Part I.
Texas Department of Insurance
Chapter 1.
General Administration
Subchapter C. Maintenance Taxes and Fees
28 TAC §1.414
The Commissioner of Insurance adopts an amendment to §1.414,
concerning assessment of maintenance taxes and fees for payment in 1999. The
amended section is adopted without changes to the proposed text as published
in the November 13, 1998, issue of the
Texas Register
(23 TexReg 11553).
The amendment is necessary to adjust the rates of assessment for maintenance
taxes and fees for 1999 which will provide the revenue necessary to fund appropriations
made by the Legislature.
Section 1.414 applies the rates to the gross premium receipts for the calendar
year 1998, or some other basis designated by statute, to life, accident, and
health insurance; motor vehicle insurance; casualty insurance, and fidelity,
guaranty and surety bonds; fire insurance and allied lines, including inland
marine; workers' compensation insurance; title insurance; health maintenance
organizations; third party administrators; and corporations issuing prepaid
legal services contracts. The department anticipates the adopted rates will
produce revenue of $42,743,354 to the state's general revenue fund.
No comments were received regarding adoption of the amendment.
The amendment is adopted under the Insurance Code, Articles 4.17,
5.12, 5.24, 5.49, 5.68, 9.46, 21.07-6, §21, 23.08A, 1.03A, and Article
20A.33 (the Texas Health Maintenance Organization Act), which provide authorization
for the Texas Department of Insurance to assess maintenance taxes and fees
for the lines of insurance and related activities specified in amended §1.414.
Article 4.17 establishes a maintenance tax based on insurance premiums for
life, accident, and health coverage and the gross considerations for annuity
and endowment contracts. Article 5.12 establishes a maintenance tax based
on insurance premiums for motor vehicle coverage. Article 5.24 establishes
a maintenance tax based on insurance premiums for casualty insurance and fidelity,
guaranty and surety bonds coverage. Article 5.49 establishes a maintenance
tax based on insurance premiums for fire and allied lines coverage, including
inland marine. Article 5.68 establishes a maintenance tax based on insurance
premiums for workers' compensation coverage. Article 9.46 establishes a maintenance
fee based on insurance premiums for title coverage. Article 21.07-6, §
21 establishes a maintenance tax based on the gross amount of administrative
or service fees for third party administrators. Article 23.08A establishes
a maintenance tax based on gross revenue of corporations issuing prepaid legal
service contracts. The Texas Health Maintenance Organization Act, Section
33 (codified at the Insurance Code, Article 20A.33), establishes an annual
tax based on the gross amounts of revenues collected for the issuance of health
maintenance certificates or contracts. Article 1.03A authorizes the commissioner
of insurance to adopt rules and regulations for the conduct and execution
of the duties and functions of the department as authorized by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January
7, 1999.
TRD-9900063
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 27, 1999
Proposal publication date: November 13, 1998
For further information, please call: (512) 463-6327
28 TAC §1.415
The Commissioner of Insurance adopts an amendment to §1.415,
concerning assessment of a maintenance tax surcharge which will be used to
service the bonded indebtedness of the Texas Workers' Compensation Insurance
Fund. The amended section is adopted without changes to the proposed text
as published in the November 27, 1998, issue of the
Texas Register
(23 TexReg 11902).
The amendment is necessary to adjust the rate of maintenance tax surcharges
due in 1999 on the basis of gross premium receipts for calendar year 1998
for workers' compensation companies. The surcharge will be used to service
the bonded indebtedness of the Texas Workers' Compensation Fund.
The Texas Workers' Compensation Commission annually establishes and certifies
to the comptroller of public accounts the rate of assessment for the maintenance
taxes which are authorized to pay the cost of administering the Texas Workers'
Compensation Act. The commissioner of insurance may increase the Texas Workers'
Compensation Commission tax rate to a rate sufficient to pay all debt service
on the bonds issued on behalf of the Texas Workers' Compensation Insurance
Fund, subject to the maximum rate established by the Texas Labor Code, §404.003.
The department estimates $10,708,389 will be generated from the maintenance
tax surcharge which will be used to pay debt service for $300 million in bonds
issued in 1991 by the Texas Public Finance Authority on behalf of the Texas
Workers' Compensation Fund.
One comment was received regarding adoption of the amendment. The commenter
recommended the commissioner reduce the maintenance tax surcharge rate to
zero percent since the Legislature intended the Texas Workers' Compensation
Fund (the Fund) to become self-sufficient and the Fund has surplus adequate
to service the debt without the surcharge.
The department responds that the commissioner does not have the authority
to require the Fund to utilize its surplus as suggested by the commenter.
Only the Board of Directors of the Fund may make the decision that the surplus
of the Fund is adequate and may be used to pay debt service on the bonds or
retire them. In 1998, the Board of Directors of the Fund decided that the
surplus of the Fund was adequate and used surplus funds to service the bonds.
The commissioner had already set the rate so it was necessary to amend the
section to set the rate at zero. The Insurance Code, Article 5.76-5, §10
directs the commissioner to set a rate sufficient to pay all debt service
on the bonds. The commissioner must proceed with the adoption of the surcharge
rate for this year in order for the comptroller to proceed with the collection
of taxes due March 1, 1999.
American International Group, Inc. commented against the amendment.
The amendment is adopted under the Insurance Code, Articles 5.76-3,
5.76-5, 5.68 and 1.03A and the Texas Labor Code, §403.002. The Insurance
Code, Article 5.76-3 establishes the Texas Workers' Compensation Insurance
Fund. Article 5.76-5 establishes the maintenance tax surcharge. Article 5.68
establishes the maintenance tax based on premiums for workers' compensation
coverage. 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 Texas Labor Code, §403.002 establishes
the maintenance tax for workers' compensation insurance companies.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January
7, 1999.
TRD-9900064
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 27, 1999
Proposal publication date: November 27, 1998
For further information, please call: (512) 463-6327
Subchapter J. Examination Expenses and Assessments
28 TAC §7.1012
The Commissioner of Insurance adopts an amendment to §7.1012,
concerning assessments to cover the expenses of examining insurance companies.
The amended section is adopted without changes to the proposed text published
in the November 13, 1998, issue of the
Texas Register
(23 TexReg 11556).
The amendment is necessary to provide a rate of assessment for domestic
and foreign insurance company examination expenses in 1999 which will provide
the revenue necessary to fund the appropriations made by the Legislature.
Section 7.1012 provides the method and rates of assessment for examination
expenses of foreign and domestic insurance companies. Rates of assessment
are levied against and collected from each domestic insurance company based
on admitted assets and gross premium receipts for the 1998 calendar year,
and from each foreign insurance company examined during the 1999 calendar
year based on a percentage of the gross salary paid to an examiner for each
month or part of a month during which the examination is made. The department
anticipates that the adopted rate will produce revenue of $9,666,623 to the
state's general revenue fund. The expenses and charges to be assessed are
in addition to, and not in lieu of, any other charge which may be made under
the law, including the Insurance Code, Article 1.16.
No comments were received regarding the adoption of the amendment.
The amendment is adopted under the Insurance Code, Articles 1.16
and 1.03A. The Insurance Code, Article 1.16(a) and (b) authorizes the commissioner
of insurance to make assessments necessary to cover the expenses of examining
insurance companies and to comply with the provisions of the Insurance Code,
Articles 1.16, 1.17, and 1.18, in such amounts as the commissioner certifies
to be just and reasonable. In addition, Article 1.16(c) provides that expenses
incurred in the examination of foreign insurers by Texas examiners shall be
collected by the commissioner by assessment. Article 1.03A authorizes the
commissioner of insurance to adopt rules and regulations for the conduct and
execution of the duties and functions of the department as authorized by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January
7, 1999.
TRD-9900062
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 27, 1999
Proposal publication date: November 13, 1998
For further information, please call: (512) 463-6327
Subchapter L. Medical Child Support, Unfair Practices
28 TAC §§21.2001, 21.2004, and 21.2010
The Commissioner of Insurance adopts amendments to §§21.2001,
21.2004, and 21.2010, concerning medical child support orders. Sections 21.2004
and 21.2010 are adopted with changes to the proposed text as published in
the November 6, 1998, issue of the
Texas Register
(23 TexReg 11270). Section 21.2001 is adopted without changes to the
proposed text and will not be republished.
The amendments are necessary to implement legislation enacted by the 75th
Legislature in Senate Bill 29 as well as to maintain compliance with the federal
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).
Failure to comply with the federal mandates in PRWORA will subject Texas to
potential penalties including the loss of federal funds. Both federal and
state law prescribe requirements concerning the enrollment of children in
health coverage pursuant to medical support orders as well as the extent of
health coverage provided to children who do not reside in the same service
area as the parent under whom they are provided coverage. This rule affects,
among others, insurance companies, stipulated premium companies, group hospital
service corporations, health maintenance organizations (HMOs), certain governmental
entities, multiple employer welfare arrangements, and health insurers that
issue coverage to group health plans as defined by the Employee Retirement
Income Security Act of 1974.
After reviewing public comment on the proposed amendments, the department
has made the following changes: Section 21.2004(a) was revised to clarify
that the change in family circumstances brought about by issuance of a medical
support order does not require an insurer to cover any person other than the
child subject to the order and, if not already covered, the child's parent.
Section 21.2004(e) was changed to apply only to children who reside outside
an insurer's service area. Section 21.2010(b) was revised to clarify that
the subsection only applies to insurers covering a child under the same preferred
provider policy with which it is covering the parent ordered to provide the
coverage. Section 21.2010(d)(5) was revised to allow, as an alternative to
a qualified actuary, an officer of an insurer to attest to the actuarial equivalence
of coverage provided children pursuant to a medical support order.
These amendments clarify a health insurer's coverage obligations under
medical support orders and in some instances requirements for certifying its
compliance. In addition, the amendments increase access to health care coverage
for children entitled to medical child support. Section 21.2001(1), (2), (3),
and (12) incorporate definitions for actuarial assumptions, actuarially equivalent,
actuarial present value, and qualified actuary, respectively. Amendments to
§21.2001(8) clarify the definition of insurer. Section 21.2004 is amended
to allow receipt of notice of a medical support order to initiate statutory
requirements, to authorize insurers to require enrollment of the parent eligible
for coverage to continue the child's coverage, and to clarify that insurers
shall not charge higher premiums for coverage of children pursuant to medical
support orders and who reside outside the insurer's service area. Section
21.2010 is amended to define comparable coverage, to establish requirements
for policies with preferred provider benefits covering children subject to
medical support orders, and to add clarifying language for HMOs and insurers
regarding alternative delivery systems and filing requirements.
Section 21.2001. A commenter expressed concern that the rule defines "qualified
actuary" more restrictively than does Insurance Code Art. 1.11(d).
Agency Response: The definition of "qualified actuary" in Insurance Code
Article 1.11(d) (concerning actuarial opinion in an annual statement) is applicable
only to that article and not to the entire Insurance Code. Notwithstanding
that distinction, §21.2001 defines "qualified actuary" consistently with
the definition in Article 1.11(d). Both recognize members of the American
Academy of Actuaries as qualified. In addition, Article 1.11(d) deems qualified
a person who has otherwise demonstrated actuarial competence to the satisfaction
of the commissioner of insurance; §21.2001 includes Fellows of the Society
of Actuaries in this category. Furthermore, the definition of qualified actuary
is identical to the definition in other rules the department has adopted,
such as the Medicare Supplement rules (28 TAC §3.3303). Finally, the
department's change to §21.2010(d)(5), allowing an officer of an insurer
to attest to actuarial equivalence as an alternative to a qualified actuary,
should allay the commenter's concern about this definition. Accordingly, the
department has not made any change to the definition.
Section 21.2004. A commenter expressed concern that there is no requirement
for the ordered parent or guardian to submit the order to the insurer within
a specified time frame and suggested a specific time frame requirement of
31 days for the submission of support orders to the insurer. The commenter
further requested clarification that coverage would begin only after the insurer
actually receives the court order and addition of language requiring cooperation
from the ordered parent/guardian to facilitate enrollment of the child by
the insurer.
Agency Response: The department understands the commenter's concerns; however,
the legislature has not granted the department regulatory authority over the
parent or guardian and therefore, the department has made no change to the
rule. The department notes that the Family Code addresses many of the commenter's
concerns. Family Code §154.184(b), for example, requires that a child
shall be automatically enrolled for the first 31 days after the receipt or
notice of the medical support order. Insurers are thus not bound to provide
coverage until receipt of the notice or the medical support order, at which
time the Family Code, Insurance Code Article 3.96-3(a), and this rule require
immediate enrollment. The Family Code does require action on the parent's
part similar to that requested by the commenter. For example, Family Code
§154.185 directs a parent ordered to provide health insurance to furnish
proof that health insurance has been provided for the child within 30 days
of notice of rendition of the order. In addition, Family Code §154.188
makes a parent ordered to provide health insurance liable for necessary medical
expenses of the child if the parent fails to obtain health insurance for the
child, which provides a strong incentive for the parent to facilitate enrollment
of the child.
Section 21.2004. A commenter inquired whether §21.2004 allows for
the application of an affiliation period used by an HMO.
Agency Response: Family Code §154.184 uses the terms "enrollment"
and "coverage" interchangeably. Accordingly, Family Code §154.184(b),
which directs automatic enrollment of a child subject to a medical support
order for 31 days, also requires coverage of the child during that period.
Accordingly, this statutory provision prevents an HMO from applying an affiliation
period to a child who is the subject of a medical support order, because during
an affiliation period an HMO is not required to provide any health care services
or benefits. Under §21.2002(b), however, an insurer can enforce policy
provisions which are "in accordance with federal and state law." Since no
law prevents an HMO from applying an affiliation period to the unenrolled
parent of a child subject to a medical support order, the HMO could apply
an affiliation period to the parent if the parent's enrollment is a condition
of making the child's enrollment permanent.
Section 21.2004. A commenter inquired whether insurers are allowed to charge
a premium for the first 31 days of coverage for the medical support order
dependent.
Agency Response: Insurers may charge premiums from the first day of enrollment
and should refer to subsection (b) which clarifies that insurers may require
payment of premium within 31 days of receipt of the medical support order
or notice.
Section 21.2004(a)(2). Commenters requested clarification regarding the
obligation of stepparents and grandparents under the rule and stated they
thought this issue was clarified when the department adopted this subchapter
in 1997. A commenter suggested language be added to §21.2004(a)(2) to
clarify that a change of family circumstances should not be construed to require
coverage of any person other than the child subject to the court order and,
if not already covered, the employee.
Agency Response: The sentence in subsection (a) stating that the receipt
of a medical support order shall be considered a change in family circumstances
is not new language and mirrors the language in Family Code §154.184(a)
and federal law. The department acknowledges a similar question arose in 1997,
and it was addressed in the response to comments at that time. As stated in
1997, Article 3.70-2(M)(2) prohibits a group or individual accident or sickness
policy that provides coverage for dependent children of a person insured from
excluding or discontinuing coverage or setting a different premium for the
natural born or adopted child of the spouse of the insured, provided the child
resides with the person insured (emphasis added). If a child of the spouse
resides with the person insured, then that stepchild would be eligible for
dependent health coverage and the provisions of Articles 3.96-1 et seq. would
apply. However, the provisions of Articles 3.96-1 et seq. would not otherwise
apply to a stepparent's policy. The department encourages, but does not require,
insurers to allow stepchildren to be added to coverage even if the stepchild
does not reside with the insured. Coverage of grandchildren is governed by
Article 3.70-2(L), which is similar to the law concerning stepchildren except
that it does not have a residence requirement. Neither the Family Code nor
§21.2004 requires enrollment of any family member other than the child
subject to the support order and, if not already covered, the parent ordered
to provide the coverage. While the department does not believe additional
language is necessary for proper interpretation of the rule, the department
has added language to §21.2004(a) for clarification.
Section 21.2004(c). Commenters felt the rule allows late enrollment by
the parent. One commenter expressed a belief this would be contrary to the
requirements of federal law. Another commenter suggested mandatory coverage
of the employee when the court orders coverage of the employee's child and
the employee is not covered.
Agency Response: The department recognizes that this rule would allow for
late enrollment of a parent. The department does not believe this would be
contrary to the federal law that addresses late enrollment in an employer-sponsored
plan (the Health Insurance Portability and Accountability Act of 1996, or
HIPAA). States may enact laws more favorable than HIPAA, and to allow a parent
to enroll in order to make coverage permanent for a child would be more favorable
and would be in harmony with Insurance Code Article 3.51-6. Moreover, this
rule does not require insurers to automatically cover the parent, it only
allows the enrollment of the parent if the insurer makes enrollment a condition
of the child's eligibility for permanent enrollment. It should also be noted
that 42 U.S.C. 1396g-1 requires that a parent required by a medical support
order to provide coverage be allowed to enroll the child under family coverage.
Family Code §154.187(a) provides that if employee or member is eligible
for dependent coverage, the employer shall immediately enroll the child regardless
of whether the employee is enrolled in the plan. Regarding mandatory enrollment
of an unenrolled parent of a child subject to a medical support order, Family
Code §154.182(b)(6) allows a parent whose employer, union, trade association,
or other organization does not offer a child/children coverage option in lieu
of a spouse/child/children option of health insurance coverage to elect to
apply for coverage through the Texas Healthy Kids Corporation. Mandating coverage
of an unenrolled parent upon receipt of a medical support order would conflict
with a parent's rights under this section of the Family Code and thus exceed
the department's statutory authority. Accordingly, the department has not
incorporated the recommendation.
Section 21.2004(d). Commenters suggested that the rule should address only
employers, not insurers, regarding the duty to report as outlined in Family
Code §154.187.
Agency Response: The department disagrees. While Family Code §154.187
does address an employer's duties, §154.184(d) requires both the employer
and the insurer to report the reasons coverage cannot be made permanent. Additionally,
the department does not have authority to impose notification and enrollment
requirements on employers, and thus it would be inappropriate to include such
requirements for employers in these rules. The duties this rule imposes on
insurers are also necessary because Insurance Code Article 3.96-1(4) defines
health insurers affected by these rules as including those issuing "individual,
group, blanket, or franchise insurance...." As the statute includes insureds
who may not be covered through their employment, it would not be appropriate
to limit the scope of the rule to employees.
Section 21.2004(e). A commenter maintained that the rule should only prohibit
an insurer from charging a higher premium for a child subject to a medical
support order when the child resides outside the insurer's service area.
Agency Response: Section 21.2004(e) states that an insurer may not charge
a higher premium for coverage of a child pursuant to a medical child support
order than it charges for coverage of other dependent children under the policy.
The department agrees this rule only concerns children residing outside the
insurer's service area; accordingly, the department has added language to
§21.2004(e) so that the rule addresses only those children.
Section 21.2004(e) and (f). A commenter suggested that the rule needs to
authorize per capita premiums in individual coverages.
Agency Response: Section 21.2004(e) states that an insurer may not charge
a higher premium for coverage of a child pursuant to a medical child support
order than it charges for coverage of other dependent children under the policy.
The department believes that this section authorizes and adequately addresses
per capita rating structures. The department provides an example in §21.2004(f)
to address a rating structure whereby a charge for coverage of an additional
child is not as clear. TDI did not intend, by this example, to address all
potential rating structures but rather to address a rating structure in which
the additional charge for coverage of a child is not as clear. The department
welcomes inquiries from insurers that are unclear whether the additional premium
they are charging complies with the new rules.
Section 21.2010(a)(2). A commenter questioned whether a PPO is an acceptable
alternative.
Agency Response: The department believes that another PPO plan is an acceptable
alternative. The rule lists indemnity insurers and HMO as examples; since
insurers can issue PPO coverage, PPO coverage falls expressly within the scope
of the rule.
Section 21.2010(a)(1). A commenter suggested that the word "employee" should
replace the word "parent."
Agency Response: The department disagrees. Insurance Code Article 3.96-1(4)
defines health insurers affected by these rules as including those issuing
"individual, group, blanket, or franchise insurance...." As the statute includes
insureds who may not be covered through their employment, it would not be
appropriate to substitute "employee" for "parent."
Section 21.2010(b). A commenter proposed adding the phrase "unless the
insurer provides coverage under subsection (a)(2) of this section."
Agency Response: The department agrees and has added the suggested language.
Section 21.2010(c) and (d). Two commenters, an HMO and an indemnity insurer,
questioned whether this section requires insurers to develop a corresponding
comparative coverage for each plan the insurer offers to employer groups,
and if so, whether the insurer has to submit a certificate for each comparable
coverage plan submitted. Another commenter questioned whether the rule requires
certification for each child covered under an alternative delivery system.
Agency Response: The rule affords insurers great latitude in deciding how
the insurer intends to achieve compliance. The insurer could contract with
a nationwide insurer to offer one plan that meets or exceeds the benefits
of all plans offered by the insurer. In that event the insurer would need
to develop only one corresponding comparative coverage and file only one certification
with the department. The insurer could also develop and contract for a corresponding
comparative coverage that meets or exceeds the benefits of its most commonly
issued plans. In this case the insurer would have to develop corresponding
comparative coverage for its remaining products. Finally, the insurer could
elect to develop a corresponding comparative coverage for each plan the insurer
offers to employer groups. In this case, the insurer would have to submit
one certification for each comparable coverage plan developed. An insurer
need not resubmit certification each time a child is covered under a plan
as long as the coverage is comparable and the insurer has previously certified
that the coverage is comparable.
Section 21.2010(d). A commenter suggested that requirements for certification
are overly broad and unduly burdensome, and may prohibit national companies
from using affiliated companies in other states. The commenter also suggested
that the rule requirements are unduly expensive in requiring certification
by qualified actuaries.
Agency Response: The department believes it is appropriate to require some
minimum qualification for the certifying actuary. The department has adopted
a broad definition which is identical to the definition in other rules adopted
by the department, such as the Medicare Supplement rules (28 TAC §3.3303).
In an effort to reduce the expense of requiring certification by a qualified
actuary, the department has changed §21.2010(d)(5) to allow an officer
of an insurer to attest to the actuarial equivalence of coverage.
For with changes: Texas Health Choice, PacifiCare, Blue Cross Blue Shield
of Texas, and Texas Association of Life & Health Insurers.
The amendments are adopted under the Insurance Code Articles
3.96-1 et seq., 3.51-13, 20A.22(c), 26.04, 21.21, and 1.03A; and the Family
Code §§154.181-154.193. Insurance Code Articles 3.96-1 et seq. prohibit
the denial of enrollment of a child based upon certain grounds; require the
enrollment without enrollment period restrictions of a child who is the subject
of a medical support order; prohibit cancellation or nonrenewal of coverage
of a child except under certain circumstances; and prohibit the imposition
of service area restrictions for covered children living outside the insurer's
service area. Article 3.96-8 directs the commissioner to adopt rules to define
"comparable coverage" in a manner that is consistent with federal law and
that meets the requirements to maintain federal Medicaid funding. Article
3.96-10 directs the commissioner to adopt reasonable rules as necessary to
implement the subchapter and the requirements of 42 U.S.C. §1396a(a)(60)
(requiring a state to have in effect certain laws relating to medical child
support as part of its plan for medical assistance to receive federal funds).
Article 3.51-13 provides that an insurer or group hospital service company
that provides coverage for a minor child who otherwise qualifies as a dependent
of a person who is a member of the group may pay benefits on behalf of the
child to the person who is not a member of the group if a court order providing
for the managing conservator of the child has been issued by a court of competent
jurisdiction in this or any other state. Article 20A.22(c) provides that the
Commissioner of Insurance may adopt rules and regulations to meet the requirements
of federal law and regulations. Article 26.04 provides that the Commissioner
of Insurance may adopt rules and regulations to implement Chapter 26 and to
meet the minimum requirements of federal law and regulations. Article 21.21
authorizes the department to promulgate rules defining acts which constitute
unfair competition and unfair practices. Family Code §§154.181-154.192
contain provisions concerning medical support orders, including §154.184
which establishes a requirement that a child who is the subject of a medical
support order be automatically enrolled in health coverage available for the
child through a parent's employment or membership in a union, trade association,
or other organization. Insurance Code Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance as authorized by statute.
§21.2004.Enrollment of Child Who is the Subject of a Medical Support Order.
(a)
If the insurer offers coverage of dependent children under
the policy, enrollment of a child who is the subject of a medical support
order in the health coverage shall be automatic for the first 31 days after
receipt of a medical support order or notice of a medical support order by
the employer, or the insurer if there is no employer and the insurer provides
health coverage to the parent ordered to provide medical support. The insurer
shall enroll the child without regard to any enrollment period restriction
that might otherwise be applicable to the parent or the child. Receipt of
a medical support order or notice of a medical support order requiring that
health coverage be provided for a child shall be considered a change in the
family circumstances of the employee or member, for health coverage purposes,
equivalent to the birth or adoption of a child. For purposes of this section,
the change of family circumstances shall not be construed to require coverage
of any person other than the child subject to the court order and, if not
already covered, the parent ordered to provide medical support.
(b)
Within 31 days after receipt of a medical support order
or notice of a medical support order by the employer or the insurer as specified
in subsection (a) of this section, the insurer shall complete all necessary
forms and procedures to enroll the child in health coverage on a permanent
basis:
(1)
on application of a parent of the child, a custodial parent
of the child, a child support agency having a duty to collect or enforce support
for the child, or the child over 18 years of age; and
(2)
if the required premium is paid within 31 days of
the receipt of the medical support order or notice of the medical support
order by the employer, or the insurer if there is no employer except that
the insurer shall not terminate coverage of a child that is the subject of
a medical support order if such insurer's billing cycle does not coincide
with this 31 day premium payment requirement, until the next billing cycle
has occurred and there has been nonpayment of the additional required premium,
within 30 days of the due date of such premium.
(c)
As a prerequisite to the child's permanent enrollment in
group health coverage, an insurer offering coverage of dependent children
may require the parent, who is required by a medical support order to provide
coverage, and who is eligible for dependent health coverage, if not already
enrolled, to enroll in the health coverage plan within 31 days after receipt
of a medical support order or notice of a medical support order by the employer,
or the insurer if there is no employer.
(d)
If the child is not enrolled on a permanent basis, the
insurer shall report in accordance with the Family Code, Chapter 154, Subchapter
D, the reasons coverage cannot be made permanent.
(e)
With respect to a child residing outside the insurer's
service area, the insurer shall not use the child's status as the subject
of a medical support order to charge a higher premium for coverage of the
child than it charges for coverage of other dependent children under the policy.
(f)
The application of subsection (e) of this section is illustrated
in the following paragraphs and assumes a monthly premium for Employee Only
coverage is $210; a monthly premium for Employee and Child(ren) coverage is
$430; and a monthly premium for Family coverage is $650.
(1)
An employee who elected Employee Only coverage must subsequently
provide coverage to 2 children pursuant to a medical support order. The total
premium charged to this employee for adding the 2 children may not exceed
$220 ($430 minus $210).
(2)
An employee who elected Employee and Child(ren) coverage
must subsequently provide coverage to an additional child pursuant to a medical
support order. The employee may not be charged an additional premium for adding
the additional child.
(3)
An employee who elected Family coverage must subsequently
provide coverage to an additional child pursuant to a medical support order.
The employee may not be charged an additional premium for adding the additional
child.
§21.2010.Prohibition on Service Area Restrictions.
(a)
With respect to a child who lives outside the insurer's
service area but inside the United States whose coverage under the policy
is required by a medical support order, an insurer shall either:
(1)
cover the child under coverage for which the parent who
has been ordered to provide the coverage is eligible and not enforce otherwise
applicable policy provisions that would deny, limit, or reduce payment for
claims for such child; or
(2)
provide coverage through the use of alternative delivery
systems, such as reciprocal agreements with indemnity insurers or HMOs.
(b)
If the policy contains preferred provider provisions for
the purposes of offering a network of preferred providers as defined in the
Insurance Code Article 3.70-3C, and the insurer does not provide coverage
under subsection (a)(2) of this section, reimbursement for services for a
child who is the subject of a medical support order and lives outside the
insurer's service area shall be provided at the preferred provider level of
benefits.
(c)
If the insurer provides coverage under subsection (a)(2),
the coverage shall include benefits identical to, greater than, or comparable
to those provided to other dependent children covered by the policy under
which coverage is required by a medical support order.
(d)
If the coverage is provided under subsection (a)(2) of
this section, the insurer shall submit a certification to the Texas Department
of Insurance. The certification shall be filed with the Life/Health/HMO Intake
Unit, Mail Code 106-1E, Texas Department of Insurance, P. O. Box 149104, Austin,
Texas 78714-9104 or 333 Guadalupe, Austin, Texas 78701, signed by an officer
of the insurer and include:
(1)
the insurer's full name;
(2)
a statement that the insurer has elected to utilize
an alternative delivery system to provide coverage for children who are the
subject of a medical support order;
(3)
the name of the HMO or indemnity carrier with which
the insurer has contracted to provide coverage to children who are the subject
of a medical support order and a statement, if applicable, that the HMO or
indemnity carrier has filed the applicable forms providing the coverage as
required by Insurance Code Articles 3.42 and 3.96-8 or §11.301 of this
title (relating to Filing Requirements for HMOs);
(4)
a statement that the coverage provided by the alternative
delivery system is either identical, greater or comparable to the coverage
provided other dependent children under the policy under which coverage is
required by a medical support order; and
(5)
if the coverage is not identical, the certification
shall also be signed by a qualified actuary or an officer of the insurer who
attests that the coverage provided is at least actuarially equivalent to or
greater than the coverage provided to other dependent children under the policy
under which coverage is required by a medical support order. The determination
of actuarial equivalence of the coverages shall take into account plan design
(e.g., copayments, coinsurance, deductibles, etc.) and scope of benefits.
The certification shall identify any other variables considered in the analysis
relating to the actuarial equivalence of the coverages.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of the Secretary of State on January
11, 1999.
TRD-9900117
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 31, 1999
Proposal publication date: (512) 463-6327
For further information, please call: (512) 463-6327
28 TAC §§21.2401-21.2407
The Commissioner of Insurance adopts new §§21.2401-21.2407,
concerning requirements of parity between mental health benefits and medical/surgical
benefits. Sections 21.2402, 21.2403, 21.2404 and 21.2405 are adopted with
changes to the proposed text as published in the August 7, 1998 issue of the
The new subchapter is necessary to implement the federal Mental Health
Parity Act of 1996, 29 U.S.C. §1185a (MHPA). The department is required
to implement the provisions of the Federal Health Insurance Portability and
Accessibility Act (HIPAA), which was amended to include the Mental Health
Parity Act (MHPA). The new subchapter is also necessary to allow the Texas
Department of Insurance to maintain regulatory authority over carriers that
issue coverage to group health plans in Texas.
The MHPA provides that in the case of a group health plan that provides
both medical/surgical benefits and mental health benefits, any annual dollar
limits or lifetime aggregate dollar limits on mental health benefits shall
not be lower than corresponding limits on medical/surgical benefits; in addition,
if no annual limits or lifetime aggregate limits are placed on medical/surgical
benefits, none may be imposed on mental health benefits. The Act does not
require that a plan provide any mental health benefits, and does not restrict
a plan from imposing terms and conditions on mental health benefits relating
to the amount, duration, or scope of mental health benefits available under
the plan or its coverage, other than the stated restrictions with respect
to annual and aggregate lifetime limits. The MHPA includes an exemption for
small employers and for group health plans or health insurance coverage offered
in connection with group health plans for which the application of the Act
would result in an increase to the cost of the plan or the plan's coverage
of at least one percent. If a group health plan offers participants and beneficiaries
two or more benefit package options, the requirements of the Act are applicable
separately to each benefit package.
After receiving public comments on the proposed subchapter, the department
has made the following changes: Section 21.2402(3) was revised in response
to a comment by clarifying in the definition of "base period" that the earliest
possible date from which data can be used to support an assertion that a plan
is exempt from the parity requirements of this subchapter is the date of the
enactment of the federal MHPA, which is September 26, 1996. Section 21.2404(a)
was revised to define small employer for purposes of that section using language
patterned after the language used in the federal rules rather than by reference
to the relevant section of the federal Act. Section 21.2403 and §21.2405
were revised, in response to comments, to include examples, patterned after
those used in the federal rules, which demonstrate the application of these
sections to a plan by a carrier under various circumstances.
The new subchapter sets forth rules for carriers that provide coverage
to group health plans affected by the MHPA to ensure that the coverage offered
those group health plans is in compliance with the federal statute. The preamble
to the federal rules implementing the MHPA specifies that the states, in the
first instance, are to enforce the provisions of the MHPA with respect to
carriers that offer health insurance coverage in connection with group health
plans. Only if a state does not substantially enforce any provisions under
its insurance laws will the Department of Health and Human Services enforce
the provisions. The new subchapter requires that when a carrier offers coverage
to group health plans, any annual dollar limits or lifetime aggregate dollar
limits for mental health benefits must be in parity with such dollar limits
for medical/surgical benefits.
Section 21.2401 states the purpose and scope of the rule, and identifies
by date of issuance or renewal the carriers' coverage to which the sections
apply. Section 21.2402 defines the terms used in this subchapter. Specifically,
"carrier" is defined to include all providers of group health insurance coverage,
group health care coverage, or group health benefit coverage that are regulated
under the Texas Insurance Code. "Group health plan" is defined to include
only employee welfare benefit plans, as defined in 29 U.S.C. 1002(1), that
provide medical care to participants or their dependents through the purchase
of coverage from a carrier.
Section 21.2403 sets out the parity requirements for all group health plan
coverage that is not exempt from the application of the MHPA. Carriers providing
coverage for both medical/surgical and mental health benefits to group health
plans must meet applicable parity requirements based on the existence of,
and, if existing, the extent to which a carrier's coverage includes, aggregate
lifetime or annual dollar limits on medical/surgical benefits. The section
also clarifies that this subchapter does not require a carrier to provide
any mental health benefits except as otherwise required by the Texas Insurance
Code, nor does this subchapter affect the terms and conditions relating to
the amount, duration, or scope of the mental health benefits provided under
a carrier's coverage, except as specified in this section.
Section 21.2404 identifies two exemptions from application of the MHPA
to carriers. The first is for coverage provided to a small employer, as defined
by 29 U.S.C. §1185a(c)(1)(B) and (C). The second is for coverage that
results in an increase in the cost of required coverage of at least one percent
of the total cost to the group health plan. Section 21.2405 sets forth the
formula for determining whether a carrier's coverage meets the requirements
for exemption of a particular plan from the parity requirements of this subchapter
based on the cost to the plan of such coverage; it also provides that a carrier
may contract with a group health plan to provide, upon request, the plan's
participants and beneficiaries any required notice and summary of information
about any such claimed exemption as required by the federal statute or rules.
Section 21.2406 provides that if a carrier provides coverage to a group
health plan that offers more than one form of coverage to its participants,
the parity requirements will be applied separately to each form of coverage.
Section 21.2407 provides that a carrier may sell coverage without parity to
a group health plan only if the coverage qualifies for an exemption provided
in this subchapter, or if the group health plan has already qualified for
such an exemption.
General. Commenters state that it is a federal statute that provides for
mental health parity, that there is not a specific state statute which requires
mental health parity, and that the department has not previously adopted rules
which interpret federal legislation. The commenters do not believe that the
amendment of HIPAA by the MHPA is sufficient authority for adoption of the
rules. The commenters believe that Insurance Code Articles 3.42, 3.51-6, 21.21,
and 26.04 do not provide authority to promulgate these rules, in that the
rules are much broader than a regulation related to the specific approval
or standards for policy form approval granted in Article 3.42; the broad overall
regulatory scheme implemented by the rules is beyond the scope of Article
3.51-6; federal laws dealing with a regulatory scheme on mental health parity
are simply amendments to ERISA which determine whether certain insurance plans
qualify, under federal law, for tax deductions and cannot be said to be laws
designed to regulate trade practices or constitute any definition of unfair
methods of competition or unfair or deceptive trade practices in the practice
of insurance which is the purpose of Article 21.21; and, while the commenters
recognize the authority of the department to exempt small employers from the
requirements of the Mental Health Parity Act, they believe that Chapter 26
does not authorize the implementation of federal laws to regulate large employers.
Response. The department disagrees. HIPAA and MHPA and the rules implementing
these Acts as they relate to mental health parity clearly envision mental
health parity as a requirement for any group health plan that provides coverage
for both medical/surgical and mental health benefits. The federal mental health
parity requirements do more than merely affect an entity's eligibility for
a federal tax deduction. The federal rules provide for enforcement action
to be taken against any carrier that fails to comply with the rules. The federal
rules also recognize the responsibility of each individual state to ensure
that the carriers within the jurisdiction of that state comply with all of
the applicable provisions of the federal law. Should a state fail to enforce
the provisions of the MHPA with respect to carriers that offer health insurance
coverage in connection with group health plans, the preamble to the federal
rules indicates that "the Department of Health & Human Services will enforce
the provisions through the imposition of civil monetary penalties." The department's
rules implement the federal law to ensure that the department does not lose
its authority to regulate carriers that issue coverage with both mental health
and medical/surgical benefits.
Carriers providing coverage to group health plans are under the jurisdiction
of the department by virtue of the relevant provisions of the Insurance Code
that regulate the various aspects of coverage provided by the carriers affected
by the MHPA and to whom the Insurance Code applies. These provisions include
Article 3.42 as it relates to the policies issued by these carriers, Article
3.51-6 as it relates to the provision of group policies by these carriers,
Chapter 21, as it relates to the business practices of carriers, and Chapter
26 as it relates to coverage issued by carriers to large and small employers
as defined in that chapter.
The department believes that Insurance Code Articles 3.95-15, 20A.22, and
26.04 authorize the Commissioner to adopt rules to comply with federal law
and regulations. Both the MHPA and the preamble to the federal rules adopted
to implement the Act require states to adopt either rules or legislation to
implement mental health parity. Each article of the Insurance Code over which
the department has regulatory and enforcement jurisdiction need not explicitly
state that the Commissioner has authority to adopt rules under that article.
Clearly, the most uniform, efficient way for the department to ensure compliance
with the federal law, and the reason each of these provisions include the
authority of the Commissioner to promulgate rules that comply with applicable
federal law, as well as the mandates of the Legislature that are contained
in each individual statute, is to enable the department to utilize the statutes
already in place in the Insurance Code that regulate the various functions
of the carriers affected by the federal law to craft rules that comply with
the applicable federal laws and are authorized by the Insurance Code
Insurance Code Articles 3.42, 3.51-6, 3.95-15, 20A.22, 21.21, and 26.04,
in conjunction with Article 1.03A, provide the necessary authority for adoption
of the rules. Articles 1.01A and 1.09 establish the "duties and functions"
of the department as the regulation of the business of insurance in this state
and implementation of the purposes of the Insurance Code. Article 1.03A provides
the agency with general rulemaking authority to implement, interpret or prescribe
law or policy to carry out the provisions of the Insurance Code authorizing
the Commissioner to adopt rules for the conduct and execution of the "duties
and functions" of the department only as authorized by statute.
Finally, in response to the commenters' remarks that the rules exempt small
employers as defined by Insurance Code Chapter 26 and that Chapter 26 does
not authorize the implementation of federal laws to regulate large employers,
the department notes that Chapter 26 applies to both large and small employers
and that the definition of small employer as used in Chapter 26 differs from
the definition of small employer set forth in the MHPA and the rules implementing
the Act contained in this subchapter.
Comment. Commenters believe that Insurance Code Article 3.51-14, Coverage
for Serious Mental Illness, should be the governing authority for mandated
mental health benefits in Texas.
Response. The department disagrees. Insurance Code Article 3.51-14 is the
authority for mandated benefits in Texas concerning serious mental illness.
Mental health parity does not mandate coverage for mental health. It ensures
parity in the application of dollar limits when mental health benefits are
provided in addition to medical/surgical benefits provided in a group health
plan issued by a carrier. Mental health parity encompasses any mental illness,
while the scope of Article 3.51-14 is limited to eight categories of illnesses
that meet that statute's definition of serious mental illness.
Comment. Commenters believe that the MHPA permits carriers to estimate,
based on projected, rather than actual, data whether a plan meets the one
percent exemption which is set forth in §21.2405.
Response. The department disagrees. While the MHPA does not clarify this
issue, the federal rules which implement the Act and upon which the department
based its rules clearly require cost exemptions to be based on actual data.
The department believes that the rules can be clarified by inserting that
the earliest date from which data can be used is the date of the enactment
of the federal MHPA, September 26, 1996, and has changed the definition of
"base period" contained in §21.2402 accordingly.
Definitions. Commenters assert that the definitions used in the rule are
different from the definitions in the federal statute. The commenters request
that the definitions be as similar as possible so there is not a problem with
different meanings.
Response. The department recognizes the commenters' concern regarding differences
among the definitions in the federal statute and the department's rules. The
department has endeavored to make the definitions as similar as possible.
However, the MHPA applies to some group health plans over which the department
does not have jurisdiction, requiring it to tailor definitions to ensure that
the department does not exceed it jurisdiction.
Section 21.2402. Commenters assert the department should define group health
plan using language from the Insurance Code Chapter 26 and the rules relating
to that chapter, rather than the federal definition set forth in ERISA.
Response. The department disagrees. ERISA preempts any state claim concerning
an employee welfare benefit plan, which may include group health plans. Any
legal determination as to whether a particular plan comes under the exclusive
jurisdiction of ERISA will necessarily be determined under the federal definition.
Section 21.2404. A commenter suggested that the definition of small employer
from Insurance Code Chapter 26 be utilized instead of citation to the federal
law.
Response. The definition of small employer from Chapter 26 cannot be utilized
because it differs from the definition in the MHPA. The department does agree
that additional language patterned after language used in the federal rules
should be added for clarity and has amended (21.2404 accordingly.
Section 21.2403 and §21.2405. A commenter requested that examples
from the federal regulations be included in the rules to assist insurers in
complying with the rules.
Response. The department agrees and has included examples to assist consumers,
industry, and staff in understanding and complying with the rules.
Section 21.2405(d). A commenter stated that the proposed rules imply that
a plan issuer has discretion as to whether to provide a summary of the information
on which the issuer was claiming exemption from mental health parity requirements
to plan participants or beneficiaries, while the comparable federal regulation,
45 CFR §146.136(f)(4) render such notice mandatory. The commenter requested
that the department adopt the language of the federal law.
Response. The department disagrees. The notice requirement of 45 CFR §146.136(f)(3)
is a federal requirement that pertains to the obligation of a group health
plan that is sponsored by an employer to provide plan participants, beneficiaries,
or their designees with notice that the plan is exempt from compliance with
the Mental Health Parity Act. 45 CFR §146.136(f)(4) requires a plan to
make a summary available to such individuals upon request of the individual.
The department lacks jurisdiction over the plan, but retains jurisdiction
over the carrier that issues the coverage to the plan. The carrier has the
data the plan would need to claim an exemption and to verify the exemption.
Therefore, the rules allow the carrier to contract with the plan to provide
the notice and summary of the information on which the exemption was based.
The rules do not relieve a plan of its responsibility to comply with all required
federal notice provisions and does not offer less protection than the federal
regulations.
For with changes: Office of Public Insurance Counsel, BlueCross BlueShield
of Texas. Against: Texas Association of Life & Health Insurers.
Subchapter P, §§21.2401-21.2407 are adopted under Insurance
Code Articles 3.42, 3.51-6, 3.95-15, 20A.22, 21.21, 26.04 and 1.03A; the federal
Health Insurance Portability and Accountability Act of 1996 (HIPAA); and the
federal Mental Health Parity Act of 1996 (MHPA). Insurance Code Article 3.42
authorizes the commissioner to disapprove any form reflecting coverage that
is contrary to law. Insurance Code Article 3.51-6 authorizes the commissioner
to promulgate rules as necessary to carry out the provisions regulating group
health insurance. The Insurance Code Article 3.95-15 requires the commissioner
to adopt rules to meet the minimum requirements of federal law and regulations.
Insurance Code Article 20A.22 authorizes the commissioner to promulgate rules
governing HMOs necessary and proper to meet the requirements of federal law
and regulations. Insurance Code Article 21.21 authorizes the commissioner
to promulgate rules regarding unfair practices to affect uniformity with federal
law and regulations. Insurance Code Article 26.04 requires the commissioner
to adopt rules to implement Chapter 26, the Health Insurance Portability and
Availability Act and to meet the minimum requirements of federal law and regulations.
Insurance Code Article 1.03A provides that the Commissioner of Insurance may
adopt rules and regulations to execute the duties and functions of the Texas
Department of Insurance only as authorized by a statute. The minimum requirements
of federal law for parity in mental health benefits are contained in HIPAA,
as amended by the MHPA. Exclusion of small employer plans as defined in the
MHPA from the provision of parity in mental health benefits is necessary to
meet the minimum requirements of federal law.
§21.2402.Definitions.
The following words and terms, when used in this subchapter shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Aggregate lifetime limit - A dollar limitation on the total
amount of specified benefits that may be paid under a carrier's coverage for
an individual (or for a group of individuals considered a single unit in applying
this dollar limitation, such as a family or an employee plus spouse).
(2)
Annual limit - A dollar limitation on the total amount
of specified benefits that may be paid in a 12-month period under a carrier's
coverage for an individual (or for a group of individuals considered a single
unit in applying this dollar limitation, such as a family or an employee plus
spouse).
(3)
Base period - The period used to calculate whether
a group health plan may claim, with respect to its coverage, the one percent
increased cost exemption provided for in §21.2405 of this subchapter
(relating to Cost of Coverage Exemption). The base period must begin on the
first day in the group health plan's plan year that the carrier's coverage
complies with this subchapter or September 26, 1996, the date of the enactment
of the federal Mental Health Parity Act, Part 7 of Subtitle B of Title I of
ERISA, 29 U.S.C. §1001, et seq., and must extend for a period of at least
six consecutive calendar months.
(4)
Carrier - An insurance company, a group hospital service
corporation operating under Chapter 20 of the Texas Insurance Code, a fraternal
benefit society operating under Chapter 10 of the Code, a stipulated premium
insurance company operating under Chapter 22 of the Code, a health maintenance
organization operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Texas Insurance Code), an approved nonprofit health corporation
that is certified under Section 5.01(a), Medical Practice Act (Article 4495b,
Texas Civil Statutes) and that holds a certificate of authority under Texas
Insurance Code Article 21.52F, or a multiple employer welfare arrangement
that holds a certificate of authority under Texas Insurance Code Article 3.95-2.
(5)
Coverage - Group health insurance coverage, group
health care coverage or group health benefit coverage issued by a carrier
to a group health plan.
(6)
Group health plan - An employee welfare benefit plan,
as defined in 29 U.S.C. 1002(1), that provides medical care to participants
or their dependents through the purchase of coverage from a carrier.
(7)
Incurred expenditures - Actual claims incurred during
the base period and reported within two months following the base period,
and administrative costs for all benefits under the group health plan, including
mental health benefits and medical/surgical benefits, during the base period.
Incurred expenditures do not include premiums.
(8)
Medical care - Amounts paid for:
(A)
the diagnosis, cure, mitigation, treatment or prevention
of disease, or amounts paid for the purpose of affecting any structure or
function of the body,
(B)
transportation primarily for and essential to medical care
described in subparagraph (A) of this paragraph, and
(C)
coverage for medical care described in subparagraphs (A)
and (B) of this paragraph.
(9)
Medical/surgical benefits - Benefits for medical
or surgical services, as defined under the terms of the coverage, but does
not include mental health benefits.
(10)
Mental health benefits - Benefits for mental health
services, as defined under the terms of the coverage, but does not include
benefits for treatment of substance abuse or chemical dependency.
§21.2403.Parity Requirements.
(a)
Coverage that provides both medical/surgical benefits and
mental health benefits must comply with paragraphs (1), (2), or (5) of this
subsection.
(1)
If a carrier's coverage does not include an aggregate lifetime
or annual limit on any medical/surgical benefits or includes aggregate lifetime
or annual limits that apply to less than one-third of all medical/surgical
benefits, the carrier may not impose any aggregate lifetime or annual limit,
respectively, on mental health benefits.
(2)
If a carrier's coverage includes an aggregate lifetime
or annual limit on at least two-thirds of all medical/surgical benefits, the
carrier must either:
(A)
apply the aggregate lifetime or annual limit both to the
medical/surgical benefits to which the limit would otherwise apply and to
mental health benefits in a manner that does not distinguish between the medical/surgical
and mental health benefits; or
(B)
not include an aggregate lifetime or annual limit on mental
health benefits that is less than the aggregate lifetime or annual limit,
respectively, on the medical/surgical benefits.
(3)
The provisions of paragraphs (1) and (2) are
illustrated in the following examples:
(A)
Prior to January 1, 1998, a carrier issuing coverage had
no annual limit on medical/surgical benefits and a $10,000 annual limit on
mental health benefits. To comply with the parity requirements of this subsection
(a), a carrier is considering each of the following options. In this example,
each of the three options being considered would comply with the requirements
of this subsection because each option offers parity in the dollar limits
placed on medical/surgical and mental health benefits:
(i)
eliminating the annual limit on mental health benefits;
(ii)
replacing the annual limit on mental health benefits with
a $500,000 annual limit on all benefits (including medical/surgical and mental
health benefits); and
(iii)
replacing the previous annual limit on mental health
benefits with a $250,000 annual limit on medical/surgical benefits and a $250,000
annual limit on mental health benefits.
(B)
Prior to January 1, 1998, a carrier issued coverage with
a $100,000 annual limit on medical/surgical inpatient benefits, a $50,000
annual limit on medical/surgical outpatient benefits, and a $100,000 annual
limit on all mental health benefits. To comply with the parity requirements
of this subsection (a), the carrier is considering each of the following options.
In this example, both options under consideration would comply with the requirements
of this section because each offers parity in the dollar limits placed on
medical/surgical and mental health benefits:
(i)
replacing the previous annual limit on mental health benefits
with a $150,000 annual limit on mental health benefits; and
(ii)
replacing the previous annual limit on mental health benefits
with a $100,000 annual limit on mental health in-patient benefits and a $50,000
annual limit on mental health outpatient benefits.
(C)
A carrier has issued coverage that is subject to the requirements
of this section which has no aggregate lifetime or annual limit for either
medical/surgical benefits or mental health benefits. While the coverage provides
medical/surgical benefits with respect to both network and out-of-network
providers it does not provide mental health benefits with respect to out-of-network
providers. In this example, the coverage complies with the requirements of
this subsection because it offers parity in the dollar limit placed on medical/surgical
and mental health benefits.
(D)
Notwithstanding Insurance Code Article 3.51-9 the following
example is provided for illustration only and does not relieve a carrier from
compliance with that article. Prior to January 1, 1998, a carrier issued coverage
with an annual limit on medical/surgical benefits and a separate but identical
annual limit on mental health benefits. The coverage included benefits for
treatment of chemical dependency and substance abuse in its definition of
mental health benefits. Accordingly, claims paid for treatment of substance
abuse and chemical dependency were counted in applying the annual limit on
mental health benefits. To comply with the parity requirements of this subsection
(a), the carrier is considering each of the following options. In this example,
the option in clause (i) would not comply with the requirements of this section
because the definition of mental health benefits excludes benefits for treatment
of substance abuse and chemical dependency. However, options set forth in
clauses (ii) (iii) and (iv) would comply with the requirements of subsection
(a) because they offer parity in the dollar limits placed on medical/surgical
and mental health benefits:
(i)
making no change in the coverage so that claims paid for
treatment of substance abuse and chemical dependency continue to count in
applying the annual limit on mental health benefits;
(ii)
amending the coverage to count claims paid for the treatment
of substance abuse and chemical dependency in applying the annual limit on
medical/surgical benefits as opposed to counting those claims in applying
the annual limit on mental health benefits;
(iii)
amending the coverage to provide a new category of benefits
for treatment of substance abuse and chemical dependency that is subject to
a separate, lower limit and under which claims paid for treatment of substance
abuse and chemical dependency are counted only in applying the annual limit
on this separate category; and
(iv)
amending the coverage to eliminate distinctions between
medical/surgical benefits and mental health benefits and establishing an overall
limit on coverage offered under which claims paid for treatment of substance
abuse and chemical dependency are counted with medical/surgical benefits and
mental health benefits in applying the overall limit.
(4)
For purposes of this section, the determination
of whether the portion of medical/surgical benefits subject to a limit represents
one-third or two-thirds of all medical/surgical benefits is based on the dollar
amount of all payments by the carrier for medical/surgical benefits expected
to be paid under a given group health plan for the plan year (or for the portion
of the plan year after a change in coverage that affects the applicability
of the aggregate lifetime or annual limits). Any reasonable method may be
used to determine whether the dollar amounts expected to be paid under the
coverage will constitute one-third or two-thirds of the dollar amount of all
payments for medical/surgical benefits.
(5)
Coverage that is not described in paragraphs (1) or
(2) of subsection (a) of this section must either impose:
(A)
no aggregate lifetime or annual limit, as appropriate,
on mental health benefits; or
(B)
an aggregate lifetime or annual limit on mental health
benefits that is no less than an average limit for medical/surgical benefits
calculated in the following manner:
(i)
The average limit is calculated by taking into account
the weighted average of the aggregate lifetime or annual limits, as appropriate,
that are applicable to the categories of medical/surgical benefits.
(ii)
Limits based on delivery systems, such as inpatient/outpatient
treatment, or normal treatment of common, low-cost conditions (such as treatment
of normal births), do not constitute categories for purposes of subparagraph
(B) of paragraph (5) of this section.
(iii)
For purposes of determining weighted averages, any benefits
that are not within a category that is subject to a separately-designated
limit under the coverage are taken into account as a single separate category
by using an estimate of the upper limit on the dollar amount that a carrier
may reasonably be expected to incur with respect to such benefits for a given
group health plan, taking into account any other applicable restrictions under
the coverage.
(C)
For purposes of paragraph (5), the weighting applicable
to any category of medical/surgical benefits is determined in the manner set
forth in paragraph (3) of this subsection for determining one-third or two-thirds
of all medical/surgical benefits.
(D)
The provisions of paragraph (5) are illustrated by the
following example:
(i)
A carrier issued coverage that is subject to the requirements
of this section which includes a $100,000 annual limit on medical/surgical
benefits related to cardio-pulmonary diseases. The coverage does not include
an annual limit on any other category or medical/surgical benefits. It is
determined that 40% of the dollar amount of coverage for medical/surgical
benefits is related to cardio-pulmonary diseases. It is also determined that
$1,000,000 is a reasonable estimate of the upper limit on the dollar amount
that may be incurred with respect to the other 60% of payments for medical/surgical
benefits.
(ii)
In this example, the coverage issued is not described
in subsection (a)(2) of this section because there is not one annual limit
that applies to at least two-thirds of all medical/surgical benefits. Further,
the coverage is not described in subsection (a)(1) of this section because
more than one-third of all medical/surgical benefits are subject to an annual
limit. Under this subsection (a)(5) the carrier may choose either to include
no annual limit on mental health benefits, or to include an annual limit on
mental health benefits that is not less than the weighted average of the annual
limits applicable to each category of medical/surgical benefits. In this example,
the minimum weighted average annual limit that can be applied to mental health
benefits is $640,000 (40% x $100,000 + 60% x $1,000,000 = $640,000).
(b)
This subchapter does not:
(1)
require a carrier to provide any mental health benefits,
except as otherwise specified in the Texas Insurance Code; or
(2)
affect the terms and conditions (including, as allowed
by law, cost sharing, limits on numbers of visits or days of coverage, and
requirements relating to medical necessity, requiring prior authorization
for treatment, or requiring primary care physicians' referrals for treatment)
relating to the amount, duration, or scope of the mental health benefits under
the carrier's coverage, except as specifically provided in this section.
§21.2404.Exemptions.
(a)
This subchapter does not apply to a carrier offering coverage
in connection with a group health plan for a plan year of a small employer.
For purposes of this subchapter, a small employer in connection with a group
health plan with respect to a calendar year and a plan year, is an employer
who employed an average of at least two but not more than fifty employees
on business days during the preceding calendar year and who employs at least
two employees on the first day of the plan year.
(1)
In determining employer size, all persons treated as a
single employer under subsections (b), (c), (m), and (o) of §414 of the
Federal Internal Revenue Code are treated as one employer.
(2)
For an employer who was not in existence throughout
the preceding calendar year, the determination as to whether the employer
is a small employer is based on the average number of employees the employer
reasonably expects to employ on business days during the current calendar
year.
(3)
A reference to an employer for purposes of the exemption
set forth in this subsection includes a reference to the predecessor of the
employer.
(b)
Coverage is not subject to the requirements of this subchapter
if the application of §21.2403 of this title (relating to Parity Requirements)
to such coverage results in an increase in the cost for such coverage of at
least one percent, as determined by §21.2405 of this title (relating
to Cost of Coverage Exemption).
§21.2405.Cost of Coverage Exemption.
(a)
To qualify for an exemption from this subchapter on the
basis that the application of this subchapter increases the cost of coverage
by at least one percent, at the request of a group health plan, a carrier
must demonstrate with actual data that the application of this subchapter
resulted in an increase of cost of the carrier's coverage in connection with
that group health plan of one percent or more. The data relied upon by a carrier
demonstrating such an increase must be based upon a base period of no shorter
than six months.
(b)
The calculation of the cost of coverage shall be by the
following formula:
FIGURE 28 TAC SECTION 21.2405(b)
(1)
IE - the incurred expenditures during the base period.
(2)
CE - the claims incurred during the base period that
would have been denied under the terms of the carrier's coverage absent amendments
to coverage required to comply with this subchapter or the federal Mental
Health Parity Act.
(3)
AE - administrative costs related to claims in CE
and other administrative costs attributable to complying with the requirements
of this subchapter or the federal Mental Health Parity Act.
(c)
The provisions of these subsections (a) and (b) are illustrated
by the following example: A carrier issued coverage to a group health plan
has a plan year that is the calendar year. The coverage issued satisfies the
requirements of §21.2403 of this title (relating to Parity Requirements)
as of January 1, 1998. On September 15, 1998, it is determined that $1,000,000
in administrative costs have been incurred during the period between January
1, 1998 and June 30, 1998 and reported by August 30, 1998. It is also determined
that $100,000 in administrative costs have been incurred for all benefits
under the coverage issued to the group health plan, including mental health
benefits. Thus, it is determined that the incurred expenditures for the base
period are $1,100,000. It is also determined that the claims incurred during
the base period that would have been denied under the terms of the plan absent
any amendments required to comply with these subsections are $40,000 and that
administrative expenses attributable to complying with the requirements of
this subsection (b) are $10,000. Thus, the total amount of expenditures for
the base period had the coverage not been amended to comply with the requirements
of §21.2403 of this title (relating to Parity Requirements) are $1,050,000
($1,100,000-($40,000 + $10,000) = $1,050,000). In this example, the coverage
issued to the group health plan satisfies the requirements of subsection (a)
of this section because the application of this section results in an increased
cost of at least one percent under the terms of the coverage ($1,100,000/$1,050,000
= 1.04762).
(d)
A carrier may contract with a group health plan to provide
to the plan's participants and beneficiaries, and to applicable federal agencies,
any notice of exemption required by applicable federal regulations.
(e)
A carrier may contract with a group health plan to provide
to the plan's participants and beneficiaries (or their representatives), on
request and at no charge to the recipient, a summary of the information on
which the exemption was based. If a carrier so contracts with a group health
plan:
(1)
An individual who is not a participant or beneficiary and
who presents the carrier a notice described in subsection (c) of this section
is considered to be a representative. A representative may request the summary
of information by providing the plan a copy of the notice provided to the
participant under subsection (c) of this section with any individually identifiable
information redacted.
(2)
The summary of information must include the incurred
expenditures, the base period, the dollar amount of claims incurred during
the base period that would have been denied under the terms of the plan absent
amendments required to comply with subsection (a) of §21.2403 of this
title (relating to Parity Requirements), the administrative costs related
to those claims, and other administrative costs attributable to complying
with the requirements for the exemption. In no event should the summary of
information include any individually identifiable information.
(f)
The provisions of these subsections (d) and (e) are illustrated
by the following example:
(1)
A carrier issued a group health plan that has a plan year
that is the calendar year and has an open enrollment period every November
1 through November 30. It is determined on September 15 that the coverage
satisfies the requirements of subsection (a) of this section. The group health
plan enters into a contract with a carrier which provides that as part of
the plan's open enrollment materials and pursuant to the notice requirement
of any federal notice requirements, the carrier mails, on October 15, to all
participants and beneficiaries a notice satisfying the requirements of all
federal notice requirements as set forth in subsection (c) of the section.
(2)
In this example, the notice requirements have been
met as required by subsections (d) and (e) of this section.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of the Secretary of State on January
11, 1999.
TRD-9900118
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 31, 1999
Proposal publication date: (512) 463-6327
For further information, please call: (512) 463-6327
Subchapter E. Examinations and Annual Reports
28 TAC §25.88
The Commissioner of Insurance adopts an amendment to §25.88,
concerning an assessment which will be used to cover the general administrative
expense assessment of insurance premium finance companies. The amendment is
adopted without changes to the proposed text published in the November 13,
1998, issue of the
Texas Register
(23TexReg
11557).
The amendment is necessary to adjust the rate of assessment which is sufficient
to meet the expenses of performing the department's statutory responsibilities
for the regulation and examination of insurance premium finance companies.
The department levies the rate of assessment set in the section to cover
the 1999 fiscal year's general administrative expense and will collect from
each insurance premium finance company on the basis of a percentage of total
loan dollar volume for the 1998 calendar year. The department estimates that
$158,158 will be collected for the state's general revenue fund.
No comments were received regarding the adoption of the amendment.
The amendment is adopted under the Insurance Code, Articles 24.06(c),
24.09, and 1.03A. Article 24.06(c) provides that each insurance premium finance
company licensed by the department shall pay an amount assessed by the department
to cover the direct and indirect cost of examinations and investigations and
a proportionate share of general administrative expense attributable to regulation
of insurance premium finance companies. Article 24.09 authorizes the department
to adopt and enforce rules necessary to carry out provisions of the Insurance
Code concerning the regulation of insurance premium finance companies. 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.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January
7, 1999.
TRD-9900061
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 27, 1999
Proposal publication date: November 13, 1998
For further information, please call: (512) 463-6327
Chapter 130.
Impairment and Supplemental Income Benefits
The Texas Workers' Compensation Commission (the Commission) adopts
new §§130.100 - 130.108 regarding supplemental income benefits.
Sections §§130.100-130.102, 130.104-130.108 are adopted with changes
to the proposed text as published in the October 16, 1998, issue of the Texas
Register (23 TexReg 10609). Section 130.103 is adopted without changes and
will not be republished. Simultaneously, the Commission also adopts the repeal
of current §§130.101 - 130.108, and 130.110 concerning supplemental
income benefits. No change has been made to current §130.109.
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.
Changes made to the rule as proposed are in response to public comment
received in writing and at a public hearing held on November 5, 1998, and
are described in the summary of comments and responses section of this preamble.
Other changes were made for clarity and consistency. Changes in the rule as
proposed are found in: §§130.100(a); 130.101(1) and (8); 130.102(c),
(d), (e), (g), and (h); 130.104(c), (e), and (g); 130.105(a) and (b); 130.106(b);
130.107(a) and (b); 130.108(d), (e), and (f).
The new rules are in response to the ever-increasing number of disputes
related to the entitlement to supplemental income benefits and the need to
simplify the language contained in the rules to increase the level of understanding
by the system participants.
Over the last several years, the number of disputes regarding entitlement
to supplemental income benefits has increased at a dramatic rate. There are
several areas in the state where these disputes represent more than 50% of
all the disputes that are adjudicated in the formal dispute resolution process.
Commission staff conducted a review of the types of issues that were causing
these disputes and determined that many of the disputes were the result of
the lack of specific direction provided in the existing provisions of the
Workers' Compensation Act and Commission rules. The Commission's experience
with the previous rules, which were adopted in 1991, has shown that many of
the decisions regarding entitlement to supplemental income benefits are left
to the discretion of the finder of fact in the dispute resolution process.
Some of the reason for this is the lack of clarity in the previous rules and
the number of issues that are subject to interpretation. These factors cause
some inconsistencies in the decisions regarding entitlement to supplemental
income benefits in similar factual situations. These inconsistencies encourage
parties to pursue a dispute through the formal dispute resolution process
because of the possibility of securing a favorable decision despite previous
decisions to the contrary in similar cases.
The specific areas where potential problems were identified related to
both procedural and entitlement issues. These issues are discussed in detail
in the descriptions of the new rules and in the explanation of the need for
new rules. By providing additional direction regarding the implementation
of the provisions of the Act and by providing specific procedures and standards
for many of the areas that have resulted in disputes, it is anticipated that
the number of administrative proceedings may be reduced. In developing these
changes, presentations were made to the Commission during public meetings
and general direction was provided by the Commissioners regarding various
issues and areas for clarification. In addition, public comment on a previously
proposed version of these rules and input from the staff of the TWCC field
offices throughout the state was considered.
The changes represent the statutory balance between the entitlement determinations
for supplemental income benefits and encouragement of the return to work efforts
on the part of the injured employee. Many of the rule changes help the parties
to better understand the mechanics of entitlement or eligibility for supplemental
income benefits and help ensure that injured employees receive the income
benefits to which they are entitled. The additional information and clarification
contained in the rules will also assist in the reduction of disputes.
In the effort to help simplify the language contained in the rules, significant
changes to the structure and format of the previous rules were necessary.
The new rules are structured to include one rule on the general eligibility
requirements that applies to all quarters, and several procedural rules for
the first quarter, subsequent quarter(s) and for disputes. Due to the extent
and nature of the changes to the rules, the previous rules have been repealed
and these new rules replace them.
Given the nature and extent of the changes contained in the new rules,
the Commission will develop ways to educate the participants in the system
after the rules are adopted. Education efforts may include the addition of
an information sheet with the letters that are sent to injured employees regarding
initial entitlement to supplemental income benefits. This information sheet
would address the new requirements and provisions of the rules. Similar information
could be provided by the field offices to individuals who are currently in
the supplemental income benefit entitlement period. In addition, public information
releases can be sent to persons listed on the public distribution list. These
informational releases will help ensure that affected individuals will receive
necessary information about the new rules.
The Texas Labor Code sets out substantive and procedural mandates and objectives
for supplemental income benefits including: entitlement to supplemental income
benefits; application requirements; computation of benefits; liability for
payment of benefits; termination and reinstatement of benefits; procedure
for contesting entitlement; and status review and referral to Texas Rehabilitation
Commission. The adopted new rules implement these mandates and objectives
by: setting out the applicability of the new rules; providing definitions
for terms used in the rules; clarifying the criteria for eligibility for supplemental
income benefits, including what is a direct result of the impairment and what
constitutes a good faith effort to obtain employment; providing a formula
for calculation of supplemental income benefit amounts; setting out the procedure
and standards for entitlement to supplemental income benefits for the first
and subsequent quarters; setting out the circumstances under which an injured
employee permanently loses entitlement to supplemental income benefits; setting
out the procedures for payment of supplemental income benefits; and setting
out the procedures for contesting entitlement or amount of supplemental income
benefits.
New §130.100 addresses the question of the effective date of the new
rules on entitlement to supplemental income benefits. Given the nature of
the dispute resolution system established by the provisions of the Act, there
will be a number of disputes pending before the Commission and court when
the changes to the rules are adopted and effective. This new section provides
that the rules applicable to a particular quarter of potential eligibility
are the rules that were in effect on the date the qualifying period began.
In addition to applicability, this rule specifies that the rules in Subchapter
B of Chapter 130 relating to supplemental income benefits are considered claim
service rules as contemplated by Texas Labor Code, §406.010.
New §130.101 adds definitions and clarifies the definition of terms
used in the previous rule. The definitions of "qualifying period", "first
quarter" and "subsequent quarter" use a 13-week period for simplicity in the
evaluation of claims and the determination of eligibility for supplemental
income benefits. The definition of "qualifying period" describes a period
of 13 consecutive weeks ending on the fourteenth day before the beginning
of the quarter. This change will help ensure that the injured employee can
provide all information regarding wages and his or her job search efforts
for the full applicable period. Under the previous rules, the injured employee
was required to submit the Statement of Employment Status (Application for
Supplemental Income Benefits) before the final two weeks of the filing period
have occurred. This created problems because the insurance carrier was required
to make a determination without the information on the employee's wages or
job search efforts for those last two weeks. Without complete information,
the insurance carrier has a difficult decision on whether to pay or dispute
and this uncertainty may result in a dispute where the complete information
would have eliminated any questions thereby avoiding a dispute. The change
which aligns the end of the qualifying period with the time the Application
for Supplemental Income Benefits is filed allows complete information to be
reported and corrects this procedural problem. Because other new rules require
the carrier to calculate and provide to the injured employee the beginning
and end dates of the qualifying period, this period is clearly established
for the injured employee. The terms "first quarter" and "subsequent quarter"
replace the terms "initial quarter," "compensable quarter," "continuing entitlement,"
"delayed entitlement," and "reinstated entitlement" in the previous rules.
The quarters are either the first quarter for which the determination of entitlement
is made by the Commission, or a subsequent quarter for which the determination
of entitlement is made by the insurance carrier.
A definition for "reviewing authority" has been added to clarify that the
provisions for determining eligibility in §130.102 apply to whoever makes
an entitlement determination. Statutory references to the Workers' Compensation
Act has been updated in the definition of "impairment income benefits period"
and a clarification added regarding when the period begins. A definition of
"vocational assistance" has been added to clarify the role of a carrier-sponsored
Vocational Case Manager. The definition of "offered wages" was deleted because
it is included in the statutory definition of "wages," which has been included
in the new rule. The definition of "underemployment" has been deleted in the
rule because this term is not used in the new rules. The term "underemployment"
is simply a label to describe when the injured employee has returned to work
but is earning less than 80% of the average weekly wage. Because the new rules
use this description, as opposed to the word "underemployment," the term need
not be defined. The term "statement of employment status" has been changed
to "Application for Supplemental Income Benefits" because this term more accurately
describes the purpose of the prescribed form. In addition, references to the
filing of the form have been deleted from the definition because they are
contained in other procedural aspects of other rules. In the definition of
"Application for Supplemental Income Benefits" the term "earned wages" has
been changed to "wages" to be consistent with the other changes to the definitions.
Documentation requirements for self-employed individuals has been added.
New §130.102 contains the eligibility criteria for supplemental income
benefits for both the first quarter and any subsequent quarter(s). This rule
addresses the primary issues related to disputes regarding the eligibility
for supplemental income benefits and the problems that often lead to disputes.
New subsection (c) adds the standard for determining direct result in a dispute.
This is the standard which has been used in the dispute resolution process
and is added for clarity and consistency of interpretation.
Section 130.102(d) sets out situations in which the injured employee has
made a good faith effort to obtain employment. Good faith is the issue that
is involved in the vast majority of disputes related to supplemental income
benefits. The previous rules included no standards, no description, and no
definition of good faith. This new rule provides standard elements for determining
this commonly disputed issue.
New §130.102(d)(1) provides that if the injured employee has returned
to work in a position which is relatively equal to the injured employee's
ability to work, the employee has made a good faith effort to obtain employment
as evidenced by the actual return to work. This standard eliminates arguments
regarding the rate of pay for the job because it ties the finding to whether
or not the employment is appropriate considering the injured employee's ability
to work. A person who has actually been successful in returning to work within
his or her ability will not be required to continue additional job search
efforts. This standard would not apply to situations where the position was
clearly limited to a very short period of time. It is intended to apply to
more regular employment that represents a true return to the workforce.
New §130.102(d)(2) provides that if the injured employee is cooperating
with the Texas Rehabilitation Commission (TRC), as required by the Act, is
enrolled in a full time program, and is satisfactorily participating in the
program, then he or she has made a good faith effort to obtain employment.
Issues regarding what constitutes a full time program or satisfactory participation
in the program would be reviewed on a case-by-case basis. One of the primary
reasons for this provision is the fact that a person who must look for work
or who secures other employment while enrolled in a program sponsored by the
Texas Rehabilitation Commission risks being removed from the program because
of the restrictions of the TRC program. This new provision allows the injured
employee to complete the appropriate TRC retraining program without fear of
losing entitlement to supplemental income benefits. This is consistent with
§408.150 of the Act which requires the Commission to refer an injured
employee to the TRC in certain circumstances.
New §130.102(d)(3) provides that an employee has made a good faith
effort to obtain employment if the employee cannot return to any type of employment.
This should be a limited situation and only applies where it is clear that
the injured employee cannot return to work because of the compensable injury.
While the actual question of whether or not a person has the ability to work
is a factual issue, the inclusion of a requirement for a medical report which
explains how the injury causes a total inability to work helps to ensure that
there is documentation, in addition to the injured employee's testimony, that
can be evaluated by the reviewing authority. This provision is not intended
to create new areas of entitlement, but to establish the finding of good faith
in situations where the injured employee truly cannot work. If a person cannot
perform any type of work, it appears contradictory to require that person
to attempt to look for work.
New §130.102(d)(4) acknowledges situations other than the three enumerated
in subsections (d)(1), (2), and (3), where the injured employee provides sufficient
information and documentation to support a finding of entitlement. The reference
to §130.102(e) helps to explain the types of documentation that can be
submitted to help show that an injured employee has made a good faith effort
to find employment.
New §130.102(e) provides guidance to reviewing authorities by listing
facts which shall be considered when presented in reviewing job search efforts.
Further, this subsection places an affirmative responsibility on the injured
employee to look for work every week of a qualifying period during which the
employee is able to perform any type of work.
New §130.102(f) simplifies the calculation of the amount of supplemental
income benefits by recognizing the potential reduction for contribution and
outlines a single mathematical calculation in each step of the calculation
process.
New §130.102(g) clarifies that if there was no dispute regarding maximum
medical improvement or impairment rating prior to the expiration of the first
quarter, the date of maximum medical improvement and impairment rating is
final.
New §130.102(h) addresses the question of carrier-sponsored vocational
case managers. Insurance carriers have been contracting with individuals of
different backgrounds to conduct certain activities with regard to entitlement
to supplemental income benefits. Some of these individuals may be very beneficial
in helping the injured employee return to the workforce. However, some of
these individuals may be perceived to be merely investigators hired by the
insurance carrier to help defeat a person's potential entitlement. For example,
some of these individuals have been alleged to have simply identified job
vacancies in the market, regardless of the injured employee's abilities. Subsection
(h) requires that these individuals have credentials which are generally accepted
in the vocational evaluation or rehabilitation arena. It is anticipated that
licensed individuals with the proper training will be more successful in vocational
assistance which is more beneficial to the system as a whole. This section
also has language to allow other individuals to perform certain aspects of
vocational assistance or job placement that do not have these credentials,
provided that such activity is performed under the direction of a person with
the appropriate credentials.
New §130.103 outlines the mechanics of the process that the Commission
must follow in making the determination of entitlement to the first quarter.
It includes the information that must be included by the Commission in the
determination of entitlement or non-entitlement. This subsection retains the
requirement for the Commission to make a referral to the Texas Rehabilitation
Commission if the injured employee needs vocational rehabilitation or training,
but ties the referral to the potential entitlement and allows the notice to
be in a separate letter to more efficiently process notification.
New §130.104 more specifically sets out the requirements for carriers
to use in determining entitlement to supplemental income benefits for subsequent
quarters. This new rule is substantially different from the previous version
of the rules due to the deletion of the terms "continuing entitlement", "delayed
entitlement", and "reinstated entitlement". The two types of quarters that
are dealt with in the rules are the first quarter (for which entitlement to
benefits is determined by the Commission), and subsequent quarters (for which
entitlement to benefits is determined by the insurance carrier). Subsection
(a) retains the requirement that the insurance carrier make the determination
of entitlement or non-entitlement within 10 days of receipt of the Application
for Supplemental Income Benefits (consistent with §102.3, the date of
receipt is not included in calculating the 10-day period). Subsection (b)
changes the time-frame for the carrier to send the injured employee an Application
for Supplemental Income Benefits. The application must be sent with the first
payment rather than with the third payment as provided in the previous rules.
Further, this subsection requires the insurance carrier to send out a new
application form with any determination of non-entitlement. This new provision
also requires the insurance carrier to fill in certain elements on the form.
The injured employee may not know the exact dates of the qualifying periods
for the quarters. The insurance carrier has the knowledge and ability to determine
these dates and therefore the new rules require the carrier to provide them
to the injured employee. This will help the injured employee to report his
or her job search efforts during the appropriate time-frame and the quarter
for which he or she is applying for supplemental income benefits. Subsection
(c) establishes the filing period for the injured employee and creates a new
provision to allow the insurance carrier to return the form to the injured
employee if it is filed too early. One of the problems under the previous
rules was the requirement for the carrier to pay or dispute the employee's
claim for supplemental income benefits regardless of when it was filed. If
the injured employee files the form two months early, the previous rules required
the carrier to pay or dispute based on the very limited information. This
new provision allows the carrier to return the document with additional filing
instructions to help ensure the injured employee can provide all the information
for the qualifying period and to potentially eliminate unnecessary disputes.
Applications received less than 20 days prior to the beginning of the quarter
must be processed by the carrier and then paid or disputed. This subsection
also has expanded the manner in which the form may be filed to include submissions
by facsimile. Subsection (d) requires the insurance carrier to date-stamp
all the Applications for Supplemental Income Benefits that they receive. Most
insurance carriers already perform this function, but some do not and the
question of the date of receipt causes disputes which could easily be avoided.
Subsection (e) changes the provisions of the previous rule to provide that
the carrier should use the Notice of Entitlement or Non-entitlement portion
of the Application for Supplemental Income Benefits to notify the injured
employee of its determination. Further, a new provision has been added to
require the carrier to explain the reason for the dispute. This will help
the injured employee understand the reasons for the finding of non-entitlement
by the insurance carrier. Subsection (f) includes a new provision in the accrual
date to allow for the situations where the failure to timely file the form
was beyond the control of the injured employee. Lastly, subsection (g) has
been added to allow the carriers a mechanism to change the amount of supplemental
income benefits from one quarter to the next without having to request a benefit
review conference. The pay or dispute requirement in the previous rule required
the carrier to file a request for a benefit review conference if there is
a reduction in the amount of benefits due. The calculation of the amount of
income benefits is based on the earnings reported by the injured employee.
Because the calculation is based on the information provided by the injured
employee, there is not a need for a proceeding in every one of these situations.
This provision allows the carrier to change the monthly payment based on the
wage information provided by the injured employee without requiring a dispute
proceeding.
New §130.105 eliminates the concept of reinstated or delayed entitlement
and addresses only the failure to timely file the Application for Supplemental
Income Benefits. An injured employee is not entitled to supplemental income
benefits if he or she fails to file the form as prescribed by the Commission.
New §130.105 also provides an exception to this general rule for situations
where the failure to timely file the form is beyond the control of the injured
employee. Exceptions are limited to the situations contained in the rule.
These situations include the carrier's failure to properly provide the injured
employee the form, the Commission's failure to make the determination for
the first quarter, and a change in the impairment rating as a result of a
proceeding. The insurance carrier has the specific obligation to send the
injured employee a copy of the Application for Supplemental Income Benefits
when it issues the first payment of the quarter or when it finds non-entitlement
for a quarter. In addition, the Commission has the specific obligation to
issue a determination for the first quarter. If the Commission or carrier
fails to meet these obligations, the injured employee should not be penalized.
Subsection (b) outlines the method that the carrier must use to calculate
the appropriate partial payment in cases where the Application for Supplemental
Income Benefits form is not timely filed.
Section 130.106 clarifies the 12-month period used to determine permanent
loss of entitlement. Since supplemental income benefits are determined on
a quarterly basis, the reference to 12 consecutive months can be confusing.
To eliminate confusion, the rule provides that four consecutive quarters is
the equivalent of 12 consecutive months. This will assist in the determination
process. New §130.106(b) reflects the changes in Texas Labor Code, §408.083,
as amended by House Bill 1089, 74th Legislature, relating to calculation of
the 104-week benefit period for occupational diseases. Further, additional
changes require some advance notification to the injured employee by the insurance
carrier when the 401-week provision applies.
New §130.107 clarifies the payment requirements for supplemental income
benefits. The payment for the first quarter has been tied to the date the
carrier receives the determination of entitlement from the Commission. The
previous rule required the carrier to pay within seven days of the expiration
of the impairment income benefit period, regardless of the date the carrier
received the determination from the Commission. The new rule reflects the
actual process for payment of supplemental income benefits and simplifies
the rule based on the change in terminology in the other rules. It should
be noted that this new rule addresses the payment of these income benefits
in the situation where the carrier has found entitlement. It is not intended
to address situations where the carrier has disputed entitlement and a decision
is later made that the injured employee is entitled to these income benefits.
In the event of a decision at a later point in time that the injured employee
is entitled, the provisions regarding the binding nature of the decision would
govern the payment of contested benefits. For example, if a decision is issued
after a benefit contested case hearing finding the injured employee is entitled
to supplemental income benefits for a quarter that has occurred at some point
in the past, the carrier must pay all accrued income benefits, plus interest,
consistent with the provisions of Chapter 142 of the rules.
New §130.108 clarifies the dispute process regarding supplemental
income benefits. Subsection (a) specifically prohibits the parties from pursuing
a dispute without a sufficient basis. Further, this provision requires the
carrier to consider the previous quarter and the outcome when it is making
a determination of entitlement or non-entitlement. This provision has been
added to help address complaints that insurance carriers sometimes dispute
quarter after quarter even when the Commission repeatedly finds entitlement.
Subsection (b) provides that an employee can dispute a finding of non-entitlement
or the amount of supplemental income benefits by requesting a benefit review
conference. Subsections (c), (d), and (e) clarify when an insurance carrier
is required to file a request for a benefit review conference to contest the
continuing entitlement to supplemental income benefits. The carrier must request
a benefit review conference if it disagrees with the Commission's determination
for the first quarter or when it makes a finding of non-entitlement for a
subsequent quarter and has previously been paying supplemental income benefits.
The insurance carrier is not required to request a benefit review conference
if it finds non-entitlement and did not pay supplemental income benefits in
the quarter that immediately preceded the quarter for which the Application
for Supplemental Income Benefits was filed. In addition, the carrier is not
required to request a benefit review conference and does not waive the right
to dispute entitlement to supplemental income benefits when the carrier is
returning an Application for Supplemental Income Benefits because the employee
filed the form more than 20 days before the beginning of the quarter. Subsection
(f) sets out the liability (for supplemental income benefits and attorneys
fees) of an insurance carrier which unsuccessfully contests a Commission determination
of entitlement for supplemental income benefits.
The repeal of §130.110 is the result of a comparison with the language
in the statute as compared with the language in the previous rule. Because
this rule does not establish any additional requirements or provisions than
are currently in the statute, there is not a need for a rule which does nothing
more than to state what the Act already explains.
The new rules will provide parties with guiding principles which may result
in resolving disputes without the need for formal proceedings. While the exact
reduction in the number of formal disputes cannot be predicted, such a reduction
will reduce the costs to the state associated with conducting these proceedings.
It is not anticipated that these changes will result in either an increase
or a decrease in the cost to the state as a result of enforcing or administering
these rules. While these rules are anticipated to reduce the number of proceedings,
there will be an increase in the number of other activities associated with
the administration of these rules. Any reductions in the number of proceedings
will also be offset as each new year increases the number of claims for supplemental
income benefits subject to the provisions of the Act and rules. With an injured
employee being entitled to all reasonable and necessary medical treatment
without any time limitations, even claims with no additional income benefits
being paid will need proceedings to resolve disputes on extent of injury and
similar matters. Finally, the demand for proceedings on other issues would
not realistically reduce the number of staff or resources required to conduct
proceedings even with a reduction in supplemental income benefit cases. These
new rules are not anticipated to affect the revenue of the state in any direct
manner. The revenue of the state for workers' compensation activities is primarily
based on a maintenance tax on the total amount of premiums paid for workers'
compensation insurance. While any increase in the amount of benefits paid
would increase the cost of individual claims, the costs of proceedings would
be reduced, thereby negating much impact to premiums. It is possible that
an increase in the enforcement of administrative violations under the adopted
rules could slightly increase revenue to the state, but this increase would
be minimal in comparison to the revenue generated by the maintenance tax.
In addition, because these new rules provide additional guidance to carriers,
there should be greater compliance and fewer violations and penalties.
The public benefit anticipated will include the ability of the parties
to clearly recognize and understand the entitlement process for supplemental
income benefits and thereby reduce the number of disputes. The new rules will
also provide more consistency and predictability in the resolution of disputes
related to supplemental income benefits. This clarification may result in
disputes being resolved in a more expeditious fashion by providing guidance
regarding what must be done to establish entitlement to supplemental income
benefits. The clarification of the entitlement and process requirements, combined
with the potential reduction in the number of proceedings, will have a positive
impact on the overall administration of the workers' compensation system.
The injured employee will benefit from the new rules by their guidance regarding
what is considered a good faith effort and what might be considered in making
the determination of entitlement in the event of a dispute on supplemental
income benefits. This type of information will allow the injured employee
to perform the appropriate actions in making a good faith effort to obtain
employment which may expedite the supplemental income benefit process and
ensure that income benefits are paid promptly when they are due. The definition
of a good faith effort may allow a limited number of injured employees to
receive supplemental income benefits that previously would not have been entitled
to these benefits. For example, injured employees who are participating in
vocational rehabilitation training with the Texas Rehabilitation Commission
will have an easier standard for qualifying for supplemental income benefits.
It should be noted that many of these same types of cases result in a finding
of entitlement, but only after the adjudication of a dispute. The added clarity
in the rules as adopted on these aspects should result in the payment of the
appropriate benefits without the need to file a dispute or to have the dispute
adjudicated. Any reduction in the number of disputes will save the injured
employees the time and frustration of the formal dispute resolution process
and associated attorney fees in certain cases. The insurance carriers will
benefit from the new rules by being provided the information necessary to
properly determine entitlement or non-entitlement to supplemental income benefits
thereby avoiding the need to proceed through the dispute resolution process
on multiple quarters with similar factual situations. Any reduction in the
number of disputes and proceedings will have a positive fiscal impact by reducing
the costs associated with litigating disputes through the formal dispute resolution
process and the payment of attorney fees in cases where the insurance carrier
disputed entitlement and did not prevail. These limited situations require
the insurance carrier to pay attorney fees directly to the injured employee's
attorney and are not paid from the benefits paid to the injured employee.
If the number of proceedings are reduced by the additional guidance contained
in the rules, the insurance carriers will avoid these additional costs. It
is anticipated that the insurance carriers may have an increase in the amount
of supplemental income benefits paid in limited situations. It is not anticipated
that the provisions regarding vocational case managers will affect the costs
of insurance carriers because the adopted rules do not require the carrier
to provide these services. Further, the insurance carriers are currently using
these types of individuals and the provision in the new rules only helps define
who may perform vocational assistance. If a dispute on whether or not an injured
employee has made a good faith effort to obtain employment must be adjudicated
through the proceeding process, there does not appear to be any additional
costs because the previous dispute resolution process for these types of disputes
is not changed by the new rules.
Comments supporting the proposed rule were received from the Texas Rehabilitation
Commission. Comments neither specifically supporting nor opposing the proposed
rules, but requesting changes were received from the following: Insurance
Employment Consultants, Texas Workers' Compensation Insurance Fund, Relyon
LLC, American Insurance Association, Jim Bailey, Mary Zersen, Liberty Mutual,
Texas Association of Business & Chambers of Commerce, Hammerman &
Gainer, Inc., Research and Oversight Council on Workers' Compensation, and
Texas Association of Rehabilitation Professionals in the Private Sector
Summaries of the comments and Commission responses are as follows:
Section 130.100(a)
Comment: Commenter stated that the focus for determining entitlement to
supplemental income benefits is on the qualifying period which is before the
quarter. Commenter recommended that the term "quarter" be replaced with "qualifying
period" to ensure that it is clear the rules that are in effect are the same
for the qualifying period and the quarter.
Response: The Commission agrees. In the provision for the effectiveness
of the rules (§130.100(a)) the term "quarter" has been replaced with
"qualifying period."
Section 130.101(1)(A) and (C)
Comment: Commenter recommended that in the definition of "Application for
Supplemental Income Benefits" (§130.101(1)(A) and (C)) the terms "supporting
documentation" and "supporting information" include further descriptive language
which could be helpful and probably reduce the number of disputes regarding
entitlement to supplemental income benefits.
Response: The Commission Agrees. The term "payroll" has been added before
"documentation" in paragraph (1)(A) and (1)(C) has been changed to read: "a
statement, with supporting information such as that outlined in §130.102(e)
of this title (relating to Eligibility for Supplemental Income Benefits; Amount),
that the employee has in good faith sought employment commensurate with the
employee's ability to work."
Section 130.101(1)(D)
Comment: Commenter recommended that a self-employment plan, as a demonstration
of a good faith job search, be specifically limited to the last vocational
resort. Commenter suggested that an injured employee should be limited in
pursuing a self-employment enterprise only when all other vocational options
have been explored and exhausted and should submit a formal business plan
based on Small Business Administration Guidelines.
Response: The Commission disagrees. The question regarding whether or not
a self-employment enterprise is a valid effort to return to work is dependent
on the facts of the individual situation and the background of an injured
employee. It may be reasonable for certain individuals to attempt self-employment
even though there may be another vocational option available. These types
of determinations should be determined on a case by case basis considering
the facts of the individual situation. A potentially successful attempt at
self-employment should not specifically be limited or prohibited in the rules.
Section 130.101(8)
Comment: Commenter stated that this definition is similar, but not identical,
to the definition in the Texas Workers' Compensation Act (the Act) which could
be confusing to injured employees. Commenter suggested that the rules adopt
the definition contained in the Act.
Response: The Commission agrees. Paragraph (8), definition of wages, has
been revised to be consistent with the provisions of the Act. It now reads:
"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."
Comment: Commenter indicated that some employers will pay injured employees
for attending training programs which does not fit within the statutory definition
of wages and recommended that the definition of wages be changed to include
payments made to the injured employee by the employer for participating in
these types of programs.
Response: The Commission disagrees. The term "wages" is specifically defined
in the Act and §130.101(8) incorporates the statutory definition. The
definition in the Act requires personal service to be rendered in order for
the income received by the injured employee to be considered wages. While
payments from some types of training programs might constitute the receipt
of wages, provided that some form of personal service is being rendered, other
income paid for programs in which personal service is not rendered does not
meet the definition of "wages" under the Act. Accordingly, it would not be
appropriate to expand the definition of wages to include payments from sources
which would not fit the definition contained in the Act.
Section 130.102(c)
Comment: Commenters made various requests for clarifying the information
regarding the direct result provision. Several suggestions were provided for
changing the term "cause" as used in §130.102(c), including using "producing
cause," "predominant cause," "primary cause," and similar language. The commenters
noted that the legislature was specific in requiring the unemployment or underemployment
to be a direct cause as opposed to simply a cause. Commenters felt the use
of the term direct cause lends itself to a definition of a clear and immediate
relationship between both the cause and effect. In addition, a commenter suggested
that "the impairment" be clarified by adding "from the compensable injury."
Response: The Commission agrees in part. Section 103.102(c) has been changed
to state: "An injured employee has earned less than 80% of the employee's
average weekly wage as a direct result of the impairment from the compensable
injury if the impairment from the compensable injury is a cause of the reduced
earnings." The Commission disagrees that the term "cause" should be narrowed.
Texas Labor Code, §408.142(a)(2), uses the language "a" direct result.
It does not use "primary" result, "predominant" result, or even use the words
chosen by the 1989 Act to control compensability of heart attacks, "substantial
contributing factor." The Appeals Panel has held that an injured employee
need only establish that his or her impairment is a cause of the unemployment
or underemployment.
Section 130.102(d)(1)
Comment: Commenters indicated that this provision does not adequately address
the situation where an injured employee voluntarily chooses to return to work
at a level less than his or her ability to work. One commenter suggested that
the language in subsection (d)(1) be changed to state that the injured employee
has returned to work in a "job whose duties the injured worker is able to
perform" and to require the injured employee to accept a job offer under certain
circumstances. Another commenter suggested the addition of language regarding
the number of days and hours worked per week.
Response: The Commission disagrees. The language contained in this provision
is tied to the employee's ability to work. This includes the number of hours
per day and the number of days per week that the employee is capable of working,
which must be determined on a case-by-case basis. Further, this language clearly
requires a comparison of the employee's ability to work and the type of job
which is being done by the injured employee. The term "ability to work" is
broad enough to allow the reviewing authority or the finder of fact to consider
other types of factors, including work experience and education, in determining
whether or not a good faith effort was made by the injured employee. The Commission
does not have the authority to require a person to accept a job. It should
be noted, however, that if an employer tenders a bona fide offer of light
duty employment and the employee does not accept the position, the carrier
may consider the wages of this position in determining entitlement to, or
the amount of, supplemental income benefits.
Section 130.102(d)(2)
Comment: Commenter recommended that the injured worker be required to continue
a job search while enrolled in a retraining program sponsored by the Texas
Rehabilitation Commission.
Response: The Commission disagrees. An injured employee who is working
full-time with the Texas Rehabilitation Commission in a retraining program
can jeopardize his or her completion of the program if they are required to
continue to look for work in order to qualify for supplemental income benefits.
This provision serves a valid, and limited purpose, to the limited number
of injured employees enrolled in Texas Rehabilitation Commission sponsored
programs to benefit from the services of another state agency without jeopardizing
entitlement to these benefits.
Comment: Commenter suggested that §130.102(d)(2) be changed to read
"has been enrolled in, and satisfactorily participated in, a full time vocational
rehabilitation program sponsored by the Texas Rehabilitation Commission, or
an approved private provider, during the qualifying period." The commenter
indicated that "an approved private provider" should be given the same status
and allowed the same finding of a good faith effort, as cooperation with the
Texas Rehabilitation Commission.
Response: The Commission disagrees. While an injured employee is required
by §408.150 of the Act to cooperate with the Texas Rehabilitation Commission
and will not be entitled to supplemental income benefits if he or she does
not cooperate, this provision and limitation does not affect retraining programs
from other sources, including private providers. In addition, the Commission
does not "approve" private providers. The Commission maintains a registry
of those who have requested to be included in the private provider registry
and supplies this registry to all field offices for the injured employees
to review, if requested. These registered private providers may or may not
have the credentials outlined in the proposed rules. The programs sponsored
by the Texas Rehabilitation Commission have various controls in place to monitor
the individuals that they accept into these programs and the types of programs
offered to the individuals to ensure that the individual will benefit from
the program and successfully return to work. The funding of the programs offered
by the Texas Rehabilitation Commission is closely tied to the successful return
to work by the injured employee and there is much incentive on the counselors
with the Texas Rehabilitation Commission to ensure the programs are appropriate
and beneficial to the individual. These controls or standards do not apply
to services offered by private providers. A private provider may offer a wide
variety of services, at the cost of either the injured employee or the insurance
carrier, without much control on the content or the eventual outcome of the
programs. A review of the types of services offered by private providers listed
in the Commission registry reveals that some of these services are only marginally
or not at all related to vocational assistance. Private provider programs
can be selected by the injured employee without containing any true vocational
assistance and may not be the most beneficial types of programs to aid a successful
return to work. Because of the uncertainty regarding the types of services
or programs offered by private providers and the absence of any true controls
to ensure that the programs are appropriate and effective for the participants,
it is not appropriate to provide private provider programs the same status
as the Act provides for cooperation with the Texas Rehabilitation Commission.
While the cooperation with a private provider is an issue that may be considered
by the hearing officer in making a determination of entitlement or non-entitlement,
it does not equate to an automatic finding that the person enrolled in any
such program with a private provider has made a good faith effort to obtain
employment.
Comment: Commenter suggested that the Commission impose a time limit on
how long an injured employee's participation in a vocational rehabilitation
program sponsored by the Texas Rehabilitation Commission amounts to a good
faith effort.
Response: The Commission disagrees. The Texas Rehabilitation Commission
offers a variety of different retraining options and evaluates each case on
the facts of the individual situation to ensure that the retraining program
is suited to the individual to ensure an expeditious and successful return
to work. It is not possible to establish a deadline when the situation will
dictate the type and length of the individual program.
Comment: Commenters suggested that the Commission define "satisfactorily
participated in" as used in §130.102(d)(2). Another commenter recommended
that the rule be clarified to indicate to what extent (period of time) an
employee must have participated during a qualifying period. Further, a commenter
requested information on who will make this type of determination.
Response: The Commission disagrees. The Texas Rehabilitation Commission
(TRC) uses a variety of retraining programs to aide an injured employee's
successful return to work. The programs may involve the payment of tuition
and fees for college courses, work study programs, or apprentice type programs.
Each of these programs could have different durations and methods to evaluate
whether or not a person is satisfactorily completing the retraining and it
is difficult to define this in a way that will apply to each and every situation.
If the injured employee wishes to show that this provision applies, the injured
employee can secure information from his or her counselor with the Texas Rehabilitation
Commission to supply to the carrier. If the insurance carrier believes the
information provided is not sufficient to meet the requirement of this provision,
the insurance carrier can dispute entitlement. The decision of whether or
not the injured employee has satisfactorily participated in a TRC sponsored
program will be made by the finder of fact during the dispute resolution process.
Further, the evaluation of the extent of participation will be dependent on
the overall evaluation of the individual facts of the case and should be left
up to the finder of fact in disputed cases because of the numerous factors
that can affect the final decision.
Comment: Commenter indicated that this new provision should assist injured
employees to maintain some income while participating in needed vocational
rehabilitation services, which will increase the likelihood of their completing
the rehabilitation program and returning to work.
Response: The Commission agrees.
Comment: Commenter felt that §130.102(d)(2) does not take into account
a situation where the injured employee has the ability to work, but desires
to obtain retraining through the Texas Rehabilitation Commission. Commenter
contended that in such a situation the insurance carrier should not be required
to subsidize the injured employee's education.
Response: The Commission disagrees. The Texas Rehabilitation Commission
(TRC) has certain screening criteria to determine who may or may not need
the assistance from their agency. If a person is capable of returning to the
workforce without any additional vocational retraining or assistance from
TRC, it is unlikely that the TRC would accept that individual as a candidate
for their programs. If a person is limited in the types of jobs that they
can perform and the TRC is able to offer some assistance or retraining to
attain a successful return to work, then the provisions of this section should
apply. It is more beneficial to allow an injured employee with limitations
to be retrained in a manner to secure stable employment than to force the
individual to attempt to return to other jobs when vocational rehabilitation
is the best approach.
Section 130.102(d)(3)
Comment: Commenter suggested that the medical records regarding the inability
to work be from the treating doctor, or if from other than a treating doctor,
that the treating doctor agree with the records or information.
Response: The Commission disagrees. Information regarding the actual ability
to work can come from a number of sources, including other health care providers.
The treating doctor may not be very involved in the determination of the vocational
abilities of an injured employee and may not want this level of involvement.
Requiring all the records to be from the treating doctor or agreed upon by
the treating doctor does not allow the full evaluation of a person's true
ability to work. There have been cases in the past where the treating doctor
finds a person is totally unable to work, but information from other sources
show that the injured employee has actually returned to work. The treating
doctor is not the sole source of return to work information nor should the
information be required to be approved by the treating doctor. It should be
noted that the Commission supports open communication and involvement of the
treating doctor. However, this communication and exchange of reports between
various health care providers are not the subject of the proposed rules regarding
entitlement to supplemental income benefits.
Comment: Commenters requested additional information on what might constitute
"detailed medical records." It was suggested that the language in subsection
(d)(3) be changed to ensure that the information is not limited to the treating
doctor's opinion, that an injured employee must seek work if any doctor's
opinion is provided that identifies the capability to work, and that the inability
to work be the "total" inability to work.
Response: The Commission agrees. Subsection (d)(3) has been changed to:
"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..."
Comment: Commenter inquired whether an injured employee's obligation to
look for work only begins when the injured employee has notice of a release
to return to work.
Response: Nothing in the proposed rules address notice to an injured employee
regarding a release to return to work. The ability to work is something that
can exist with or without medical records and is ultimately a decision of
the finder of fact in the event of a dispute. Many injured employees return
to work when they feel capable of working, sometimes without any consultation
from a doctor. A person may have the ability to work and simply fail to make
a doctor's appointment to document that he or she has been released. Because
of these types of issues, the language of this provision is tied to the ability
to work and not any "notice" requirement.
Section 130.102(d)(4)
Comment: Commenter stated that the phrase "sufficient documentation" should
either be defined or §130.102(d)(4) should be eliminated.
Response: The Commission agrees that the term "sufficient documentation"
should be clarified. Accordingly, subsection (d)(4) has been changed to state:
"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."
It should be noted that in the event of a dispute regarding entitlement or
non-entitlement, the presiding officer of a proceeding will be responsible
for weighing the credibility of the information provided to determine if an
injured employee has made a good faith effort and if the documentation is
sufficient under this subsection.
Section 130.102(e)
Comment: Commenter indicated that the use of the words "any type of work
in any capacity" in §130.102(d)(3) and the words "any ability to work"
in §130.102(e) could be confusing to injured employees.
Response: The Commission agrees. Subsection (e) has been changed to use
the same language as contained in subsection (d)(3). Subsection (e) now reads:
"Except as provided in subsections (d)(1), (2), and (3) 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..."
Comment: Commenter stated that the term "qualifying period" could lead
to an unnecessarily harsh result and gave the example of an injured employee
who did not look for work because of the death of a family member. The commenter
suggested that the rules be revised to allow for a prorated entitlement which
is tied to the number of weeks of the job search. For example, an injured
employee who looked for work only six weeks of the qualifying period would
be entitled to six weeks of supplemental income benefit payments.
Response: The Commission disagrees. The Act sets forth that if an injured
employee meets the entitlement criteria for supplemental income benefits,
then the injured employee is entitled to the entire quarter of payments. The
statute does not provide for prorated benefits for the failure to meet the
entitlement provisions. The injured employee is either entitled or not entitled
to supplemental income benefits for the particular quarter, based on whether
or not the injured employee met the entitlement criteria during the qualifying
period.
Comment: Commenters recommended that documentation requirements be included
in subsection (e). Insurance carriers are able to make good determinations
regarding entitlement when the injured employees provide sufficient documentation.
One commenter suggested requiring the injured employee to file the documentation
monthly instead of quarterly. Another commenter suggested inserting the words
"and document his search for" between "look for" and "employment."
Response: The Commission agrees in part. Additional language on the documentation
of the job search effort has been included subsection (e) which now reads:
"Except as provided in subsections (d)(1), (2), and (3) 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." The Commission disagrees with the comment on changing the filing
standard to a monthly basis. Entitlement is determined on a quarterly basis
and the submission of a monthly report on job search efforts would increase
the amount of paperwork required by the injured employee with minimal benefits
to the parties in the system.
Comment: Commenter suggested adding a subsection (e)(11) which reads "the
methods, manner and degree of diligence exhibited by the employee in seeking
employment."
Response: The Commission disagrees. These concepts are already included
in the list of considerations in different words. The inclusion of an additional
element does not appear to provide any further clarification or benefit.
Section 130.102(e)(1)
Comment: Commenter recommended replacing the word "during" with "throughout"
because an injured employee should be continuously engaged in a job search.
"During" implies that the number of applications can be considered whenever
they were made, even if all were in the first or last week of the qualifying
period.
Response: The Commission agrees. The word "during" has been replaced with
"throughout" in subsection (e)(1).
Section 130.102(e)(4)
Comment: Commenter stated that the cooperation with private sector rehabilitation
counselors should be viewed as relevant and desirable. Commenter recommended
that this provision be changed to "cooperation with the Texas Rehabilitation
Commission and approved private provider."
Response: The Commission disagrees. Under the Texas Labor Code, an injured
employee who does not cooperate with the Texas Rehabilitation Commission is
not entitled to supplemental income benefits. No such disqualifier exists
for private providers of vocational rehabilitation services. Therefore, a
specific reference to cooperation with the Texas Rehabilitation Commission
in the determination of a good faith effort is warranted, but not necessary
for a private provider. Further, the cooperation with a private sector rehabilitation
counselor can be considered by the reviewing authority under item 10, "any
other relevant factor," along with an evaluation of the qualifications of
the individual counselor and the types of services being provided to the injured
employee.
Section 130.102(e)(7)
Comment: Commenter indicated that the term "job search plan" could lead
to confusion among injured employees and recommended that this be further
explained in the brochure on entitlement to supplemental income benefits.
Response: The Commission agrees and will include some clarifying language
in the brochure.
Section 130.102(g)
Comment: Commenter stated that this section appears to be in conflict Texas
Labor Code, §410.307, regarding substantial change of condition. As proposed,
this section precludes both claimants and carriers from challenging the date
of maximum medical improvement or the impairment rating following the first
quarter. It fails to take into account situations where newly discovered evidence
or a substantial change in condition affects the findings of maximum medical
improvement or the impairment rating. Commenter suggested adding a "good cause"
exception to this provision.
Response: The Commission disagrees. The provisions of Texas Labor Code,
§410.307, only apply to the judicial review of a claim and this provision
does not limit the ability of the courts to render any determination regarding
a substantial change in condition. This section of the Act provides a mechanism
for the courts to have the injured employee examined by the designated doctor
and requires the court to adopt an impairment rating that has previously been
assigned. While disputes on the impairment rating are generally raised prior
to the beginning of the supplemental income benefit period (pending disputes
on the impairment rating negate the application of this subsection), disputes
after the first quarter may still be adjudicated and pursued through judicial
review. Once a dispute on an impairment rating has been appealed to the courts,
there is nothing in the proposed rules that would limit a court from invoking
and following the provisions under Texas Labor Code, §410.307, for a
substantial change in condition.
Comment: Commenter requested clarification on what is meant by "final determination
of the Commission," considering how the delay in making a determination on
the finding of maximum medical improvement or the impairment rating can affect
supplemental income benefits.
Response: The Commission agrees. The statement "and the final determination
of the Commission found that the injured employee was entitled to supplemental
income benefits for the first quarter" has been deleted from this subsection.
This change means that in the absence of a pending dispute on the date of
maximum medical improvement or the impairment rating, the date of maximum
medical improvement and the impairment rating become final upon the expiration
of the first quarter. This provision will not apply to any situation where
a party has raised a dispute prior to the first quarter of supplemental income
benefits.
Section 130.102(h)
Comment: Commenter questioned the failure to include Texas Licensed Professional
Counselors (LPC) in the list of credentialed individuals which may provide
vocational rehabilitation counseling and case management. LPCs are licensed
by the state of Texas as established by the Licensed Professional Counselor
Act. Additionally, LPCs are required to complete an extensive 48 hour Master's
degree level program, 3000 hours of supervised clinical experience, and pass
a State LPC examination. Commenter recommended adding Licensed Professional
Counselors to this provision.
Response: The Commission agrees. Subsection (h) has been amended to include
Licensed Professional Counselor (LPC).
Comment: Commenters stated that limiting the individuals who are allowed
to provide vocational assistance may limit the ability of job placement experts
to be used in the process if they do not have the proper credentials. During
public testimony, it was mentioned that many of these non-credentialed individuals
receive referrals from the licensed individuals to perform specific action
on cases. A concern was raised that this could jeopardize the business of
these individuals and the commenters requested a revision or a grandfather
clause.
Response: The Commission agrees in part. The addition of some credentials
to perform true vocational assistance is designed to limit the use of individuals
who do not have the proper training and background. The Commission disagrees
with adding a "grandfather" provision because this would allow persons who
do not hold the credentials listed in this subsection to perform vocational
assistance activities without any oversight. However, this provision is not
designed to eliminate the use of individuals or companies with specific talents
and capabilities for the various components of a return to work effort as
long as a person with the listed credentials directs and is responsible for
the overall vocational assistance program. Accordingly, the following statement
has been added to subsection (h): "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 outlined in this
subsection."
Section 130.103
Comment: Commenters recommended that the rule include a provision that
would require the injured employee to file an application with the Commission
and send a copy of the application and any documentation to the insurance
carrier. Commenter further recommended that the rule state that if the application
is not received by the Commission, the Commission shall not make the initial
determination on entitlement.
Response: The Commission disagrees. The statute does not require the injured
employee to submit an application with the Commission for the first quarter
determination. The recommendation would require additional paperwork on the
part of the injured employee without any realistic means to enforce the proposed
requirement. In addition, the statute specifically requires the Commission
to make an initial determination for all cases in which the injured employee
receives an impairment rating of 15% or greater, without any provision requiring
the filing of the application for supplemental income benefits.
Comment: Commenters indicated that the Commission should refer injured
employees to the Texas Rehabilitation Commission prior to reaching the supplemental
income benefit period.
Response: The Commission agrees. The Commission does, and will continue,
to make referrals to the Texas Rehabilitation Commission at any time as necessary
or as required by the other rules regarding this matter. Since the proposed
rules address the supplemental income benefit period, it is not appropriate
to include additional language regarding referrals to the Texas Rehabilitation
Commission prior to the supplemental income benefit period. These referrals
are addressed in other rules.
Section 130.104(b)
Comment: Commenter indicated that there is no problem with the insurance
carrier providing the required information on the application, but raised
a question regarding when there is a pending dispute on the date of maximum
medical improvement or the impairment rating. In those situations, the carrier
may have difficulty in providing the information required in §130.104(b).
Response: The Commission disagrees. Since the carrier requirement to provide
this information does not apply until after the Commission's determination
for the first quarter, this should not be a problem and the carrier can base
the information provided during subsequent quarters on the information provided
by the Commission's notice of entitlement or non-entitlement for the first
quarter during the pendency of a dispute.
Section 130.104(c)
Comment: Commenter indicated that the proposed rule appears inconsistent
because it provides that a claimant cannot submit an application earlier than
14 days before the beginning of the quarter; however, the rule requires the
carrier to process the application if it is received 20 days or less prior
to the beginning of the quarter. Commenter recommended that subsection (c)
be changed to read as follows: "Except as otherwise provided by this section,
the Application for Supplemental Income Benefits shall be filed no later than
seven days before and no earlier than 20 days before the beginning of the
quarter for which the injured employee is applying for supplemental income
benefits. If the Application for Supplemental Income Benefits is received
by the carrier more than 20 days before the beginning of the quarter, the
insurance carrier..."
Response: The Commission agrees and has revised subsection (c) as suggested
by the commenter.
Comment: Commenter raised doubts regarding whether or not this approach
would be practical and indicated that this could result in additional mechanisms
for which an application may get "lost" in the system and generate disputes
regarding who lost the paperwork or who filed incorrectly. Commenter recommended
revising the rules to allow the injured worker to submit only ten weeks of
information and to have the carrier make the determination based on this information
which would be adjusted later after the receipt of the additional three weeks.
Response: The Commission disagrees. The process suggested by the commenter
is basically the same as the process contained in the previous rules, where
the injured employee filed the form prior to the expiration of the filing
period. The change in the filing mechanism was developed to help address the
problem that the commenter described, because some carriers will deny entitlement
to supplemental income benefits in the absence of complete information which
increases the number of disputes. With the change in the new rules regarding
the dates of the qualifying period, the carrier should have all available
information which negates the need for adjustments.
Comment: Commenters indicated that insurance carriers would not have a
problem with delivery of the application by facsimile (fax).
Response: The Commission agrees. Subsection (c) has been modified to include
the submission of the Application for Supplemental Income Benefits by facsimile.
Section 130.104(e)
Comment: Commenter contended that the use of the word "immediately" in
§130.104(e) is ambiguous, especially since §130.104(a) gives the
carrier 10 days.
Response: The Commission agrees. The word "immediately" has been deleted
from §130.104(e).
Comment: Commenter raised a question regarding the impact of a carrier's
failure to provide sufficient claim specific information on a finding of non-entitlement.
Commenter recommended that the rule include the specific consequences for
failure to contain this information and that this could be used as a basis
for a ruling on a determination for entitlement to supplemental income benefits.
Response: The Commission disagrees. The concept proposed by the commenter
is basically to apply the same standards for a contest of compensability to
a dispute on supplemental income benefits. This would mean that if the dispute
was deemed insufficient for the lack of claim specific information, the carrier
would waive the right to contest and would be liable to pay supplemental income
benefits. Texas Labor Code, §409.022, limits a carrier to the grounds
raised in their dispute which is a basis of the language associated with this
waiver on compensability disputes in the rules. The Act does not contain similar
language for a contest of entitlement to supplemental income benefits. In
making a determination of entitlement or non-entitlement to supplemental income
benefits, the Act requires the carrier to dispute in a certain time frame,
but does not limit the language a carrier may use as the grounds of their
defense. Applying this type of waiver for the entitlement determination for
supplemental income benefits is not necessary. There is a potential administrative
violation for the failure to contain specific claim related information as
a basis for a finding of non-entitlement. In addition to other possible violations,
§130.100 specifies that this is a claims service rule subject to the
provisions of Texas Labor Code, §406.010. Under that section of the Act,
any violation of a claim service rule is a Class C administrative violation.
Section 130.105(a)
Comment: Commenter stated that the use of the term "time period" in this
provision is unclear and needs additional clarification.
Response: The Commission agrees. Subsection (a) has been revised to state:
"Failure to timely file. An injured employee who does not timely file an Application
for Supplemental Income Benefits with the insurance carrier shall not receive
supplemental income benefits for the period of time between the beginning
date of the quarter and the date on which the form was received by the insurance
carrier, unless the following apply: ..."
Comment: Commenter interpreted §130.105(a) as containing a "good cause"
exception and stated support of this concept for situations where an injured
employee was prevented from completing an application and returning it to
the carrier. Commenter recommended that the rule clarify whether these exceptions
are limited to the three items or if other exceptions are contemplated.
Response: The Commission agrees that §130.105(a) lists circumstances
in which an injured employee will not be penalized for a late filing of an
Application for Supplemental Income Benefits. The exceptions are limited to
the three items contained in the rule. This limitation is important to prevent
an increase in disputes based on this type of an issue.
Section 130.105(b)
Comment: Commenter requested clarification of the meaning of "that particular
payment period" as used in §130.105(b) because supplemental income benefits
are paid monthly while entitlement is determined quarterly. Commenter requested
additional language in the rules to clarify this term.
Response: The Commission disagrees. The payment of supplemental income
benefits is by month. Any reference to the payment period is a reference to
the monthly payment of the benefits.
Comment: Commenter indicated that subsection (b) in effect inserts an additional
"good cause" excuse for a late filing which is not included in the enumerated
excuses in subsection (a). Commenter recommended changing this by substituting
the words "without an exception as listed in subsection (a) of this section"
for the proposed words "without good cause."
Response: The Commission agrees. The words "without good cause" in §130.105(b)
have been replaced with "and none of the exceptions listed in subsection (a)
of this section apply."
Section 130.106(b)
Comment: Commenter suggested that in §130.106(b) the word "proceeding"
should be "preceding."
Response: The Commission agrees and has made the recommended change.
Comment: Commenters indicated that the language contained in §130.106(b)
regarding the 401-week notification requirement could be confusing, especially
in situations where the injured employee has already permanently lost entitlement
to supplemental income benefits. One commenter suggested that a subsection
(c) could be added to state that the carrier is not required to provide these
notices if the injured employee has previously lost entitlement to supplemental
income benefits.
Response: The Commission agrees. Subsection (b) has been changed to state:
"Except for situations where the injured employee has previously permanently
lost entitlement to supplemental income benefits, the carrier shall send two
notices to the injured employee prior to the expiration of the 401-week period
if the employee has submitted an Application for Supplemental Income Benefits
during the 12 months immediately preceding the expiration of the 401-week
period."
Comment: The commenter recognized that the proposed rules will require
a notice to certain injured employees about the expiration of the 401-week
period. The commenter requested information on whether these notices must
be sent with the monthly payment of supplemental income benefits or if the
notice can be sent separately.
Response: The provisions of §130.106(b) regarding the 401-week notice
letter specifies the time frames for sending the notices, which injured employees
must be sent the notices, and provides that the notices shall be sent in the
form and manner prescribed by the Commission. However, the insurance carrier
is free to determine the most appropriate method for sending this type of
notice. Nothing in the rule requires or prevents the insurance carrier to
send the notice with the benefit payment.
Section 130.107(a)
Comment: Commenters indicated that the rule should be revised to allow
for the initial payment of supplemental income benefits consistent with the
ten days that an insurance carrier has available to make the determination
to pay or dispute. Further, the commenter suggested that rule should be amended
to allow for payment "on or before" the required dates to expedite the payment
process and allow the carriers to use the payment systems already in place.
Response: The Commission agrees and has changed §130.107(a) as follows:
1. the first payment shall be made on or before the tenth day after the
day on which the insurance carrier received the commission determination of
entitlement or the seventh day of the quarter, whichever is later;
2. the second payment shall be made on or before the 37th day of the first
quarter; and
3. the last payment shall be made on or before the 67th day of the first
quarter.
Section 130.107(b)
Comment: Commenters indicated that the rule should be revised to allow
for the initial payment of supplemental income benefits consistent with the
ten days that an insurance carrier has available to make the determination
of entitlement or non-entitlement for the subsequent quarter. Further, the
rule should be amended to allow for payment "on or before" the required dates
to expedite the payment process and allow the carriers to use the payment
systems already in place.
Response: The Commission agrees and has changed §130.107(b) as follows:
1. the first payment shall be made on or before the tenth day after the
day on which the insurance carrier received the Application for Supplemental
Income Benefits, or the seventh day of the quarter, whichever is later;
2. the second payment shall be made on or before the 37th day of the quarter;
and
3. the last payment shall be made on or before the 67th day of the quarter.
Section 130.108(a)
Comment: Commenter stated that they did not have a problem being required
to consider the factual situation of the previous quarter, but did have a
problem with a requirement that any particular weight be given to the factual
situation. Commenter appeared basically opposed to the creation of a presumption
for entitlement on these grounds.
Response: The Commission agrees. Section 130.108(a) does not create any
presumption of entitlement or non-entitlement. It requires that the insurance
carrier at least consider the factual situation of the previous quarter before
making a decision to pay or dispute.
Comment: Commenter recommended that the provision regarding the consideration
of the previous quarter be extended to injured employees and their representatives.
Commenter felt that this amendment would help avoid having disputes previously
decided in favor of the carrier from being re-adjudicated if the factual situation
has not changed.
Response: The Commission disagrees. Injured employees and their representatives
do not make determinations of entitlement or non-entitlement. The subsequent
quarter determinations are made by the insurance carrier based on the information
submitted by the injured employee. The injured employee or his or her representative
may dispute a determination of non-entitlement. The provision that a dispute
shall not be filed without a factual or legal basis does apply equally to
insurance carriers, injured employees, and their representatives.
Comment: Commenter asked who is intended to make the determination as to
whether the carrier's dispute of entitlement contained a factual or legal
basis. Commenter suggested that the hearing officer is in the best position
to evaluate compliance.
Response: The Commission agrees in part. While the presiding officer of
a proceeding has access to all the information regarding the factual or legal
issues that generated a dispute, other appropriate Commission staff can evaluate
the same types of information. Dispute resolution officers, benefit review
officers, and hearing officers all review the types of disputes filed by the
parties and can approve agreements if the information supports either entitlement
or non-entitlement. Appropriate Commission staff can make a determination
on the absence of a factual or legal basis for a dispute and will make a referral
to the Division of Compliance and Practices, if deemed appropriate. This holds
true whether the disputing party was the injured employee, the injured employee's
representative, or the insurance carrier. This type of violation is addressed
in Texas Labor Code, §415.009, and a person that knowingly pursues or
defends a request for benefits in a dispute without a factual or legal basis
may be subject to the penalties for a Class B administrative violation.
Section 130.108(b)
Comment: Commenter indicated that the injured employee has not been given
any time limit to dispute the Commission's determination of non-entitlement
for the initial quarter or the insurance carrier's determination of non-entitlement
for a subsequent quarter. Commenter recommended that the injured employee
be given a ten-day time limit to dispute a non-entitlement determination similar
to the ten-day limitation for the insurance carrier.
Response: The Commission disagrees. The limitation on the insurance carrier
to dispute within ten days and the associated waiver is contained in Texas
Labor Code, §408.147(b). There is no similar limitation placed on the
injured employee by the Act. The time limitation on the insurance carrier
helps to ensure a timely determination regarding the payment of benefits and
a quick request for a proceeding, if required. The injured employee can be
placed in a position of financial hardship if the carrier delays any determination.
Because the injured employee's decision to pursue, not to pursue, and when
to pursue a finding of non-entitlement by an insurance carrier affects the
injured employee's own interest, placing a similar time limitation on the
injured employee is not essential. In addition, the injured employee is generally
not as familiar with the complexities of the Act and rules as the insurance
carrier. To impose a time limitation on the injured employee may be detrimental
if he or she is not aware of such a limitation.
Section 130.108(d)
Comment: Commenter recommended that at the end of §130.108(d), a statement
should be added help clarify the distinction between returning a form which
is filed too early and the need to dispute entitlement. The commenter suggested
that the carrier would not waive their right to dispute entitlement when the
injured employee has filed the form too early and the carrier has returned
the form consistent with the proposed rules.
Response: The Commission agrees that clarification could be helpful and
has added the following to the end of §130.108(d): "The insurance carrier
does not waive the right to contest entitlement to supplemental income benefits
if the carrier has returned the injured employee's Application for Supplemental
Income Benefits pursuant to §130.104(c) of this title (relating to Determination
of Entitlement or Non-entitlement for Subsequent Quarters)."
Section 130.108(e)
Comment: Commenter stated that §130.108(e) is a good addition and
will eliminate some disputes.
Response: The Commission agrees.
Section 130.108(f)(2)
Comment: Commenter stated that this provision sets forth the liability
of an insurance carrier for attorney's fees where the carrier unsuccessfully
contests a determination. Commenter indicated that using the broader "reasonable
and necessary" language and not referring to Chapter 152 would provide an
incentive for claimants' attorneys to pursue disputes, and would be inconsistent
with Chapter 152. Commenter suggested that the subsection be revised to make
the carrier liable for: "attorney's fees, as determined pursuant to 28 TAC
Chapter 152, incurred by the employee as a result of the carrier's dispute."
Response: The Commission disagrees. While the commenter is correct that
the Act and Chapter 152 of the TWCC rules governs the payment of attorney
fees, an additional reference to the attorney fee portion of these rules does
not appear to be necessary in the proposed supplemental income benefit rules.
Comment: Commenter suggested that some additional language be included
in §130.108(f)(2) to emphasize that the attorney fees must be ordered
by the Commission as required under the provisions of the Act and rules.
Response: The Commission agrees and has amended §130.108(f)(2) to
read: "...reasonable and necessary attorney's fees incurred by the employee
as a result of the carrier's dispute which have been ordered by the Commission
or court."
General Comments
Comment: Commenters stated that more emphasis needs to be placed on the
return to work during the earlier stages of benefits (prior to the supplemental
income benefit period). Commenters further indicated a need for additional
communication regarding releases to return to work and specific restrictions
between doctors, case managers, insurance carriers, and injured employees.
Response: The Commission agrees with the commenters' general concern and
believes that the new rules will help in encouraging an appropriate and timely
return to work.
Comment: Commenter stated that before adopting these rules, Commission
staff should evaluate the rules in the context of the rules' objective of
reducing the number of disputes on entitlement to supplemental income benefits.
The commenter stated that Commission staff should provide estimates on the
reduction in disputes anticipated by these rules.
Response: Commission staff has evaluated these rules in the context of
the three specific objectives: simplifying the eligibility language to allow
the rules to be more readily understood by the parties; encouraging the injured
employee's return to work; and reducing the number of supplemental income
benefit disputes. In addition, a constant theme in the development of these
rules has been to help ensure that injured employees that meet the entitlement
criteria receive these benefits, and those who do not meet the entitlement
criteria do not. Exact estimates on the reduction of disputes is not possible
given the many different aspects of the dispute resolution process that may
affect the implementation of the rules. However, The Commission believes that
these rules will reduce the number of disputes by providing more clarity regarding
the criteria which must be met to establish entitlement to supplemental income
benefits and other commenters have agreed that they will do so.
Comment: Commenter stated that the Commission should identify ways to improve
consistency among Appeals Panel decisions so that injured workers in similar
situations can expect similar results.
Response: The new rules will help with the consistency in the application
of the Act and rules at the various levels of the dispute resolution process.
However, it must be noted that the Appeals Panel is limited to the evidence
that is contained in the record for the benefit contested case hearing. This
is noted because even though the individual situations may be similar, there
can be differences related to the types of evidence exchanged, introduced,
and admitted during the formal hearing. With these and the other factors that
can be different from case to case, it is seldom that a case, even though
it may look similar, will be identical to another case under review by the
Appeals Panel. The Commission will continue to train staff on the application
of the Act and rules to help achieve consistent results.
Comment: Commenter felt that the new rules provide little specific guidance
regarding the "good faith" job search requirement.
Response: The Commission disagrees. The language contained in §130.102
provides specific situations in which a good faith effort will be considered
to have been performed, and provides information regarding what other documentation
can be considered in evaluating other cases or situations.
Comment: Commenter recommended that the Appeals Panel Decisions be readily
accessible to the public through the agency Internet website.
Response: The Appeals Panel Decisions are currently available on the agency
Internet website located at twcc.state.tx.us.
Comment: Commenter recommended that Commission staff should report periodically
to the Commissioners on the impact of the proposed rules in reducing disputes.
Response: Commission staff will continue to review the impact of these,
and other, rules to determine the impact on disputes and the workers' compensation
system. Reports will be provided to the Commissioners as necessary to inform
them regarding any major issues or problems.
Comment: Commenter requested information regarding how the Commission will
oversee the activities of carrier-sponsored vocational case managers to ensure
that they comply with the provisions of the Act and rules. Commenter questioned
how administrative violations would be handled that apply to carrier-sponsored
vocational case managers.
Response: While the Commission does not license these types of individuals,
a carrier is liable for the actions of their agents. If the carrier-sponsored
vocational case manager does violate a provision of the Act or rules, the
carrier may be subject to an appropriate administrative violation.
Staff Recommendations
Section 130.104(g)(2)
Staff felt that the general reference to the "instructions about the process
by which the injured employee may request a benefit review conference" in
§130.104(g)(2) and §130.108(e) was not clear and did not properly
account for situations in which the injured employee was represented. Therefore,
§130.104(g)(2) has been changed to read: "include instructions about
the procedures for contesting the carrier's determination as provided by §130.108
of this title (relating to Contesting Entitlement or Amount of Supplemental
Income Benefits; Attorney Fees)" and similar language has been included in
§130.108(e).
Section 130.108(e)
Staff felt that the general reference to the instructions about the process
by which the injured employee may request a benefit review conference was
not clear and did not properly account for situations in which the injured
employee was represented. Staff suggested that a reference be made to subsection
(b) that deals with the injured employee's contest of determination. Section
130.108(e) has been changed to read: "If an insurance carrier disputes entitlement
to a subsequent quarter and the carrier did not pay supplemental income benefits
during the quarter immediately preceding the quarter for which the Application
for Supplemental Income Benefits is filed, the carrier shall send the determination
within 10 days of the date the form was filed with the insurance carrier to
the injured employee and include the reasons for the carrier's finding of
non-entitlement and instructions about the procedures for contesting the carrier's
determination as provided by subsection (b) of this section."
Subchapter B. Supplemental Income Benefits
Chapter 7.
Corporate and Financial Regulation
Chapter 21.
Trade Practices
Subchapter P. Mental Health Parity
Chapter 25.
Insurance Premium Finance
Part II.
Texas Workers' Compensation Commission