonable request for an additional medical examination under subsections (d), (e) and (g) [ (f) ] of this section includes:

(1)

a request for an additional examination for a reason which does not comply with this section;

(2)

a request for a different doctor without sufficient grounds;

(3)

a request which would result in a violation of subsection (g) [ (f) ] of this section; and

(4)

a request which provides false, incomplete, or misleading information.

(i)

The carrier shall send a copy of the request for a medical examination order required by subsection (c) of this section to the employee and the employee's representative by facsimile or electronic transmission unless the employee or the employee's representative does not have a means of receiving the transmission, in which case the carrier shall send the request by certified mail. [ An insurance carrier who unreasonably requests an additional required medical examination as defined in subsection (h) of this section, commits a Class B administrative violation. An insurance carrier who demonstrates a pattern of unreasonably requesting additional required medical examinations commits a Class A administrative violation. ]

(j)

The carrier shall maintain copies of the request for a medical examination order and shall also maintain verifiable proof of successful transmission of the information. For the purposes , verifiable proof includes, but is not limited to, a facsimile confirmation sheet, certified mail return receipt, or a copy of the electronic transmission.

§126.6.Order for Required Medical Examinations.

(a)

When a request is made by the insurance carrier[ , ] or a division of the Commission [ commission ], for a medical examination, the Commission [ commission ] shall determine if an examination should be ordered. The Commission [ commission ]shall issue an order granting or denying the request within seven days of the date the request is received by the Commission [ commission ]. A copy of the order shall be sent to the injured employee, the employee's representative, and the [ insurance ] carrier[ , by first class mail or personal delivery to the carrier ]. The order shall explain the potential loss of benefits and penalty exposure for failing to attend the examination as well as the need to reschedule a missed examination [ state the penalty cited in subsection (h) of this section ]. An agreement between the parties for an examination under §126.5 of this title (relating to Procedure for Requesting Required Medical Examinations) has the same effect as the Commission's [ commission's ] formal order.

(b)

All examinations ordered must be scheduled as soon as possible, with at least 10 days notice to the [ injured ] employee and [ or ] the employee's representative. If a scheduling conflict exists, the [ injured ] employee shall [ must ] contact the doctor prior to the examination to re-schedule the examination to a time within seven days of the date the examination was originally scheduled to occur . In this event, the examining doctor shall notify the carrier and the 10 day notice requirement does not apply to a rescheduled examination .

(c)

The [ injured ] employee's treating doctor, chosen under the Texas Workers' Compensation Act (the Act), Texas Labor Code, §408.022, may be present at an examination scheduled with a doctor selected by the carrier [ according to subsection (b) of this section ]. The [ injured ] employee's treating doctor may observe the conduct of the examination, and may consult with the examining doctor about the course of the [ injured ] employee's treatment. The [ injured ] employee's treating doctor shall not otherwise participate in, or impede, the examination.

(d)

If the RME [ required medical examination ] doctor, selected by a [ an insurance ] carrier, refuses to allow the treating doctor to attend the examination, the [ insurance ] carrier shall cancel the appointment and request that another doctor be approved for the RME [ required medical examination ]. If reasonable notice is not provided to the [ injured ] employee and [ or ] the employee's representative, the [ insurance ] carrier shall be liable for any reasonable travel expenses incurred by the [ injured ] employee and for the payment for the treating doctor's attendance at a refused appointment. This subsection shall not apply to situations where the treating doctor is not able to attend the examination due to any form of scheduling conflict. The RME [ required medical examination ] is not required to be scheduled based on the availability of the treating doctor.

(e)

A RME [ An examining ] doctor who determines the [ injured ] employee has reached maximum medical improvement or who assigns an impairment rating shall complete and file the report as required by §130.1 and §130.3 of this title (relating to Reports of Medical Evaluation; Maximum Medical Improvement and Certification of Maximum Medical Improvement by Doctor Other than Treating Doctor or Designated Doctor ). Other reports shall be completed according to applicable rules for consultant medical reports as described in §133.104 of this title (relating to Consultant Medical Reports) and shall be sent to the carrier, [ injured ] employee, the treating doctor, and Commission [ commission ] no later than 10 days after the examination.

(f)

An RME doctor who determines that the employee can return to work immediately is required to file a Work Status Report, as described in §129.5 of this title (relating to Work Status Report) within seven days of the date of the examination of the employee. This report shall be filed with the treating doctor and the carrier by facsimile or electronic transmission. In addition, the RME doctor shall file the report with the employee and the employee's representative by facsimile or by electronic transmission unless the employee or the employee's representative does not have a means of receiving the transmission, in which case the RME doctor shall send the report by mail. [ The commission shall, if disputed, hold a benefit review conference within 30 days after receiving notification that the examining doctor has released the injured employee to return to work, and the carrier shall continue benefits pending the benefit review conference. ]

(g)

A doctor who conducts an examination solely under the authority of an order issued according to this rule shall not be considered a designated doctor under the Act, §408.122 or §408.125. Examinations with a designated doctor or a second opinion spinal surgery doctor under the Act, §408.026, are not subject to any limitations under the provisions for required medical examinations.

(h)

A carrier may suspend temporary income benefits on the eighth day after the date an examination was originally scheduled to be conducted if the employee failed to submit to examination and failed to reschedule as required by subsection (b) of this section and submit to the examination within seven days of the date the examination was originally scheduled to occur. An employee is not entitled to temporary income benefits for a period during which the carrier suspended benefits pursuant to this section unless the employee later submits to the examination and the Commission finds that the employee had good cause to fail to attend the appointment. If after the carrier suspends temporary income benefits, the employee submits to the required medical examination, the carrier shall reinitiate temporary income benefits as of the date the employee submitted to the examination.

(i)

[ (h) ] An [ injured ] employee who, without good cause, fails or refuses to appear at the time scheduled for an examination authorized by this section may be assessed a Class D administrative penalty under the Act, §408.004(f). An [ injured ] employee who fails to submit to an examination at the [ insurance ] carrier's request when the carrier selected doctor refuses to allow the treating doctor to attend the examination [ shall not be subject to this administrative violation ] does not commit an administrative violation and shall not have benefits suspended for failing to attend [ for ] that particular appointment.

(j)

[ (i) ] The Commission [ commission ] shall order examinations requiring travel of up to 75 miles from the [ injured ] employee's residence unless the treating doctor certifies that such travel may be harmful to the [ injured ] employee's recovery. The [ insurance ] carrier shall pay reasonable travel expenses incurred by the [ injured ] employee in submitting to any required medical examination, as specified by §134.6 of this title (relating to Travel Expenses).

§126.7.Effect of an Opinion by a Carrier-Selected Required Medical Examination Doctor.

(a)

As used in this section, "required medical examination doctor" refers to an insurance carrier-selected RME doctor and "notice of intent to suspend" refers to the notice of suspension described in Texas Labor Code, §408.004(f).

(b)

Nothing in this section prevents a carrier from suspending or reducing temporary income benefits if the injured employee no longer has disability based on factors or conditions other than the RME doctor's opinion regarding ability to return to work or maximum medical improvement. If a carrier suspends or reduces income benefits for reasons other than the RME doctor's opinion, this section does not apply.

(c)

If a carrier intends to suspend or reduce TIBs based upon the opinion of an RME doctor that the employee is able to return to work without restriction immediately or has reached maximum medical improvement, the carrier shall send by facsimile or mutually agreed upon electronic transmission, a copy of the RME doctor's report to the treating doctor, the employee and the employee's representative (if any) along with a notice of intent to suspend and shall not file it with the Commission except as permitted in subsection (i) of this section. If the employee or the employee's representative does not have the means to receive the transmission, the report and notice shall be sent by certified mail. The notice will contain language prescribed by the Commission.

(d)

If the treating doctor indicates agreement with the RME doctor's certification of maximum medical improvement and the impairment rating or with the RME doctor's release to return to work without restriction, the carrier shall maintain documentation of the treating doctor's agreement and shall pay income benefits in accordance with the treating doctor's opinion as provided in this title and the rest of this section does not apply.

(e)

Subsections (f), (g), and (h) of this section only apply when the opinion of the RME doctor was that the employee reached MMI.

(f)

If, on the eighth day after transmitting the notice and an RME doctor's certification of MMI to the treating doctor as required by subsection (c) of this section, the carrier has not received the treating doctor's agreement or disagreement with the RME doctor's opinion, or if the treating doctor has indicated disagreement with the certification of MMI, the carrier shall review the certification, impairment rating, and current income benefit status to see whether continuing to pay TIBs for eight additional weeks pending resolution of a dispute would result in an unrecoupable overpayment to the employee based upon the amount of impairment income benefits that the employee would be entitled to as a result of the RME doctor's or the carrier's reasonable assessment of impairment.

(g)

If payment of an additional eight weeks of TIBs as described in subsection (f) of this section will not result in an unrecoupable overpayment, the carrier shall:

(1)

not file a notice of intent to suspend with the Commission;

(2)

shall instead notify the Commission of the existence of a dispute based upon the lack of a response from the treating doctor, the disagreement of the treating doctor, and/or the carrier's reasonable assessment of impairment; and

(3)

shall continue to pay TIBs until:

(A)

the carrier receives a report from the designated doctor;

(B)

receipt of the treating doctor's agreement with the RME doctor's certification of MMI; or

(C)

the eighth day after the date a designated doctor examination was originally scheduled to be conducted if the employee failed to submit to examination and failed to reschedule and submit to the examination within seven days of the date the examination was originally scheduled to occur.

(h)

If a carrier continues TIBs as provided in subsection (g) of this section and does not receive the report of a designated doctor by the 35th day after notifying the Commission of the need to assign a designated doctor, the carrier shall contact the Commission to obtain help in receiving the report.

(i)

The carrier shall only file the notice of intent to suspend if permitted by this section or in response to a request or order by the Commission. The carrier may file the notice of intent to suspend with the Commission if:

(1)

payment of an additional eight weeks of TIBs pursuant to subsections (f) and (g) of this section would result in an unrecoupable overpayment;

(2)

the RME doctor released the employee to return to work without restriction and the treating doctor either did not agree with the release or failed to respond to the carrier's notice under subsection (c) of this section; or

(3)

the carrier continued to pay TIBs pursuant to subsection (g) of this section and had not received the designated doctor's report by the 42nd day after filing the request for a designated doctor with the Commission.

(j)

The carrier may suspend or reduce TIBs in accordance with RME doctor's opinion on the 14th day after the day the carrier files the notice intent to suspend with the Commission as permitted by subsection (i) of this section unless an interlocutory order is entered in accordance with Chapter 140 of this title (relating to Dispute Resolution) or is automatically entered pursuant to subsection (l) of this section. For the purpose of this subsection, filed means received.

(k)

Upon receipt of a notice of intent to suspend filed under subsections (i) and (j) of this section, the Commission shall:

(1)

review the notice and its potential impact on the employee's income benefits;

(2)

attempt to obtain the treating doctor's opinion regarding the required medical examination doctor's opinion;

(3)

schedule the issue for an expedited benefit review conference within ten days notwithstanding the notification requirements provided by Chapter 140 of this title (relating to Dispute Resolution); and

(4)

if the RME doctor indicated that the employee reached MMI and the employee or the treating doctor disagrees with this certification or the assigned impairment rating or the treating doctor fails to indicate agreement or disagreement, the Commission will consider a dispute to exist as provided by Texas Labor Code, Chapter 408, Subchapter G (Impairment Income Benefits), which may require the assignment of a designated doctor and resolution of the dispute by the Commission (unless an designated doctor was already assigned).

(l)

If a carrier files with the Commission a notice of intent to suspend based upon an RME doctor's certification of MMI pursuant to subsections (i) and (j) of this section and a BRC is not held within 14 days of the Commission receiving the carrier's notice, an interlocutory order will be automatically entered which requires the carrier to continue to pay temporary income benefits and which expires upon the earlier of:

(1)

the date the Commission holds a BRC;

(2)

the date the carrier receives a report from the designated doctor, if a designated doctor was assigned;

(3)

the eighth day after the date a designated doctor examination was originally scheduled to be conducted if the employee failed to submit to examination and failed to reschedule and submit to the examination within seven days of the date the examination was originally scheduled to occur; or

(4)

the date otherwise indicated on the order.

(m)

A carrier that suspends TIBs pursuant to this section based upon the RME doctor's certification of MMI, shall initiate impairment income benefits in accordance with the Act and this title.

(n)

A carrier which makes an unrecoupable overpayment pursuant to an interlocutory order may be eligible for reimbursement from the subsequent injury fund. An unrecoupable overpayment for the purpose of reimbursement from the subsequent injury fund only includes those benefits that were overpaid by the carrier pursuant to an interlocutory order which were not owed to the employee and which were not recoverable or convertible to IIBs.

(o)

The carrier shall maintain copies of the notice of intent and report sent to the treating doctor, employee, employee's representative, and Commission and shall also maintain verifiable proof of successful transmission of the information. For the purposes , verifiable proof includes, but is not limited to, a facsimile confirmation sheet, certified mail return receipt, or a copy of the electronic transmission.

§126.12.Payment of Interest on Accrued but Unpaid Income Benefits.

(a)

Accrued but unpaid income benefits are those benefits which either:

(1)

have accrued during a period of dispute over carrier liability for the claim or employee entitlement to the benefits; or

(2)

have not been paid by the date the insurance carrier was required to pay them.

(b)

Carriers shall include simple interest in all payments for accrued but unpaid income benefits.

(c)

Income benefits accrue in either weekly or monthly pay periods, as otherwise provided by the Texas Workers' Compensation Act and this title, and interest shall be calculated separately for each pay period based upon the length of time the benefits for that pay period remained accrued and unpaid.

(1)

For pay periods in which benefits accrued while in dispute as provided in subsection (a)(1) of this section, the carrier shall pay interest for number of days between the seventh day after the day the benefits accrued and the day the payment was made.

(2)

For pay periods in which benefits accrued and were paid late by the carrier as provided in subsection (a)(2) of this section, the carrier shall pay interest for the number of days between the due date for the payment and the date the payment was made.

(d)

The rate of interest to be paid on accrued but unpaid income benefits by insurance carriers will be set quarterly and will be calculated in accordance with the Texas Labor Code, §401.023.

(e)

If the period for which a carrier is required to pay interest crosses more than one quarter and the interest rate changes from one quarter to the next, the carrier shall apportion the number of days of interest owed for each quarter and shall pay interest on those days in accordance with the interest rate for the respective quarter.

(f)

The following method shall be used to calculate interest in a given quarter:

(1)

multiply the rate of interest for the quarter by the amount in question (to create annual amount of interest);

(2)

divide the annual amount of interest by 365 (to create daily interest amount); then

(3)

multiply daily interest amount by the number of days of interest that is owed for the quarter.

§126.13.Employer Initiation of Benefits and Reimbursement.

(a)

An employer may initiate benefits including medical benefits to compensate an employee during a period in which the insurance carrier has either:

(1)

contested compensability of the injury;

(2)

contested liability for the injury; or

(3)

has not completed its initial investigation of the injury which is limited to seven days after the carrier receives first written notice of the injury as defined in §124.1 of this title (relating to Notice of Injury).

(b)

An employer who initiates benefits as provided in subsection (a) of this section is entitled to reimbursement from the carrier for those benefits paid to the claimant which otherwise would have been paid by the carrier had the carrier immediately accepted compensability for the injury and began payment of income benefits.

(c)

An employer who initiates benefits as provided in subsection (a) of this section shall report to the carrier the amount of any benefits provided to the employee in the form and manner prescribed by the Commission within seven days of initiating the benefits and every two weeks thereafter until:

(1)

the date the claim is finally adjudicated as being compensable;

(2)

the date the carrier is ordered to pay benefits;

(3)

the date the carrier accepts liability for the claim; or

(4)

the employer discontinues providing benefits to the employee under this section and has reported to the carrier all benefits provided.

(d)

A carrier who is notified by an employer that the employer initiated compensation as described in subsection (c) of this section shall reimburse the employer the compensation that the carrier would have otherwise paid not later than the seventh day after the latter of:

(1)

receipt of notice of the employer's payments; or

(2)

the earliest of:

(A)

the date the claim is finally adjudicated as being compensable;

(B)

the date the carrier is order to pay benefits; or

(C)

the date the carrier accepts liability for the claim.

(e)

Any benefits which the employer initiated with the agreement of the claimant in accordance with subsection (a) of this section, which are not reimbursed or reimbursable under subsection (d) of this section shall be reimbursed to the employer by apportioning the amount owed to the employer equally from any weekly impairment income benefits that the employee becomes entitled to under Subchapter (A) of Chapter 130 of this title (relating to Impairment Income Benefits), if any. The carrier shall make the reimbursement to the employer in a lump sum not later than the seventh day after the later of:

(1)

the date the carrier receives a certification of maximum medical improvement with an impairment rating of greater than 0%; or

(2)

the date an impairment rating dispute is resolved by a designated doctor's opinion, agreement, or final adjudication.

(f)

An employer is not entitled to and shall not seek reimbursement from the employee for any benefits initiated by the employer which are not reimbursed under subsections (d) or (e) of this section.

(g)

If an employer pays money to a health care provider for medical service to an injured employee which is greater than the payment allowed by the statute and this title for such services, the employer is not entitled to and shall not seek reimbursement from the employee or the carrier.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 16, 1999.

TRD-9905174

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512)707-5829

Chapter 129. Income Benefits-Temporary Income Benefits

The Texas Workers' Compensation Commission (the Commission) proposes new §129.1 concerning Definitions for Temporary Income Benefits, §129.2 concerning Entitlement to Temporary Income Benefits, §129.3 concerning Amount of Temporary Income Benefits, §129.5 concerning Work Status Reports, §129.6 concerning Bonafide Offers of Employment, and §129.7 concerning Non-Reimbursable Employer Payments. Simultaneously, the Commission proposes the repeal of current §129.1 concerning Definitions for Temporary Income Benefits Calculation, §129.2 concerning Calculation of Temporary Income Benefit for Employees Who Earn Less Than $8.50 Per Hour, and §129.5 concerning Bona Fide Offers of Employment.

The additions and repeals are proposed to address new legislation enacted by the 76th Texas Legislature. At the same time, these actions are also proposed to include in the rules, some of the Commission's long standing policies and to address problems with the rules that were identified by the Claims Service Task Force (a group of representatives from the system appointed by the Commission to serve as a sounding board for ideas regarding rule development in the area of claims services), other system participants, and Commission staff. The proposed rules simplify and shorten rule construction and are designed to be more prescriptive and to eliminate or significantly reduce ambiguity in the rules. The proposals are designed to more clearly lay out expectations so that all system participants will understand the requirements the Act and rules place on them. It is expected that together, these changes will improve benefit delivery, reduce disputes, make dispute resolution easier, reduce violations, and make it easier to hold system participants accountable for their actions and inactions.

Specifically, House Bill 2510 made changes to address required medical examinations; House Bill 2513 required the Commission to promote communication to enhance return to work; and House Bill 2842 amended to the Texas Labor Code to clarify salary continuation. In addition, House Bill 2511 amended Texas Labor Code, §401.024 authorizing the Commission to adopt rules to require electronic transmission of information by means such as facsimile, email, and electronic data interchange. This authorization is utilized in the proposed rules and amendments to achieve a legislative goal of reducing paper communication requirements in the workers' compensation system while ensuring timely and effective communication between system participants. The amendments and additions to Chapter 129 (relating to Income Benefits - Temporary Income Benefits) are intended to address this legislation as well as the other issues raised above.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Repeal of §129.1 - Definitions for Temporary Income Benefits Calculation

Current agency practice is to structure rules chapters and subchapters with a list of definitions in the first rule of the chapter/subchapter. The existing rule does not follow this format well. The existing language is proposed to be either deleted and the concept moved to a more appropriate rule or revised. The concept currently contained in subsection (a) is proposed to be contained in the new §129.1 but rewritten to more closely resemble the general usage of the term and the concept is further detailed in the new §129.2. The existing language of subsection (b) is proposed to be deleted because it is not a definition and the concept was moved to the new §129.3.

New §129.1 - Definitions for Temporary Income Benefits

Definition of Weekly Earnings After the Injury has been rewritten to more closely resemble the general usage of the term and the concept is further detailed in the new §129.2. In addition, definitions for salary continuation and salary supplementation have been added.

Repeal of §129.2 - Calculation of Temporary Income Benefit for Employees Who Earn Less Than $8.50 Per Hour

This rule is proposed for repeal because it only covers employees who earn less than $8.50 per hour, it has been used to justify paying "windfalls" to injured workers (a windfall involves paying an injured employee the minimum compensation rate in temporary income benefits (TIBs) even if the employee's actual lost wages are minuscule), and it is generally not detailed enough to ensure that the proper amount of TIBs is paid to the injured employee. This is particularly true in cases where the employer pays salary continuation in an amount less that the employee's average weekly wage (AWW).

New §129.2 - Entitlement to Temporary Income Benefits

This rule is proposed to be added to provide a conceptual overview of entitlement to TIBs as well as to fully develop what is and is not considered post injury earnings (PIE) which is needed to calculate the lost wages and ensure the proper amount of TIBs is paid under the new §129.3. The requirements of this proposed rule are essentially the same methodology used by the Commission in enforcement actions for the past several years. The new legislation helped support this methodology and its enactment by rule should not significantly change the requirements although it should help reduce confusion that may have existed. The level of detail included in the proposed rule as well as the proposed rule §129.3 is intended to address several common misunderstandings relating to calculating the amount of TIBs to be paid and to ensure that the injured employee receives TIBs in the amount the employee is entitled to.

Subsections (a) and (b) outline entitlement to TIBs and that is based upon lost wages due to the compensable injury. Subsections (c) and (d) clearly indicate what is and is not considered post injury earnings.

New §129.3 - Amount of Temporary Income Benefits

This rule is proposed to be added to provide specific instruction on the methodology a carrier must use to calculate the amount of TIBs that is due. As with the proposed rule §129.2, the methodology is essentially the same methodology that has been used by the Commission in enforcement actions for the past several years and helps to resolve common misunderstandings by both carriers and employees regarding the calculation of TIBs. In addition, this proposed rule is written in a prescriptive format, laying out the requirements more clearly.

Subsection (a) is an overview on applicability which requires a carrier to pay an employee the amount of TIBs the employee is entitled to in accordance with this chapter. Subsection (b) contains the concept originally contained in the existing §129.1(b) which was the methodology to determine whether an employee earns less $8.50 per hour. The existing language ties the determination to the hourly wage that the employee was earning on the date of injury. Unfortunately this was almost impossible to determine on many cases since, many employees are paid overtime and so their hourly wage could be affected by whether they were working overtime that day. This in turn could mean that two employees who had the same job and the same injury could be entitled to different amounts of TIBs because one was injured while working overtime and the other was not. In addition, employers have not been required to report the hourly wage the employee was earning on the date of injury which has made this calculation more difficult still. The proposed language does two things. First, it ties hourly wage to the AWW. Since the statute ties income benefits to the AWW of the 13 consecutive weeks prior to the injury, the rule follows this lead and ties the determination of the hourly wage to the AWW. Secondly it provides three different methods for making the determination depending on what information the carrier has available.

Although the calculation of the hourly wage is designed to be accomplished using the AWW and average hours worked during the 13 week period, an employer is not required to provide this information to the carrier until at least 30 days after the date of injury. Therefore, during this period prior to receiving the Wage Statement (TWCC-3), the carrier must rely on another method to make the calculation. The preferred method is to use the wage information on the Employer's First Report of Injury (TWCC-1). However, there are times that the employer does not timely or correctly provide the carrier this information and so, again, the carrier must rely on another method. In the case where the carrier has a wage statement, the carrier is instructed to use it. In the case where the carrier does not have a TWCC-3 but does have the TWCC-1, the carrier is instructed to use the TWCC-1. If the carrier does not have wage information available through the TWCC-3 or the TWCC-1, the carrier is instructed to obtain the information from the claimant and use it until the carrier is able to obtain it from the employer.

Subsection (c) requires the carrier to calculate the AWW in accordance with Chapter 128 (relating to Benefits - Calculation of Average Weekly Wage) and the PIE in accordance with §129.2. In addition, the carrier is required to use specific wage information in order to ensure that the proper amount of TIBs is paid. The Commission has found that often when an employer reports wage information in a generic manner such as stating , the employee returned to work "at full salary" or that the employer has a salary continuation program and is continuing "full salary," employees do not receive benefits they are entitled to. This is because for workers' compensation purposes, the statute considers "full salary" to be AWW which includes overtime if generally worked. Most employers consider full salary to be a 40 hour week. So if the employee AWW was equal to $550 based upon 40 hours of normal pay and 10 hours per week of overtime, and the employer continues "full salary" after the injury (which would be $400), the employee would be entitled to TIBs based upon the lost wages of $150. Yet, if the carrier simply takes the employer at its word that it is continuing "full salary" then the employee will not get TIBs. The requirement that the carrier base its calculations on the specific wage information, will help ensure that employees receive the income benefits they are entitled to; no more, no less. Amendments being simultaneously proposed to §120.3 (relating to Employer's Supplemental Report of Injury), are designed to clarify that employers must report post-injury earning information in the specific amounts being paid.

Subsection (d) requires the carrier to subtract the PIE from the AWW to determine the employee's lost wages. Subsection (e) specifies that if a PIE is greater than or equal to AWW then there are no lost wages and the carrier is not to pay TIBs. Since salary continuation is a form of PIE, these subsection establish that an employee will not receive TIBs if the amount of salary continuation equals or exceeds the AWW which clarifies one of the requirements of House Bill 2842, that salary continuation can be paid in lieu of TIBs. This methodology is identical to the methodology that the Commission has used in enforcement actions for the past several years.

Subsections (f) and (g) specify the percentage of lost wages that an employee is entitled to in TIBs. The entitlement is based upon the employee's hourly wage and whether the week of benefits being paid is one of the first 26 weeks. Subsection (h) lays provides that the amount of TIBs that an employee is entitled to is limited to the statutory maximum.

Subsection (i) represents a change from the existing rule. This subsection was added to address the "windfall" issue. As described above, a windfall occurs when an employee receives more money through TIBs than the employee actually lost as a result of the injury. This generally occurs when the employee has returned to work but attends doctor's appointments once or twice a week. The actual lost wages may be less than $30, but paying the minimum compensation rate would more than double that amount. As a result, the employee's income through wages and TIBs exceeds the AWW. This provides a disincentive to working towards a "full release."

When the legislature began to examine the issues associated with workers' compensation in Texas it formed the Joint Select Committee on Workers Compensation Insurance which presented a set of recommendations for workers' compensation reform to the 71st Texas Legislature. Included in these recommendations was that reform ensure that temporary benefits replace a high proportion of after-tax lost earnings. It is clear that the intent of TIBs is to replace a high proportion of employees' lost wages, not to "overcompensate" them. To apply the minimum compensation rate in cases such as this where the lost wages are relatively minor would defeat the purpose of TIBs. However, the Legislature also put a minimum compensation rate in the statute and said that it applied to TIBs. In trying to reconcile these seeming incompatible positions, it is believed that the Legislature intended the minimum compensation rate ensure that an employee whose AWW was extremely low, be given a "floor" below which the employee's TIBs would not fall, not to provide windfalls to employees whose earning capacity was barely affected by the injury. Therefore, subsection (i) specifies that if an employee's AWW is less than the weekly minimum and the amount of TIBs an employee is entitled to under subsections (f) or (g) is also less than the minimum, then the carrier will pay the minimum. Otherwise, the carrier will pay TIBs specifically based upon the lost wages. This will ensure the purpose of the statute is met without providing a disincentive to achieving a full release to return to work.

Repeal of §129.5 - Bona Fide Offers of Employment

Current §129.5 does not address the way the system functions and as a result is inadequate to govern behavior regarding modified duty offers. Often a treating doctor will release an employee to "light duty" with little specificity of what restrictions an employee is to operate under. Then the employer will send a letter to the employee similarly offering "light duty" and then tell the carrier that the employee never responded to the offer which the carrier then uses to suspend TIBs. Unfortunately, since the employer's letter does not have any detail regarding what the job entails and since the treating doctor did not specify the employee's limitations or abilities, determinations of what is a bonafide offer leads to disputes and inappropriate suspensions of benefits. Made more difficult in this is the fact that the existing rule does not require the carrier to have copies of the release or the offer. The existing rule seems to anticipate that the Commission will make the final decisions regarding bonafide offers but it does not provide guidance to any of the system participants as to what they should or should not do. The replacement of the rule is designed to recognize that the rule has to provide guidance in cases that do not go to dispute resolution which is the norm rather than the exception.

New §129.5 - Work Status Reports

This rule is intended to address the requirements of House Bill 2513 which requires the Commission to promote communication between employers and treating doctors regarding modified duty opportunities. The rule creates a new report to be filed by the treating doctor called the Work Status Report which will provide the carrier and the employer with information about the employee's ability to work to enable the employer to offer a modified duty position consistent with the employee's ability to work and restrictions. Filing a work status report is not the equivalent of a functional capacity evaluation (FCE). FCEs are not appropriate for all cases, but the Commission has authority to require one as appropriate.

Subsection (a) describes the report and requires it to indicate what job functions the employee can safely perform as well as any restrictions on the employee's activities. The intent is to encourage the safe return to work not to aggravate the employee's condition. Providing specific detail about the employee's limitations should help ensure that the employer is able to offer work which is truly consistent with treating doctor's assessment.

Subsection (b) lays out the timeframes for filing the report. The report must be filed with the carrier and the employer within three days which is similar to the employer's duty to file the supplemental report of injury with the carrier and the employee in three days. Since this report will also be used by carriers to make decisions regarding payment of TIBs, it is imperative that the information be provided to the carrier as early as possible. Currently benefit delivery is delayed in part because carriers are unable to timely obtain disability information. In addition, health care providers have long complained about the number of calls they receive from adjusters regarding disability status. With the provision of this information on a regular and timely basis through a required report, these calls should be significantly reduced. Although the report is required to be filed within three days, the treating doctor is expected to provide a copy to the employee at the time of the examination. This will facilitate employee understanding of the doctor's restrictions and give the employee the opportunity to ask questions. The planned report is expected to be very simple to fill out with a "check-box" approach that will make completion easy. Discussion with several health care providers and a review of sample reports that some providers are already using support this idea. The providers also pointed out that employers often need information following every appointment if for no other reason than to be able to know when the next appointment is scheduled in order to be able to anticipate when the employee will need time off for medical care.

Subsection (c) lays out two other conditions which require the treating doctor to file the Work Status Report. There may be cases where the treating doctor has not released the employee to return to work and the employer believes that it has a very good modified duty position which the employee would be able to work. In this situation, the employer is allowed to provide the treating doctor a set of functional job descriptions which list the physical and time demands of the position so that the treating doctor can evaluate the positions. If the treating doctor receives a set of functional job descriptions the employer will have to file a Work Status Report based upon the descriptions. In addition, the treating doctor will have to file the work status report if a required medical examination doctor believes that the employee can return to work.

Subsection (d) explains that filing the Work Status Report as required by subsection (c) does not require a separate examination of the employee. One can be filled out using chart notes from the last examination. Filing of a Work Status Report is not equivalent to certifying maximum medical improvement and/or permanent impairment which must be done through an examination of the employee.

Subsection (e) requires use of "instant" communication such as electronic transmission through facsimile or email to reduce the delay in providing critical information for benefit delivery and reduce the use of paper as required by House Bill 2511. The language is written to make use of traditional postal mail a last resort for filing the report. By using the proposed language, as use of email and other forms of instant communication by system participants expands, the rules will reduce the reliance on traditional paper mail that has often caused over, under, and delayed payments.

New §129.6 - Bonafide Offers of Employment This rule is intended to address the requirements of House Bill 2513 which requires the Commission to promote communication between employers and treating doctors regarding modified duty opportunities and to allow for the suspension of TIBs if a bonafide offer of modified duty is rejected. The rule is also designed to better specify the mechanism for modified duty offers to be made and the length of time the carrier has to wait until it can deem an offer to have been rejected by the employee. In addition, changes are being concurrently proposed in Subchapter B (relating to Required Reports) of Chapter 133 (relating to Benefits - Medical Benefits).

Subsection (a) is an overview statement which explains that modified duty offers may be made by an employer either in response to a treating doctor's release or by its own initiation. Subsection (b) requires an employer or carrier that to initiate a modified duty offer to provide to the treating doctor, a set of functional job descriptions of positions that the employer has available to offer the employee. By requiring the request to include functional job descriptions, the treating doctor has some specific information to make a judgement regarding ability to work. Subsection (c) requires an offer of modified duty to be on the form and in the manner prescribed by the Commission. Although nothing previously prohibited employers or carriers from trying to initiate the process, there was no requirement for the treating doctor to cooperate with the request nor was there any structure to how the request should be made. These subsections also tie it to changes concurrently being proposed to Chapter 133.

Subsection (d) sets out the conditions that an offer must meet before the carrier can deem it to be a bonafide offer of employment and requires the carrier to have written copies of the employer's offer and the treating doctor's Work Status Report. This represents a change from the prior rule which did not provide guidance to carriers regarding how to judge an offer of employment. It also represents a change in that it requires the carrier to have the offer and certification in order to deem an offer to be bonafide. As discussed above, these changes are necessary to address the reality of the system which is that carriers often make these decisions in the absence of dispute resolution and often without the benefit of all the facts. This subsection should ensure that carriers have the information necessary to determine whether an offer of employment is bonafide and can work with the employer to fix offers that are lacking.

Subsection (e) is virtually identical to the existing rule with the addition of a sentence designed to provide additional guidance on what a reasonable distance is. This addition is designed to provide some consistency to the review of offers but still allows either the carrier or the employee to dispute the offer if either believes that the standard is inappropriate in the immediate situation.

Subsection (f) provides guidance regarding how much time a carrier has to wait before deeming the wages offered as part of a modified duty offer to be Post-Injury Earnings because the employee rejected the modified duty position. This provision is a new concept that has been added to address two problems that have been found with the existing process. The first relates to how much time does an employee have to be given to decide whether to accept a modified duty offer. Given mail time and work schedules, this has proven difficult under the current system. The second problem is that sometimes an employer offers a modified duty position which turns out to have greater physical demands than the employer initially stated. In many of these cases the employee is familiar with the position because it is one that the employer regularly offers to employees. The seven day period allows the employee time to talk to the treating doctor to be sure that the position truly meets the employee's restrictions. Nothing in this subsection prevents a carrier from adjusting TIBs if the employee immediately accepts the offer and begins work since those wages would be actual Post-Injury Earnings and not "deemed" Post-Injury Earnings resulting from a rejected bonafide offer of employment.

New §129.7. - Non-Reimbursable Employer Payments

This rule is proposed to be added to address that while an employer can initiate "benefits" during a period in which the carrier has not yet accepted a claim which are reimbursable to the employer (as provided in Texas Labor Code, §408.003, and simultaneously proposed §126.13), payment of salary continuation or salary supplementation is not an employer initiation of "benefits." Salary continuation is a type of Post-Injury Earnings which reduces the amount TIBs the employee receives. If an employer pays salary continuation and then attempts to be reimbursed from the employee, the employee would not receive all the compensation the employee is entitled to.

Victor Rodriguez, Finance Manager, has determined that for the first five-year period the proposed rules are in effect there will be fiscal implications for state or local governments as a result of enforcing or administering the rules. The Commission should see a number of benefits, after an introductory period, if the proposed rules are adopted. Ultimately a reduction in costs due to reduced dispute resolution and information service expenses is expected. Disputes may be reduced because of the clarifications of the rules. Many of the issues being addressed in the new rules currently are resolved on a case by case basis through dispute resolution. Information services costs should be reduced because many of the confusing areas in the existing rules will be clarified. This clarification may reduce the number of calls from system participants with questions. Also, it will be easier to hold system participants accountable for their actions or inactions because the requirements of the law and rules will be clarified. The amount of these fiscal implications cannot be quantified.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rule will be:

Injured employees should benefit by an increase in the accuracy of TIBs payments and will be more assured of modified duty positions being consistent with their work abilities. Further, the additional clarification of the rules should make it easier for them to navigate the workers' compensation system.

Employers should benefit because the new rules should promote earlier returns to work and provide clearer guidance about what an employee is able to do while on modified duty. The earlier returns to work should also reduce the loss of productivity that an injury can cause. Employers may also benefit from additional information that will make it easier to schedule around employee medical appointments.

Health care providers should benefit from these rules because there will be more structure to the modified duty release/request process. Health care providers should also benefit from having to deal with fewer calls from carriers attempting to obtain disability status information.

Carriers should benefit because many of the uncertainties about existing processes should be eliminated with the new rules. As a result carriers should be much more able to accurately pay benefits and react to modified duty offers. In addition, the timely provision of disability information from the treating doctor should significantly improve the carrier's ability to monitor their claims and ensure that benefits are timely started and terminated.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the requirements to comply with the rules will have the following affects on costs of system participants:

Claimants will probably not see either an increase or decrease in costs.

Some employers may experience a drop in costs associated with the increased emphasis on early return to work. This reduction is anticipated because an early return to work of an employee should save the employer the cost of obtaining and training a temporary or permanent replacement for the injured employee or should save the cost of leaving the position vacant longer. In addition, to the extent that the time to return to work decreases, insurance premiums may be reduced because of the reduced costs of indemnity claims. Otherwise, employers will probably not see either an increase or decrease in costs.

Health care providers should see a reduction in costs associated with reduced calls from carriers attempting to obtain information regarding an employee's disability status and expected return to work.

Carriers should see a reduction in costs associated with the increased emphasis on return to work because an earlier return to work should reduce the number of weeks of income benefits that will be owed on many claims or otherwise reduce the weekly amount of those benefits which are owed. In addition, carriers may also experience a reduction in penalty exposure because of the clarification of the rules (particularly regarding issues associated with the compensation rate and wage continuation). This reduction in penalty exposure should also come from the increased quantity and quality of information that the carriers are going to receive from providers which should improve the carrier's ability to timely initiate income benefits.

The requirements of these rules should reduce costs for small businesses as described above. The cost of compliance for small businesses as compare to large businesses will be identical and there is no anticipated adverse economic impact on small businesses or micro-businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

28 TAC §§129.1, 129.2, 129.5

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Workers' Compensation Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeals are proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the AWW for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of AWW; Texas Labor Code, §408.047, which defines the state average weekly wage which is used to calculate maximum and minimum weekly benefit rates; Texas Labor Code, §408.061, which addresses the maximum weekly benefit rate; Texas Labor Code, §408.062, which addresses the minimum weekly benefit rate; Texas Labor Code, §408.063, which requires the employer to provide a wage statement; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.103, which outlines how the amount of TIBs is to be calculated and addresses that the wages offered as part of a rejected bonafide offer of employment are considered post injury earnings; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue; and Texas Labor Code, §413.018 as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

The proposed repeals affect the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the AWW for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of AWW; Texas Labor Code, §408.047, which defines the state average weekly wage which is used to calculate maximum and minimum weekly benefit rates; Texas Labor Code, §408.061, which addresses the maximum weekly benefit rate; Texas Labor Code, §408.062, which addresses the minimum weekly benefit rate; Texas Labor Code, §408.063, which requires the employer to provide a wage statement; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.103, which outlines how the amount of TIBs is to be calculated and addresses that the wages offered as part of a rejected bonafide offer of employment are considered post injury earnings; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue; and Texas Labor Code, §413.018, as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

§129.1.Definitions for Temporary Income Benefits Calculation.

§129.2.Calculation of Temporary Income Benefit for Employees Who Earn Less Than $8.50 per Hour.

§129.5.Bona Fide Offers of Employment.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 16, 1999.

TRD-9905176

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512)707-5829

28 TAC §§129.1-129.3, 129.5-129.7

The proposed new rules are proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the AWW for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of AWW; Texas Labor Code, §408.047, which defines the state average weekly wage which is used to calculate maximum and minimum weekly benefit rates; Texas Labor Code, §408.061, which addresses the maximum weekly benefit rate; Texas Labor Code, §408.062, which addresses the minimum weekly benefit rate; Texas Labor Code, §408.063, which requires the employer to provide a wage statement; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.103, which outlines how the amount of TIBs is to be calculated and addresses that the wages offered as part of a rejected bonafide offer of employment are considered post injury earnings; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue; and Texas Labor Code, §413.018 as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

These proposed new rules affect the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.003, as amended by the 76th Texas Legislature, which allows an employer to initiate benefits or to pay salary continuation; Texas Labor Code, §408.004, which addresses required medical examinations and the affect of a carrier selected doctor's opinion of payment of TIBs; Texas Labor Code, §§408.041, 408.042, 408.043, and 408.044, which address calculation of the AWW for different types of employees; Texas Labor Code, §408.045, which addresses the effect of non-pecuniary wages on the calculation of AWW; Texas Labor Code, §408.047, which defines the state average weekly wage which is used to calculate maximum and minimum weekly benefit rates; Texas Labor Code, §408.061, which addresses the maximum weekly benefit rate; Texas Labor Code, §408.062, which addresses the minimum weekly benefit rate; Texas Labor Code, §408.063, which requires the employer to provide a wage statement; Texas Labor Code, §408.081, which provides that, except as otherwise provided, benefits are to benefits are to be paid weekly as and when they accrue; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.103, which outlines how the amount of TIBs is to be calculated and addresses that the wages offered as part of a rejected bonafide offer of employment are considered post injury earnings; Texas Labor Code, §408.105, as amended by the 76th Texas Legislature, which allows TIBs to be offset by salary continuation; Texas Labor Code, §409.021, which requires carriers to timely initiate or dispute compensation; Texas Labor Code, §409.023, which requires carriers to pay benefits as and when they accrue; and Texas Labor Code, §413.018, as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

§129.1.Definitions for Temporary Income Benefits.

The following terms shall have the following meanings unless the context clearly indicates otherwise:

(1)

Salary Continuation (also Wage Continuation) - Monies paid by the employer to compensate the employee for wages lost as a result of a compensable injury. Salary continuation does not include moneys paid to an employee as compensation for work such as wages paid while an employee is on modified duty.

(2)

Salary Supplementation (also Wage Supplementation)- Monies paid by the employer to supplement the amount of income benefits a carrier pays to an employee with a compensable injury.

(3)

Weekly Earnings After the Injury - Post-Injury Earnings (PIE), further described in §129.2 of this title (relating to Entitlement to Temporary Income Benefits).

§129.2.Entitlement to Temporary Income Benefits.

(a)

Once temporary income benefits accrue, an employee is entitled to TIBs to compensate the employee for lost wages due to the compensable injury during a period in which the employee has disability and has not reached maximum medical improvement.

(b)

Lost wages are the difference between the employee's gross average weekly wage and the employee's gross Post-Injury Earnings. If the employee's PIE equals or exceeds the employee's AWW, the employee has no lost wages.

(c)

PIE shall include, but not be limited to, the documented weekly amount of:

(1)

all pecuniary wages paid to the employee after the date of injury including wages based upon work performed while on modified duty and pecuniary fringe benefits which are paid to the employee whether the employee has returned to work or not;

(2)

any employee contribution to benefits such as health insurance that the employee normally pays but that employer agrees to pay for the employee in order to continue the benefits (which does not include the portion of the benefits that the employer normally pays for);

(3)

the weekly amount of any wages offered as part of a bonafide job offer which is not accepted by the employee which the carrier is permitted to deem to be PIE under §129.5 of this title (relating to Bonafide Offers of Employment);

(4)

any accrued sick leave or accrued annual leave that the employee has voluntarily elected to use after the date of injury; and

(5)

any monies paid to the employee by the employer as salary continuation based upon:

(A)

a contractual obligation between the employer and the employee including through a collective bargaining agreement;

(B)

an employer policy; or

(C)

a written agreement with the employee.

(d)

PIE shall not include:

(1)

any non-pecuniary wages paid to the employee by the employer after the injury;

(2)

any accrued sick leave or accrued annual leave that the employee did not voluntarily elect to use;

(3)

any wages paid by the employer as salary supplementation;

(4)

any moneys paid by the employer which would otherwise be considered PIE under subsection (c) of this section but which the employer attempts or intends to seek reimbursement from the employee or insurance carrier; or

(5)

any money paid to an employee under an indemnity disability program separate from workers' compensation.

§129.3. Amount of Temporary Income Benefits.

(a)

The insurance carrier shall pay an employee the temporary income benefits (TIBs) the employee is entitled to in accordance with this chapter.

(b)

The carrier shall determine whether the employee earns less than $8.50 per hour as follows:

(1)

Once the carrier has received the Wage Statement required by this title, the carrier shall divide the average weekly wage (AWW) calculated from the Wage Statement by the average number of hours worked. The average hours worked is the total gross hours reported worked on the Wage Statement divided by the period in which the hours were worked;

(2)

If the carrier has not received the Wage Statement, but has received the Employer's First Report of Injury, the carrier shall use the wage information provided by the employer through the report; or

(3)

If the carrier has not received the information necessary to perform the calculations required by subsection (b)(1) or (2) of this section, the carrier shall use wage information provided by the claimant until the necessary information is obtained from the employer.

(c)

The carrier shall calculate the AWW in accordance with Chapter 128 of this title (relating to Calculation of Average Weekly Wage) and shall calculate the Post-Injury Earnings in accordance with §129.2 of this title (relating to Entitlement to Temporary Income Benefits). In determining the PIE, the carrier shall base its calculations on specific wage information reported by the employer and/or the employee. A generic statement by the employer indicating the employer is "continuing full salary" or "the employee is earning full salary" is not adequate documentation to be considered PIE.

(d)

The carrier shall calculate the employee's lost wages by subtracting the PIE from the AWW (or AWW - PIE).

(e)

The amount of TIBs an employee is entitled to is based upon the lost wages. If the employee's PIE equals or exceeds the employee's AWW, the employee has no lost wages and the carrier shall not pay TIBs.

(f)

An employee who earns less than $8.50 per hour is entitled to TIBs as follows:

(1)

75% of the lost wages for the first 26 weeks of TIBs due; and

(2)

70% of the lost wages for all TIBs payments thereafter.

(g)

An employee who earns $8.50 per hour or more is entitled to TIBs in the amount of 70% of the lost wages.

(h)

If the amount of TIBs the employee is entitled to as calculated in subsections (f) or (g) of this section is greater than the maximum weekly TIBs rate computed in accordance with Texas Labor Code, §408.061, the carrier shall pay the maximum weekly TIBs rate.

(i)

If the amount of TIBs the employee is entitled to as calculated is subsections (f) or (g) of this section is less than the minimum weekly TIBs rate computed in accordance with Texas Labor Code, §408.062 and the employee's AWW is equal to or less than the minimum weekly TIBs rate, the carrier shall pay the minimum weekly TIBs rate.

§129.5.Work Status Reports.

(a)

The treating doctor shall file a Work Status Report in the form and manner prescribed by the Commission with the employer and the insurance carrier and provide a copy to the employee and the employee's representative. The Work Status Report shall indicate the job functions the employee is able to safely perform as well as any specific restrictions on the employee's activities, if any. If the doctor believes that the employee has restrictions on his or her ability to work as a result of the compensable injury, the Work Status Report shall include the date that the restrictions are expected to expire.

(b)

The treating doctor shall file the Work Status Report within three days of the initial examination of the employee, regardless of the employee's work status and shall file a new one for every subsequent appointment, but no more than once every week, until the doctor releases the employee to return to work without restrictions. If, after releasing an employee to return to work the employee's unrestricted work status changes, the treating doctor shall begin and continue to file the Work Status Report again. Although the report is to be filed within three days of the exam, the treating doctor shall provide the employee with a copy of the report at the time of the examination.

(c)

In addition, the treating doctor shall file the Work Status Report within seven days of the day of receipt of:

(1)

functional job descriptions from the employer listing available modified duty positions that the employer is able to offer the employee as provided by §129.6(b) of this title (relating to Bonafide Offers of Employment); or

(2)

a required medical examination doctor's report that the employee can return to work.

(d)

Filing the Work Status Report as required by subsection (c) of this section does not require a new examination of the employee.

(e)

The treating doctor shall file the Work Status Report with the employer, the carrier, and the employee's representative by facsimile or electronic transmission unless the recipient does not have a means of receiving the transmission in which case the reports shall be sent by personal delivery or mail.

§129.6.Bonafide Offers of Employment.

(a)

An employer may offer an injured employee a modified duty position which has restricted duties which are within the employee's work abilities as determined by the employee's treating doctor. The offer of modified duty may be initiated by the employer as provided in subsection (b) of this section or in response to the treating doctor's certification of the employee's work abilities.

(b)

An employer or insurance carrier may request the treating doctor provide a Work Status Report by providing the treating doctor a set of functional job descriptions which list modified duty positions which the employer has available for the employee to work. The functional job descriptions must include descriptions of the physical and time requirements of the positions.

(c)

An employer's offer of modified duty shall be made to the employee on the form and in the manner prescribed by the Commission and include the information required by the form. Included with the offer must be a copy of the treating doctor's Work Status Report. The employer shall make the modified duty offer to the employee by facsimile or electronic transmission unless the employer does not have a means of sending by facsimile or electronic transmission or the employee does not have the means of receiving one, in which case the offer shall be made by personal delivery or mail. In addition, the employer shall provide a copy of the offer to the carrier by facsimile or electronic transmission unless the employer does not have a means to send by facsimile or electronic transmission, in which case the copy of the offer shall be sent by mail.

(d)

A carrier may deem an offer of modified duty to be a bonafide offer of employment if:

(1)

it has written copies of the Work Status Report and the offer; and

(2)

the offer:

(A)

is for a job at a location which is geographically accessible as provided in subsection (e) of this section;

(B)

is consistent with the treating doctor's certification of the employee's work abilities; and

(C)

was communicated to the employee in writing, on the form and in the manner prescribed by the Commission and included all required information.

(e)

Employment is "geographically accessible" to the injured employee if it is within a reasonable distance from the employee's residence unless the employee establishes through medical evidence that the employee's physical condition precludes travel of that distance. An offer of employment is presumed to be within a reasonable distance if it is at the same location that the employee normally worked at the time of the injury. Other locations may also be considered within a reasonable distance.

(f)

A carrier may deem the wages offered by an employer through a bonafide offer of employment under subsection (d) of this section to be Post-Injury Earnings, as outlined in §129.2 of this title (relating to Entitlement to Temporary Income Benefits), on the seventh day after the employee receives the offer of modified duty unless the employee's treating doctor notifies the carrier that the offer made by the employer is not consistent with the employee's work restrictions. For the purposes of this section, if the offer of modified duty was made by mail, an employee is deemed to have received the offer from the employer five days after it was mailed. The wages the carrier may deem to be PIE are those that would have been paid on or after the seventh day following the employee's receipt of the offer.

§129.7.Non-Reimbursable Employer Payments.

(a)

An employer who pays an employee salary continuation is not entitled to and shall not seek reimbursement from the employee or the insurance carrier.

(b)

An employer who pays an employee salary supplementation to supplement income benefits paid by the carrier is not entitled to and shall not seek reimbursement from the employee or the insurance carrier.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 16, 1999.

TRD-9905175

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512)707-5829

28 TAC §129.11

The Texas Workers' Compensation Commission (the Commission) proposes new §129.11, concerning the monthly payment of temporary income benefits. The proposed rule establishes the requirements for agreements under which temporary income benefits may be paid monthly, to establish the due date of monthly benefit payments, and the method of calculation of the monthly amount. The new rule is being proposed in response to the amendments to §408.081(c) as passed by the 76th Legislature.

The Texas Register published text shows the complete text of the new rule, and should be read to determine all new language.

Proposed new subsection (a) allows the insurance carrier and the injured employee to enter into a written agreement to change the frequency of payments from the standard weekly period to a monthly period. This section also sets out the requirements for such an agreement. When less than the maximum weekly compensation rate in effect at the time of the injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the agreement. If the parties agree to the monthly payments issued by the insurance carrier, the monthly payments will begin the first day of the month following the date of the agreement. Filing an agreement with the Commission is not required except upon request of the Commission,

Proposed new subsection (b) establishes the method for calculating the amount of entitlement for the monthly payment of TIBs. The average weekly wage will be multiplied by 4.34821 to establish an average monthly wage. The actual amount earned during the calendar month will be subtracted from the average monthly wage. The amount of the wages lost during the month will then be calculated by 70% or 75%, as appropriate, to determine the actual amount of TIBs the injured employee is entitled to for the month.

Proposed new subsection (c) allows either party to the agreement to dispute the period, amount of or entitlement to temporary income benefits and that any disputes should be raised as they arise.

Proposed new subsection (d) establishes that the monthly payment of temporary income benefits will expire upon the suspension of TIBs based on a zero percent impairment rating or upon the change of benefit type to impairment income benefits, lifetime income benefits or death benefits. Agreements for the monthly payment of impairment income benefits, lifetime income benefits or death benefits each require a separate agreement

Proposed new subsection (e) allows an injured employee who has opted for monthly payment of TIBs to terminate the agreement and return to weekly payments. On the termination of the agreement, the insurance carrier will be responsible for all TIBs which have accrued and are due and will be required to continue making weekly payments as and when they accrue and are due.

New §129.11(f) states the rule will apply only to agreements entered into on or after September 1, 1999, for payment of TIBs under the provisions of the Act.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rule is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rule as proposed is in effect the public benefits anticipated as a result of enforcing the rule will be:

Compliance with the requirement of the §408.081(c) as passed by the 76th legislature.

Regarding monthly payments of TIBs, the injured employee will receive the full monthly amount by the seventh day of each month. This can provide them opportunity for better money management and less paperwork.

Insurance carriers will benefit from reduced administrative costs associated with issuing and mailing weekly benefit checks and less likelihood of late payments since there will be fewer checks issued.

There will be no adverse economic impact on those required to comply with the rule as proposed or for small businesses or micro-businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

The new rule is proposed under the following statutes: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041 which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.062, which establishes the minimum benefit payment amount; Texas Labor Code, §408.081, as amended by the 76th Legislature, which establishes the frequency of income benefits and requires the Commission to adopt rules which establish the criteria which must be included in an agreement for monthly payments; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.102, which establishes the duration of temporary income benefits; Texas Labor Code, §408.103, which sets out the method for calculating the amount of temporary income benefits; and Texas Labor Code, §409.023, which requires insurance carriers to pay benefits as and when they accrue.

The proposed new rule affects the following statutes: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.062, which establishes the minimum benefit payment amount; Texas Labor Code, §408.081, as amended by the 76th Legislature, which establishes the frequency of income benefits and requires the Commission to adopt rules which establish the criteria which must be included in an agreement for monthly payments; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.101, which addresses entitlement to TIBs; Texas Labor Code, §408.102, which establishes the duration of temporary income benefits; Texas Labor Code, §408.103, which sets out the method for calculating the amount of temporary income benefits; and Texas Labor Code, §409.023, which requires insurance carriers to pay benefits as and when they accrue.

§129.11.Agreement for Monthly Payment of Temporary Income Benefits.

(a)

Upon the request of an injured employee, the insurance carrier and an injured employee entitled to temporary income benefits (TIBs) may agree to change the frequency of TIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the Commission if the Commission requests a copy. To relieve the insurance carrier of the responsibility to pay TIBs weekly, the written agreement must include:

(1)

TIBs payments will be initiated with the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2)

monthly TIBs payment will be issued on or before the seventh day of the month following the month for which benefits are due;

(3)

weekly TIBs payments will continue through the end of the month in which the agreement was signed.;

(4)

payment of the last week of TIBs to transition from weekly payment of TIBs to monthly payments will be to the end of the month to ensure the injured employee receives TIBs through the last day of the month; and

(5)

if less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the written agreement.

(b)

To calculate the amount of monthly TIBs to pay, the carrier shall determine the average monthly wage by multiplying the average weekly wage by 4.34821 and subtracting any Post-Injury Earnings the employee earned during the month for which the employee was entitled to TIBs to determine the lost wages. The carrier shall than pay the employee in monthly TIBs as follows:

(1)

if the employee earns $8.50 per hour or more, the carrier shall pay 70% of the lost wages; or

(2)

if the employee earns less than $8.50 per hour, the carrier shall pay:

(A)

75% of the lost wages for the first 26 weeks of TIBs due; and

(B)

70% of the lost wages for all TIBs payments thereafter.

(c)

Entering into an agreement under this section does not prohibit any party to the claim from raising disputes over periods, amounts of, or entitlement to TIBs. Disputes must be raised as and when they arise, not when the monthly payment is being adjusted or suspended.

(d)

The agreement for the monthly payment of TIBs will expire upon the suspension or termination of TIBs in accordance with the Act and Commission rules.

(e)

At any time after signing the agreement for the monthly payment of TIBs, the injured employee may notify the insurance carrier that he/she no longer agrees to the monthly payment of TIBs. In this case, the insurance carrier shall pay all accrued but unpaid TIBs at the end of the current monthly cycle and will continue to pay TIBs weekly as and when they accrue and are due.

(f)

This section applies only to agreements entered into on or after September 1, 1999, for payment of TIBs under the provisions of the Act.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 16, 1999.

TRD-9905182

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512)707-5829

Chapter 130. Impairment and Supplement Income Benefits

Subchapter A. Impairment Income Benefits

28 TAC §130.3

The Texas Workers' Compensation Commission (the Commission) proposes an amendment to §130.3 concerning Certification of Maximum Medical Improvement by a Doctor other than Treating Doctor (retitled Certification of Maximum Medical Improvement by a Doctor other than a Treating or Designated Doctor). The Commission is simultaneously withdrawing in this issue of the Texas Register the proposed amendment to §130.3 which appeared in the February 19, 1999, issue of the Texas Register (24 TexReg 1134).

The amendment is proposed to address new legislation enacted by the 76th Texas Legislature, 1999. Specifically, House Bill 2510 made changes to address required medical examinations. In addition, House Bill 2511 amended Texas Labor Code, §401.024, authorizing the Commission to adopt rules to require electronic transmission of information by means such as facsimile, email, and electronic data interchange. This authorization is utilized in the proposed amendments to achieve a legislative goal of reducing paper communication requirements in the workers' compensation system while ensuring timely and effective communication between system participants.

At the same time, amendments are proposed to include in the rule, some of the Commission's long standing policies and to address problems with the rules that were identified by the Claims Service Task Force (a group of representatives from the system appointed by the Commission to serve as a sounding board for ideas regarding rule development in the area of claims service), other system participants, and Commission staff. The proposed amendment simplifies and shortens the rule construction and is designed to be more prescriptive and to eliminate or significantly reduce ambiguity in the rules. The proposal is designed to more clearly lay out expectations so that all system participants will understand the requirements the Act and rule place on them. It is expected that together, these changes will, improve benefit delivery, reduce disputes, make dispute resolution easier, reduce violations, and make it easier to hold system participants accountable for their actions and inactions.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Amendments to §130.3 - Certification of Maximum Medical Improvement by a Doctor other than a Treating or Designated Doctor.

Amendments to subsection (a) are proposed to clarify the requirements of the rule.

The existing language in subsection (b) is proposed to be deleted and replaced with language that better explains the requirements that the rule places on the treating doctor. Plain reading of the current language in the rule suggests that the treating doctor is required to agree with the required medical examination (RME) doctor's opinion regarding maximum medical improvement and impairment which is clearly inappropriate if the treating doctor does not agree with the RME doctor's certification.

The proposed subsection (c) is intended to clarify that a treating doctor's indication of agreement or disagreement with the RME doctor's opinion does not require a separate examination of the employee.

New subsection (d) adds language relating to the means of filing the reports required by the rule. The new language emphasizes use of "instant" communication such as electronic transmission through facsimile or email to reduce the delay in providing critical information for benefit delivery and reduce the use of paper as required by House Bill 2511. The language is written to make use of traditional postal mail the last resort for filing the report. By using this language, as use of email and other forms of instant communication by employees expands, the rules will reduce the reliance on mail that has often caused over, under, and delayed payments.

New subsection (e) is added to improve enforcement by requiring doctors to maintain documentation of how and when reports under the rule are filed and received. Currently, efforts to ensure the compliance with the existing rule are hampered by an inability to prove that reports were timely filed with all parties. For instance, in the case of the treating doctor responding to a report by the RME doctor, it is necessary to prove that the report was sent to the treating doctor and to prove when it was received by the treating doctor. With the addition of this subsection it should be easier to ensure compliance because there will be documentation of the treating doctor's receipt of the report which is currently not regularly maintained.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rules are in effect there will be fiscal implications for state or local governments as a result of enforcing or administering the rules. The Commission should ultimately see a reduction in costs if more treating doctors responding to RME doctor's reports. This is expected to increase the number of agreements and reduce disputes. Information service expenses should also be reduced. The anticipated reduction in costs cannot be quantified.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rule will be:

Injured employees should benefit by an increase in the timeliness of income benefit payments.

Employers should benefit because the new rule will help resolve disputes over MMI and impairment more quickly and, along with changes being proposed in Chapter 126 (relating to Benefits - General Provisions Applicable to All Benefits) and Chapter 129 (relating to Income Benefits - Temporary Income Benefits), should reduce overpayments within the system and thus potentially have a positive affect on premiums.

Health care providers are not likely to significantly benefit by the amendments to this rule.

Carriers should benefit from more timely provision of information and the ability to more quickly resolve disputes.

The Commission should find it easier to hold system participants accountable for their actions and inactions due to clearer requirements and there will be more documentation to review.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the requirements to comply with the rules will have the following affects on costs of system participants:

Claimants will probably not see either an increase or decrease in costs.

Employers may see reduced costs to the extent that timely provision of information helps reduce the time it takes disputes to be resolved through reduced premium amounts.

Health care providers are not likely to see a significant increase in costs associated with this rule since the most significant changes are to require use of facsimile or electronic transmission that most doctors already have an ability to use and maintenance of the documentation required by the rule can be accomplished by simply keeping a copy of the electronic transmission or facsimile confirmation sheet.

Carriers should see a reduction in costs associated because of the clarification of the rule and the emphasis on "instant communication."

The requirements of these rules are not expected to affect costs for small businesses except that by helping to reduce overpayments by more timely reporting of information, the employer's premiums may be positively affected. There will be no difference in cost of compliance for small businesses as compared to large businesses and there is no anticipated adverse economic impact on small businesses or micro-businesses because the proposed amendments to the rule primarily clarify existing requirements.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us .

The amendment is proposed under the following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.004, which addresses required medical examinations; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.101 and §408.102, which cut off entitlement to TIBs upon the employee reaching MMI; Texas Labor Code, §408.121, which states that entitlement to IIBs begins on the day after MMI; Texas Labor Code, §408.122, which establishes eligibility for IIBs and provides for use of designated doctors when a dispute exists regarding the certification of MMI; Texas Labor Code, §408.123, which requires a doctor certifying MMI to file a report and which requires a certification of MMI and assignment of an impairment rating by a doctor other than the treating doctor, to be sent to the treating doctor who must indicate either agreement or disagreement with the certification and evaluation; Texas Labor Code, §408.124, which prescribes the guides to be used for assigning impairment ratings; Texas Labor Code, §408.125, which addresses use of a designated doctor to resolve impairment rating disputes.

The proposed amendment affects the following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.004, which addresses required medical examinations; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.101 and §408.102, which cut off entitlement to TIBs upon the employee reaching MMI; Texas Labor Code, §408.121, which states that entitlement to IIBs begins on the day after MMI; Texas Labor Code, §408.122, which establishes eligibility for IIBs and provides for use of designated doctors when a dispute exists regarding the certification of MMI; Texas Labor Code, §408.123, which requires a doctor certifying MMI to file a report and which requires a certification of MMI and assignment of an impairment rating by a doctor other than the treating doctor, to be sent to the treating doctor who must indicate either agreement or disagreement with the certification and evaluation; Texas Labor Code, §408.124, which prescribes the guides to be used for assigning impairment ratings; Texas Labor Code, §408.125, which addresses use of a designated doctor to resolve impairment rating disputes.

§130.3.Certification of Maximum Medical Improvement by a Doctor other than the Treating or Designated Doctor.

(a)

A doctor, other than a treating or designated doctor, who certifies that an employee has reached maximum medical improvement shall complete a medical evaluation report (the report) in accordance with [ under ] §130.1 of this title (relating to Reports of Medical Evaluation: Maximum Medical Improvement and Permanent Impairment), and send [ a copy of ] the medical evaluation report, no later than seven days after the conclusion of the examination, to the treating doctor, [ if the certifying doctor is not a designated doctor selected to resolve a dispute about maximum medical improvement. A copy of the report shall also be sent to ] the Commission, the employee , and [ or ] the employee's representative (if any) , and the insurance carrier [ at the same time ].

(b)

Upon receipt of the report, the treating doctor shall: [ A treating doctor who receives the report shall mail to the Commission within seven days: ]

(1)

indicate on the report either agreement or disagreement with the certification of maximum medical improvement and with the impairment rating assigned by the certifying doctor; and [ a statement indicating the treating doctor's agreement with the certifying doctor's certification and impairment rating; and ]

(2)

within seven days of receipt, send a signed copy of the report indicating agreement or disagreement to the Commission, the employee and the employee's representative (if any), and the carrier. [ the report required by §130.1 of this title (relating to Reports of Medical Evaluation: Maximum Medical Improvement and Permanent Impairment), based on the most recent examination, if the treating doctor disagrees with either the finding that the employee has reached maximum medical improvement, or the impairment rating assigned by the certifying doctor. ]

(c)

A treating doctor's agreement or disagreement under subsection (b) of this section does not require a separate examination of the employee prior to the issuance of the opinion and shall not be considered a certification as that term is used in §130.1 of this title.

(d)

The reports required under this section to be filed with a doctor and carrier shall be filed by facsimile or electronic transmission. In addition, the doctor shall file the report with the employee and the employee's representative by facsimile or electronic transmission unless the employee or the employee's representative does not have a means of receiving the transmission, in which case the report shall be sent by mail or personal delivery.

(e)

A doctor shall maintain documentation of the date and means of delivery and receipt of reports under this section.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905173

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

28 TAC §130.11

The Texas Workers' Compensation Commission (the Commission) proposes new §130.11, concerning the monthly payment of impairment income benefits. The new rule establishes the criteria which must be contained in a written agreement to pay impairment income benefits monthly rather than weekly, to establish the due date of monthly impairment income benefit payments and the calculation of the monthly amount accrued and due. The new rule is being proposed in response the amendments to §408.081(c) as passed by the 76th Legislature, 1999.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Proposed new subsection (a) allows an insurance carrier and an injured employee to enter into a written agreement to change the frequency of payments from the standard weekly period to a monthly period. This section also sets out the requirements for such an agreement. The weekly compensation rate must be multiplied by 4.34821. When less than the maximum weekly compensation rate in effect at the time of the injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the agreement. If the parties agree to the monthly payments issued by the insurance carrier, the monthly payments will begin the first day of the month following the date of the agreement. The impairment rating upon which impairment income benefits are paid and the source of the impairment rating are required. Filing an agreement with the Commission is not required except upon request of the Commission.

Proposed new subsection (b) directs that the injured employee and the insurance carrier may not agree to the monthly payment of IIBs until there is an agreed impairment rating or the impairment rating has become final.

Proposed new subsection (c) establishes that the agreement for payment of IIBs shall expire upon the suspension of IIBs or the change of benefit type to supplemental income benefits or death benefits.

Proposed new §130.11(d) allows an injured employee who has opted for monthly payment of IIBs to terminate the agreement and return to weekly payments. Upon termination of the agreement, the insurance carrier will be responsible for all IIBs which have accrued and are due and will be required to continue to pay benefits weekly as and when they accrue and are due.

New §130.11(e) establishes that the requirements of this rule apply only to agreements for monthly payments of IIBs entered into on or after September 1, 1999.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rule is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rule as proposed is in effect the public benefits anticipated as a result of enforcing the rule will be:

Compliance with the requirement of the §408.081(c) as passed by the 76th legislature.

Regarding monthly payments of IIBs, the injured employee will receive the full monthly amount by the seventh day of each month. This can provide them opportunity for better money management and less paperwork.

Insurance carriers will benefit from reduced administrative costs associated with issuing and mailing weekly benefit checks and less likelihood of late payments since there will be fewer checks issued.

There will be no adverse economic impact on those required to comply with the rule as proposed or for small businesses or micro-businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us .

New §130.11 is proposed under: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.062, which establishes the minimum benefit payment amount; Texas Labor Code, §408.081, which establishes the frequency of income benefits and requires the Commission to adopt rules which establish the criteria which must be included in an agreement for monthly payments; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.121, which addresses entitlement to and payment of IIBs; Texas Labor Code, §408.122, which establishes eligibility for IIBs; Texas Labor Code, §408.123, which addresses certification maximum medical impairment and the evaluation of impairment rating; Texas Labor Code, §408.125, which addresses disputes of impairment ratings; Texas Labor Code, §408.126, which establishes the amount of IIBs; Texas Labor Code, §408.127, which addresses reduction of IIBs; Texas Labor Code, §408.128, which addresses commutation of IIBs; Texas Labor Code, §408.129, which addresses acceleration of IIBs; and Texas Labor Code, §409.023, which requires insurance carriers to pay benefits as and when they accrue.

The proposed new rule affects the following statutes: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.062, which establishes the minimum benefit payment amount; Texas Labor Code, §408.081, which establishes the frequency of income benefits and requires the Commission to adopt rules which establish the criteria which must be included in an agreement for monthly payments; Texas Labor Code, §408.082, which addresses entitlement to income benefits; Texas Labor Code, §408.121, which addresses entitlement to and payment of IIBs; Texas Labor Code, §408.122, which establishes eligibility for IIBs; Texas Labor Code, §408.123, which addresses certification maximum medical impairment and the evaluation of impairment rating; Texas Labor Code, §408.125, which addresses disputes of impairment ratings; Texas Labor Code, §408.126, which establishes the amount of IIBs; Texas Labor Code, §408.127, which addresses reduction of IIBs; Texas Labor Code, §408.128, which addresses commutation of IIBs; Texas Labor Code, §408.129, which addresses acceleration of IIBs; and Texas Labor Code, §409.023, which requires insurance carriers to pay benefits as and when they accrue.

§130.11. Agreement for Monthly Payment of Impairment Income Benefits.

(a)

Upon the request of the employee, the insurance carrier and an employee entitled to impairment income benefits (IIBs) may agree to change the frequency of IIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the Commission if the Commission requests a copy. To relieve the insurance carrier of the responsibility to pay IIBs weekly, the written agreement must include the following terms and conditions:

(1)

IIBs payments will be initiated with the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2)

monthly IIBs payment will be issued on or before the seventh day of the month for which benefits are due;

(3)

weekly IIBs payments will continue through the end of the month in which the agreement was signed.;

(4)

payment of the last week of IIBs to transition from weekly payment of IIBs to monthly payments will be prorated to the end of the month to ensure the injured employee receives IIBs through the last day of the month;

(5)

if less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the written agreement;

(6)

the monthly benefit amount shall be equal to the weekly compensation rate for IIBs that the injured employee is entitled to multiplied by 4.34821; and

(7)

the impairment rating and source of the impairment rating upon which payment of impairment income benefits is being based.

(b)

An injured employee and insurance carrier may not agree to the monthly payment of IIBs until the impairment rating has been agreed to or has become final.

(c)

The agreement for the monthly payment of impairment income benefits will expire upon the suspension or termination of IIBs in accordance with the Act and Commission rules.

(d)

At any time after signing the agreement for the monthly payment of IIBs, the injured employee may notify the insurance carrier that he/she no longer agrees to the monthly payment of IIBs. In this case, the insurance carrier shall pay all accrued but unpaid IIBs at the end of the current monthly cycle and will continue paying IIBs weekly as and when they accrue and are due.

(e)

Effective Date. This section applies only to agreements entered into on or after September 1, 1999, for payment of IIBs under the provisions of the Act.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905181

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Subchapter B. Supplemental Income Benefits

28 TAC §§130.101-130.103, 130.110

The Texas Workers' Compensation Commission (the Commission) proposes amendments to §130.101 concerning definitions, §130.102 concerning eligibility for supplemental income benefits (SIBs); §130.103 concerning determination of entitlement or non-entitlement for the first quarter of SIBs, and new §130.110 concerning return to work disputes during SIBs.

Amended §§130.101, 130.102 and 130.103 are being proposed in response to the amendments to Texas Labor Code, §408.150(a) and (b) and new §130.110 is being proposed in response to new Texas Labor Code, §408.151, as passed by the 76th Legislature. The amended rules are proposed to define vocational rehabilitation services and the requirements of a vocational rehabilitation program provided by a private provider of vocational rehabilitation services. The amendments to Texas Labor Code, §408.150 include cooperation with a private provider of vocational rehabilitation as a good faith effort to obtain employment commensurate with the injured employee's abilities and establishes that an insurance carrier may provide vocational rehabilitation services through a private provider of such services. These provisions have been incorporated into the proposed rules. In addition, the proposed rules define what constitutes a dispute regarding an injured employee's ability to return to work, and that a designated doctor will be assigned to resolve such a dispute.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Proposed §130.101.

Proposed amendments to §130.101 adds definitions of "vocational rehabilitation services" and "vocational rehabilitation program" as paragraphs (7) and (8) and deletes the definition of "vocational assistance". These definitions establish what constitutes vocational rehabilitation services and what must be included in a vocational rehabilitation program. The concept of vocational assistance is encompassed in these terms and therefore that definition is no longer needed.

Proposed §130.102.

Proposed §130.102(d)(3) adds to the list of actions which constitute a good faith effort to obtain employment being enrolled in, and satisfactorily participating in a full time vocational rehabilitation program provided by the insurance carrier through a private provider of vocational rehabilitation services.

Proposed amendments to §130.102(e) adds to its exceptions new subsection (d)(3) and adds to the list of items to be considered in determining good faith effort, cooperation with a private provider of vocational rehabilitation services.

Proposed §130.102(h) is amended to address vocational rehabilitation services provided by an insurance carrier through a private provider of such services, and that an injured employee who refuses services or refuses to cooperate with a private provider will lose entitlement to supplemental income benefits.

Proposed §130.103.

Proposed amendment to §103.103(d) clarifies what information must be included in a notice regarding referral to the Texas Rehabilitation Commission and adds the requirement that the Commission notify the insurance carrier in addition to the injured employee.

Proposed New §130.110.

Proposed new §130.110(a) establishes that if a dispute exists regarding return to work during supplemental income benefits, the Commission shall select a designated doctor to resolve the dispute and that the report of the designated doctor has presumptive weight.

Proposed new §130.110(b) defines what constitutes a dispute regarding an injured employee's ability to work.

Proposed new §130.110(c) establishes the timeframe for raising a dispute regarding an injured employee's ability to work.

Proposed new §130.110(d) provides that a request for a designated doctor to resolve a dispute regarding an injured employee's ability to work shall be requested in writing in the form, format and manner prescribed by the Commission. Subsection (d) also provides an exception to this general requirement for an injured employee who does not have a representative.

Proposed new §130.110(e) prohibits a designated doctor selected to resolve a dispute regarding maximum medical improvement and/or impairment rating from being appointed to resolve a dispute regarding ability of the same injured employee to return to work.

Proposed new §130.110(f) establishes that the Commission shall select a designated doctor from the Commission's designated doctor list that is, to the extent possible, the same type of doctor as the injured employee's current treating doctor. The rule also establishes that the designated doctor shall not have treated or examined the injured employee regarding the medical condition being examined, and that a designated doctor selected under this section shall act in that capacity for all disputes until unable or unwilling to do so.

Proposed new §130.110(g) addresses rescheduling of designated doctor appointments. This subsection provides that a designated doctor or injured employee with a scheduling conflict, within 24 hours of the appointment and that the re-scheduled examination shall be set for a date within seven days of the originally scheduled examination. The rule also establishes that the designated doctor shall notify the insurance carrier and Commission of the date and time of the rescheduled examination.

Proposed new §130.110(h) establishes that both the injured employee's treating doctor and the insurance carrier are responsible for forwarding all the injured employee's medical records to the designated doctor and establishes the timeframe for receipt of those records by the designated doctor. The rule also establishes that the medical records may not contain any marks or highlights for the purpose of influencing the designated doctor.

Proposed new §130.110(i) provides that only the injured employee and appropriate Commission staff may communicate with the designated doctor about the case. This prohibition is contained in Texas Labor Code, §408.125.

Proposed new §130.110(j) requires the designated doctor to review all medical records provided and requires the designated doctor to conduct a functional capacity examination to determine the injured employee's ability to return to work. This subsection also allows the designated doctor to decline performance of functional capacity testing if the designated doctor determines it is not appropriate for a particular patient due to the patient's medical condition.

Proposed new §130.110(k) establishes that the designated doctor shall file a report with the Commission and send a copy to the injured employee, the employee's representative if any, and the insurance carrier not later than seven days after completing the examination. The report is to be sent to the injured employee, the injured employee's representative, and the insurance carrier via facsimile or electronic transmission unless the recipient does not have means of receiving the transmission, in which case, the report shall be sent by mail.

Proposed new §130.110(l) allows the designated doctor to perform additional testing or refer the injured employee to other health care providers when necessary to determine the injured employee's ability to work or return to work. The proposed new rule also provides that the additional testing does not require pre-authorization and must be performed within seven days of the designated doctor's physical examination of the injured employee.

Proposed new §130.110(m) lists the information the designated doctor must maintain in his/her records.

Proposed new §130.110(n) lists the actions the Commission may take to enforce this section.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rules are in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the rules.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rules as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect the public benefits anticipated as a result of enforcing the rule will be:

Compliance with the requirements of Texas Labor Code, §408.150 and §408.151 as passed by the 76th legislature.

Injured employees, that may be eligible for supplemental income benefits, that cooperate with an insurance carrier sponsored private provider of vocational rehabilitation services will be assured that the provider has the training and experience to provide services and training that may assist the injured employee to be able to return to work. The injured employee will also have a plan for vocational rehabilitation that clearly spells out what is required of the injured employee to satisfactorily complete the program. Additionally, the injured employee will know that cooperation in a full time vocational rehabilitation program meets the good faith job search effort.

Injured employees will benefit from having the ability to dispute an insurance carrier's position regarding the injured employee's ability to return to work and have a designated doctor appointed to resolve the dispute. The designated doctor selected to resolve a return to work dispute will not have previously examined the injured employee regarding the medical condition and will be able to provide an objective, unbiased determination.

Insurance carriers will benefit from being able to offer vocational rehabilitation services to injured employees who are receiving supplemental income benefits that may assist the injured employee to be able to return to work. In addition, if the injured employee refuses the services or fails to cooperate with the services offered, the injured employee loses entitlement to supplemental income benefits.

Insurance carriers will benefit from having the ability to dispute an injured employee's position regarding the injured employee's ability to return to work and have a designated doctor appointed to resolve the dispute. The insurance carrier will not be able to immediately implement the designated doctor's determination but will be able to use it as information when making the entitlement determination during the subsequent quarter.

Employers will benefit from the injured employee being able to return to some type of employment, whether with the employer the injured employee was working for at the time of the injury or with another employer.

The proposed rules will add clarity regarding disputes which will benefit injured employees, insurance carriers, and injured employees.

There will be no anticipated economic costs to persons who are required to comply with the rule as proposed. The decision to provide or not to provide vocational rehabilitation services lies with the insurance carrier.

There will be no adverse economic impact on small businesses or micro-businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us .

The proposed amendments to §§130.101, 130.102 and 130.103 and proposed new §130.110 are proposed under the Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, 1999, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.141, which addresses the award of supplemental income benefits; Texas Labor Code, §408.142, which sets out the requirements for an injured employee's eligibility to receive supplemental income benefits; Texas Labor Code, §408.143, which requires an injured employee to file with the insurance carrier a quarterly statement regarding employment after the Commission's initial determination of supplemental income benefits; Texas Labor Code, §408.147, which sets out the procedures for contest of supplemental income benefits by an insurance carrier and provides that the insurance carrier is liable for the attorney's fees of an injured employee who prevails in such a contest; Texas Labor Code, §408.150, as amended by the 76th Legislature, which provides for Commission referral to the Texas Rehabilitation Commission for vocational rehabilitation and training; Texas labor Code, §408.151, as added by the 76th Legislature, which requires the selection of a designated doctor to resolve a dispute regarding an injured employee's ability to return to work; and Chapter 410 of the Texas Labor Code, regarding adjudication of disputes.

The proposed amendments to §§130.101, 130.102 and 130.103 and proposed new §130.110 affect the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; Texas Labor Code, §408.141, which addresses the award of supplemental income benefits; Texas Labor Code, §408.142, which sets out the requirements for an injured employee's eligibility to receive supplemental income benefits; Texas Labor Code, §408.143, which requires an injured employee to file with the insurance carrier a quarterly statement regarding employment after the Commission's initial determination of supplemental income benefits; Texas Labor Code, §408.147, which sets out the procedures for contest of supplemental income benefits by an insurance carrier and provides that the insurance carrier is liable for the attorney's fees of an injured employee who prevails in such a contest; Texas Labor Code, §408.150, as amended by the 76th Legislature, which provides for Commission referral to the Texas Rehabilitation Commission for vocational rehabilitation and training; Texas labor Code, §408.151, as added by the 76th Legislature, which requires the selection of a designated doctor to resolve a dispute regarding an injured employee's ability to return to work; and Chapter 410 of the Texas Labor Code, regarding adjudication of disputes.

§130.101. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)-(6)

(No change.)

(7)

Vocational Rehabilitation Services - Services including, but not limited to, training, physical or mental restoration, or other services necessary to enable an injured employee to become employed in an occupation that is consistent with his or her strengths, abilities and interest. [ Vocational assistance - Services to assist the injured employee in the identification of physical abilities, vocational abilities, and other activities to enhance the potential to return to work. ]

(8)

Vocational Rehabilitation Program - A program for the provision of vocational rehabilitation services designed to assist the injured employee to return to work. A vocational rehabilitation plan includes, at a minimum, an employment goal, any intermediate goals, a description of the services to be provided or arranged, the start and end dates of the described services, and the injured employee's responsibilities for the successful completion of the plan.

(9)

Wages - All forms of remuneration payable for personal services rendered during the qualifying period as defined in Texas Labor Code, §401.011(43), including the wages of a bona fide offer of employment which was not accepted.

§130.102. Eligibility for Supplemental Income Benefits; Amount.

(a)-(c)

(No change.)

(d)

Good Faith Effort. An injured employee has made a good faith effort to obtain employment commensurate with the employee's ability to work if the employee:

(1)

has returned to work in a position which is relatively equal to the injured employee's ability to work;

(2)

has been enrolled in, and satisfactorily participated in, a full time vocational rehabilitation program sponsored by the Texas Rehabilitation Commission during the qualifying period;

(3)

has during the qualifying period been enrolled in, and satisfactorily participated in, a full time vocational rehabilitation program provided by an insurance carrier through a private provider of vocational rehabilitation services;

(4)

has been unable to perform any type of work in any capacity, has provided a narrative report from a doctor which specifically explains how the injury causes a total inability to work, and no other records show that the injured employee is able to return to work; or

(5)

[ (4) ] has provided sufficient documentation as described in subsection (e) of this section to show that he or she has made a good faith effort to obtain employment.

(e)

Job Search Efforts and Evaluation of Good Faith Effort. Except as provided in subsections (d)(1), (2), [ and ] (3) , and (4) of this section, an injured employee who has not returned to work and is able to return to work in any capacity shall look for employment commensurate with his or her ability to work every week of the qualifying period and document his or her job search efforts. In determining whether or not the injured employee has made a good faith effort to obtain employment under subsection (d) (5) [ (4) ] of this section, the reviewing authority shall consider the information from the injured employee, which may include, but is not limited to information regarding:

(1)

number of jobs applied for throughout the qualifying period;

(2)

type of jobs sought by the injured employee;

(3)

applications or resumes which document the job search efforts;

(4)

cooperation with the Texas Rehabilitation Commission;

(5)

cooperation with a vocational rehabilitation program provided by an insurance carrier through a private provider of vocational rehabilitation services;

(6)

[ (5) ] education and work experience of the injured employee;

(7)

[ (6) ] amount of time spent in attempting to find employment;

(8)

[ (7) ] any job search plan by the injured employee;

(9)

[ (8) ] potential barriers to successful employment searches;

(10)

[ (9) ] registration with the Texas Workforce Commission; or

(11)

[ (10) ] any other relevant factor.

(f)-(g)

(No change.)

(h)

Services Provided by a Carrier Through a Private Provider of [ Carrier-Sponsored ] Vocational Rehabilitation Services [ Case Managers ]. The insurance carrier may provide vocational rehabilitation services through a private provider of such services provided that the individual [ a case manager to perform vocational assistance provided that the individual ] is [ a ] registered as a private provider in accordance with §136.2 of this title (relating to Registry of Private Providers of Vocational Rehabilitation Services) and is credentialed as a Licensed Professional Counselor (LPC), Certified Case Manager (CCM), Certified Rehabilitation Counselor (CRC), Certified Vocational Evaluator (CVE), or Certified Disability Management Specialist (CDMS). Specific services may be performed by other persons provided that they have the appropriate background and the work is done by or at the direction of a person with the credentials required [ outlined ] in this subsection.

§130.103. Determination of Entitlement or Non-entitlement for the First Quarter.

(a)-(c)

(No change.)

(d)

Referral to the Texas Rehabilitation Commission. For each injured employee who may be eligible to receive supplemental income benefits, the Commission shall send the injured employee and the insurance carrier [ notice containing ]:

(1)

notice of the need for vocational rehabilitation or training services;

(2)

a referral to the Texas Rehabilitation Commission for appropriate services; and

(3)

[ (2) ] a warning to the injured employee that refusing such services, or refusing to cooperate with such services, will result in loss of entitlement to supplemental income benefits.

§130.110. Return to Work Disputes During Supplemental Income Benefits; Designated Doctor.

(a)

If a dispute exists regarding an injured employee's ability to return to work during the supplemental income benefit period (day after expiration of impairment income benefits (IIBs) through the expiration of 401 weeks from the date of injury or permanent loss of entitlement to supplemental income benefits), the Commission shall appoint a designated doctor to resolve the dispute. The report of the designated doctor shall have presumptive weight unless the great weight of the other medical evidence is to the contrary.

(b)

A dispute exists as to whether an injured employee is able to return to work if:

(1)

a doctor chosen by the insurance carrier has determined that the injured employee can return to work, and the injured employee disagrees and has medical evidence to support that position;

(2)

either the insurance carrier or the injured employee disagree with the opinion of a treating doctor concerning the ability of the injured employee to return to work and has medical or physical evidence to support the position;

(3)

either the carrier or the injured employee disagree with the restrictions placed on the ability to return to work and has medical or physical evidence to support the position; or

(4)

the injured employee returned to work but was unable to continue to work during the qualifying period because of the injured employee's medical condition and the injured employee has medical evidence to support the inability to work.

(c)

A party who wishes to seek the appointment of a designated doctor to resolve the dispute shall make a request to the Commission not later than 14 days following:

(1)

the receipt of medical or physical evidence which supports the party's position; or

(2)

the last day of work if the dispute is made under subsection (b)(4) of this section.

(d)

The request for a designated doctor from an insurance carrier or an injured employee's representative, must be in writing and provided to the Commission in the form, format and manner prescribed by the Commission. A request for a designated doctor from an unrepresented injured employee may be submitted in any manner.

(e)

If a designated doctor has been appointed to resolve a prior dispute regarding maximum medical improvement and/or impairment rating, that doctor may not be appointed to resolve the dispute(s) regarding the injured employee's ability to return to work.

(f)

The Commission shall select the next available doctor from the Commission's designated doctor list, which is, to the extent possible, in the same discipline and licensed by the same board of examiners as the injured employee's treating doctor of choice at the time of the certification of ability to return to work and who has not previously treated or examined the injured employee with regard to the medical condition being evaluated by the designated doctor. A doctor selected under this section shall serve as the designated doctor for all dispute(s) raised under this section unless that doctor is unable or unwilling to act in that capacity.

(g)

The designated doctor and the injured employee shall contact each other if there exists a scheduling conflict for the designated doctor appointment. The designated doctor or the injured employee who has the scheduling conflict must make the contact at least 24 hours prior to the appointment. The 24 hour requirement will be waived in an emergency situation (such as a death in the immediate family or a medical emergency). The rescheduled examination shall be set for a date within seven days of the originally scheduled examination unless an extension is granted by the field office managing the claim. Within 24 hours of rescheduling, the designated doctor shall contact the Commission field office and the insurance carrier with the time and date of the rescheduled examination.

(h)

The treating doctor and insurance carrier shall send to the designated doctor without the requirement of a signed release from the injured employee, all the employee's medical records in their possession relating to the medical condition to be evaluated by the designated doctor. The designated doctor is authorized to receive the employee's confidential medical records to assist in the resolution of the injured employee's ability to return to work. The medical records must not contain any marks, highlights, or other alterations placed on such records for the purpose of communicating with or influencing the designated doctor. The medical records must be received by the designated doctor at least three days prior to the date of the appointment as specified in the Commission order. If the medical records are marked, highlighted, altered, or unrelated to the medical condition to be evaluated by the designated doctor, the designated doctor shall notify the Commission and report the noncompliance of the treating doctor and/or insurance carrier. If the designated doctor has not received the medical records at least three days prior to the examination, the designated doctor's office shall notify the Commission at the appropriate field office and the appropriate Commission staff will send an order to the treating doctor and/or insurance carrier for the delivery of medical records.

(i)

To avoid undue influence on a person selected as a designated doctor in accordance with Texas Labor Code, §408.125, only the injured employee or an appropriate member of the staff of the Commission may communicate with the designated doctor about the case regarding the employee's medical condition or history prior to the examination of the employee by the designated doctor. After that examination is completed, communication with the designated doctor regarding the a's medical condition or history may be made only through appropriate Commission staff members. An ombudsman is not considered appropriate staff to contact the designated doctor and should communicate with a designated doctor only through appropriate Commission personnel. The designated doctor may initiate communication with any doctor who has previously treated or examined the employee for the work-related injury.

(j)

The designated doctor shall review all medical records provided by the insurance carrier and treating doctor and shall conduct a functional capacity examination to determine the injured employee's ability to work and whether the injured employee can return to work, unless the designated doctor determines the functional capacity examination is not an appropriate testing technique based on the injured employee's medical condition. Following the examination, the designated doctor will prepare a report of his/her findings in the form and manner prescribed by the Commission.

(k)

The designated doctor shall file the report with the Commission so that it is received by the Commission not later than the seventh day after the completion of the examination of the injured employee. At the same time it is filed with the Commission, the designated doctor shall provide a copy of the report by facsimile or electronic transmission to the injured employee, the injured employee's representative, if any, and the insurance carrier, unless the recipient does not have a means of receiving the transmission, in which case the report shall be sent by mail.

(l)

The designated doctor may perform additional testing or refer the injured employee to other health care providers when deemed necessary to determine the injured employee's ability to work and whether the injured employee can return to work. Necessary additional testing is not subject to the preauthorization requirements in the Texas Labor Code, §413.014 (relating to Preauthorization) and additional testing must be completed within seven days of the designated doctor's physical examination of the employee.

(m)

The designated doctor shall maintain accurate records to reflect:

(1)

the date and time of any designated doctor appointments scheduled with injured employees;

(2)

the circumstances regarding a cancellation, no-show or other situation where the examination did not occur as initially scheduled or rescheduled;

(3)

the date of the examination;

(4)

the date medical records were received from the treating doctor or any other person or organization;

(5)

the date the medical evaluation report was submitted to all parties in accordance with subsection (k) of this section; and

(6)

the name of all referral health care providers, dates of appointments and reason(s) for referral by the designated doctor.

(n)

The Commission may:

(1)

issue an order requiring timely submission of medical evaluation reports or narrative reports;

(2)

issue an order for refund to the insurance carrier of the examination payment if an improper or incomplete examination is performed or improper or incomplete report is submitted;

(3)

take action to remove a doctor from the Designated Doctor List as described in accordance with §126.10 of this title (relating to Commission Approved List of Designated Doctors); and/or

(4)

take action to remove a doctor from the Approved Doctor List in accordance with §126.8 of this title (relating to Commission Approved Doctor List).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905180

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Chapter 131. Benefits-Lifetime Income Benefits

28 TAC §131.4

The Texas Workers' Compensation Commission (the Commission) proposes new §131.4, concerning lifetime income benefits (LIBs), to establish requirements for agreements under which LIBs may be paid monthly. The new rule is proposed in response to the amendments to Texas Labor Code, §408.081 and §408.161, as passed by the 76th Legislature, 1999.

Proposed new subsection (a) allows the insurance carrier and the injured employee entitled to LIBs to enter into a written agreement to change the frequency of payments from the standard weekly period to a monthly period. This section also sets out the requirements for such an agreement. The weekly compensation rate must be multiplied by 4.34821. When less than the maximum weekly compensation rate in effect at the time of the injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the agreement. If the parties agree to monthly payments issued directly by the insurance carrier, the monthly payments will begin the first day of the month following the date of the agreement. The agreement must contain a clear statement regarding the due date of the annual three percent increase in LIBs. Filing an agreement with the Commission when the insurance carrier is directly issuing the monthly payments is not required except upon request.

Proposed new subsection (b) allows an injured employee who has opted for monthly payment of LIB to terminate the agreement and return to weekly payments. On the termination of the agreement, the insurance carrier will be responsible for payment of all LIBs which have accrued and are due and will be required to continue weekly payments as and when they accrue and are due.

Proposed new subsection (c) allows the insurance carrier and the injured employee to agree for the insurance carrier to fund LIBs through purchase of an annuity. This proposed subsection requires that when an annuity is purchased for the payment of monthly LIBs, the insurance carrier and the injured employee are required to submit an application in the manner required by the Commission for approval of the annuity.

Proposed new subsection (d) sets out the required for such an annuity If the payments are issued by an annuity company, the payments will begin the first day of the month following the Commission's approval for the carrier to purchase an annuity. Licensing and financial standards for an annuity company are set out in the proposed rule. The workers' compensation carrier is required to guarantee the payments provided by an annuity company in case of default. The annuity contract must include funds for payment of the annual three percent increase in LIBs required by the Act. When the injured employee dies, the remaining funds in the annuity will be returned to the insurance carrier that purchased the annuity. The injured employee, or guardian if applicable, will not be allowed to transfer the right to receive LIBs from an annuity. The workers' compensation carrier cannot purchase an annuity to fund payment of medical costs incurred by an injured employee entitled to LIBs. The purchase of an annuity does not relieve the carrier of its responsibility under the statute and rules. The annuity represents a mechanism for delivering benefits, not a transfer of the responsibility from the carrier to the annuity company.

Proposed new subsection (e) states the rule will apply only to agreements entered into on or after September 1, 1999, for payment of LIBs under the provisions of the Act.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rule is in effect, there will no fiscal implications for state or local governments as a result of enforcing or administering the rule.

Mr. Rodriguez has also determined that for each year of the first five years the rule as proposed is in effect, the public benefits anticipated as a result of enforcing the rule are the following:

Injured Employees entitled to LIBs will receive the full monthly payment by the seventh day of each month. This can provide the opportunity for better money management and less paperwork.

Insurance Carriers will benefit from lowered administrative costs associated with issuing and mailing weekly lifetime income benefit checks when an agreement is entered into by the carrier and the injured employee or when an application to pay through the purchase of an annuity is approved by the Commission. Additionally, a carrier will receive a substantial discount by purchasing an annuity at present value for a long-term payout.

There will be no adverse economic impact on those required to comply with the rules as proposed or on small businesses or micro-businesses. Both the injured employee and the insurance carrier must agree before any change in payment method or frequency takes place.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us .

The new section is proposed under: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, and the Texas Labor Code; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.062, which establishes the minimum benefit payment amount; Texas Labor Code, §408.161, as amended by the 76th Legislature, which establishes the criteria for entitlement to LIBs; Texas Labor Code, §408.081, as amended by the 76th Legislature, which establishes eligibility for income benefits; and Texas Labor Code, §408.162, which deals with the payment of LIBs from the subsequent injury fund.

The proposed new §131.4 affects: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, and the Texas Labor Code; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code §408.062 which establishes the minimum benefit payment amount; Texas Labor Code, §408.161, as amended by the 76th Legislature, which establishes the criteria for entitlement to LIBs; Texas Labor Code, §408.081, as amended by the 76th Legislature, which establishes eligibility for income benefits; and Texas Labor Code, §408.162, which deals with the payment of LIBs from the subsequent injury fund.

§131.4. Change in Payment Period; Purchase of Annuity for Lifetime Income Benefits.

(a)

Upon the request of an injured employee entitled to lifetime income benefits (LIBs) as defined in the Act, the insurance carrier and an injured employee may agree to change the frequency of LIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the Commission if the Commission requests a copy. To relieve the insurance carrier of the responsibility to pay LIBs weekly the written agreement must include the following terms and conditions:

(1)

LIBs payments will be initiated with the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2)

Monthly LIBs will be issued on or before the seventh day of the month for which benefits are due;

(3)

Weekly LIBs payments will continue through the end of the month in which the agreement was signed;

(4)

Payment of the last week of LIBs to transition from weekly payment of LIBs to monthly payments will be to the end of the month to ensure the injured employee receives LIBs through the last day of the month;

(5)

The monthly compensation rate will be calculated by multiplying the weekly compensation rate by 4.34821;

(6)

If less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the written agreement; and

(7)

A clear statement regarding the due date of the annual three percent increase in LIBs must be included.

(b)

At any time after signing the agreement for the monthly payment of LIBs, the injured employee may notify the insurance carrier that he/she no longer agrees to the monthly payment of LIBs. In this case, the insurance carrier shall pay all accrued but unpaid LIBs at the end of the current monthly cycle and will continue to pay LIBs weekly as and when they accrue and are due.

(c)

The insurance carrier and the injured employee entitled to LIBs may agree that the carrier will purchase an annuity for payment of LIBs. An application for payment of LIBs by annuity must be submitted to the Commission for approval in the form, format, and manner required by the Commission. If less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a complete Employer's Wage Statement must be included with the application.

(d)

An annuity for the payment of LIBs shall meet the following terms and conditions.

(1)

LIBs payments will be initiated with the first calendar day of the month following the month in which the written agreement was approved by the Commission.

(2)

The company providing an annuity for the payment of LIBs must be licensed to do business in Texas and must have a current A. M. Best rating of B+ or better or have a Standard and Poor's rating of claims paying ability of A or better.

(3)

The workers' compensation insurance carrier must guarantee the payments provided by the annuity company in the event of default.

(4)

The annuity contract must include funds for payment of the annual three percent increase in LIBs required by the Act.

(5)

When the injured employee dies, the remaining funds, if any, in the annuity will be returned to the insurance carrier that purchased the annuity.

(6)

The injured employee, or guardian if applicable, shall not be allowed to transfer the right to receive LIBs from an annuity.

(7)

An annuity cannot be purchased to fund the payment of medical costs incurred by an injured employee entitled to LIBs.

(8)

The annuity company shall pay LIBs either weekly or monthly as indicated in the application for payment of LIBs by annuity. This payment frequency cannot be changed during the term of the annuity.

(9)

If monthly payments are agreed to by the insurance carrier and the injured employee, the transition from weekly to monthly benefits paid by annuity shall be the same as that for LIBs paid by the responsible insurance carrier set out in subsection (a) of this section.

(e)

This section applies only to agreements entered into on or after September 1, 1999, for payment of LIBs under the provisions of the Act.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905183

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Chapter 132. Death Benefits-Death and Burial Benefits

28 TAC §132.13, §132.16

The Texas Workers' Compensation Commission (the Commission) proposes an amendment to §132.13 concerning burial benefits and proposes new §132.16 concerning the change in payment period and the purchase of annuities for payment of death benefits. The proposed rule establishes requirements for agreements under which death benefits may be paid monthly. The amended rule and the new rule are proposed in response to amendments to Texas Labor Code, §408.186 and §408.181 as passed by the 76th Legislature, 1999.

Proposed Amendment to §132.13.

The recent amendment to Texas Labor Code, §408.186(a)(2) increases the maximum burial benefit an insurance carrier is required to pay for a death which results from a compensable workers' compensation injury from $2,500 to $6,000. The increased amount is applicable only to a claim for burial benefits based on a compensable injury that occurs on or after September 1, 1999. The proposed amendment to §132.13 reflects this change in burial benefit amount.

Proposed New §132.16.

Texas Labor Code, §408.181, was amended by the 76th Legislature to add subsection (c) and (d) allowing the monthly payment of death benefits upon request by the legal beneficiary(ies) and allowing the payment of death benefits through the purchase of an annuity. New §132.16 is proposed as a result of these statutory changes. Because the Commission has noted cases in which death benefits were not being properly paid, the proposed rules require Commission approval of both agreements to pay death benefits monthly and agreements to pay death benefits through an annuity. This Commission approval will provide an opportunity to review the accuracy of the death benefits being paid to beneficiaries who are less likely than an injured employee to question the benefits they are receiving.

Proposed new §132.16(a) requires the insurance carrier and the eligible beneficiaries to apply to the Commission for approval to change from weekly to monthly payments by filing a written agreement in the manner prescribed by the Commission. The proposed rule requires separate agreements to be filed for each beneficiary. The insurance carrier is required to file an Employer's Wage Statement to support the payment of any weekly rate paid at less than the maximum rate in effect on the date of the compensable fatal injury. The weekly compensation rate must be multiplied by 4.34821. When less than the maximum weekly compensation rate in effect at the time of the injury is being paid, a completed Employer's Wage Statement must be included with the agreement. If the parties agree to monthly payments issued directly by the insurance carrier, the monthly payments will begin the first day of the month following the date of the agreement.

Proposed new §132.16(b) allows a beneficiary who has opted for monthly payment of death benefits to terminate the agreement and return to weekly payments. On the termination of the agreement, the insurance carrier will be responsible for payment of all death benefits which have accrued and are due and will be required to continue weekly payments as and when they accrue and are due.

Proposed new §132.16(c) allows the insurance carrier and an eligible beneficiary to agree that the insurance carrier will purchase an annuity to fund the beneficiary's death benefits. To be allowed to fund death benefits through an annuity, subsection (c) requires that an application for payment of death benefits by annuity be submitted to the Commission.

Proposed new §132.16(d) sets out the required terms and conditions for such an annuity. Licensing and financial standards for an annuity company are set out and the insurance carrier is required to guarantee the payments provided by an annuity company in case of default of the annuity company. The annuity contract must address the redistribution of benefits to remaining eligible beneficiaries, if any, when a beneficiary becomes ineligible. The Subsequent Injury Fund will receive remaining benefits if all beneficiaries become ineligible before 364 weeks of death benefits have been paid. If more than 364 weeks of benefits have been paid when all beneficiaries become ineligible, the remaining funds in the annuity will be returned to the workers' compensation insurance carrier that purchased the annuity. A beneficiary, or guardian if applicable, will not be allowed to transfer the right to receive death benefits from an annuity. The purchase of an annuity does not relieve the carrier of its responsibility under the statute and rules. The annuity represents a mechanism for delivering benefits, not a transfer of the responsibility from the carrier to the annuity company.

Proposed new §132.16(e) establishes that the requirements of this rule would apply only to agreements entered into on or after September 1, 1999.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the amended rule and the proposed rule are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rules.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rules as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rules are the following:

Beneficiaries will benefit from the increased burial benefit.

Regarding monthly payments of death benefits, the beneficiary will receive the full monthly payment by the seventh day of each month. This can provide the opportunity for better money management and less paperwork.

Insurance Carriers will have increased costs for burial benefits imposed by statute. Insurance Carriers will benefit from reduced administrative costs associated with issuing and mailing weekly death benefit checks when an application to pay monthly benefits is approved by the Commission. An insurance carrier will have reduced costs by purchasing an annuity at present value for a long-term payout.

There will be no adverse economic impact on those required to comply with the rules as proposed or for small businesses or micro-businesses, except for the increased burial benefit amount imposed by statute.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us .

The proposed amendment to §132.13 and new §132.16 are proposed under: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.181, as amended by the 76th Legislature, which requires payment of death benefits to legal beneficiary(ies) and establishes that death benefits are paid at 75% of the employee's average weekly wage; Texas Labor Code, §408.182, which establishes the distribution of death benefits; Texas Labor Code, §408.183, which establishes the duration of death benefits; Texas Labor Code, §408.184, which establishes the redistribution of death benefits when a beneficiary becomes ineligible; Texas Labor Code, §408.185, which addresses beneficiary disputes; Texas Labor Code, §408.186, as amended by the 76th Legislature which addresses burial benefits; and Texas Labor Code, §408.187, which addresses autopsies.

The proposed amendment to §132.13 and new §132.16 affects: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.041, which sets out the method for calculating average weekly wage; Texas Labor Code, §408.061, which establishes the maximum benefit amount; Texas Labor Code, §408.181, as amended by the 76th Legislature, which requires payment of death benefits to legal beneficiary(ies) and establishes that death benefits are paid at 75% of the employee's average weekly wage; Texas Labor Code, §408.182, which establishes the distribution of death benefits; Texas Labor Code, §408.183, which establishes the duration of death benefits; Texas Labor Code, §408.184, which establishes the redistribution of death benefits when a beneficiary becomes ineligible; Texas Labor Code, §408.185, which addresses beneficiary disputes; Texas Labor Code, §408.186, as amended by the 76th Legislature which addresses burial benefits; and Texas Labor Code, §408.187, which addresses autopsies.

§132.13. Burial Benefits.

(a)

When an employee has died as the result of a compensable injury, a person claiming burial benefits shall file a request for payment of burial benefits and the bills showing the amount of burial and transportation costs incurred. The request and the documentation shall be filed with the insurance carrier within 12 months of the date of death of the employee.

(b)

The person who incurred liability for the costs of burial is entitled to receive the lesser of:

(1)

the actual costs incurred for reasonable burial expenses; or

(2)

$2,500 - if burial benefits are paid based on a compensable injury that occurs before September 1, 1999; or [ . ]

(3)

$6,000 - if burial benefits are paid based on a compensable injury that occurs on or after September 1, 1999.

(c)

The person who incurred liability for the costs of transporting the body of the employee is entitled to be reimbursed for the reasonable cost of transportation if the employee died away from the usual place of employment. The insurance carrier's liability for transportation costs under this subsection shall not exceed the cost equivalent to transporting the body from the place the employee died to the employee's usual place of employment.

(d)

The insurance carrier shall review each claim for burial benefits. The insurance carrier must either pay or deny the claim within seven days of the date the claim was received by the carrier. If the claim is denied, the insurance carrier must notify the person claiming burial benefits and the Commission in writing of its denial and the facts supporting the denial.

§132.16. Change in Payment Periods; Purchase of Annuity for Death Benefits.

(a)

Upon the request of the eligible beneficiaries, the insurance carrier and eligible beneficiaries entitled to death benefits may agree to change the frequency of death benefits payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing. To relieve the insurance carrier of the responsibility to pay death benefits weekly:

(1)

An application to change the frequency of payments must be submitted to the Commission with the written agreement for approval in the form, format and manner required by the Commission

(2)

A separate application must be submitted to the Commission for each eligible beneficiary, and the application must state that a payment adjustment will be made when there is a change in the individual beneficiary's eligibility status in accordance with the provisions of the Act.

(3)

If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application to change the payment period.

(4)

The written agreement for monthly payment of death benefits must include:

(A)

initiation of monthly death benefit payments starting with the first calendar day of the month following the month in which the written agreement was approved by the Commission;

(B)

payment of monthly death benefits on or before the seventh day of the month for which benefits are due.

(C)

continuation of weekly death benefits payments through the end of the month in which the agreement was approved;

(D)

payment of the last week of death benefits to transition from weekly payment of death benefits to monthly payments prorated to the end of the month to ensure the eligible beneficiaries receives death benefits through the last day of the month; and

(E)

calculation of the monthly compensation rate by multiplying the weekly compensation rate by 4.34821.

(5)

The Commission must approve the application to change the frequency of death benefit payments.

(b)

At any time after signing the agreement for the monthly payment of death benefits, the eligible beneficiary may notify the insurance carrier the that he/she no longer agrees to the monthly payment of death benefits. In this case, the insurance carrier shall pay all accrued but unpaid death benefits at the end of the current monthly cycle and shall resume paying death benefits weekly as and when they accrue and are due.

(c)

The insurance carrier and an eligible beneficiary may enter into a written agreement that the carrier will purchase an annuity for that beneficiary for weekly or monthly payment of death benefits. An application for payment of death benefits by annuity must be submitted to the Commission for approval in the form, format and manner required by the Commission. If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application for payment by annuity.

(d)

An annuity for the payment of death benefits shall meet the following terms and conditions.

(1)

Monthly death benefit payments will be initiated with the first calendar day of the month following the month in which the written agreement was approved by the Commission.

(2)

The company providing an annuity for the payment of death benefits must be licensed to do business in the State of Texas and must have a current A. M. Best rating of B+ or better or have a Standard and Poor's rating of claims paying ability of A or better.

(3)

The workers' compensation insurance carrier must guarantee the payments provided by the annuity company in the event of default.

(4)

When benefits are paid to an eligible spouse of the deceased employee and the spouse subsequently remarries, the annuity contract must address the payment of a lump sum payment equal to 104 weeks of benefits to the eligible spouse and the redistribution of benefits at the end of 104 weeks to the remaining eligible beneficiaries, if any.

(5)

If all beneficiaries become ineligible to receive death benefits and an amount equal to 364 weeks of death benefits has not been paid, the remaining benefits shall be paid by the annuity company without an order from the Commission to the Subsequent Injury Fund not later than 30 days after all beneficiaries' eligibility ends.

(6)

If all beneficiaries become ineligible to receive death benefits after 364 weeks of death benefits have been paid, the remaining funds in the annuity will be returned to the insurance carrier that purchased the annuity. For purposes of this subsection, the insurance carrier is not a beneficiary.

(7)

A beneficiary, or the beneficiary's guardian if applicable, shall not be allowed to transfer the right to receive death benefits from an annuity.

(8)

The annuity company shall pay death benefits either weekly or monthly as elected by the beneficiary in the application for payment of death benefits by annuity. This election cannot be changed during the term of the annuity.

(9)

If monthly payments are elected by the beneficiary, the transition from weekly to monthly benefits paid by annuity shall be the same as that for death benefits paid by the responsible insurance carrier set out in subsection (a) of this section.

(e)

This section applies only to agreements entered into on or after September 1, 1999, for payment of death benefits under the provisions of the Act.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905184

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Chapter 133. General Medical Provisions

Subchapter B. Required Reports

The Texas Workers' Compensation Commission (the Commission) proposes an amendment to §133.100 concerning Required Medical Reports. Simultaneously the Commission proposes the repeal of §133.101 concerning Initial Medical Report; §133.102 concerning Subsequent Medical Report; and §133.103 concerning Specific Medical Reports.

The amendments and repeals are proposed to address new legislation enacted by the 76th Legislature. Specifically, House Bill 2513 required the Commission to promote communication to enhance return to work. In addition, House Bill 2511 amended Texas Labor Code, §401.024, authorizing the Commission to adopt rules to require electronic transmission of information by means such as facsimile, email, and electronic data interchange. This authorization is utilized in the proposed rules to achieve a legislative goal of reducing paper communication requirements in the workers' compensation system while ensuring timely and effective communication between system participants. With the development of rules to encourage the return to work, the Commission examined health care provider reports in general and found that several of the existing reports do not serve the purpose for which they were intended and will be partially redundant to new rules being simultaneously proposed in Chapter 129 (Income Benefits-Temporary Income Benefits) as part of the return to work communication effort.

At the same time, amendments are proposed to include in the rules, some of the Commission's long standing policies and to address problems with the rules that were identified by the Claims Service Task Force (a group of representatives from the system appointed by the Commission to serve as a sounding board for ideas regarding rule development in the area of claims services), other system participants, and Commission staff. The proposed rule simplifies and shortens the rule construction, and is designed to be more prescriptive and to eliminate or significantly reduce ambiguity in the rules. The proposals are designed to more clearly lay out expectations so that all system participants will understand the requirements the Act and rule place on them. It is expected that together, these changes will improve benefit delivery, simplify reporting requirements, reduce disputes, make dispute resolution easier, reduce violations, and make it easier to hold system participants accountable for their actions and inactions.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Amendment of §133.100-Required Medical Reports.

The existing language in subsection (b) is proposed to be deleted. The existing language lists a set of reports which are identified as required medical reports. This list is noninclusive and is not necessary since each report a provider is required to file is specifically required by a rule.

New language is proposed for subsection (b) that emphasizes use of "instant" communication such as electronic transmission through facsimile or email to reduce the delay in providing critical information for benefit delivery and reduce the use of paper as required by House Bill 2511. The language is written to make use of traditional postal mail, a last resort for filing the report. By using the proposed language, as use of email and other forms of instant communication by system participants expands, the rules will reduce the reliance on traditional paper mail that has often caused over, under, and delayed payments. Subsection (c) regarding enforcement and violations was removed because it is redundant to the statute. Removal of the enforcement language is not intended to limit the Commission's authority to take enforcement action for violations of this or any other rule. Rather, the existing language does not address all of the methods of enforcement that the Commission has at its disposal for these violations and could be interpreted as limiting the Commission's authority. The Commission's authority to enforce the statute and rules is granted in multiple provisions of the statute and duplicate language in rules is redundant and unnecessary.

Repeal of §133.101-Initial Medical Report.

Section 133.101 is proposed for repeal because discussions with members of the carrier and health care provider communities have suggested that the Initial Medical Report is not currently serving the purpose for which it was intended. Carriers primarily obtain information about an employee's medical condition through documentation submitted with medical bills. It is very common, in fact, for providers to merely fill out the identifying information at the top of the required form and then attach their office notes to the report. The current rule requires providers to fill out extra paperwork that does not serve the carrier's needs and that represents a practice that they are not accustomed to outside of workers' compensation.

Repeal of §133.102-Subsequent Medical Report.

As with the proposed the repeal of §133.101, the repeal of §133.102 is proposed because discussions with members of the carrier and health care provider communities have suggested that the Subsequent Medical Report is not currently serving the purpose for which it was intended. Carriers primarily obtain information about an employee's medical condition through documentation submitted with medical bills. It is very common, in fact, for providers to merely fill out the identifying information at the top of the required form and then attach their office notes to the report. The current rule requires providers to fill out extra paperwork that does not serve the carrier's needs and that represents a practice that they are not accustomed to outside of workers' compensation.

Repeal of §133.103-Specific Medical Reports.

As with the proposed repeal of §133.101 and §133.102, the repeal of §133.103 is proposed because discussions with members of the carrier and health care provider communities have suggested that the Specific Medical Report is not currently serving the purpose for which it was intended. Carriers primarily obtain information about an employee's medical condition through documentation submitted with medical bills. It is very common, in fact, for providers to merely fill out the identifying information at the top of the required form and then attach their office notes to the report. The current rule requires providers to fill out extra paperwork that does not serve the carrier's needs and that represents a practice that they are not accustomed to outside of workers' compensation.

Victor Rodriguez, Chief Finance Officer, has determined that for the first five-year period the proposed rules are in effect there maybe some reduction in costs for state or local governments as a result of enforcing or administering the rules. TWCC should ultimately see a reduction in costs due to reduced dispute resolution and information service expenses. Reductions in costs could occur if the proposed rule results in a reduction of paperwork, but this reduction cannot be quantified. Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the public benefits anticipated as a result of enforcing the rule will be:

Injured employees should benefit by an increase in the timeliness of benefit deliver caused by the faster filing of medical reports.

Health care providers should benefit from these rules because they will no longer have to file as many reports that are specific to the workers' compensation system and will be able to provide the same information in a manner that is more consistent with their general practices.

Carriers should benefit from more timely provision of information needed to ensure timely and appropriate delivery of benefits.

Mr. Rodriguez has also determined that for each year of the first five years the rules as proposed are in effect, the requirements to comply with the rules will have the following affects on costs of system participants:

Claimants should not see either an increase or decrease in costs.

Employers will probably not see either an increase or decrease in costs.

Health care providers are not likely to see a significant increase in costs associated with this rule since the most significant changes are to require use of facsimile or electronic transmission that most doctors already have. Providers may experience positive cost benefits as a result of the proposals because of the reduced paperwork.

Carriers should see a reduction in costs associated because of the emphasis on "instant communication" and because they will not be paying providers for reports that do not serve the carrier's needs.

The requirements of these rules are not expected to affect costs for small businesses except that by helping to reduce overpayments by more timely reporting of information, the employer's premiums may be positively affected. There will be no difference in the cost of compliance for small businesses as compared to large businesses and there is no anticipated adverse economic impact on small businesses or micro-businesses because the proposed amendments to the rule primarily clarify existing requirements.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas, 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

28 TAC §133.100

The proposed amendment is proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; and Texas Labor Code, §413.018 as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

These proposed amendment affects the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; and Texas Labor Code, §413.018, as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

§133.100.Required Medical Reports.

(a)

Medical reports shall be in a form and manner prescribed by the Commission. Additional information may be attached.

(b)

A health care provider shall file required medical reports by facsimile or electronic transmission unless the recipient does not have a means of receiving the transmission in which case the reports shall be sent by personal delivery or mail. [ Following is a list of medical reports required by Commission §§133.101-133.105 of this title (relating to Initial Medical Report; Subsequent Medical Report; Specific Medical Reports; Consultant Medical Reports; and Physical or Occupational Therapy Report: ]

[(1)

initial medical report; ]

[(2)

subsequent medical reports;]

[(3)

specific medical reports;]

[(4)

consultant medical reports and]

[(5)

physical and occupational therapy report(s).]

[(c)

The willful or intentional failure to file a required report is an administrative violation under the Act, §10.07 (c)(3) and may result in assessment of penalties listed in the Act, §10.07 (d).]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905178

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

28 TAC §§133.101-133.103

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Workers' Compensation Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeals are proposed under following statutes: Texas Labor Code, §401.024, as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; and Texas Labor Code, §413.018 as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

The proposed repeals affect the following statutes: Texas Labor Code, §401.024 as amended by the 76th Texas Legislature, which provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; Texas Labor Code, §402.042, which authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form manner and procedure for transmission of information to the Commission; Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules regarding claims service; Texas Labor Code, §408.025, which requires the Commission to specify by rule what reports a health care provider is required to file; and Texas Labor Code, §413.018, as amended by the 76th Texas Legislature, which requires the Commission develop a program to encourage employers and treating doctors to communicate about modified duty offers.

§133.101.Initial Medical Report.

§133.102.Subsequent Medical Report.

§133.103.Specific Medical Reports.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905179

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Chapter 134. Benefits--Guidelines for Medical Services, Charges, and Payments

Subchapter G. Treatments and Services Requiring Pre-Authorization

28 TAC §134.600

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Workers' Compensation Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Workers' Compensation Commission (the Commission) proposes new §§134.601-134.607, concerning treatments and services requiring preauthorization and the simultaneous repeal of §134.600 concerning the same subject. These new rules are proposed to comply with a statutory mandate in the Texas Labor Code, §413.014, that requires the Commission to specify by rule which health care treatments and services require express preauthorization by the insurance carrier, except for treatments and services for a medical emergency. This statute also states the insurance carrier is not liable for the specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained from the carrier or ordered by the Commission. Proposed new §§134.601-134.607 are considered claims service rules as contemplated by Texas Labor Code, §406.010.

These proposed new rules address a number of issues encountered under the current rule by providing clarification of the preauthorization process for all parties. The new rules are proposed to separate components of the current rule into seven individual rules. The proposed new rules: clarify areas through incorporation of definitions; describe carrier liability; establish applicability; efficiently organize the preauthorization process by identifying responsibilities and establishing accountability of requestor and respondent; provide a process for the reconsideration of a denial; require specific record-keeping parameters; and, revise the list to include those medical services and treatments for which preauthorization is required. In addition, the proposed new rules are drafted to work in conjunction with the workers' compensation utilization review rules adopted by the Texas Department of Insurance (TDI) (28 TAC §§19.2001-19.2021), to provide consistency for utilization review processes within the workers' compensation system.

In drafting the proposed new rules §§134.601-134.607, the Commission has received input from a wide variety of sources including employees, health care providers, insurance carriers, TWCC Claims Services Task Force, TWCC Medical Advisory Committee, Research & Oversight Council on Workers' Compensation, other payor systems, and other states' workers' compensation systems. This input was crucial in ensuring a broad-based set of rules that achieve the joint purposes of timely delivery of appropriate medical care and effective cost containment.

The Texas Register published text shows the proposed new language and should be read to determine all proposed changes.

§134.601. Definitions.

Proposed new §134.601 defines terms used in the preauthorization rules. The current rule does not include definitions of terms. This has allowed wide latitude in interpretation leading to delays and disputes. Under the proposed new rules, definitions of terms, such as complete request, emergency, requestor, respondent, screening criteria, and denial rationale, are provided for clarity. For example, the current rule does not define a complete request or an incomplete request, which makes it difficult for requestors to know when the processing timeframes begin. This has caused denials of preauthorization based on incomplete information, thereby delaying treatment to the injured employee. The proposed new §134.601 provides specificity regarding information to be included in a complete request for preauthorization and requires that a single Commission-approved form be used for requests, responses, and reconsideration requests. This form will provide a standardized format and assure that the information being required by carriers is uniform. In addition, the use of this standardized form for responses will ensure that carriers are providing required information in response to requests. The implementation of this form is expected to decrease the number of disagreements regarding completeness of requests and should increase the efficiency of the preauthorization process to the system. Another example is the definition of respondent that was added to clarify who is the appropriate party to process and respond to a preauthorization request. A respondent is defined as the insurance carrier, the carrier's agent or any entity contracted or subcontracted with by the insurance carrier, to provide preauthorization utilization review. For consistency with TDI utilization review rules for workers' compensation, the definition requires a respondent to be an insurance company licensed by TDI or a utilization review agent certified by TDI. The 15 definitions proposed in new §134.601 provide clarity to terminology otherwise open to interpretation.

§134.602. Carrier Liability.

Proposed new §134.602 describes when the insurance carrier is liable for the cost of services that are required to be preauthorized. The proposed new rule establishes three situations that result in insurance carrier liability when: (1) the respondent approves the preauthorization request; (2) the respondent fails to respond within the 3-day time frame; or (3) payment is ordered by the Commission. The current rule does not address non-response by the insurance carrier, that may result in delays in the delivery of health care to injured employees. The proposed new §134.602 provides that a preauthorization request will be deemed approved if there is no timely response by the respondent. This will require greater accountability on the part of the respondent, as well as reduce delays in obtaining treatment for the injured employee. The current rule regulates carrier liability pursuant to a Commission order; however, it does not address recoupment of payment by the insurance carrier to the health care provider in the event reimbursement has been ordered by the Commission during the pendency of a dispute regarding liability, compensability, or extent of injury. Whereas, the proposed new §134.602 relieves the insurance carrier of liability if the outcome of a dispute on compensability, carrier liability, or extent of injury is finally adjudicated and resolved in the carrier's favor. In this circumstance, if the insurance carrier has already paid for medical services as a result of a Commission order, reimbursement may be sought from a responsible party according to the law and Commission rules.

§134.603. Applicability.

Proposed new §134.603 establishes the applicability for these proposed new rules. Proposed new subsection (a) addresses the effective date of the new preauthorization rules. Requests for preauthorization transmitted by the requestor on or after the effective date of the proposed new rules will be governed by the new rules; requests transmitted prior to that date will be governed by the current rule. Although the current rule addresses three exclusions (the first three identified below), the proposed new subsection (b) identifies five instances in which preauthorization is not required. The proposed new preauthorization rules do not apply to (1) emergency care, (2) second opinions for spinal surgery, (3) treatment(s) and/or service(s) not specifically identified in proposed new §134.606, (4) required diagnostic testing ordered by a designated doctor to complete an impairment rating examination, or (5) diagnostic testing being performed by the treating doctor in response to an insurance carrier's dispute of compensability or extent of injury. The exclusion of not requiring preauthorization for required impairment rating testing is limited to the designated doctor, as this doctor's opinion carries presumptive weight, and the exclusion for testing in response to an insurance carrier's dispute of compensability or extent of injury is limited to the treating doctor who is primarily responsible for the delivery of health care to the injured employee.

§134.604. The Processes.

Proposed new §134.604 details the processes to be followed by requestors and respondents. The processes enhance accountability by requiring: paper or electronic documentation of the request, response and reconsideration; acknowledgment of receipt of the request and assignment of a preauthorization reference number; and, documentation of reasons for denials. In addition, the proposed new processes reduce confusion by clarifying when time frames begin, when a preauthorization request is complete and when preauthorization has been approved or denied. The addition of a reconsideration process and requirements for the respondent to contact the requestor prior to issuing a denial is anticipated to save time and reduce the number of medical disputes appealed to the Commission. Requiring that all steps in the preauthorization process be in writing provides documentation of each action being taken and ensures that both the requestor and respondent are aware of the status of the preauthorization request.

Proposed new subsection (a) addresses general provisions that: (1) require the submission of the request by facsimile or mutually agreed-upon electronic transmission (not telephonic transmission); (2) establish the response "due-date" as 5:00 P.M. central standard time, on the third working day after receipt of a complete preauthorization request; (3) clarify that neither approval nor denial is required when incomplete requests or requests for treatment(s) and/or service(s) not identified on the list are returned to the requestor; (4) delineate the responsibilities of requestor to include the provision of accessible facsimile numbers, designation of contact personnel for preauthorization inquiries, initiation of approved treatment(s) and/or service(s) within 30-days of receipt of approval, and to request preauthorization for only those treatment(s) and/or service(s) identified on the list; and (5) define the responsibilities of the respondent to include the provision of accessible facsimile numbers, toll-free telephone numbers during normal business hours on working days, acquiring and documenting consent from the requestor prior to altering any request for preauthorization, not requiring copies of previously submitted medical information, and requiring the transfer of all records and necessary information to any utilization review agent processing the requests. The current rule is unclear regarding when the time starts for the preauthorization process and this can unnecessarily delay the delivery of treatment and/or services to the injured worker when the process timeframes are extended due to confusion. The proposed new rules provide detail regarding time frames for taking certain actions and when those time frames begin. The time allowed in the proposed new rules for responding to a request for preauthorization is three working days from receipt of a complete request, just as in the current rule. However, the proposed new §134.604 also provides that the respondent's failure to timely respond constitutes an approval of preauthorization. This inclusion will create an incentive for respondents to comply with the three-day time limit.

Proposed new subsection (b) outlines the request process for preauthorization. All requests for preauthorization are required to be made on a Commission prescribed form with all required data fields completed. Supporting medical documentation must accompany the form if not previously submitted. If a requestor elects to re-initiate the preauthorization process following the return of an incomplete request, a new form must be submitted. The processing timeframe begins only with the receipt of a complete request.

Proposed new subsection (c) details the respondents' responsibilities in reviewing the preauthorization request for completeness. The respondent is required to mark an incomplete request for preauthorization, "INCOMPLETE" and a request for treatments that are not specifically identified as requiring preauthorization, "PREAUTHORIZATION NOT REQUIRED" and return these requests to the requestor no later than the end of the next working day. Return of a request in this fashion would end the respondent's obligations regarding such preauthorization requests. Proposed new subsection (c) further outlines the respondent's responsibility to acknowledge the receipt of a complete preauthorization request by writing the due date and the preauthorization reference number on the form, and returning the form to the requestor no later than the end of the next working day. The respondent would also be required to determine medical necessity of the treatment(s) and/or service(s) requested, regardless of any pending dispute(s) regarding compensability, liability for the claim, or extent of injury. This provision is included in the proposed new rule to avoid a delay in the provision of medically necessary treatment to the injured employee pending resolution of such disputes. Proposed new subsection (d) explains the actual processing by the respondent of a complete request for preauthorization. Respondents are required to apply preauthorization screening criteria so approvals are based on criteria developed by persons with medical expertise that should be consistent for all requests. The proposed new §134.604(d) requires the respondent to employ the screening criteria for approvals of preauthorization requests and to refer possible denials to an appropriate doctor or an appropriate health care provider for review and decision. Currently, §134.600 does not establish requirements regarding the review of requests for preauthorization to determine if the request is for reasonable and necessary treatment. Proposed new subsection (d) requires that screening criteria, as defined in §134.603, be used to review for appropriateness. Prior to a denial of the request for preauthorization, the requestor must be contacted and given the opportunity to talk to the reviewer making the decision. This is consistent with the TDI utilization review rules for workers' compensation. In the event of a denial of a request, the current rule requires only that the respondent provide documentation identifying the reasons for the denial. The proposed new subsection includes the specific components that must be included in a denial notification, to include the denial rationale, as defined in §134.603, identification of the health care provider making the determination, and a reasonable list of documents needed for a reconsideration appeal. The current §134.600 is silent regarding situations in which preauthorization may not be denied. Proposed new §134.604 (d) identifies 5 situations in which a respondent may not totally or partially deny requests for preauthorization. The reasons include: the claimant has reached MMI; compensability in dispute; extent of injury in dispute; carrier liability in dispute; and, no further entitlement to medical benefits. Each of these is currently being used by system participants to deny preauthorization requests and postpone treatment for injured employees. The proposed new §§134.601-134.607 focuses the preauthorization decision on medical necessity of the specified treatment and/or service and, therefore, these 5 denial reasons would be inappropriate as they do not related to medical necessity.

Reconsideration of a denied request for preauthorization is addressed in the proposed new subsection (e). The current rule directs the appeal of a denial of preauthorization to Medical Dispute Resolution. Proposed §134.604(e) requires a requestor to seek reconsideration of the preauthorization denial by submitting new and/or additional documentation to the respondent prior to allowing the requestor to submit a request for Medical Dispute Resolution. The proposed new subsection establishes a 30-day period for requesting reconsideration. The reconsideration process will follow the same processing timeframes and guidelines contained in proposed new §134.604(b). The proposed new rule requires the review of a reconsideration request be performed by a doctor who is qualified and permitted by licensure to provide the requested treatment(s) and/or service(s), and establishes that the reconsideration doctor cannot be the same doctor who performed the initial review and denial. This process will ensure appropriate review of denials for preauthorization by a doctor having expertise in the treatment or service being reviewed. The proposed reconsideration process will ensure that injured employees receive the health care reasonably required by the nature of their injury as and when needed. This proposed new process is also expected to reduce the number of disputes resulting from denial of preauthorization and thereby decrease the cost of the preauthorization process to the system. The requirement for review of the denial of preauthorization by a doctor who is qualified and permitted by licensure to provide the requested treatment(s) and/or service(s) should simplify dispute resolution by also requiring this doctor to provide a detailed explanation and reasons for denial of the preauthorization request.

Proposed new subsection (f) addresses the requestor's submission of a subsequent request for preauthorization and requires a documentation of a substantial change in the injured employee's medical condition, a new request form, and the previous preauthorization reference number. The current rule does not address the submission of a subsequent request. As a result, health care providers often submit a second or subsequent request for preauthorization for the identical services. Proposed new subsection (f) is expected to reduce unnecessary processing of identical requests for preauthorization.

§134.605. Record Keeping.

Proposed new §134.605 addresses record keeping and requires both the requestor and respondent to maintain the records listed in the rule for a period of two years from the date of each preauthorization request. The current rule does not clearly require participants in the preauthorization process to maintain sufficient documentation to allow the Commission to readily determine compliance with the rule and especially with the three-day response requirement. The proposed new §134.605 directs specific record-keeping requirements and will encourage compliance with preauthorization requirements and simplify dispute resolution. Proposed new §134.605 further requires the respondent to maintain information in a consolidated electronic format and produce aggregate statistical summaries of this required information to the Commission, upon request. An annual summary report to the Commission of the total numbers of preauthorization requests, reconsiderations, approvals, and denials grouped by preauthorization list item is required of each insurance carrier together with the insurance carrier's average processing cost. The intent of these new record-keeping requirements is to ensure accountability of both health care providers and insurance carriers and to track essential information on preauthorization requests that would otherwise be unavailable to the Commission for the future review and revision of these preauthorization rules for determining the cost effectiveness and system costs associated with preauthorization. The proposed new record-keeping requirements also will provide the Commission with the information necessary to monitor participants in the preauthorization process.

§134.606. The List.

Proposed new §134.606 lists the types of treatment(s) and/or service(s) that require preauthorization as mandated by the Texas Labor Code, §413.014. The current §134.600 lists 16 categories of treatments and services that require preauthorization. Proposed new §134.606 (a) lists five specific categories of treatments and/or services that must be approved by the respondent prior to being provided. In addition, proposed §134.606(b) allows an option for a requestor to request preauthorization for an individualized plan of treatment. Should a request be submitted for an individualized plan of treatment, the proposed new rule requires the respondent to process and respond to the request in accordance with the processes established in these proposed new rules.

The specific categories requiring preauthorization in the proposed §134.606(a) were developed based on analysis of Commission data and input from system participants. The Commission data was derived from the following Commission data bases: the medical billing data base, the medical dispute resolution data base and the SOAH appeals data base. From the medical billing database, the Commission compiled a list of the top 1000 American Medical Association Current Procedural Terminology codes (AMA CPT codes) billed in the workers' compensation system in 1997. Detailed information concerning each of these top 1000 CPT codes was compiled regarding the total amount billed, total amount reimbursed, and the frequency of services. Information was also reviewed relating to the mean, median and mode of charges and payments, as well as information on the number of providers billing each code and the number of injured employees receiving the treatment(s) and/or service(s) represented by the codes. In addition, the 1997 data was evaluated to determine the volume of treatments and services billed and reimbursed which under the current rule should have required preauthorization. The Commission analyzed Phase I and Phase II of a medical cost driver study that had been developed by TWCC using the medical billing data within the Texas Workers' Compensation system. The studies analyzed changes in medical costs from 1995 to 1997. In addition, the frequency and type of preauthorization denials and disputes was evaluated using the Commission's medical dispute resolution and SOAH appeals data bases.

The following specific treatment(s) and/or service(s) are being proposed for inclusion on the list for preauthorization:

1. Inpatient and outpatient admissions to any hospital or ambulatory surgical center: Based on the analysis of the Commission study titled Texas Workers' Compensation Medical Trend Analysis, 1995-1997 , there has been a net increase in the per claim medical payment between 1995 and 1997 of $860 per claim and 65% of the increase is due to hospital inpatient and hospital outpatient costs. The current rule requires preauthorization for all non-emergency hospitalizations, ambulatory surgical center care, and transfers between facilities. The proposed new rule eliminates the requirement for preauthorization of transfers between facilities due to the noted low frequency of this service, and includes the requirement for preauthorization of all outpatient admissions. Outpatient hospital admission has been added to the list due to a continuous increase in the amount paid per claim from 1995 to 1997 for these services as portrayed in the Texas Workers' Compensation Medical Trend Analysis . Additionally, proposed new §134.606(a)(1) clarifies that the admission request includes notification by the requestor of the treatment(s) and/or service(s) to be performed during the admission. The proposed subsection further specifies that approval of the admission by the respondent shall not include length of stay, and that any disputes regarding length of stay shall be reviewed retrospectively. The current preauthorization rule does not address these issues and the proposed clarifications are expected to reduce unnecessary disputes and unnecessary additional preauthorization requests during an admission for length of stay extensions.

2. Physical medicine (as defined by the Medical Fee Guideline), work hardening, work conditioning, and/or manipulations beyond eight (8) weeks from the date of injury: The current rule requires preauthorization for physical or occupation therapy beyond eight weeks of treatment, work hardening in excess of six weeks and work conditioning in excess of four weeks with both the work conditioning and work hardening limited to a one-time two week extension. The proposed new rule allows the provision of any and all of these treatments and/or services within eight (8) weeks of the date of injury without the necessity of obtaining preauthorization. Therefore, any sequence or combination of physical medicine, work hardening, work conditioning and/or manipulations must be preauthorized after eight weeks from the date of injury. As identified in the Texas Workers' Compensation Medical Trend Analysis , back injuries comprise the largest group of injuries and make up the most costly category of health care in the workers' compensation system. The normal recovery period for most injuries is 4-6 weeks in general, and in the development of the Spine Treatment Guideline, research of the literature has shown that approximately 75% of all injured employees with a back injury return to work within four weeks of the date of injury with an additional nine percent returning to work within eight weeks of the date of injury. In addition, the duration of patient contact hours for the primary level of care was set at 50 hours of treatment. This amount of time, when distributed among the services normally provided during the primary level of care, including office visits, physical medicine, and diagnostic studies, totals to approximately eight weeks of care. Because physical medicine comprises the second highest group of charges for services (second to hospital and attendant professional charges), this service and the programs of work hardening and work conditioning are included as one item for time calculation from the date of injury. Additionally, the proposed new rule includes manipulations, that had previously been excluded from preauthorization by Commission Advisory. As manipulations are an integral component of physical medicine treatment, manipulations are being included in the treatment(s) and/or service(s) that require preauthorization after 8 weeks from the date of injury.

3. Electro diagnostic testing (includes all sensory, motor, and reflex studies, including but not limited to, electromyogram (EMG), surface electromyogram (SEMG), somatosensory evoked potential (SSEP), dermatomal sensory evoked potentials (DSEP), nerve conduction velocity (NCV), and H reflex and F reflex studies): The current preauthorization rule includes only non-emergency SEMG studies in the list of services requiring preauthorization. In the development of the proposed new §134.606, the analysis of information compiled from the medical billing and dispute resolution data bases for CPT codes for electro diagnostic testing revealed high frequency of usage and billing, as well as a high incidence of requests for dispute resolution of denials of payment for these diagnostic services. One of the purposes of the preauthorization mandate is to prevent injured employees from subjection to overutilization of treatment(s) and/or service(s) and at the same time to provide both timely and appropriate diagnostics and treatment. To ensure that injured employees don't find themselves in a situation where diagnostic testing that is necessary to establish compensability or extent of injury cannot be obtained due to lack of preauthorization for those tests, proposed new §134.603 provides that preauthorization is not required for diagnostic testing by the treating doctor in response to an insurance carrier's dispute of compensability or extent of injury.

4. A repeat individual radiology/nuclear medicine procedure with a whole procedure maximum allowable reimbursement (MAR) or DOP charged at greater than $350 as specified by the Medical Fee Guideline: The current rule requires preauthorization for all repeat individual diagnostic studies with an established reimbursement in the Medical Fee Guideline of greater than $350 or with the requirement to submit Documentation of the Procedure (DOP) with the billing. The proposed new rule limits the requirement for preauthorization to the repeat procedures in the areas of radiology/nuclear medicine. The inclusion of repeat radiology/nuclear medicine procedures greater than $350, will require preauthorization for the majority of magnetic resonance imaging and computerized axial tomography procedures performed more than once. The inclusion of the term "repeat" stays consistent with the current rule and is logical because the initial use of radiology/nuclear medicine procedures as initial diagnostic tools is necessary, yet subsequent procedures (repeats) should be evaluated for medical necessity prior to performing the procedure. Again, to ensure that injured employees don't find themselves in a situation where diagnostic testing necessary to establish compensability or extent of injury cannot be obtained due to lack of preauthorization for those tests, proposed new §134.603 provides that preauthorization is not required for diagnostic testing by the treating doctor in response to an insurance carrier's dispute of compensability or extent of injury.

5. Durable medical equipment with charges exceeding $500 per item (either purchase or cumulative rental), and purchase or rental of all transcutaneous and/or neuromuscular electrical nerve stimulators (TENS and NENS), as specified by the Medical Fee Guideline: The current preauthorization rule includes all durable medical equipment in excess of $500 per item and all TENS units. The proposed new rule clarifies that rental of any durable medical equipment will require preauthorization if the cumulative rental billing exceeds $500. The DME Ground Rules contained in the current Medical Fee Guideline state that rental fees are applicable for short-term utilization up to 60 days, unless the doctor provides medical justification for an extension beyond that 60 days. When the rental for an item will exceed the $500 threshold, the requestor would be required to seek preauthorization for the continued use of the item. Additionally, neuromuscular electrical nerve stimulators (NENS) were added to the list due to the analysis of the costs within the system having shown that NENS units make up a significant amount of DME costs. The NENS units are billed and reimbursed at a much greater cost than TENS units, while both TENS and NENS are being similarly applied for pain management. The preauthorization requirement extends to both the purchase and rental of all TENS and NENS.

§134.607. Severability. Proposed new §134.607 incorporates the issue of severability of the individual rules. The effect of severability is to ensure that should any one or more rules be found inconsistent with any applicable law, the remaining rules, terms and provisions of the subchapter will remain in effect.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed new rules are in effect there may be fiscal implications for state or local governments as a result of enforcing or administering the rules. The added clarification provided by these rules could result in a reduction of disputes, thereby decreasing the cost of enforcement or administration. Any reduction in costs to the Commission cannot be quantified.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rules, as proposed, are in effect, the public benefits anticipated as a result of enforcing the rules will be an improved system for preauthorization, of payment for medical treatment(s) and/or service(s) that will provide positive benefits to all participants in the system. The participants in the system are: injured employees, employers, insurance carriers and health care providers.

Preauthorization is prospective utilization review. The benefit of the new rules is to outline the responsibilities of all parties in the preauthorization process. Injured employees will benefit from the clarification of responsibilities and the use of a prescribed form that identifies the required information because these changes will result in timely response to the preauthorization request and, therefore, more timely provision of the preauthorized medical services. The injured employee will also benefit from the requirement in the new rules that the requestor be afforded the opportunity to discuss the requested treatments, with the appropriate doctor or health care provider performing the review. This allows the injured employee's medical needs to be discussed by medically competent professionals. In addition, the requirement that reconsideration of a denial of preauthorization be performed by a doctor in the same or similar speciality as the requestor, and the prohibition against the reconsideration doctor being the same doctor who performed the initial review, benefits the injured employee by providing a second opinion regarding the denial.

The benefits of the proposed new rules to health care providers in the workers' compensation system include a determination of insurance carrier liability for the treatment(s) and/or service(s) that are preauthorized as medically reasonable and necessary, clarification and streamlining of the preauthorization request process, and the addition of a clearly defined reconsideration process. The opportunity to discuss the request with a doctor or appropriate health care provider prior to a denial, will result in improved communication between the participants in the preauthorization process and should reduce disputes and improve delivery of care to injured employees as and when needed.

The benefits of the proposed new rules to insurance carriers and their utilization review agents include the opportunity for prospective review of specifically identified treatment(s) and/or service(s) prior to their delivery. The use of a single form with specific required information to be submitted by the health care providers allows the respondent to more efficiently review a request for completeness. In addition, the proposed new rules allow the respondent to return the form if not complete and know that their obligations are ended for that incomplete request. The rule establishes the processing timeframes and defines when the clock starts processing a request for preauthorization. The rules clarify that health care providers should not request preauthorization for services which are not contained in the list. This provision should reduce the number of unnecessary requests that must be processed by respondent. A clearly defined reconsideration process may result in a decrease of disputes filed with the Commission, thereby saving the insurance carrier the time and expense associated with defending those decisions. Any additional costs to respondent that may result from the requirements of the reconsideration process are already required by the TDI utilization review rules (28 TAC §§19.2001-19.2021). Any additional costs that may be incurred by the respondent to receive, review and acknowledge incoming fax requests are expected to be offset by savings resulting from an overall more efficient preauthorization process and the anticipation of a reduction in disputes.

The benefits of the proposed new rules to employers is the assurance that their injured employees are receiving appropriate and medically necessary treatment in a timely manner for their compensable injury in anticipation of an early return-to-work. In addition, savings that may result from a more efficient preauthorization process should ultimately be reflected in the cost to provide workers' compensation coverage to employees.

There will be minimal anticipated economic costs to persons who are required to comply with the rules as proposed.

There will be no economic impact on small businesses or on microbusinesses as a result of the proposed new rules. There will be no difference in the cost of compliance for small businesses and microbusinesses as compared to large businesses because the same basic processes and procedures apply to all entities regardless of size.

Health care providers and insurance carriers who do not currently have the capability of facsimile transmission will be required to obtain equipment that can perform such transmissions or arrange for the use of such equipment. Due to the prevalence of facsimile transmission in the health care business and insurance environment, the vast majority of health care providers and insurance carriers currently have facsimile capability and those that do not will be required by the nature of the insurance industry to obtain such capability regardless of these proposed new rules. Therefore, it is not anticipated that this requirement will have an adverse impact on health care providers or insurance carriers. Likewise, costs to the insurance carriers associated with being required to provide toll free telephone numbers should be minimal as most currently provide them. Insurance carriers that do not already provide toll free numbers will see an increase in costs associated with this requirement.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

The repeal is proposed under the following statutes: Texas Labor Code, §401.024, that provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the Commission; §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, the Texas Labor Code, §406.010 that authorizes the Commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; §408.021(a) that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; §408.025 that requires the Commission to specify by rule what reports a health care provider is required to file; §408.026 that establishes when a carrier is liable for costs relating to spinal surgery and mandates the Commission to adopt rules necessary to effectuate the statute; §409.021, that requires insurance carriers to timely initiate or dispute compensation; §409.022, that requires a notice of refusal to specify the insurance carrier's grounds for disputing a claim and requires the reason to be reasonable; §413.002 that requires the Commission to monitor health care providers and insurance carriers to ensure compliance with Commission rules relating to health care including medical policies and fee guidelines; §413.011 that requires the Commission by rule to establish medical policies relating to necessary treatments for injuries and designed to ensure the quality of medical care and to achieve effective medical cost control; §413.012 that requires the Commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; §413.013 (1), (2), and (3) that require the Commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the Commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the Commission; §413.014 that requires the Commission to specify by rule which health care treatments and services require express preauthorization by the insurance carrier, except for treatments and services for a medical emergency. This statute also states the insurance carrier is not liable for the cost of the specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained or ordered by the Commission; §413.017 that establishes medical services to be presumed reasonable when provided subject to prospective, concurrent review and are authorized by the insurance carrier; §413.031 that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied; §415.002 that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a Commission rule or to fail to comply with the Act; §415.003 that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a Commission rule, or to fail to comply with the act; and the Texas Labor Code, §415.0035 that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with Commission rules.

The proposed repeal affects the following statutes: Texas Labor Code, §401.024, that provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the Commission; §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, the Texas Labor Code, §406.010, that authorizes the Commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; §408.021(a) that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; §408.025 that requires the Commission to specify by rule what reports a health care provider is required to file; §408.026 that establishes when a carrier is liable for costs relating to spinal surgery and mandates the Commission to adopt rules necessary to effectuate the statute; §409.021, that requires insurance carriers to timely initiate or dispute compensation; §409.022, that requires a notice of refusal to specify the insurance carrier's grounds for disputing a claim and requires the reason to be reasonable; §413.002 that requires the Commission to monitor health care providers and insurance carriers to ensure compliance with Commission rules relating to health care including medical policies and fee guidelines; §413.011 that requires the Commission by rule to establish medical policies relating to necessary treatments for injuries and designed to ensure the quality of medical care and to achieve effective medical cost control; §413.012 that requires the Commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; §413.013 (1), (2), and (3) that require the Commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the Commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the Commission; §413.014 that requires the Commission to specify by rule which health care treatments and services require express preauthorization by the insurance carrier, except for treatments and services for a medical emergency. This statute also states the insurance carrier is not liable for the cost of the specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained or ordered by the Commission; §413.017 that establishes medical services to be presumed reasonable when provided subject to prospective, concurrent review and are authorized by the insurance carrier; §413.031 that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied; §415.002 that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a Commission rule or to fail to comply with the Act; §415.003 that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a Commission rule, or to fail to comply with the act; and the Texas Labor Code, §415.0035 that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with Commission rules.

§134.600.Procedure for Requesting Pre-Authorization of Specific Treatments and Services.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905186

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

28 TAC §§134.601-134.607

The new rules are proposed under the following statutes: Texas Labor Code, §401.024, that provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the Commission; §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, the Texas Labor Code, §406.010 that authorizes the Commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; §408.021(a) that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; §408.025 that requires the Commission to specify by rule what reports a health care provider is required to file; §408.026 that establishes when a carrier is liable for costs relating to spinal surgery and mandates the Commission to adopt rules necessary to effectuate the statute; §409.021, that requires insurance carriers to timely initiate or dispute compensation; §409.022, that requires a notice of refusal to specify the insurance carrier's grounds for disputing a claim and requires the reason to be reasonable; §413.002 that requires the Commission to monitor health care providers and insurance carriers to ensure compliance with Commission rules relating to health care including medical policies and fee guidelines; §413.011 that requires the Commission by rule to establish medical policies relating to necessary treatments for injuries and designed to ensure the quality of medical care and to achieve effective medical cost control; §413.012 that requires the Commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; §413.013 (1), (2), and (3) that require the Commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the Commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the Commission; §413.014 that requires the Commission to specify by rule which health care treatments and services require express preauthorization by the insurance carrier, except for treatments and services for a medical emergency. This statute also states the insurance carrier is not liable for the cost of the specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained or ordered by the Commission; §413.017 that establishes medical services to be presumed reasonable when provided subject to prospective, concurrent review and are authorized by the insurance carrier; §413.031 that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied; §415.002 that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a Commission rule or to fail to comply with the Act; §415.003 that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a Commission rule, or to fail to comply with the act; and the Texas Labor Code, §415.0035 that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with Commission rules.

The proposed new rules affect the following statutes: Texas Labor Code, §401.024, that provides the Commission the authority to require use of facsimile or other electronic means to transmit information in the system; §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the Commission; §402.061, which authorizes the Commission to adopt rules necessary to administer the Act, the Texas Labor Code, §406.010, that authorizes the Commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; §408.021(a) that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; §408.025 that requires the Commission to specify by rule what reports a health care provider is required to file; §408.026 that establishes when a carrier is liable for costs relating to spinal surgery and mandates the Commission to adopt rules necessary to effectuate the statute; §409.021, that requires insurance carriers to timely initiate or dispute compensation; §409.022, that requires a notice of refusal to specify the insurance carrier's grounds for disputing a claim and requires the reason to be reasonable; §413.002 that requires the Commission to monitor health care providers and insurance carriers to ensure compliance with Commission rules relating to health care including medical policies and fee guidelines; §413.011 that requires the Commission by rule to establish medical policies relating to necessary treatments for injuries and designed to ensure the quality of medical care and to achieve effective medical cost control; §413.012 that requires the Commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; §413.013 (1), (2), and (3) that require the Commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the Commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the Commission; §413.014 that requires the Commission to specify by rule which health care treatments and services require express preauthorization by the insurance carrier, except for treatments and services for a medical emergency. This statute also states the insurance carrier is not liable for the cost of the specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained or ordered by the Commission; §413.017 that establishes medical services to be presumed reasonable when provided subject to prospective, concurrent review and are authorized by the insurance carrier; §413.031 that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied; §415.002 that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a Commission rule or to fail to comply with the Act; §415.003 that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a Commission rule, or to fail to comply with the act; and the Texas Labor Code, §415.0035 that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with Commission rules.

§134.601.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)

Accessible facsimile number(s)--Telephone number(s) designated in sufficient quantity to handle the volume of requests and responses for preauthorization by facsimile during routine working hours on normal business days.

(2)

Approval--a determination by the respondent, as defined in this subchapter, that the health care proposed to be furnished to an injured employee is medically reasonable and necessary

(3)

Claim file information--information relating to an injured employee's workers compensation claim, including but not limited to, medical reports/records, test results, treatment histories, and other medical documents.

(4)

Complete Request--A request for preauthorization that is on the Commission prescribed form with all required fields completed in the manner prescribed by the Commission. Additional information that a requestor elects to submit, or a respondent solicits, is not required for a request to be considered complete.

(5)

Denial--a determination by the respondent, that the health care proposed to be furnished to an injured employee is not medically reasonable and necessary. Failure to completely approve a request for preauthorization is a partial denial.

(6)

Denial Rationale--the notice providing a full and complete statement describing the respondent's reason(s) and clinical basis for denial. The statement must contain claim specific substantive information to enable the requestor to understand the respondent's reasons for denying the request for preauthorization. A generic statement such as "not medically necessary", "denied based on peer review", "does not meet screening criteria" or other similar phrases with no further description of the factual basis for the denial does not constitute denial rationale.

(7)

Emergency--means either a medical or mental health emergency as outlined below:

(A)

a medical emergency consists of the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected to result in placing the patient's health or bodily functions in jeopardy, or dysfunction of any body organ or part; or,

(B)

a mental health emergency is a documented condition which presents danger to self or others.

(8)

Extent of injury--the effects naturally resulting from the compensable injury including body areas and systems affected.

(9)

Incomplete Request--a preauthorization request that is not on the Commission prescribed form or a request on the Commission prescribed form that does not contain information in all required data fields. A request is not considered incomplete if the requestor does not provide additional information requested by the respondent or documentation that was previously provided to the respondent.

(10)

Preauthorization--the process by which a health care provider requests to provide specific treatment(s) and/or service(s) prior to rendering the treatment(s) and/or service(s), and that results in carrier liability if approval or partial approval is obtained. This process affords the insurance carrier the opportunity for prospective utilization review to determine the medical reasonableness or necessity of proposed treatment(s) and/or service(s) prior to their being performed.

(11)

Reference number--Specific identifying number assigned by the respondent to a complete request to track the status, progress, and decision of a request. The provision of a reference number does not signify approval or denial of the request for preauthorization.

(12)

Requestor--Treating doctor or referred health care provider as described in the Texas Labor Code, §401.011 (42), or (22), and §133.4 of this title (relating to Consultant and Referral Doctors), their office staff, or agent who requests preauthorization for services. An injured employee may only serve as requestor through the treating doctor.

(13)

Respondent--An insurance carrier, carrier agent, and/or any entity contracted or subcontracted to provide preauthorization utilization review for the insurance carrier. Respondents must be an insurance company licensed by the Texas Department of Insurance (TDI) or a utilization review agent certified by TDI.

(14)

Response--Reply by the respondent submitted by facsimile or electronic mail to the requestor, approving or denying the request for preauthorization.

(15)

Screening criteria--The written policies, decision rules, medical protocols, Commission fee and treatment guidelines, and Commission rules and advisories used by the carrier or its agent as part of the preauthorization process (e.g., appropriateness evaluation protocol (AEP), and intensity of service, severity of illness, discharge, and appropriateness screens (ISD-A).)

§134.602.Carrier Liability.

(a)

The insurance carrier is liable for the reasonable and necessary costs of the treatment(s) and/or service(s) listed in §134.606 of this title (relating to The List) in accordance with the Commission fee guidelines and may not dispute their medical reasonableness or necessity if the respondent:

(1)

approves preauthorization of treatment(s) and/or service(s) pursuant to this chapter;

(2)

fails to respond to a complete request for preauthorization within the timeframe required under §134.604(a)(2) of this title (relating to The Processes); or,

(3)

is ordered by the Commission.

(b)

An approval of preauthorization does not affect a carrier's right to contest liability for a claim, compensability of the injury, or extent of injury for a claim. If the carrier successfully contests one of these issues through final adjudication and, the carrier had paid for the preauthorized treatment(s) and/or service(s) prior to resolution of the dispute, the carrier can seek reimbursement as allowed by law and Commission rules.

§134.603.Applicability.

(a)

The requirement for preauthorization of health care treatment(s) and/or service(s) shall be determined in accordance with the rules in effect on the date a request for preauthorization is transmitted by the requestor.

(b)

Preauthorization is not required for:

(1)

treatment(s) and/or service(s) provided to an injured employee for an emergency;

(2)

second opinions for spinal surgery and all medically reasonable and necessary costs of spinal surgery to include services of the surgeons and ancillary providers during the hospital admission, and the hospital services as addressed in Chapter 133, Subchapter C of this title (relating to Second Opinions for Spinal Surgery);

(3)

treatment(s) and/or service(s) not identified in §134.606 (a) or (b) of this title (relating to The List);

(4)

diagnostic testing ordered by a designated doctor performing an impairment rating, when the testing is required by the mandated version of the American Medical Association's Guides to the Evaluation of Permanent Impairment to complete an impairment rating evaluation; or

(5)

diagnostic testing being performed or requested by the treating doctor in response to an insurance carrier's dispute of compensability or extent of injury.

§134.604.The Processes.

(a)

General Provisions - This section outlines the processes that requestors must follow to request preauthorization and that respondents must follow when they receive requests under this subchapter.

(1)

Requests for preauthorization and responses to preauthorization requests shall be submitted by facsimile transmission or, upon mutual agreement of the requestor and respondent, by electronic transmission. A preauthorization request may only be withdrawn by the requestor, and the withdrawal must be in writing to the respondent.

(2)

The due date for the respondent to provide the requestor a response regarding a request for preauthorization is 5 p.m., central standard time, three working days after receipt of a complete request as defined in §134.601 of this title (relating to Definitions).

(3)

The return of a request identified by the respondent as "INCOMPLETE" or "PREAUTHORIZATION NOT REQUIRED" as required by subsection (c) of this section does not constitute an approval or a denial.

(4)

The requestor shall:

(A)

provide accessible facsimile numbers;

(B)

designate one or more individuals as the contact person(s) for preauthorization inquiries from the respondent. In no event will the designation of a contact person(s) preclude a respondent from contacting another party in the requestor's office when a review might be delayed due to the contact person's unavailability or inability to provide the necessary information or data requested;

(C)

initiate approved treatment(s) and/or service(s) within 30 days of receipt of the approval or the approval shall expire, thereby releasing the respondent from liability for payment. If an approval expires and the requestor still wants to provide the treatment(s) and/or service(s), the requestor must submit a new request and seek approval; and,

(D)

only request preauthorization for treatment(s) and/or service(s) specified in §134.606 (a) and (b) of this title (relating to The List).

(5)

The respondent shall:

(A)

provide accessible facsimile numbers;

(B)

provide toll-free telephone numbers for discussing preauthorization requests with requestors during normal business hours on working days as defined in §102.3 of this title (relating to Computation of Time);

(C)

acquire prior consent from the requestor to alter any request for preauthorization, and document the communication as required by §134.605 of this title (relating to Record Keeping).

(D)

not require a requestor to submit copies of previously submitted medical reports or records; and

(E)

transfer all relevant claim file information and medical records to any entity or agent processing preauthorization requests on the respondent's behalf. The transfer of information shall not extend the due date for responding to the request.

(b)

The Request for Preauthorization.

(1)

A request for preauthorization shall be transmitted to the respondent by the requestor on the Commission prescribed form with all required fields completed in the manner prescribed by the Commission.

(2)

When an incomplete request is returned to the requestor, the requestor may re-initiate the preauthorization process by completing and submitting a new form as specified in this section. The respondent's timeframe for approving or denying the preauthorization request will only start with receipt of a complete request.

(c)

Reviewing the Request for Completeness.

(1)

Upon receipt of a written request on the Commission prescribed form, the respondent shall review the form for completion of all required data fields and determine whether the request is for treatments or services that are not covered by this subchapter as defined in §134.603 and §134.606 of this title (relating to Limitations on Applicability and The List).

(2)

If the request form is missing information in any required data fields, the form will be deemed incomplete. The respondent shall mark the request "INCOMPLETE", identify the missing data fields on the form, and return the request by facsimile or agreed electronic transmission to the requestor by the end of the next working day following the date of receipt of the incomplete request. The proper return of an incomplete request by the respondent ends the respondent's obligations with regard to the incomplete request. Respondents shall not return a request as incomplete except as provided by this section.

(3)

If the preauthorization request is not for treatment(s) and/or service(s) identified in §134.606 of this title, the respondent shall mark the request "PREAUTHORIZATION NOT REQUIRED" and return the form by facsimile or agreed electronic transmission by the end of the next working day following the date of receipt of the request. The return of such a request by the respondent ends the carrier's obligations with regard to the request. Respondents shall not return a request as "PREAUTHORIZATION NOT REQUIRED" except as provided by this section.

(4)

If the request is complete, the respondent shall:

(A)

acknowledge receipt of the completed request by writing the due date and preauthorization reference number on the request form and returning the request form by facsimile or agreed electronic transmission to the requestor, by the end of the next working day after the complete request was received; and

(B)

process the request to determine the medical reasonableness or necessity of the requested treatment(s) and/or service(s), regardless of whether the carrier is disputing liability for the claim, compensability of the injury, or extent of injury.

(d)

Processing the Complete Request for Approval or Denial.

(1)

Screening criteria must be used to review the requested treatment(s) and/or service(s).

(2)

If the entire request is approved, the preauthorization form with the response section completed, shall be transmitted by facsimile or agreed electronic transmission to the requestor by the due date. The response must include a statement notifying the requestor that approved services must be initiated within 30 days from the date of the approval by the respondent. The response shall not include any end dates or cut-off dates for the requested treatment(s) and/or service(s) nor otherwise specify the date the treatment(s) and/or service(s) are to be initiated.

(3)

If, based on the screening criteria, the entire request cannot be approved the following shall occur:

(A)

The respondent shall refer the request to an appropriate doctor or other appropriate health care provider, either of whom is qualified and permitted by licensure to provide the requested treatment(s) and/or service(s), to determine whether the requested treatment(s) and/or service(s) or individualized plan of treatment are medically reasonable and necessary.

(B)

If the appropriate doctor or other appropriate health care provider performing the review believes that the request should be denied, whether partially or totally, the respondent shall, prior to issuance of a denial, afford the requestor a reasonable opportunity to discuss the treatments(s) and/or service(s), or the plan of treatment and discuss the clinical basis for the respondent's decision with the appropriate doctor or health care provider performing the review. The respondent shall contact the requestor by telephone and offer this opportunity by 5 p.m. central standard time on the second working day following receipt of the complete request and shall extend this opportunity until at least 2 p.m. central standard time on the third working day following receipt of the complete request. If the requestor is unable to speak with the respondent's doctor or health care provider at the time the respondent calls, the respondent shall provide the toll-free telephone number the requestor can use to call the respondent back.

(C)

By the due date, the respondent shall complete the response section on the preauthorization request form and transmit it by facsimile or agreed electronic transmission to the requestor. For denials or partial denials, the response must include:

(i)

the decision;

(ii)

the denial rationale as defined in §134.601 of this subchapter;

(iii)

the full name, license type, and professional license number, including the name of the state that issued the license, of the doctor or health care provider making the denial determination; and,

(iv)

a reasonable list of documents needed to be submitted for reconsideration of the denial.

(D)

Respondents shall not partially or totally deny preauthorization for any of the following reasons:

(i)

claimant reached MMI;

(ii)

compensability in dispute;

(iii)

extent of injury in dispute;

(iv)

carrier liability in dispute; or

(v)

no further entitlement to medical benefits.

(E)

For partial denials, the requestor can perform those treatment(s) and/or service(s) that are approved and would only need to pursue the reconsideration process for those services that are denied.

(e)

The Reconsideration.

(1)

If, after receiving a denial or partial denial, the requestor wants to request reconsideration, the requestor shall submit a reconsideration request to the respondent within 30 days of receipt of a denial or partial denial. If the requestor fails to request reconsideration within the time period, the respondent shall return the reconsideration request marked "UNTIMELY", and this return does not constitute an approval or a denial. When an untimely reconsideration request is returned to the requestor, the requestor may re-initiate the preauthorization process by completing and submitting a new form as specified in this section. The proper return of an untimely request by the respondent ends the carrier's obligations with regard to the untimely request. Respondents shall not return a request as untimely except as provided by this section.

(2)

The request for reconsideration shall:

(A)

be transmitted by facsimile or agreed electronic transmission on the same form as previously submitted.

(B)

indicate that the request is for reconsideration.

(C)

include the documents identified by the respondent in the denial as needed for reconsideration and any additional documentation not previously submitted with the preauthorization request to the respondent to support the medical reasonableness or necessity of the treatment(s) and/or service(s) to be reconsidered.

(3)

The review of a request for reconsideration of a denial shall be performed by a doctor who is qualified and permitted by licensure to provide the requested treatment(s) and/or service(s). The reconsideration doctor cannot be the same doctor who performed the initial review.

(4)

The respondent shall notify the requestor by facsimile or agreed electronic transmission of the decision within three working days after receipt of the request for reconsideration. This notice shall indicate approval, denial, or partial denial on the request form. If the response is again a denial or partial denial, the response to the requestor shall also include the information identified in subsection (d)(3)(C) of this section.

(5)

The requestor may appeal the decision by filing a request for medical dispute resolution as provided in the Texas Labor Code, §413.031 and in §133.305 of this title (relating to Request for Medical Dispute Resolution) if the reconsideration decision is a denial or partial denial. Requestors may not request medical dispute resolution if they have not completed the reconsideration process.

(f)

Submission of a Subsequent Request.

(1)

If the requestor determines that there is a substantial change in the injured employee's medical condition, a new preauthorization request form for the same requested treatment(s) and/or services or individualized plan of treatment that was denied or partially denied may be completed and submitted for processing.

(2)

The subsequent request must document the previous preauthorization reference number and the change in medical condition.

(3)

All of the requirements of this subchapter apply to the subsequent request and its review.

(4)

Requestors shall not request preauthorization for the same treatment(s) and/or service(s) that a respondent has previously denied unless a substantial change in condition has occurred, the requestor is utilizing the reconsideration process under subsection (e) of this section, or the requestor is re-submitting a previously incomplete request under subsection (b) of this section.

§134.605.Record Keeping.

(a)

The requestor and the respondent shall maintain records in either paper or electronic format of preauthorization and reconsideration requests and responses for a period of two years from the date of the request.

(b)

For each preauthorization request, the requestor must maintain a copy of the final preauthorization request form with all attachments and documentation of:

(1)

the date the initial request was sent;

(2)

the date the following were received from the respondent (as applicable):

(A)

the returned request marked "INCOMPLETE;"

(B)

the returned request marked "PREAUTHORIZATION NOT REQUIRED;" or

(C)

the acknowledgment with the preauthorization due date and reference number;

(3)

the date the requestor was given the opportunity to discuss a potential denial or partial denial with the respondent's doctor or health care provider;

(4)

the date the reconsideration request was sent, if applicable;

(5)

the date the reconsideration response was received by the requestor, if applicable; and

(6)

all communication, either verbal or written, between the requestor and respondent to include: date of communication, name of parties, and summary of communication.

(c)

For each preauthorization request, the respondent must maintain a copy of the final preauthorization request form with all attachments and documentation of:

(1)

the date the initial request was received (this is the earlier of the date the carrier or their contracted utilization review agent received the request);

(2)

the date the following was sent to the requestor (as applicable);

(A)

the returned request marked "INCOMPLETE;"

(B)

the returned request marked "PREAUTHORIZATION NOT REQUIRED;" or

(C)

the acknowledgment with the preauthorization due date and reference number;

(3)

the date requestor was given the opportunity to discuss a potential denial or partial denial with the respondent's doctor or health care provider;

(4)

the date the reconsideration request was received, if applicable;

(5)

the date the reconsideration response was sent, if applicable;

(6)

all communication, either verbal or written, between the requestor and respondent to include: date of communication, name of parties, method of communication, and summary of communication.

(d)

Upon request by the Commission, an insurance carrier shall provide all information in the form and manner as prescribed by the Commission. Each insurance carrier shall maintain the following information, in a consolidated electronic format, for each preauthorization request and reconsideration received:

(1)

the date the request was received;

(2)

type of request (e.g., initial request or reconsideration);

(3)

the name of the requestor;

(4)

the name, date of injury, and Social Security number of the claimant for which the request is being made;

(5)

the treatment(s) and/or service(s) being requested;

(6)

the final response (e.g., approval, partial denial, or denial) to the request;

(7)

the name and license number of the appropriate doctor or health care provider who made the denial; and,

(8)

the date the respondent provided the requestor with its final response.

(e)

Each insurance carrier shall submit to the Commission by March 1 of each year, a summary report for the preceding calendar year containing the following preauthorization information:

(1)

total number of requests approved, denied, partially denied, and processed, grouped by each item listed in §134.606 (a) and (b) of this title (relating to The List);

(2)

total numbers of reconsiderations approved, denied, partially denied, and processed, grouped by each item listed in §134.606 (a) and (b), of this title; and

(3)

average cost to process each of the following: approvals, denials, partial denials, and reconsiderations.

§134.606.The List.

(a)

The following health care treatment(s) and/or service(s) require preauthorization except as provided by §134.603 of this title (relating to Limitations on Applicability):

(1)

Inpatient and outpatient admissions to any hospital or ambulatory surgical center as follows:

(A)

the admission includes the treatment(s) and/or service(s) to be performed; and

(B)

approval of the admission shall not include length of stay, and disputes regarding length of stay shall be reviewed retrospectively.

(2)

Physical medicine (as defined by the Medical Fee Guideline), work hardening, work conditioning, and/or manipulations beyond eight weeks from the date of injury.

(3)

Electrodiagnostic testing (includes all sensory, motor, and reflex studies, including but not limited to, electromyogram (EMG), surface electromyogram (SEMG), somatosensory evoked potential (SSEP), dermatomal sensory evoked potentials (DSEP), nerve conduction velocity (NCV), and H reflex and F reflex studies).

(4)

A repeat individual radiology/nuclear medicine procedure with a whole procedure maximum allowable reimbursement (MAR) or DOP charged at greater than $350 as specified by the Medical Fee Guideline.

(5)

Durable medical equipment with charges exceeding $500 per item (either purchase or cumulative rental), and purchase or rental of all transcutaneous and/or neuromuscular electrical nerve stimulators, as specified by the Medical Fee Guideline.

(b)

The requestor may elect to request preauthorization for an individualized plan of treatment. An individualized plan of treatment is defined as a documented course of treatment for an injured employee with specific proposed treatment(s) and/or service(s) to include the following at a minimum: type of intervention/treatment, frequency of treatment, expected duration of treatment, expected clinical response to treatment, and specification of re-evaluation timeframe. An individualized plan of treatment may include treatment(s) and/or service(s) as specified in subsection (a) of this section and therefore, would not require separate preauthorization.

(c)

If preauthorization of an individualized plan of treatment listed in subsection (b) of this section is:

(1)

requested, the respondent is required to process and respond to the request in the same manner as for any treatment(s) and/or service(s) listed in subsection (a) of this section and all reconsideration and appeal provisions apply; and

(2)

approved, the insurance carrier is liable for all medically reasonable and necessary costs of all treatment(s) and/or service(s) specifically listed in the approved individualized plan of treatment.

§134.607.Severability.

Where any terms or sections of this subchapter are determined by a court of competent jurisdiction to be inconsistent with any applicable law, the applicable law will apply, and the remaining terms and provisions of this subchapter shall remain in effect.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905185

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829

Chapter 136. Benefits--Vocational Rehabilitation

28 TAC §136.2

The Texas Workers' Compensation Commission (the Commission) proposes an amendment to §136.2, concerning the registry of private providers of vocational rehabilitation services. The amendment is proposed in response to the addition of subsection (e) of Texas Labor Code, §409.012, as passed by the 76th Legislature. The amendment is proposed to remove reference to a specific Commission form and to establish the criteria a private provider of vocational rehabilitation services must meet in order to be included in the Commission's Registry of Private Providers of Vocational Rehabilitation Services.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

The proposed amendment to §136.2(b) removes the reference to the TWCC form number. The requirements for the application to be on a Commission approved form remains. Additional language specifying that the form shall submitted in the form, format and manner prescribed by the Commission has been added.

Proposed amended §136.2(b)(5) removes the requirement that the application for inclusion on the Commission's registry of private providers of vocational rehabilitation services show any accreditation held with any national or state-wide organization and replaces it with the requirement that the private provider be credentialed as a Licensed Professional Counselor (LPC), Certified Case Manager (CCM), Certified Rehabilitation Counselor (CRC), Certified Vocational Evaluator (CVE), or Certified Disability Management Specialist (CDMS).

Proposed amended §136.2(d) deletes the requirement that a copy of the registration form for each private provider be available in each Commission field office. This requirement is not in harmony with the Commission's efforts to reduce its reliance on paper and is not necessary because a copy of the registry itself will be available for inspection at each field office and at the Commission's central office.

Victor Rodriguez, Chief Financial Officer, has determined that for the first five-year period the proposed rule is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule. There may be minimal costs to the Commission to review application forms and compile and maintain the registry; however these functions are already being performed so there will be little change in the process.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. Rodriguez has also determined that for each year of the first five years the rule as proposed is in effect the public benefits anticipated as a result of enforcing the rule will be:

Compliance with the changes to Texas Labor Code, §408.081(c), as passed by the 76th legislature.

Injured employees, employers, and insurance carriers will benefit from proposed amendment by being able to access the registry to determine if a private provider of vocational rehabilitation services possesses the credentials required by Commission rule.

There will be no adverse economic effect on small or micro-businesses. There will be no difference in the costs of compliance for small businesses or micro-businesses as compared to large businesses.

Comments on the proposal must be received by 5:00 p.m., September 27, 1999. You may comment via the Internet by accessing the Commission's website at http://www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Donna Davila at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Due to the large number of rules proposed by the Commission at its August meeting, commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The Commission may not be able to respond to comments which cannot be linked to a particular proposed rule. Along with your comment, it is suggested that the reasoning for the comment also be included for Commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon action by the commissioners at the public meeting, the rule(s) as adopted may be revised from the rule(s) as proposed in whole or in part. Persons in support of the rule(s) as proposed, in whole or in part, may wish to comment to that effect.

A public hearing on this proposal will be held on September 14, 15, or 16, 1999, at the Austin central office of the Commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the Commission's website at http://www.twcc.state.tx.us.

The amended rule is proposed under: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.141, which addresses the award of supplemental income benefits; Texas Labor Code, §408.142, which sets out the requirements for an employee's eligibility to receive supplemental income benefits; Texas Labor Code, §408.143, which requires an injured employee to file with the insurance carrier a quarterly statement regarding employment after the Commission's initial determination of supplemental income benefits; Texas Labor Code, §408.147, which sets out the procedures for contest of supplemental income benefits by an insurance carrier and provides that the insurance carrier is liable for the attorney's fees of an employee who prevails in such a contest; Texas Labor Code, §408.150, as amended by the 76th Legislature, which provides for Commission referral to the Texas Rehabilitation Commission for vocational rehabilitation and training; Texas Labor Code, §408.151, as added by the 76th Legislature, which requires the selection of a designated doctor to resolve a dispute regarding an employee's ability to return to work; Texas Labor Code, §409.012(e), as added by the 76th Legislature, which allows the Commission to require a private provider of vocational rehabilitation services to maintain certain credentials and qualifications in order to provide services in connection with a workers' compensation claim; and Chapter 410 of the Texas Labor Code, regarding adjudication of disputes.

This proposed amendment to §136.2 affects the following statutes: Texas Labor Code, §402.061, which authorizes the Commission to adopt rules necessary to administer the Act; Texas Labor Code, §406.010, which authorizes the Commission to adopt rules on claims service activities of insurance carriers; Texas Labor Code, §408.141, which addresses the award of supplemental income benefits; Texas Labor Code, §408.142, which sets out the requirements for an employee's eligibility to receive supplemental income benefits; Texas Labor Code, §408.143, which requires an injured employee to file with the insurance carrier a quarterly statement regarding employment after the Commission's initial determination of supplemental income benefits; Texas Labor Code, §408.147, which sets out the procedures for contest of supplemental income benefits by an insurance carrier and provides that the insurance carrier is liable for the attorney's fees of an employee who prevails in such a contest; Texas Labor Code, §408.150, as amended by the 76th Legislature, which provides for Commission referral to the Texas Rehabilitation Commission for vocational rehabilitation and training; Texas Labor Code, §408.151, as added by the 76th Legislature, which requires the selection of a designated doctor to resolve a dispute regarding an employee's ability to return to work; Texas Labor Code, §409.012(e), as added by the 76th Legislature, which allows the Commission to require a private provider of vocational rehabilitation services to maintain certain credentials and qualifications in order to provide services in connection with a workers' compensation claim; and Chapter 410 of the Texas Labor Code, regarding adjudication of disputes.

§136.2.Registry of Private Providers of Vocational Rehabilitation Services.

(a)

The Commission shall maintain a registry of private providers of vocational rehabilitation services. A private provider may apply to the Commission to be included in the registry.

(b)

A private provider who wishes to be included in the registry shall complete a Commission approved registration form [ TWCC-65 ]. The registration form shall be submitted in the form, format and manner prescribed by the Commission to the Commission at its Austin office, signed by the provider, and include the following information:

(1)

the private provider's name, business address, and telephone number;

(2)

an informational brochure that describes the evaluation, assessment, assistance, placement, or support services available from the private provider;

(3)

the locations where the private provider renders services;

(4)

a statement showing the private provider's education, training, or experience in vocational rehabilitation; and

(5)

a statement showing [ any accreditation held by ] the private provider is credentialed as a Licensed Professional Counselor (LPC), Certified Case manager (CCM), Certified Rehabilitation Counselor (CRC), Certified Vocational Evaluator (CVE), or Certified Disability Management Specialist (CDMS) [ with any national or state-wide organization ] .

(c)

The Commission shall include in its registry, for a period of one year from the date the Commission enters the private provider's name in the registry, a copy of the registration form of each private provider who complies with the requirements of subsection (b) of this section.

(d)

The Commission shall provide a copy of the [ registration form of each private provider included in the ] registry for inspection by the public at the Commission's central office in Austin, Texas and each local field office of the Commission.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on August 16, 1999.

TRD-9905187

Susan Cory

Assistant General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: September 26, 1999

For further information, please call: (512) 707-5829