Part I.
Texas Department of Insurance
Chapter 3.
Life, Accident and Health Insurance and Annuities
28 TAC Chapter 3
The Texas Register administratively transfers Texas
Department of Insurance sections in Chapter 3 to comply with the Texas Register's
restriction on rule number length detailed in 1 TAC §91.19 (Numbering
Schemes). The conversion is outlined in the Tables and Graphics section of
this issue and takes effect April 16, 1999.
Figure: 28 TAC Chapter 3
28 TAC Chapter 5
The Texas Register administratively transfers Texas
Department of Insurance sections in Chapter 5 to comply with the Texas Register's
restriction on rule number length detailed in 1 TAC §91.19 (Numbering
Schemes). The conversion is outlined in the Tables and Graphics section of
this issue and takes effect April 16, 1999.
Figure: 28 TAC Chapter 5
Chapter 165.
Rejected Risk; Injury Prevention Services
The Texas Workers' Compensation Commission (the commission) adopts
new §§165.1-165.7, concerning Rejected Risk Injury Prevention Services
and simultaneous repeal of current §§165.6-165.9. Section 165.4
is adopted with changes to the proposed text as published in the February
19, 1999, issue of the
Texas Register
(24
TexReg 1138). New §§165.1-165.3, 165.5-165.7, and the repeal of
§§165.6-165.9 are adopted without changes and will not be republished.
As required by the Government Code, §2001.033(1), the Commission's
reasoned justification for this rule is set out in this order which includes
the preamble, which in turn includes the rule. The reasoned justification
is contained in this preamble, and throughout this preamble, including how
and why the Commission reached the conclusions it did, why the rule is appropriate,
the factual, policy, and legal bases for the rule, a restatement of the factual
basis for the rule, a summary of comments received from interested parties,
names of those groups and associations who commented and whether they were
for or against adoption of the rule, and the reasons why the Commission disagrees
with some of the comments and proposals.
A change was made to the rules as proposed in §165.4(b). In that section,
the words "or by telephonic document transfer" were replaced with the words
"by facsimile, or by electronic transmission" to clarify the means of transmission
that can be used to transmit a request for safety consultation to the Commission.
The original Rejected Risk Program was established under the Texas Workers'
Compensation Insurance Facility (the Facility) by House Bill 62, 2nd Called
Session, 72nd Legislature, as an amendment to Article 5.76-2 of the Insurance
Code, and as an integral part of the workers' compensation insurance reform
in Texas. The amendment also established the Commission's authority and responsibility
to administer portions of the program involving: access to the premises of
identified policyholders; development of a program to target policyholders;
approval of professional sources to conduct safety consultations under the
program; investigation of accidents and monitoring of implementation of accident
prevention plans for selected policyholders; adoption of rules; conducting
follow-up inspections of identified policyholders; assessment of administrative
penalties; and charging policyholders for services provided. The goal of the
program was to assist employers that were unable to obtain workers' compensation
insurance on the voluntary market with their injury prevention programs, thus
reducing policyholder injuries, costs to the workers' compensation system,
and the number of employers in the risk pool. House Bill 62 additionally established
provisions to transfer the program to the Workers' Compensation Insurance
Fund (the Fund) as the Facility ceased writing coverage. The initial Rejected
Risk Program under the Facility was implemented by Commission rules §§165.1-165.5.
With the transition of the program to the Fund as the insurer of last resort,
§§165.6-165.9 were adopted by the Commission to allow initiation
of the new program under the Fund and continuation of the original program
under the Facility until all Facility policyholders had completed the program.
Sections 165.1-165.5 were repealed effective May 1, 1996, to reflect completion
of the program under the Facility. The Rejected Risk Program has helped achieve
the goal of reducing the number of employers in the rejected risk pool. The
number identified for the injury prevention program has been reduced from
2034 in 1992 to 350 in 1998. The success of the program is further indicated
by the 37% reduction in injuries experienced by employers completing the program
(measured by comparing the injury rate 12 months after completing the program
to the injury rate 12 months prior to notification).
The Commission repeals current §§165.6-165.9 and adopts new §§165.1-165.7
to provide continuity and logical rule numbering for the Rejected Risk Program
rules and to separate these rules from the Extra-Hazardous Employer Program
rules, except for references to §164.9 and §164.10 (relating to
Approval of Professional Sources for Safety Consultations, and Removal From
the List of Approved Professional Sources). The new Chapter 165 rules (relating
to the Rejected Risk Program), continue to make reference to the Extra-Hazardous
Employer rules only to the extent of avoiding duplication of the Approved
Professional Source Program which is required by both the Insurance Code and
the Labor Code.
Section 165.1.
New §165.1(a), (b), and (c) retain the language of existing §165.6(a),
(c), and (d), with an administrative correction to the mailing address. Subsection
(b) of existing §165.6, addressing policyholders identified under both
the Extra-Hazardous Employer Program and the Rejected Risk Program, is deleted.
The new Chapter 165 rules are designed to stand alone, except for references
relating to the Approved Professional Source Program, as noted previously.
The new rule uses the word "policyholder" rather than "employer," where applicable,
for consistency with the statute.
Section 165.2.
New §165.2 incorporates the safety consultation portions of existing
§165.7(a) and (b). References to Chapter 164 have been removed and the
language of those provisions have been incorporated into this section and
§165.4 and §165.5. Section 165.2(a) only applies to policyholders
that have not had an accident prevention plan developed and implemented in
the last six months prior to notification. New §165.2(b) provides instructions
for those policyholders that have had a plan developed within the six month
period described in subsection (a). New §165.2(c) incorporates the provisions
of existing §165.7(b). Section 165.2(d) incorporates the basic provisions
of existing §165.7(c) but eliminates the option for the Fund to use Field
Safety Representatives (FSR) that have not been qualified as Approved Professional
Sources. This option was included in the current rule to ensure that the Fund
had sufficient resources to conduct the free safety consultations being offered
by the Fund. Because the Fund is now a well established entity, this provision
is no longer necessary. New §165.2(e) incorporates the basic requirements
of existing §165.7(d), again eliminating reference to the FSR option.
Additionally, rule terminology is updated to reflect current report titles
and provisions referring to removal from the Approved Professional Source
list are deleted because these criteria are included by reference to Chapter
164. New §165.2(f) incorporates the provisions of existing §165.7(e),
without those portions made unnecessary by elimination of the FSR provision.
New §165.2(g) incorporated the provisions of §165.7(a)(1) by reference
to §164.3 and provides the authority for safety consultants to charge
for their services if they elect to do so. The new rule uses the word "policyholder"
rather than "employer", where applicable, for consistency with the statute.
Section 165.3.
New §165.3 adds provisions for the formulation of an accident prevention
plan referred to in existing §165.7(f). New §163.3 incorporates
the language of §164.4, deleting the references to the exception for
Fund FSRs because it is no longer needed, and aligning timelines to the provisions
established by the Insurance Code. New §165.3 uses the word "policyholder"
rather than "employer," where applicable, for consistency with the statute.
Section 165.4.
New §165.4 includes provisions currently incorporated by reference
in existing §165.7(a)(1) to §164.11. The language of §164.11
has been included in new §165.4, so no incorporation by reference is
necessary. New §165.4 instructs the policyholder that it may request
that the division perform its safety consultation, that the request will be
in writing on a form prescribed by the commission and that the form may be
delivered to the division by mail, in person, by fascimile, or by electronic
transmission. It also states that the form shall include the policyholder's
name, address, and telephone number, the name of the contact person at the
policyholder's place of business and the date the policyholder received their
notice of identification as a Rejected Risk employer. The division is instructed
to notify the requesting policyholder, within three working days of receipt
of their request to have the division perform their safety consultation, to
inform them that they have accepted or rejected their request.
Section 165.5.
New §165.5 includes provisions currently incorporated by reference
in §165.7(a)(1) to §164.12. The language of §164.12 has been
included in §165.5 so no incorporation by reference is necessary. New
§165.5 informs the policyholder that they shall be required to reimburse
the division for the services it provides when the policyholder requests the
services pursuant to new §165.4 and the division provides the consultation
and formulates the accident prevention plan, when the division conducts a
follow-up inspection of the policyholder's premises under new §165.6,
or when the division conducts an accident investigation at the policyholder's
work site. New §165.5 also provides for the commission to bill the policyholder
in accordance with the commission's approved fee schedule and provide the
policyholder with an itemized statement each month. The rule also instructs
the policyholder that the payment is due 30 days after the billing date.
Section 165.6.
New §165.6 contains the provisions for the follow-up inspection contained
in existing §165.8 with some changes. The purpose of the inspection is
expanded to include ensuring the effectiveness of the accident prevention
plan to meet program objectives. The provision referencing the Extra-Hazardous
Employer Program and requirement that the inspection follow Chapter 164 criteria,
is removed. New Chapter 165 criteria will be applicable to all inspections
conducted under this chapter. The reference to penalties and sanctions for
failure to comply with a commission order is expanded to include the Insurance
Code which requires the inspection.
Section 165.7.
New §165.7 contains the provisions in existing §165.9, with only
minor word changes for clarity. The new rule outlines report submission guidelines
of 30 days from date of inspection, requires a statement of policyholder compliance
or non-compliance with the plan, requires a list of those elements of the
plan that were not in compliance, and the conditions under which the Commission
will pursue an administrative violation.
The public benefits anticipated as a result of administering and enforcing
the new rules will be a safer and healthier workplace for employees because
of employers' participating in the program. Historically, employers participating
in the program as previously administered have seen reductions in injuries
of up to 37%, measured by comparing the injury rate 12 months after completing
the program to the 12 months prior to identification. A reduced number of
injuries should also result in reduced experience modifiers for employers
and be reflected in lower future premiums as an insured in the voluntary market,
as opposed to obtaining insurance from the Fund as the insurer of last resort.
No public comments were received regarding adoption of the new rules and
the repeals.
Chapter 5.
Property and Casualty Insurance
Part II.
Texas Workers' Compensation Commission