Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter T. FAIR PLAN
1.
PLAN OF OPERATION
28 TAC §§5.9910 - 5.9929
The Texas Department of Insurance proposes new Subchapter
T, §§5.9910-5.9929 concerning the Fair Access to Insurance Requirements
(FAIR) Plan of Operation developed by the FAIR Plan Governing Committee and
submitted for approval to the Commissioner of Insurance pursuant to the Insurance
Code Article 21.49A sec. 3(a). Several insurance companies who together write
over 50% of the Texas homeowners insurance market are not currently writing
new homeowners insurance policies. The largest writer of homeowners insurance
in Texas with over 30% of the market, has not been writing new homeowners
policies for over a year. Another large writer of homeowners insurance with
approximately 20% of the homeowners market in force in Texas, is also not
writing new homeowners policies. Many other insurers have continued to maintain
restrictions or limitations on writing homeowners insurance and some insurers
have withdrawn from the market. In addition, according to statistics obtained
from the Surplus Lines Stamping Office of Texas, from February 28, 2002, to
February 28, 2003, there has been a 184.4% increase in the homeowners premium
written by surplus lines insurers, which indicates a significant increase
in the writing of homeowners policies by surplus lines insurers. This increase
is a clear indication that consumers are having difficulty obtaining or are
finding it impossible to obtain homeowners insurance coverage through the
voluntary market, and have had to obtain such coverage in the surplus lines
market. Based on all of these factors it is possible that in some cases residential
property homeowners are having to go without insurance coverage, due to unavailability
and other factors. In addition, since the FAIR Plan Association started issuing
policies on December 31, 2002, it has issued approximately 5000 residential
property insurance policies, thus further evidencing the need for this program.
Considering these facts, it is clear that the consumers seeking new homeowners
insurance coverage are facing difficulty in obtaining or finding it impossible
to obtain homeowners insurance coverage through the voluntary market. The
new sections are necessary to implement Article 21.49A and to ensure that
residential property insurance coverage is available to Texas residents. The
purpose of proposed §§5.9910-5.9929 is to set forth and establish
the structure, function, procedures and powers of the Texas FAIR Plan Association.
Proposed §5.9910 sets forth the purpose of the Texas FAIR Plan Association
(Association) as well as the purpose of the Plan of Operation. Proposed §5.9911
provides the definitions of terms to be used in the subchapter. Proposed §5.9912
provides for the formation and authority of the Governing Committee. Proposed §5.9913
sets forth the role of agents, minimum requirements and performance standards
for agents, and the procedure for the payment of commissions. Proposed §5.9914
provides for the maximum limits of liability and other limitations on FAIR
Plan policies. Proposed §5.9915 sets forth procedures for the inspections
of property to be insured under FAIR Plan policies and the requirements for
inspection reports. Proposed §5.9916 provides the procedures for adoption
of application forms and approval of underwriting rules, rates, policy forms,
and endorsements. Proposed §5.9917 sets forth the documentation the agents
are required to maintain regarding an applicant’s eligibility; rules
and procedures for issuance or cancellation of binders; and rules and procedures
for issuance, renewal, or cancellation of policies. Proposed §5.9918
sets forth the Association’s options for servicing its policies and
guidelines for establishing servicing standards. Proposed §5.9919 sets
forth the appeals process for an applicant or affected insurer to appeal an
action of the Association. Proposed §5.9920 sets out the immunity from
liability and indemnification available to insurers, inspectors, the Association,
the Governing Committee, their agents and employees, the Association administrator,
the Commissioner, and the Commissioner’s authorized representatives.
Proposed §5.9921 authorizes the Association to purchase fidelity bonds
for the purpose of reimbursing the Association for losses sustained due to
fraud or dishonesty on the part of members of the Governing Committee, Association
officers, or employees. Proposed §5.9922 describes the member insurers
required to participate in the Association, how the proportions of participation
are determined, and the procedures for Association and member meetings. If
necessary, it provides the procedure for an initial assessment of the member
insurers to facilitate the commencement of operations. Proposed §5.9923
sets forth the procedures for member insurer assessments and recoupment of
assessments, for reapportioning assessments of an insolvent member insurer,
and for assessments of member insurers who cease writing property insurance
in Texas. Proposed §5.9924 sets forth the procedures for the Association
to cede or purchase reinsurance and acquire other financing. Proposed §5.9925
sets forth the statistical reporting requirements of the Association. Proposed §5.9926
provides for the Association’s treatment of excess funds. Proposed §5.9927
provides for the Association to file annual and quarterly financial statements.
Proposed §5.9928 lists the additional powers of the Association and proposed §5.9929
provides for the severability of any section of this subchapter, or the application
thereof, if it is determined to be invalid.
Marilyn Hamilton, associate commissioner, property and casualty division,
has determined that for each year of the first five years the proposed sections
will be in effect, there will be no fiscal impact to state and local governments
as a result of the enforcement or administration of the rule. There will be
no measurable effect on local employment or the local economy as a result
of the proposal.
Ms. Hamilton has also determined that for each year of the first five years
the sections are in effect, the public benefits anticipated as a result of
the proposed sections will be increased availability of residential property
insurance to qualified citizens in areas of the state determined by the Commissioner
to be underserved areas. There is no probable economic cost to persons required
to comply with the sections because the sections set forth the Plan of Operations
of the Texas Fair Plan Association, an entity created by Insurance Code Article
21.49A. There is no effect on small or micro businesses.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on May 5, 2003 to Gene C. Jarmon, General Counsel and
Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104,
Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously
submitted to Marilyn Hamilton, Associate Commissioner, Property and Casualty
Program, Mail Code 104-PC, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. A request for a public hearing should be submitted
separately to the Office of the Chief Clerk.
The sections are proposed under the Insurance Code Article 21.49A
and §36.001. Article 21.49A sec. 3(a) authorizes the FAIR Plan Governing
Committee to develop a plan of operation and submit it to the Commissioner
of Insurance for his approval. Article 21.49A charges the Commissioner with
the authority to supervise the Association and to approve and adopt by rule
the plan of operation developed by the Governing Committee. Section 36.001
provides that the Commissioner of Insurance may adopt rules to execute the
duties and functions of the Texas Department of Insurance only as authorized
by statute.
The following article is affected by this proposal: Insurance Code Article
21.49A
§5.9910.Purpose.
The Texas FAIR Plan Association was established by Insurance Code Article
21.49A for the purpose of delivering residential property insurance to qualified
citizens of Texas in areas determined by the Commissioner of Insurance to
be underserved areas. The purpose of this plan of operation is to set forth
and establish the structure, function, procedures and powers of the Texas
FAIR Plan Association.
§5.9911.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise.
(1)
Agent--Any person licensed by the Commissioner as a general
lines property and casualty agent pursuant to Insurance Code Article 21.14.
sec. 2.
(2)
Applicant--Any person applying for insurance from the Association
including any person designated by the applicant to be the applicant's representative
at an inspection.
(3)
Association--The Fair Access to Insurance Requirements
(FAIR) Plan Association created under Insurance Code Article 21.49A.
(4)
Commissioner--The Commissioner of Insurance of the State
of Texas.
(5)
Governing Committee--The Governing Committee of the Association
authorized pursuant to Insurance Code Article 21.49A, sec. 3.
(6)
Inspector--The individual(s) or organization(s) designated
by the Association to make inspections to determine the condition of the properties
for which residential property insurance is sought and to perform such other
duties as may be authorized by the Association or the Commissioner.
(7)
Insurable risk--Property that meets the underwriting rules
of the Association for determining the insurability of the risk.
(8)
Member insurer or member--An insurer licensed to write
property and casualty insurance in Texas and writing residential property
insurance in Texas, including reciprocal exchanges and Lloyds plan insurers.
(9)
Residential property insurance--Coverage as defined in
Insurance Code Article 21.49A §2(3), with the exception of farm and ranch
owners and farm and ranch insurance as set forth in Insurance Code Article
5.13-2 sec. 1.
(10)
Residential property insurance premiums--Net direct written
premiums for residential property insurance for a calendar year as determined
by the Texas residential property statistical plan.
(11)
Underserved area--The areas of the State of Texas so designated
by the Commissioner in §5.3701 of this chapter (relating to Designation
of Underserved Areas for Residential Property Insurance for Purposes of the
Insurance Code Article 21.49A).
(12)
Underwriting rules--The underwriting rules for residential
property insurance as developed by the Association and which have been filed
with and approved by the Commissioner.
§5.9912.Governing Committee.
(a)
The Association shall be governed by a Governing Committee.
(b)
The Governing Committee shall be composed of 11 voting
members appointed by the Commissioner as follows:
(1)
five members who represent the interests of insurers;
(2)
four public members; and
(3)
two members who are licensed agents.
(c)
The Commissioner or the Commissioner’s designated
representative from within the Texas Department of Insurance shall serve as
an ex-officio non-voting member.
(d)
To be eligible to serve on the Governing Committee as a
representative of insurers, a person must be a full-time employee of an authorized
insurer.
(e)
Members of the Governing Committee shall serve a term of
two years.
(f)
To stagger the terms of the Governing Committee, five members
shall be selected randomly by the initial Governing Committee to serve a one-year
term. Those members may be reappointed for a full term.
(g)
If a Governing Committee member representing the interest
of an insurer vacates the position prior to the end of the term, then the
insurer who employed the Governing Committee member shall appoint a replacement
within 45 days to serve the remainder of the term. If the insurer fails to
appoint a replacement, the Commissioner shall appoint a replacement to serve
the reminder of the term.
(h)
If any other Governing Committee member vacates a position
prior to the end of the term, then the Commissioner shall appoint a replacement
to serve the remainder of the term.
(i)
The Governing Committee shall meet as often as may be required
to perform the general duties of administration of the Association or at the
request of the Commissioner. Seven of the members of the Governing Committee
shall constitute a quorum.
(j)
The Governing Committee may promulgate guidelines consistent
with state law and the plan of operation to govern such internal operations
as investments, accounting, audit, personnel, underwriting rules, inspections,
and claims practices. The guidelines shall be in writing.
(k)
The Governing Committee may appoint committees as it deems
necessary to carry out the purpose and operations of the Association. Such
committees may include an Executive Committee, a Reinsurance Committee, a
Finance & Audit Committee, an Underwriting Committee, an Agent Relations
Committee, a Depopulation Committee and a Claims Committee.
(l)
The Governing Committee may undertake a public education
program to assure that the services of the Association receive adequate public
attention. The Governing Committee may adopt a written program for decreasing
the overall utilization of the Association as a source of insurance. The Association
may adopt depopulation plans to reduce the number of risks insured by the
Association.
(m)
The Governing Committee shall exercise all of the Association’s
powers not delegated to others pursuant to this plan of operation.
(n)
The Governing Committee may propose amendments to the plan
of operation to the Commissioner for approval.
§5.9913.Authority of Agents and Commissions.
(a)
Upon request, an agent, may assist any owner of residential
property in completion and submission of an application for insurance on forms
prescribed by the Association.
(b)
No agent, even if licensed to represent one or more member
insurers of the Association with respect to policies not underwritten by the
Association, shall hold himself out as an agent of the Association.
(c)
A commission shall be paid pursuant to a commission schedule
set by the Governing Committee and approved by the Commissioner. The commission
shall be based on paid gross written premiums and subject to adjustment based
on policy changes and cancellations. The agent shall remit the gross premium
collected on an Association policy to the Association, and the Association
will pay the commission.
(d)
The Association shall establish minimum requirements and
performance standards for agents who submit applications to the Association
or renew business in the Association. These requirements and standards shall
be designed to ensure the efficient transmission of applications, forms, notices,
and money from the agent to the Association and visa versa, ensure the efficient
operation of the Association, and the efficient and convenient servicing of
applicants and policyholders. The Association may require that agents demonstrate
and certify compliance with these requirements and standards. The Association
shall have the power to bar an agent from submitting new applications to or
renewing business in the Association if the agent refuses to demonstrate and
certify compliance with these requirements and standards or the agent violates
any of these requirements or standards. Such minimum requirements and performance
standards shall be binding upon any agent as a condition of such agent’s
request for an inspection, submission of an application, receipt of commissions
from the Association, or other act in connection with the Association. The
Association may contract with agents who meet the Association’s standards
and may limit applications to the Association to those agents. The Association
shall not be required to appoint agents.
(e)
The Association may limit communications with agents to
website communications only.
(f)
An applicant may only apply to the Association through
an agent.
§5.9914.Maximum Limits of Liability and Limitations.
(a)
The maximum limits of liability for residential property
insurance per location through the Association shall be $1,000,000 dwelling
- $500,000 contents. The Association is authorized to reinsure some or all
risks that are within or at these maximum limits.
(b)
The Association may not provide windstorm and hail insurance
coverage for a risk eligible for that coverage under Insurance Code Article
21.49.
(c)
The Association may issue a policy that includes coverage
for an amount in excess of a liability limit set forth in subsection (a) of
this section, if the Association first obtains, from a reinsurer approved
by the Commissioner, reinsurance for the full amount of policy exposure above
the limits for any given type of risk.
(d)
The premium charged by the Association for the excess coverage
shall be equal to the amount of the reinsurance premium charged to the Association
by the reinsurer, plus any payment to the Association that is approved by
the Commissioner.
§5.9915.Inspections.
(a)
The underwriting rules shall determine the inspection criteria
for risks to be written by the Association. The Association may issue a policy
of residential property insurance on certain types of risks without an inspection
in accordance with the underwriting rules.
(b)
An inspection shall be made only of property requiring
an inspection to determine eligibility for Association coverage in accordance
with the underwriting rules. The inspection shall be free of charge to the
applicant. An inspection request may be made by the owner, his/her representative,
or an agent.
(c)
All inspection reports shall be in writing and shall contain
the information necessary to determine eligibility for coverage pursuant to
the Association's underwriting rules. After the inspection report has been
completed, a copy of the completed inspection report and any photograph indicating
the pertinent features of the building construction, maintenance, and occupancy
shall be sent within ten days to the Association.
(d)
The inspection report shall contain information describing:
(1)
occupancy,
(2)
information necessary for underwriting and rating,
(3)
construction; and
(4)
physical deficiencies.
(e)
If an interior inspection is necessary to determine eligibility
of property described in an application submitted to the Association, the
inspector shall contact the applicant and arrange for the applicant to be
present during the inspection. The inspector shall not recommend correction
of physical deficiencies or advise the applicant whether the Association will
provide coverage.
(f)
The Association shall, as soon as practical but not to
exceed thirty days after receipt of the inspection report, advise the applicant
and agent of the following:
(1)
If the inspector finds that the residential property meets
the underwriting rules, the Association shall notify the applicant in writing
and issue a policy or binder.
(2)
The Association shall indicate to the applicant any condition
charges that have been applied by the Association in accordance with §5.9917(h)
of this subchapter (relating to Application, Binder, Policy Issuance, Renewal
and Cancellation.)
(3)
If the residential property is not insurable based on the
underwriting rules, the Association shall notify the applicant in writing
why the residential property is not insurable.
(g)
If, at any time, the applicant makes improvements in the
residential property or its condition that the applicant believes are sufficient
to make the residential property insurable, an inspector shall reinspect the
residential property upon request. The applicant for residential property
insurance shall be eligible for one reinspection any time within 60 days after
the initial inspection. If upon reinspection the residential property meets
the Association’s underwriting rules, the Association shall notify the
applicant in writing and issue a policy or binder.
(h)
If an inspection report shows that a property has unrepaired
damages or is in violation of any building, housing, air pollution, sanitation,
health, fire or safety code, ordinance or rule, or if an applicant otherwise
has received written notice of any violation of a code, ordinance or rule,
the applicant shall submit to the Association a detailed plan that indicates
the manner and estimated period of time in which the violation will be corrected
or the damage repaired. The Association shall not provide coverage unless
the necessary corrections are completed to the satisfaction of the Association
(i)
The Association may, for cause upon information or well-founded
belief, without notice to the insured at any time during the policy term,
inspect an insured property for the purpose of determining whether the property
meets the underwriting rules. The Association need not afford an insured the
opportunity to be present during a reinspection nor furnish the insured with
a copy of a reinspection report, unless requested. Reinspections may also
occur:
(1)
upon change in type of occupancy, or
(2)
upon a reasonable periodic schedule.
(j)
The Association may cancel or refuse to renew a policy
upon the basis of the reinspection report in accordance with policy terms
and this plan of operation.
§5.9916.Application Forms, Underwriting Rules, Rates, Policy Forms and Endorsements.
(a)
The Association shall adopt application forms. The forms
shall be designed to obtain all of the information necessary for underwriting
and rating the risk. Such forms may also elicit additional information that
the Association may use to revise its rates, underwriting rules, policy forms
and endorsements. An application is considered complete when every question
on the application form is answered fully and is signed by a proposed named
insured and submitted by the agent. The Association may independently verify
the information in an application or request additional information from the
applicant or other sources.
(b)
The Association shall file with the Commissioner for approval
the underwriting rules for Association policies prior to use. Such underwriting
rules shall determine whether a residential property is an insurable risk
eligible for Association coverage, and if eligible, what coverages, policy
forms and endorsements can be offered for that risk. The underwriting rules
shall be subject to the underwriting standards set forth in §§5.9914,
5.9915 and 5.9917 of this subchapter (relating to Maximum Limits of Liability
and Limitations, Inspections, and Application, Binder, Policy Issuance, Renewal
and Cancellation) and any other requirements set forth in the underwriting
rules. Such rules shall include under what circumstances the Association may
grant an agent permission to bind coverage.
(c)
The Association shall file with the Commissioner for approval
the proposed rates and supplemental rate information, including a manual of
rating rules, to be used in connection with the issuance of Association policies
or endorsements. No policies or endorsements shall be issued unless the Commissioner
has approved the rates to be applied to the policy or endorsement:
(1)
The Association rates must be set in an amount sufficient
to carry all claims to maturity and to meet all expenses incurred in the writing
and servicing of the business.
(2)
The rate filing shall additionally provide for:
(A)
premium installment payment plans including a servicing
fee for those policyholders electing to use such a plan; and
(B)
deductible options such as different dollar amounts, different
percentages of property coverage limits, that may vary by coverage or peril
insured against.
(d)
The Association shall file with the Commissioner for approval
policy forms and endorsements prior to use. The policy forms and endorsements
that the Association will offer to applicants will be governed by its underwriting
rules. The Association may offer its policy forms on either an actual cash
value or a replacement cost value basis, based on its underwriting rules.
Association policies shall not cover businesses or commercial risks even if
they are operated in or from a residence. Association policies shall not cover
motor vehicles.
§5.9917.Application, Binder, Policy Issuance, Renewal and Cancellation.
(a)
An agent shall maintain and submit, at the request of the
Association, written documentation that indicates that:
(1)
At least two insurance companies, not in the same holding
company as defined in Insurance Code Article 21.49-1, licensed to write and
actually writing residential property insurance in Texas have declined to
provide residential property insurance (the names of the two insurance companies
shall be identified), and the applicant has not received a valid offer of
comparable residential property insurance from an insurance company licensed
in Texas, not including any surplus lines insurers; and
(2)
There are no outstanding taxes, assessments, penalties
or charges with respect to the property to be insured, except those covered
under a properly filed deferral affidavit in compliance with §33.06 of
the Property Tax Code; and
(3)
The applicant has not received written notice from an authorized
public entity stating that the property is in violation of any building, housing,
air pollution, sanitation, health, fire or safety code, ordinance or rule.
(b)
The Association may specify what documentation would fulfill
the requirements of subsection (a)(1)-(3) of this section.
(c)
The Association is under no obligation to issue residential
property insurance unless the property would constitute an insurable risk
in accordance with the Association’s underwriting rules. The Association,
in determining whether the property is insurable, shall give no consideration
to the condition of surrounding property or properties, where such condition
is not within the control of the applicant.
(d)
The Association shall deliver a policy or binder to the
agent upon acceptance of the risk. The Association shall pay the authorized
commission to the agent.
(e)
The effective date of coverage shall be no earlier than
the date and time that the Association both accepts and binds the risk. The
policy shall be issued in the name of the Association, as insurer.
(f)
The Association may suspend the taking of applications
in the state when issuance of binders and/or policies has been suspended by
the Texas Windstorm Insurance Association. The Association may also suspend
the taking of applications when and in the part of the state it finds that
an ongoing event threatens to create an imminent danger of catastrophic losses.
(g)
The policy shall be issued for a term of one year.
(h)
If the property is found to be an insurable risk but the
inspection reveals that there are one or more physical deficiencies, surcharges
will be imposed in conformity with the rates and underwriting rules. If the
physical deficiencies are corrected and verified, the surcharges shall be
revised.
(i)
In accordance with the underwriting rules of the Association
except for subsection (k) of this section, at least 30 days prior to the expiration
of an Association policy, the Association shall do one of the following:
(1)
send an offer to the policyholder with a copy to the agent
to renew the Association policy for a term of one year at the Association
rates that will be in force on the effective date of the renewal;
(2)
send an offer to the policyholder with a copy to the agent
to renew the Association policy conditioned upon a change in coverage, limits
and/or terms or conditions; or
(3)
send a notice to the policyholder with a copy to the agent
of nonrenewal of the Association policy.
(j)
If a payment for an estimated premium, annual premium or
any installment payment is refused or dishonored by the bank upon which it
is drawn for any reason, coverage under the Association policy shall be cancelled
for nonpayment of premium, and the Association shall send a notice of cancellation.
(k)
Every two years starting with the second renewal, the policyholder
shall reapply for residential property insurance in the voluntary market.
If a diligent effort has been made and the policyholder is unable to obtain
residential property insurance, as evidenced by two current declinations from
insurers licensed to write property insurance and actually writing residential
property insurance in the state, the policyholder will be eligible for renewal
of Association coverage. If an Association policyholder receives a valid offer
of comparable residential property insurance from an insurance company licensed
by the State of Texas, other than a surplus lines carrier, then the policyholder
is no longer eligible for coverage and the Association may nonrenew the policy.
(l)
The Association shall not issue a policy to an applicant
if the applicant or any proposed named insured is indebted to the Association
on a prior Association policy. If the new Association policy has already been
bound or issued, then the Association shall cancel that binder or policy and
deduct from any return premium the amount that the Association is owed from
the prior Association policy.
(m)
Binders shall be issued for a definite period, not to exceed
ninety days.
(n)
Policies issued are not subject to flat cancellation and
are subject to a minimum earned premium as stated in the underwriting rules.
(o)
If an insurance policy will not be issued, the full earned
premium must be charged.
(p)
A binder shall terminate upon the acceptance of a risk
by the Association and the payment of any premium due; or upon the cancellation
of a risk and notice of reasons for the cancellation given to the applicant
and agent.
(q)
The Association shall not cancel a policy or binder issued
by it, except:
(1)
for a condition which would have been grounds for nonacceptance
of the risk had such condition been known to the Association at the time of
acceptance;
(2)
for property that does not meet the underwriting rules;
(3)
for nonpayment of premium, including nonpayment of premium
on a prior Association policy;
(4)
fraud;
(5)
material misrepresentation;
(6)
evidence of incendiarism by the insured or another acting
on the insured’s behalf; or
(7)
at the written request of an insured.
(r)
The Association shall send notice of cancellation, stating
the reasons for cancellation to an insured and agent. The cancellation shall
take effect in accordance with the policy provisions.
(s)
Any cancellation notice to an insured, except for the cancellation
set forth in subsection (q)(7) of this section, shall be accompanied by a
statement that the insured has a right to appeal as provided in §5.9919
of this subchapter (relating to Right to Appeal).
(t)
If a property meets all underwriting requirements, the
Association shall calculate the actual annual premium. The Association shall
remit a return premium to the applicant if the provisional binder premium
exceeds the actual annual premium. The Association shall bill the applicant
for additional premium if the actual annual premium exceeds the provisional
binder premium.
(u)
The Association shall cancel a binder on a pro rata basis.
If an applicant requests cancellation of a binder, the Association shall cancel
the binder on a pro rata basis.
§5.9918.Servicing of Policies.
(a)
In accordance with the provisions of §5.9912(e) of
this subchapter (relating to Governing Committee) the Association shall have
the following options for servicing Association policies:
(1)
Contract with one or more member insurers to service some
or all of the policies.
(2)
Contract with one or more non-member insurers to service
some or all of the policies;
(3)
Contract with one or more private non-insurers to provide
some or all of the servicing of Association policies;
(4)
Contract with one or more insurance pools for property
and/or casualty insurance established by Texas law to provide some or all
of the servicing of Association policies; and
(5)
Service some or all of the Association policies itself.
(b)
No entity, be it a member insurer, non-member insurer,
private non-insurer, or insurance pool, can be compelled to contract with
the Association to service some or all Association policies.
(c)
The servicing contracts under subsection (a)(1)-(4) of
this section shall establish servicing standards and provide for compensation
to be paid to contractors.
(d)
The Association may divide the servicing of an Association
policy between two or more persons. For example, the Association may underwrite
an Association policy itself, use a non-insurer contractor for premium billing
and collection, and use insurer contractors to service policy claims.
(e)
In establishing servicing standards for Association policies,
the Association shall consider:
(1)
the accessibility of the servicing entity for submission
of applications by agents;
(2)
the ability of the servicing entity to provide inspections;
(3)
the accessibility of the servicing entity for policyholder
inquiries about underwriting, premium billing, collection, and claims;
(4)
the ability of the servicing entity to service claims;
and
(5)
the ability of the servicing entity to provide catastrophe
claim services.
(f)
The Association may contract with any insurer admitted
to do business in Texas or any other entity holding the license required to
perform such services.
(g)
Regardless of the option used by the Association to service
its policies, all policies shall be issued in the name of the Association.
§5.9919.Right to Appeal.
(a)
Any applicant or affected insurer shall have the right
to appeal any action or decision of the Association or inspector to the staff
of the Association or its administrator. Each denial of insurance to an applicant
shall be accompanied by a statement to the applicant and the agent that the
applicant or affected insurer has the right to appeal and how an appeal can
be made. Such appeal must be made in writing within thirty days after receipt
of notice of the action or decision to be appealed.
(b)
The staff of the Association or its administrator shall
render its decision on the appeal and notify the applicant or affected insurer
of its decision within forty-five days of receipt.
(c)
Any applicant or affected insurer shall have the right
to appeal to the Commissioner any action or decision under subsection (b)
of this section. An appeal to the Commissioner shall be made within thirty
days of the decision.
(d)
The decision of the Commissioner of an appeal under subsection
(c) of this section is a final order and is subject to judicial review as
provided in Insurance Code Chapter 36.
§5.9920.Immunity from Liability and Indemnification.
(a)
There is no liability on the part of, and no cause of action
against insurers, the inspector, the Association, the Governing Committee,
their agents or employees, the Association’s administrator, the Commissioner
or the Commissioner's authorized representatives, with respect to any inspections
required to be undertaken by this subchapter; for any acts or omissions in
connection with any required inspections; or for any statements made in any
report or communication concerning the insurability of the property, in any
findings required by the provisions of this subchapters or at any hearings
conducted in connection with any required inspections.
(b)
All liabilities under the policy to the policyholder, insureds
and claimants are those of the Association. A servicing entity contracted
by the Association or the Association’s administrator to service the
policy, even if a licensed insurer, has no liability under the policy to the
policyholder, insureds or claimants. The Association’s administrator
has no liability under the policy to the policyholder, insureds or claimants.
(c)
Each member of any Association committee, each Association
officer, employee, member insurer, and member of the Governing Committee shall
be indemnified by the Association against liability incurred in connection
with the affairs of the Association. The Association shall indemnify each
former, present, and future insurer, committee member, officer, and employee
of the Association against, and each such insurer, committee member, officer,
and employee shall be entitled without further act on his/her part of indemnity
from the Association for, all costs and expenses (including the amount of
judgments and the amount of reasonable settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Association
itself) reasonably incurred by him/her in connection with or arising out of
any action, suit, or proceeding in which he/she may be involved by reason
of his/her being or having been an insurer, committee member, officer, or
employee of the Association or of any other Association or company which he/she
serves as a director, member, officer, or employee at the request of the Association,
whether or not he/she continues to be such director, member, officer, or employee
at the time of incurring such costs or expenses.
(d)
However, such indemnity shall not include any costs or
expenses incurred by any such insurer, committee member, officer, or employee
in respect of matters as to which he/she shall be finally adjudged in any
such action, suit, or proceeding to be liable for willful misconduct in the
performance of his/her duty as such insurer, committee member, officer, or
employee, or in respect of any matter in which any settlement is effected
in any amount in excess of the amount of expenses which might reasonably have
been incurred by such insurer, committee member, officer, or employee had
such litigation been conducted to a final conclusion; provided, further, that
in no event shall anything herein contained be so construed as to protect,
or to authorize the Association to indemnify such insurer, committee member,
officer, or employee against any liability to the Association or to its members
to which he/she would otherwise be subject by reason of his/her willful misfeasance
or malfeasance, bad faith, dishonesty, gross negligence, or reckless disregard
of the duties or responsibilities involved in the conduct of his/her office
or employment as such insurer, committee member, officer, or employee. The
foregoing right of indemnification shall inure to the benefit of the heirs,
executors, or administrators of each such insurer, committee member, officer,
or employee and shall be in addition to all other rights to which such insurer,
committee member, officer, or employee may be entitled as a matter of law.
§5.9921.Fidelity Bonds.
The Association is authorized to purchase fidelity bonds in the amounts
required by the Governing Committee. The bonds shall reimburse the Association
for any pecuniary loss it may sustain by any act or acts of fraud or dishonesty
on the part of members of the Governing Committee, Association officers or
employees in the discharge of their duties.
§5.9922.Relationship with Member Insurers.
(a)
Each member insurer shall participate in the writings,
expenses, assessments, profits and losses of the Association in the same proportion
as a member insurer's net direct residential property insurance premiums written
in Texas bears to the aggregate net direct residential property insurance
premiums written by all member insurers in Texas as determined by the Texas
residential property statistical plan. The Association, however, may adopt
depopulation plans under which insurers who voluntarily write residential
property insurance or take risks out of the Association will receive a credit.
(b)
In response to a data call developed by the department,
all members shall file annually by June 1, their residential property insurance
written premiums for the prior calendar year with the department. The department
shall provide this information filed by all members to the Association. The
Association shall use this information to calculate each member’s participation
under subsection (a) of this section and to calculate any assessments under §5.9923
of this subchapter (relating to Assessments, Recoupments, Member Insolvency
and Withdrawal).
(c)
In order to facilitate the commencement of operations immediately
after the adoption of this plan of operation, all members, if requested by
the Association, shall file with the department their residential property
insurance written premiums for calendar year 2001. Any data so requested shall
be submitted by the members to the department within 30 days after the department
has mailed the request. Any such data collected by the department, in coordination
with other 2001 statistical/financial data for members that the department
has, shall be provided to the Association upon request. The Association may
use this data to calculate initial assessment percentages for all members.
Each member shall be required to pay any start-up assessment request based
on these initial percentages within 30 days after receipt of the assessment
request. Any member company may challenge the accuracy of a start-up assessment
request after timely paying the start-up assessment request under protest.
Payment of the disputed amount is a required predicate to challenging the
accuracy of the start-up calculation. Any subsequent adjustments made to start-up
assessment payments under protest shall be paid by (or remitted to) the challenging
member company within 30 days after the agreement or final order that establishes
the correct start-up assessment request amount. The Association may issue
more than one start-up assessment request using the initial assessment percentages
until new percentages can be calculated based on data for the year ended December
31, 2002 and thereafter. Time frames and procedures for payment of assessments
other than a start-up assessment are governed by other provisions of this
plan of operation.
(d)
There shall be an annual meeting of the Association and
its member insurers at a time and place fixed by the Governing Committee.
(e)
A special meeting of the Association and its member insurers
may be called by the Governing Committee at such time and place designated
by the Governing Committee.
(f)
Ten days notice of an annual or special meeting with member
insurers shall be given in writing by the Governing Committee to member insurers.
Notice of any meeting shall be accompanied by an agenda for the meeting.
§5.9923.Assessments, Recoupments, Member Insolvency and Withdrawal.
(a)
Should a deficit occur in the Association, the Association
shall assess member insurers to cover such deficit. The Association shall
determine annually any deficit or surplus for each calendar year period that
the Association is operational or has outstanding liabilities.
(b)
In addition to the start-up assessment authority provided
by §5.9922(c) of this subchapter (relating to Relationship with Member
Insurers), the Governing Committee may at any time levy an interim assessment
against member insurers to provide necessary operating funds.
(c)
Each member insurer may recoup assessments levied against
it under subsections (a), (b) and (d) of this section and §5.9922 of
this subchapter by adding a premium surcharge on every property insurance
policy issued or renewed for a three year period beginning ninety days after
the date of the assessment by the Association. The amount of the surcharge
shall be calculated on the basis of a uniform percentage of the premium on
such policies equal to one-third of the ratio of the amount of an insurer's
assessment to the amount of its direct earned premiums as reported on Statutory
Page 14 in its annual financial statement to the department for the calendar
year immediately preceding the year in which the assessment is made, such
that over the period of three years the aggregate of all such surcharges by
an insurer shall be equal to the amount of the assessment of such insurer.
The minimum surcharges on a policy may be $1; all surcharges may be rounded
to the nearest dollar (50 cents and higher rounded up to next dollar and 49
cents or less rounded down). A surcharge is not subject to premium tax unless
so determined by the Comptroller of Public Accounts.
(d)
If any member insurer fails to pay the assessment for its
proportionate part of any loss or expense because the member insurer is insolvent,
and the Governing Committee determines that the assessment cannot be collected
within a reasonable period of time, the unpaid assessment shall be paid by
the remaining member insurers, each contributing in the manner provided by
Insurance Code Article 21.49A, sec. 3 (e) (2), but without regard to the premium
writings of the insolvent member insurer. The insolvent member insurer shall
remain liable to the Association for the full amount of the assessment. If
the insolvent member insurer later pays any or all of its assessment, the
Association shall credit or reimburse the remaining members insurers in the
same proportion as used in calculating each member insurer's contribution
toward the unpaid assessment.
(e)
No refund which would otherwise be paid under the plan
of operation shall be paid to a member if it is no longer a member because
it withdrew from writing residential property insurance in Texas, or to the
liquidator, receiver, conservator, or statutory successor of a member insurer
until the assessment of the member insurer has been paid in full. Any refund
shall be first applied as a set-off against any assessment or other monies
owed to the Association. Any balance remaining after the set-off shall be
paid to the member insurer or its liquidator, receiver, conservator, or statutory
successor of the member insurer.
(f)
If a member ceases writing residential property insurance
in Texas, it shall remain liable for any assessments that have already been
made, and it shall be liable for any assessment that will be made covering
the calendar year in which it had any direct earned premium for residential
property insurance in Texas and/or any prior calendar years. Assessments will
be based on the last year the company had written premiums. It shall not be
liable for any assessments covering the calendar year next following the calendar
year that it last had direct earned premium for residential property insurance
in Texas.
(g)
Each insurer shall remit to the Association payment in
full of its assessed amount within 30 days of the receipt of notice of assessment.
If an insurer fails to remit its assessed amount after the 40th day the Association
shall report the failure to the Commissioner who shall immediately take action
to suspend or revoke such insurer's certificate of authority to transact the
business of insurance in the State of Texas until such time as the Association
certifies to the Commissioner that such assessment has been paid in full.
Suspension of an insurer's certificate of authority to transact business in
the State of Texas shall not affect the right of the Association to proceed
against such insurer in any court for any remedy provided by law or contract
to the Association, including, the right to collect such insurer's assessment.
In addition to any other remedy, the Governing Committee may offset assessments
due from an insurer against any amounts in any account of such delinquent
insurer. A member by mailing payment of its allocated amount of assessment,
as provided herein, shall not waive any right it may have to contest the computation
of its allocated amount of assessment. Such contest shall not, however, toll
the time within which assessments shall be paid or the report to be made to
the Commissioner or the action to be taken by the Commissioner upon receipt
of such report.
§5.9924.Reinsurance and Other Financing.
(a)
The Association may cede or purchase reinsurance in the
name of the Association or on behalf of member insurers on eligible risks
written through the Association.
(b)
The Association may not assume reinsurance without the
prior consent of the Commissioner.
(c)
The Association is authorized to arrange for and consummate
a taxable or tax-exempt borrowing or borrowings of money or lines of credit
for the Association to meet its anticipated financial obligations, including,
the funding of Association claims in the event of a catastrophe.
§5.9925.Statistics.
(a)
Every insurance policy issued by the Association shall
be separately coded for statistical purposes.
(b)
The Association shall comply with any reporting requirements
of the Commissioner concerning its underwriting operations and experience.
The reports shall be made at least annually in such form and detail as may
be required by the Commissioner.
(c)
The Association shall report its premium, loss and expense
experience in accordance with a statistical plan promulgated by the Commissioner.
(d)
The Association shall submit to the Commissioner periodic
reports including:
(1)
the number of risks inspected,
(2)
the number of risks accepted,
(3)
the number of risks conditionally accepted,
(4)
the number of reinspections made,
(5)
the number of risks declined, and
(6)
any other necessary information.
§5.9926.Excess Funds.
(a)
Association funds in excess of that needed to carry all
incurred claims to maturity and to meet the expenses incurred in the writing
and servicing of that business and to meet the expenses of the Association
shall be added to the reserves of the Association for future catastrophes,
and possible fluctuations in existing claim reserves.
(b)
Subject to the approval of the Commissioner, any funds
in excess of the amounts in subsection (a) of this section shall be distributed
to the Association members to reimburse each member for any and all costs,
taxes and other expenses associated with participation in the Association
using the same formulas as for assessments of Association members.
§5.9927.Annual and Quarterly Financial Statements.
The Association shall file annual and quarterly financial statements
with the Commissioner in the form prescribed by the Commissioner. Annual financial
statements shall be prepared and furnished to the Commissioner on or before
March thirty-first of the following year.
§5.9928.Additional Powers of the Association.
The powers of the Association shall include the following:
(1)
the ability to sue;
(2)
the ability to own or lease real estate for its operations;
(3)
the ability to retain the services of experts to aid it
in carrying out its operations;
(4)
the ability to generally contract for goods and services
needed to carry out its operations;
(5)
the ability to invest its funds in accordance with Insurance
Code Article 2.10; and
(6)
the ability to conclude its affairs should the FAIR Plan
be deactivated by the Commissioner.
§5.9929.Severability.
If any section of this subchapter or the application thereof to any
person or situation is held invalid, such invalidity shall not affect any
other section or application of the section which can be given effect without
the invalid section or application, and to this end the sections of this subchapter
are declared to be severable.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 19, 2003.
TRD-200301829
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 463-6327
Chapter 110.
REQUIRED NOTICES OF COVERAGE
Subchapter A. CARRIER NOTICES
28 TAC §110.1
The Texas Workers' Compensation Commission (commission) proposes
amendments to §110.1, concerning Requirements for Notifying the Commission
of Insurance Coverage.
By Advisories 2002-07 and 2002-07B the commission has implemented the electronic
reporting of insurance coverage information by commercial insurance carriers
through designated data collection agents effective September 1, 2002. The
International Association of Industrial Accident Boards and Commissions (IAIABC)
Proof of Coverage (POC) Release 2 standard is used as the reporting medium.
The commission has received requests from several carriers to report workers'
compensation insurance coverage represented by binders using the IAIABC POC
binder transaction to meet the reporting requirements of §110.1. The
proposed revisions more clearly state how binders are used in the Texas workers'
compensation system and clarify the requirements for reporting workers' compensation
insurance coverage to the commission.
The
Texas Register
published text shows
words proposed to be added to or deleted from the current text, and should
be read to determine all proposed changes.
Proposed §110.1 adds new subsection (a), which clarifies that a binder
constitutes an approved insurance policy as referenced in Texas Labor Code §401.011(44)(A),
and new subsection (b), which defines, for purposes of the rule as proposed,
the term "insurance coverage information." The proposed amendments redesignate
the remaining subsections as (c) through (l) accordingly. Proposed subsection
(e) clarifies that the requirements of that subsection apply to employers
who do not have workers' compensation insurance coverage.
Another proposed change is the addition of language to proposed subsection
(h)(2), requiring an insurance carrier to notify the commission if it cancels
a binder before it issues a policy. Although no changes are proposed to current
subsection (i), it should be noted that the proposed changes to the rule make
this subsection applicable to situations in which a binder is canceled prior
to the issuance of a policy. That is, workers' compensation insurance coverage,
including coverage that becomes effective pursuant to the issuance of a binder,
remains in effect until the later of the circumstances enumerated in current
subsection (i).
Finally, the proposed section is amended by the addition of certain verbiage
for clarity and for consistency in terminology.
Brent Hatch, Director of Customer Relations and Customer Services, has
determined that for the first five-year period the proposed rule is in effect
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the rule because the rule does not change current
practice.
Local government and state government as covered regulated entities will
be impacted in the same manner as described later in this preamble for persons
required to comply with the rule as proposed.
Mr. Hatch has also determined that for each year of the first five years
the rule as proposed is in effect the public benefits anticipated as a result
of enforcing the rule will be as follows:
The proposed amendment clarifies that the submission of binder information
by an insurance carrier is acceptable to the commission for purposes of meeting
the notification requirements of the rule. All system participants will benefit
from the proposed amendment because it provides more complete and accurate
information regarding the existence of workers' compensation coverage for
Texas employers.
There will be no anticipated economic costs to persons who are required
to comply with the rule as proposed because the proposed rule does not change
current practice.
There will therefore be no costs of compliance for small businesses and
no adverse economic impact on small businesses or micro-businesses.
Comments on the proposal or requests for public hearing must be received
by 5:00 p.m., May 5, 2003. You may comment via the Internet by accessing the
commission's website at www.twcc.state.tx.us, clicking on "Laws, Rules &
Forms" and then clicking on "Proposed Rules." This medium for commenting will
help you organize your comments by rule chapter. You may also comment by emailing
your comments to RuleComments@ twcc.state.tx.us or by mailing or delivering
your comments to Nell Cheslock, Legal Services, Mailstop #4-D, Texas Workers'
Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas
78704-7491.
Commenters are requested to clearly identify by number the specific rule
and paragraph commented upon. The commission may not be able to respond to
comments that cannot be linked to a particular proposed rule. Along with your
comment, it is suggested that you include the reasoning for the comment in
order for commission staff to fully evaluate your recommendations.
Based upon various considerations, including comments received and the
staff's or commissioners' review of those comments, or based upon the commissioners'
action at the public meeting, the rule as adopted may be revised from the
rule as proposed in whole or in part. Persons in support of the rule as proposed,
in whole or in part, may wish to comment to that effect.
The amendments are proposed under Texas Labor Code §401.024,
which allows the commission to collect coverage information by electronic
transmission; Texas Labor Code §402.042, which authorizes the Executive
Director to prescribe the form, manner, and procedure for transmission of
information to the commission; Texas Labor Code §402.061, which authorizes
the commission to adopt rules necessary to administer the Texas Workers' Compensation
Act (Act); Texas Labor Code Chapter 406, Subchapter A, which addresses workers'
compensation coverage election and security procedures, including Texas Labor
Code §406.006, which requires insurance carriers to report employer coverage
and claim administration contact information to the commission; Texas Labor
Code §406.008, which requires insurance carriers to report changes they
initiate to employer coverage to the commission; and Texas Labor Code §406.009,
which requires the commission to collect and maintain coverage information;
monitor and enforce the compliance of the timely submission of coverage information
and authorizes the commission to adopt rules as necessary to enforce the provisions
of Texas Labor Code Chapter 406, Subchapter A.
No other code, statute, or article is affected by this rule action.
§110.1.Requirements for Notifying the Commission of Insurance Coverage.
(a)
An approved insurance policy,
as referenced in Texas Labor Code §401.011(44)(A), includes a binder,
which serves as evidence of a temporary agreement that legally provides workers'
compensation insurance coverage until the approved insurance policy is issued
or the binder is canceled.
(b)
As used in this section, "insurance
coverage information" includes information regarding whether or not an employer
has workers' compensation insurance coverage and, if so, information about
the means of insurance coverage used.
(c)
[
(d)
[
(e)
[
(1)
if the employer elects not to be covered by workers' compensation
insurance, the earlier of the following:
(A)
30 days after receiving a commission request for the filing
of a notice of non-coverage and annually thereafter on the anniversary date
of the original filing;
(B)
30 days after hiring an employee who is subject to coverage
under the Act, and annually thereafter on the anniversary date of the original
filing;
(2)
if the employer cancels coverage without purchasing a new
policy or becoming a certified self-insurer, within ten days after notifying
the insurance carrier and annually thereafter on the anniversary of the cancellation
date of the workers' compensation policy; or
(3)
if the employer is principally located outside of Texas,
within ten days after receiving a written request from the commission for
information about the coverage status of its Texas operations.
(f)
[
(1)
30 days after filing the notice of non-coverage with the
commission; or
(2)
the cancellation date of the policy.
(g)
[
(h)
[
(1)
within ten days after the effective date of coverage or
endorsement and annually thereafter no later than ten days after the anniversary
date of coverage;
(2)
30 days prior to the date on which cancellation or non-renewal
becomes effective if the insurance carrier cancels[
(3)
ten days prior to the date on which the cancellation becomes
effective if the insurance carrier cancels an employer's workers' compensation
coverage in accordance with Texas Labor Code, §406.008(a)(2)
; or
[
(4)
within ten days after receiving notice of the effective
date of cancellation from the covered employer because the employer switched
workers' compensation insurance carriers.
(i)
[
(1)
the end of the policy period, or
(2)
the
date the
commission and the employer receive
the notification from the insurance carrier of coverage cancellation or non-renewal
and the later of:
(A)
the date 30 days after receipt of the notice required by
Texas Labor Code, §406.008(a)(1);
(B)
the date ten days after receipt of the notice required
by Texas Labor Code, §406.008(a)(2); or
(C)
the effective date of the cancellation if later than the
date in paragraphs (1) or (2) of this subsection.
(j)
[
(k)
[
(l)
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 24, 2003.
TRD-200301885
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 804-4287
28 TAC §124.2
The Texas Workers' Compensation Commission (the commission)
proposes amendments to §124.2, concerning Carrier Reporting and Notification
Requirements.
In order to properly execute its responsibilities under the Texas Labor
Code, the commission must associate reported workers' compensation claims
with the coverage information reported by the insurance carrier (as defined
in Texas Labor Code §401.011(27)) under §110.1 of this title (related
to Requirements for Notifying the Commission of Insurance Coverage). To facilitate
this process and allow for its automation, the commission proposes to modify §124.2(c)(1)
to require that specific items of coverage information (the insurance carrier's
Federal Employer Identification Number (FEIN), the employer's policy number
and the policy period) be reported by the insurance carrier in conjunction
with the information from the Employer's First Report of Injury and that this
information be identical with that reported under §110.1 for the employer
associated with the claim.
Section 124.2(c)(4) is proposed to be modified to require that the items
of coverage information specified in §124.2(c)(1) be reported to the
commission through a "Change" transaction if they are not available when the
First Report of Injury is submitted.
The provisions for reporting the required coverage information are already
incorporated in the International Association of Industrial Accident Boards
and Commissions (IAIABC) Electronic Data Interface First Report of Injury
currently in use by the commission pursuant to subsection (b) of the rule.
No changes to the current First Report of Injury record layout are required
by the proposed rule.
Analysis of the commission's database indicates that of the first reports
of injury submitted by EDI, all of them contain the carrier's FEIN (mandatory
field), approximately 86 percent contain the policy number, and approximately
70 percent contain the policy period information. However, of the first reports
of injury containing the policy number, in only 58 percent of the cases does
the policy number match the policy number reported through the coverage reporting
system. This rule change is designed to emphasize the importance of consistent
reporting of these key data elements which will enable the automated association
of claim and coverage information in the commission's new automation system
(TXCOMP).
All participants in the workers' compensation system interact with the
insurance carrier (as defined in Texas Labor Code §401.011(27)) or the
third party representing the insurance carrier for various claim administration
functions such as coverage confirmation, claim adjustment, medical billing
and preauthorization. The commission is continuously asked for this contact
information but does not currently collect or maintain it in a standardized
or accessible form. The commission proposes to add §124.2(n) to require
each insurance carrier to create and maintain a single World Wide Web (Web)
page containing this information and to furnish the Uniform Resource Locator
(URL) of that Web page to the commission through its Austin representative.
The commission will then make that URL available to the public and the commission
staff through its Web site.
The
Texas Register
published text shows
words proposed to be added to or deleted from the current text, and should
be read to determine all proposed changes.
Proposed subsection 124.2(c)(1) requires that certain coverage information
(insurance carrier FEIN, policy number and policy period) be reported by the
insurance carrier in conjunction with the information from the Employer's
First Report of Injury and that this information be identical with that reported
under §110.1 for the employer associated with the claim.
Proposed subsection 124.2(c)(4) requires that the coverage information
required by subsection 124.2(c)(1) be reported through a Change transaction
if it is not available when the First Report of Injury is submitted to the
commission.
Proposed new subsection 124.2(n) is added to state the requirement for
each insurance carrier to create and maintain a Web page containing contact
information for the claim service functions of coverage verification, claim
adjustment, medical billing, pharmacy billing if different from medical billing,
and preauthorization request processing. The organization and presentation
of this information should reflect the insurance carrier's business organization
and may be done geographically, functionally, by specific insured, or a combination
of these. Telephone and facsimile numbers, mailing address, and company and/or
department email address information for each function shall be provided.
It is anticipated that an insurance carrier's Austin representative will provide
the URL for its Web page to the commission through its access to the commission's
automation system (TXCOMP) for the purpose of inputting and maintaining the
carrier's correct URL.
Brent Hatch, Director of Customer Relations and Customer Services, has
determined that for the first five-year period the proposed rule is in effect
there will be minimal fiscal implications for state or local governments as
a result of enforcing or administering the proposed rule because it does not
impose additional duties for these entities. Self-insured governmental entities
could incur some nominal costs associated with procedural changes required
to ensure consistency of information reported between coverage reporting under §110.1
and claim reporting under §124.2 as proposed. They may also incur nominal
costs associated with development of the required Web page if it cannot be
accommodated within the routine maintenance and updating of their Web site.
Local government and state government as a covered regulated entity will
be impacted in the same manner as described later in this preamble for persons
required to comply with the rule as proposed.
Mr. Hatch has also determined that for each year of the first five years
the rule as proposed is in effect the public benefits anticipated as a result
of enforcing the rule will be as follows:
The public will benefit from the proposed change in that the commission
will be able to more quickly, accurately and efficiently associate a reported
workers' compensation claim with the related coverage information and therefore
more accurately advise the parties to the claim on status and actions relating
to the claim. The commission will also be able to provide to the public, workers'
compensation system participants, and to the commission staff access to the
contact information for the insurance carrier's various claim administration
functions in a comprehensive and easily accessible manner.
There may be some economic costs to persons who are required to comply
with the rule as proposed. Both the Coverage and Claim reporting channels
are already established and are not changed by this proposal. However, procedural
changes may be required, depending on the regulated entity's current practices.
Should a regulated entity elect to modify its automation systems in order
to facilitate compliance with the proposed rules, then significant economic
costs could be incurred. The only new requirement is consistency of reporting
between the two reporting channels.
Persons who are required to comply with the rule as proposed may also incur
nominal costs associated with development of the required Web page if it cannot
be accommodated within the routine maintenance and updating of their current
Web site. The required Web page is a simple, static, content only page with
no functionality required. It can be developed and hosted using the most basic
of Web technology and can be either a component of an existing Web site or
a single page hosted on an Internet accessible server.
There will be no different costs of compliance for small businesses or
micro-businesses as compared to large businesses. There will be no adverse
economic impact on small businesses or micro-businesses.
Comments on the proposal or requests for public hearing must be received
by 5:00 p.m., May 5, 2003. You may comment via the Internet by accessing the
commission's website at www.twcc.state.tx.us, clicking on "Laws, Rules &
Forms" and then clicking on "Proposed Rules." This medium for commenting will
help you organize your comments by rule chapter. You may also comment by emailing
your comments to RuleComments@ twcc.state.tx.us or by mailing or delivering
your comments to Nell Cheslock, Legal Services, Mailstop #4-D, Texas Workers'
Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas
78704-7491.
Commenters are requested to clearly identify by number the specific rule
and paragraph commented upon. The commission may not be able to respond to
comments that cannot be linked to a particular proposed rule. Along with your
comment, it is suggested that you include the reasoning for the comment in
order for commission staff to fully evaluate your recommendations.
Commenters are also requested to provide the commission with any concerns
or suggestions regarding the information required by new subsection (n) of
the rule as proposed, particularly the types of contact information specified
in subsection (n)(1) and whether the rule should require any additional information
or, perhaps, less information.
Based upon various considerations, including comments received and the
staff's or commissioners' review of those comments, or based upon the commissioners'
action at the public meeting, the rule as adopted may be revised from the
rule as proposed in whole or in part. Persons in support of the rule as proposed,
in whole or in part, may wish to comment to that effect.
The amendments are proposed under the Texas Labor Code, §401.011(27)
which defines an insurance carrier, Texas Labor Code, §402.042, which
authorizes the Executive Director to prescribe the form, manner, and procedure
for transmission of information to the Commission; Texas Labor Code, §402.061,
which authorizes the commission to adopt rules necessary to administer the
Act; Texas Labor Code, §406.006, which requires insurance carriers to
report employer coverage and claim administration contact information to the
commission; and Texas Labor Code, §409.005, which requires the insurance
carrier to file the report of injury on behalf of the policyholder.
No other code, statute, or article is affected by this rule action.
§124.2.Carrier Reporting and Notification Requirements.
(a)
An insurance carrier shall notify the Commission and the
claimant of actions taken on, or events occurring in a claim as required by
this title.
(b)
The Commission shall prescribe the form, format, and manner
of required electronic submissions through publications such as advisory(ies),
instructions, specifications, the
Texas Electronic
Data Interchange Implementation Guide
, and trading partner agreements.
Trading partners will be responsible for obtaining a copy of the International
Association of Industrial Accident Boards and Commissions (IAIABC) Electronic
Data Interchange Implementation Guide.
(c)
The carrier shall electronically file, as that term is
used in §102.5(e) of this title (relating to General Rules for Written
Communication To and From the Commission), with the Commission:
(1)
the information from the original Employer's First Report
of Injury
and the insurance carrier's Federal Employer Identification
Number (FEIN), policy number, policy effective date and policy expiration
date reported under §110.1, of this title (relating to Requirements for
Notifying the Commission of Insurance Coverage) for the employer associated
with the claim,
not later than the seventh day after the later of:
(A)
receipt of a required report where there is lost time from
work or an occupational disease; or
(B)
notification of lost time if the employer made the Employer's
First Report of Injury prior to the employee experiencing absence from work
as a result of the injury;
(2)
any correction of Commission-identified errors in a previously
accepted electronic record as provided in §102.5(e) of this title (Correction);
(3)
information regarding a compensable death with no beneficiary
(Compensable Death No Beneficiaries/Payees) not later than the tenth day after
determining that an employee whose injury resulted in death had no legal beneficiary;
and
(4)
a change in an electronic record initiated by carrier (Change)
, the coverage information required by subsection (c) (1) of this section
if not available when the First Report of Injury was submitted to the commission
[
(d)
The carrier shall notify the Commission and the claimant
of a denial of a claim (Denial) based on non-compensability or lack of coverage
in accordance with this section and as otherwise provided by this title.
(e)
The carrier shall notify the Commission and the claimant
of the following:
(1)
first payment of indemnity benefits on a claim (Initial
Payment) within 10 days of making the first payment;
(2)
change in the net benefit payment amount caused by a change
in the employee's post-injury earnings (Reduced earnings) within ten days
of making the first payment reflecting the change;
(3)
change in the net benefit payment amount that was not caused
by a change in employee's post-injury earnings, this includes but is not limited
to subrogation, attorney fees, advances, and contribution (Change in Benefit
Amount) within 10 days of making the first payment reflecting the change;
(4)
change from one income benefit type to another or to death
benefits (Change in Benefit Type) within 10 days of making the first payment
reflecting the change;
(5)
resumption of payment of income or death benefits (Reinstatement
of Benefits) within 10 days of making the first payment;
(6)
termination or suspension of income or death benefits (Suspension)
within 10 days of making the last payment for the benefits.
(7)
employer continuation of salary equal to or exceeding the
employee's Average Weekly Wage as defined by this title (Full Salary) within:
(A)
seven days of receipt of the Employer's First Report of
Injury or a Supplemental Report of Injury (if the report included information
that salary would be continued) if the carrier has not initiated temporary
income benefits; or
(B)
ten days of making the last payment of temporary income
benefits due to the employer's continuation of full salary.
(f)
Notification to the claimant as required by subsections
(d) and (e) of this section requires the carrier to use plain language notices
with language and content prescribed by the Commission. These notices shall
provide a full and complete statement describing the carrier's action and
its reason(s) for such action. The statement must contain sufficient claim-specific
substantive information to enable the employee/legal beneficiary to understand
the carrier's position or action taken on the claim. A generic statement that
simply states the carrier's position with phrases such as "employee returned
to work," "adjusted for light duty," "liability is in question," "compensability
in dispute," "under investigation," or other similar phrases with no further
description of the factual basis for the action taken does not satisfy the
requirements of this section.
(g)
Notification to the Commission as required by subsections
(c), (d) and (e) of this section requires the carrier to use electronic filing,
as that term is used in §102.5(e) of this title. In addition to the electronic
filing requirements of this subsection, when a carrier notifies the Commission
of a denial as required by subsection (d) of this section, it must provide
the Commission a written copy of the notice provided to the claimant under
subsection (f) of this section. The notification requirements of this section
are not considered completed until the copy of the notice provided to the
claimant is received by the Commission.
(h)
Notification to the Commission and the claimant of a dispute
of disability, extent of injury, or eligibility of a claimant to receive death
benefits shall be made as otherwise prescribed by this title and requires
the carrier to use plain language notices with language and content prescribed
by the Commission. These notices shall provide a full and complete statement
describing the carrier's action and its reason(s) for such action. The statement
must contain sufficient claim-specific substantive information to enable the
employee/legal beneficiary to understand the carrier's position or action
taken on the claim. A generic statement that simply states the carrier's position
with phrases such as "no medical evidence to support disability," "not part
of compensable injury," "liability is in question," "under investigation,"
"eligibility questioned" or other similar phrases with no further description
of the factual basis for the action taken does not satisfy the requirements
of this section.
(i)
The Commission shall send an acknowledgment to the transmitting
trading partner detailing whether an electronically submitted record was accepted,
accepted with errors, or rejected. The acknowledgment shall be provided directly
to the trading partner submitting the transmission, not through the Austin
representative box identified in §102.5 of this title. If the record
was accepted with errors in conditional elements, the carrier must correct
the errors in accordance with §102.5 of this title.
(j)
Except as otherwise provided by this title, carriers shall
not provide notices to the Commission that explain that:
(1)
benefits will be paid as they accrue;
(2)
a wage statement has been requested;
(3)
temporary income benefits are not due because there is
no lost time;
(4)
the carrier is disputing some or all medical treatment
as not reasonable or necessary;
(5)
compensability is not denied but the carrier disputes the
existence of disability (if there are no indications of lost time or disability
and the employee is not claiming disability); or
(6)
future medical benefits are disputed (notices of which
shall not be provided to anyone in the system).
(k)
Written requests for a waiver of the electronic filing
requirement for the Employer's First Report of Injury may be submitted to
the Commission's executive director or his/her designee for consideration.
Waivers must be requested at least annually and the requests must include,
a justification for the waiver, the volume of the carrier's claims and total
premium amounts, current automation capabilities, Electronic Data Interchange
(EDI) programming status, and a specific target date to implement EDI. Waivers
require written approval from the executive director and shall be granted
at the discretion of and for the time frame noted by the Executive Director
or his/her designee.
(l)
If specifically directed by the Commission, such as through
Commission advisory or the
Texas Electronic Data
Interchange Guide
, the carrier may provide the information required
in subsection (c), (d), or (e) of this section to the Commission in hardcopy/paper
format.
(m)
Notifications to the claimant and the claimant's representative
shall be filed by facsimile or electronic transmission unless the recipient
does not have the means to receive such a transmission in which case the notifications
shall be personally delivered or sent by mail.
(n)
Each insurance carrier shall provide to
the commission, through its Austin representative in the form and manner prescribed
by the commission, a single World Wide Web (Web) Uniform Resource Locator
(URL) for a Web page that contains the contact information for all workers'
compensation claim service administration functions performed by the insurance
carrier either directly or through third parties.
(1)
The contact information for each function
shall include mailing address, telephone number, facsimile number, and email
address as appropriate. The list of contacts shall include the following claim
administration functions and shall be organized to reflect the insurance carrier's
business practices (geographically, functionally, by specific insured, or
combination of these):
(A)
Coverage verification questions;
(B)
Claim adjustment;
(C)
Medical billing;
(D)
Pharmacy billing (if different from medical billing); and
(E)
Preauthorization.
(2)
The Web page shall contain the date on
which it was last updated and an email address or other contact information
to which a user may report problems or inaccuracies.
(3)
The insurance carrier shall update the
Web page content within five business days after any such change is made.
In addition, the insurance carrier shall provide to the commission, through
its Austin representative in the form and manner prescribed by the commission,
any new or changed URL for its Web page within five business days after any
such change is made.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 24, 2003.
TRD-200301886
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 804-4287
28 TAC §126.11
The Texas Workers' Compensation Commission (the commission)
proposes amendments to §126.11, concerning the Extension of the Date
of Maximum Medical Improvement for Spinal Surgery.
Section 408.026 of the Texas Workers' Compensation Act (the Act) was revised
by the 77th Texas Legislature, 2001, to delete the spinal surgery second opinion
process and establish carrier liability for medical costs related to non-emergency
spinal surgery only as provided by §413.014 (relating to Preauthorization
Requirements; Concurrent Review and Certification of Health Care). Section
413.014 directs that all non-emergency spinal surgery procedures require preauthorization
approval prior to surgery, and concurrent review approval for the continuation
of treatment beyond previously approved treatment.
The amendments to §126.11 are proposed to replace the rule language
that references approval for non-emergency spinal surgery through the spinal
surgery second opinion process with the appropriate references to the preauthorization
process in §134.600 (relating to Preauthorization Requirements; Concurrent
Review and Certification of Health Care).
The language is further amended to delete reference to §134.1001 (relating
to the Spine Treatment Guideline), abolished effective January 1, 2002 by
House Bill-2600, 77th Texas Legislature.
Proposed subsection (a) replaces language that references the spinal surgery
second opinion section of the commission with language that connects an approval
for spinal surgery to the preauthorization process. The language of subsection
(a) is further revised to reflect the approval notification source as the
insurance carrier (carrier) as provided in the preauthorization process, rather
than the commission.
Proposed subsection (f)(3) deletes the reference to §134.1001 (the
abolished Spine Treatment Guideline).
Proposed subsection (j) replaces the language of "concurrence finding"
with "preauthorized approval."
The
Texas Register
published text shows
words proposed to be added to or deleted from the current text, and should
be read to determine all proposed changes.
Judy Bruce, Director of the Medical Review Division, has determined that
for the first five-year period the proposed rule amendments are in effect
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the rule. The spinal surgery preauthorization
and concurrent review requirements, which were instituted by statute and previous
amendments to commission rules, are anticipated to more closely and timely
monitor the delivery of medical care to injured employees than the previously
mandated second opinion process. The rules changes proposed reflect the completion
of the transition from the spinal surgery second opinion process to the preauthorization
process.
The Division anticipates savings as a result of deletion of the internal
management of the spinal surgery second opinion process now that the transition
is complete. The volume of requests to the commission for the resolution of
preauthorization and concurrent review disputes regarding the need for spinal
surgery, resulting from denials by the insurance carrier (carrier) or their
delegated agents has been less than previously anticipated. The Division received
fewer than 100 requests for spinal surgery preauthorization medical dispute
resolution during calendar year 2002, having minimal impact on the level of
internal management of medical disputes within the Division. Local government
and state government as covered regulated entities will be impacted in the
same manner as described later in this preamble for persons required to comply
with the rule as proposed.
Ms. Bruce has also determined that for each year of the first five years
the rule amendments as proposed are in effect the public benefits anticipated
as a result of enforcing the rule will be the removal of obsolete rule references
that could cause confusion to system participants and simplification of the
process for the approval of spinal surgery. The statutory and rule language
established that on or after the effective date of January 1, 2002, recommendations
for spinal surgery would no longer be subject to the spinal surgery second
opinion process, but that requests for preauthorization of spinal surgery
are required and are submitted to the insurance carrier or the carrier's delegated
agent by telephone or facsimile. All TWCC-63 forms submitted prior to January
1, 2002 have been processed in accordance with the statute and rules in effect
at the time the form was filed with the commission; no previously submitted
recommendations remain open or unprocessed.
This amendment makes no change to the substance of the rule. There will
be no anticipated economic costs to persons who are required to comply with
the rule as proposed. There will be no costs of compliance for small or large
businesses. There will be no adverse economic impact on small businesses or
micro-businesses.
Comments on the proposal or requests for public hearing must be received
by 5:00 p.m., May 5, 2003. You may comment via the Internet by accessing the
commission's website at www.twcc.state.tx.us, clicking on "Laws, Rules &
Forms" and then clicking on "Proposed Rules." This medium for commenting will
help you organize your comments by rule chapter. You may also comment by emailing
your comments to RuleComments@ twcc.state.tx.us or by mailing or delivering
your comments to Nell Cheslock, Legal Services, Mailstop #4-D, Texas Workers'
Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas
78704-7491.
Commenters are requested to clearly identify by number the specific rule
and paragraph commented upon. The commission may not be able to respond to
comments that cannot be linked to a particular proposed rule. Along with your
comment, it is suggested that you include the reasoning for the comment in
order for commission staff to fully evaluate your recommendations.
Based upon various considerations, including comments received and the
staff's or commissioners' review of those comments, or based upon the commissioners'
action at the public meeting, the rule as adopted may be revised from the
rule as proposed in whole or in part. Persons in support of the rule as proposed,
in whole or in part, may wish to comment to that effect.
The amendment is proposed under the Texas Labor Code, §402.061,
which authorizes the Commission to adopt rules necessary to administer the
Act; the Texas Labor Code, §402.072, which mandates that only the Commission
can impose sanctions which deprive a person of the right to practice before
the Commission, receive remuneration in the workers' compensation system,
or revoke a license, certification or permit required for practice in the
system; the Texas Labor Code, §408.022, which requires an employee receiving
treatment under the workers' compensation system to choose a doctor from a
list of doctors approved by the Commission and establishes the extent of an
employee's option to select an alternate doctor; the Texas Labor Code §408.026,
(as amended by HB-2600, 2001 Texas Legislature) that requires the preauthorization
of non-emergency spinal surgery; the Texas Labor Code Chapter 410, which provides
procedures for the adjudication of disputes; the Texas Labor Code §413.014
(as amended by HB-2600, 2001 Texas Legislature) that requires the commission
to specify by rule, except for treatments and services required to treat a
medical emergency, which health care treatments and services require express
preauthorization and concurrent review by the carrier as well as allowing
health care providers to request precertification and allowing the carriers
to enter agreements to pay for treatments and services that do not require
preauthorization or concurrent review. This mandate also states the carrier
is not liable for the cost of the specified treatments and services unless
preauthorization is sought by the claimant or health care provider and either
obtained or ordered by the commission; the Texas Labor Code §413.031,
which provides a process for dispute resolution for disputes involving medical
services; the Texas Labor Code, §415.034, which allows a party charged
with an administrative violation or the Executive Director of the Commission
to request a hearing with the State Office of Administrative Hearings; and
the Texas Government Code, §2003.021(c), which requires the State Office
of Administrative Hearings to conduct hearings under the Texas Labor Code,
Title 5, in accordance with the applicable substantive rules and policies
of the Texas Workers' Compensation Commission.
No other code, statute, or article is affected by this rule action.
§126.11.Extension of the Date of Maximum Medical Improvement for Spinal Surgery.
(a)
The commission may approve an extension of the date of
maximum medical improvement, subject to subsection (f) of this section, if
the injured employee has had spinal surgery or has been approved for spinal
surgery
in accordance with §134.600 of this title (relating to Preauthorization,
Concurrent Review, and Voluntary Certification of Health Care),
12 weeks
or less before the expiration of 104 weeks from the date income benefits began
to accrue. Only one extension of the date of maximum medical improvement pursuant
to this section may be granted. Approval for spinal surgery is either the
notification from the
insurance carrier (carrier) that the spinal surgery
has been preauthorized
[
(b)
Upon application by either the injured employee or the
insurance carrier, the commission may by order extend the date of maximum
medical improvement past the period of 104 weeks from the date income benefits
began to accrue as described in the Texas Labor Code, §401.011(30)(B).
The request shall be made in the form and manner prescribed by the commission.
The commission shall issue an order approving or denying the request for an
extension of the date of maximum medical improvement within ten days of the
date the request is received by the commission.
(c)
Prior to submission to the commission of a request for
an extension of the date of maximum medical improvement, the requestor shall
request from the treating doctor or surgeon the information listed in subsection
(f) of this section. The request shall also be sent to the injured employee,
the injured employee's representative, and the insurance carrier by first
class mail on the same day it is submitted to the treating doctor or surgeon.
The treating doctor or surgeon shall provide to the injured employee, the
injured employee's representative, and the insurance carrier the information
requested in subsection (f) of this section within ten days of the date the
request is received. If the requesting party has not received the information
from the treating doctor or surgeon within 15 days, the request may be submitted
to the commission without this information.
(d)
After the actions in subsection (c) have been completed,
a request for an extension of the date of maximum medical improvement shall
be filed at the commission field office managing the claim by personal delivery
or first class mail. A request is deemed filed upon receipt at the appropriate
field office. In addition, the request shall be sent to the injured employee,
the injured employee's representative, and the insurance carrier on the same
date it is sent to the commission. If the information from the treating doctor
or surgeon is absent when the request is received, commission staff may invoke
the provisions of §102.9 of this title (relating to Submission of Information
Requested by the Commission) to secure any necessary information.
(e)
A request for an extension of the date of maximum medical
improvement shall be filed no earlier than 12 weeks before the expiration
of 104 weeks after the date income benefits began to accrue. The commission
shall deny any request for an extension of the date of maximum medical improvement
that is received by the commission prior to 12 weeks before the expiration
of 104 weeks after the date income benefits began to accrue or is received
on or after the expiration of 110 weeks from the date income benefits began
to accrue.
(f)
In making the determination to approve or deny a request
for an extension of the date of maximum medical improvement, the commission
shall consider:
(1)
typical recovery times for the specific spinal surgery
procedure;
(2)
projected date and information regarding when the condition
may be medically stable as provided by the treating doctor or the surgeon;
(3)
case specific information regarding any extenuating circumstances
that may have resulted in variances from conservative treatment protocols
and time frames [
(4)
information from any source regarding intentional or non-intentional
delays in securing the surgery or medical treatment for the compensable injury;
(5)
any pending, unresolved disputes regarding the date of
maximum medical improvement; and
(6)
any pertinent information provided by the insurance carrier,
injured employee, and/or the injured employee's representative regarding the
extension being requested under this section.
(g)
An injured employee or an insurance carrier may dispute
the approval, denial, or the length of the extension granted by the commission
order by filing a request for a benefit review conference in accordance with §141.1
of this title (relating to Requesting and Setting a Benefit Review Conference)
no later than ten days after the date the order is received. Any proceedings
and further appeals shall be conducted in accordance with Chapters 140-143
of this title (relating to Dispute Resolution/General Provisions, Benefit
Review Conference, Benefit Contested Case Hearing, and Review by the Appeals
Panel). Any agreement which resolves a dispute regarding extension of the
date of maximum medical improvement in accordance with this section shall
be in writing and approved by the commission. Approval shall not be granted
if any party rescinds the agreement by notifying the commission within three
working days of signing the agreement.
(h)
If a request for benefit review conference is not received
by the commission within ten days after the date the order granting or denying
the extension was received by the disputing party, the parties waive their
right to dispute the commission order. In the event that an order is timely
disputed, the order shall remain binding pending final resolution of the dispute.
(i)
If the injured employee is certified by a doctor to have
reached maximum medical improvement between the date the extension order was
issued and the extended date of maximum medical improvement specified in the
order, any dispute regarding the date of maximum medical improvement shall
be resolved through the selection of a designated doctor consistent with the
provisions of the Texas Labor Code, §408.122, concerning Eligibility
for Impairment Income Benefits; Designated Doctor, and §130.6 of this
title (relating to Designated Doctor; General Provisions). If the certification
of maximum medical improvement during this time period is not disputed and
the date certified is prior to the date of maximum medical improvement specified
in the order for the extension, the date of maximum medical improvement from
that certification shall apply. If the certification was timely disputed and
the resolution of such a dispute determines that the injured employee reached
maximum medical improvement at a date which is different than the date of
maximum medical improvement specified in the order for the extension, the
earlier date shall apply.
(j)
In the event that the extension of the date of maximum
medical improvement is granted based on a finding of liability for spinal
surgery within the 12 week period and a party appeals the
preauthorized
approval
[
(k)
This section applies only to compensable claims with a
date of injury on or after January 1, 1998. This section does not apply to
an employee who has reached maximum medical improvement prior to requesting
an extension under this section. An employee has reached maximum medical improvement
in accordance with the Texas Labor Code, §401.011(30)(A), when either
a finding of the date of maximum medical improvement is not disputed, or the
date of maximum medical improvement has been finally resolved.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 24, 2003.
TRD-200301887
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 804-4287
The Texas Workers' Compensation Commission (the commission) proposes
amendments to §133.2, concerning Sharing Medical Reports and Test Results
and the simultaneous repeal of §133.206, concerning Spinal Surgery Second
Opinion Process.
Section 408.026 of the Texas Workers' Compensation Act (the Act) was revised
by the 77th Texas Legislature, 2001, to delete the spinal surgery second opinion
process and establish carrier liability for medical costs related to non-emergency
spinal surgery only as provided by §413.014 (relating to Preauthorization
Requirements; Concurrent Review and Certification of Health Care). Section
413.014 directs that all non-emergency spinal surgery procedures require preauthorization
approval prior to surgery, and concurrent review approval for the continuation
of treatment beyond previously approved treatment.
The amendment to §133.2 is proposed to replace the current rule language
referencing a doctor performing a second opinion on spinal surgery with language
that includes any doctor performing non-emergency surgery. The repeal of §133.206
reflects the statutory deletion of the spinal surgery second opinion process
from the workers' compensation system. Section 133.206, amended effective
January 1, 2002, is no longer needed and therefore is proposed to be repealed.
The proposed amendment to §133.2(a) adds a "referral doctor" to the
list of doctors to whom the treating doctor is required to forward copies
of reports, radiographic films, and test results. The proposal further removes
language that references a doctor "performing a second opinion on spinal surgery"
to reflect the changes in the Act regarding Spinal Surgery approval procedure.
The
Texas Register
published text shows
words proposed to be added to or deleted from the current text, and should
be read to determine all proposed changes.
Judy Bruce, Director of the Medical Review Division, has determined that
for the first five-year period the proposed rule amendment is in effect there
will be no fiscal implications for state or local governments as a result
of enforcing or administering the rule. The spinal surgery preauthorization
and concurrent review requirements, which were instituted by statute and previous
amendments to commission rules, are anticipated to more closely and timely
monitor the delivery of medical care to injured employees than the previously
mandated second opinion process. The rules changes proposed reflect the completion
of the transition from the spinal surgery second opinion process to the preauthorization
process.
The Division anticipates savings as a result of deletion of the internal
management of the spinal surgery second opinion process now that the transition
is complete. The volume of requests to the commission for the resolution of
preauthorization and concurrent review disputes regarding the need for spinal
surgery, resulting from denials by the insurance carrier (carrier) or their
delegated agents has been less than previously anticipated. The Division received
fewer than 100 requests for spinal surgery preauthorization medical dispute
resolution during calendar year 2002, having minimal impact on the level of
internal management of medical disputes within the Division. Local government
and state government as covered regulated entities will be impacted in the
same manner as described later in this preamble for persons required to comply
with the rule as proposed.
Ms. Bruce has also determined that for each year of the first five years
the rule as proposed is in effect the public benefits anticipated as a result
of enforcing the rule will be the removal of obsolete rule references that
could cause confusion to system participants and simplification of the process
for the approval of spinal surgery. The statutory and rule language established
that on or after the effective date of January 1, 2002, recommendations for
spinal surgery would no longer be subject to the spinal surgery second opinion
process, but that requests for preauthorization of spinal surgery are required
and are submitted to the insurance carrier or the carrier's delegated agent
by telephone or facsimile. All TWCC-63 forms submitted prior to January 1,
2002 have been processed in accordance with the statute and rules in effect
at the time the form was filed with the commission; no previously submitted
recommendations remain open or unprocessed.
This amendment makes no change to the substance of the rules. There will
be no anticipated economic costs to persons who are required to comply with
the rules as proposed. There will be no costs of compliance for small or large
businesses. There will be no adverse economic impact on small businesses or
micro-businesses. Comments on the proposal or requests for public hearing
must be received by 5:00 p.m., May 5, 2003. You may comment via the Internet
by accessing the commission's website at www.twcc.state.tx.us, clicking on
"Law, Rules & Forms" and then clicking on "Proposed Rules." This medium
for commenting will help you organize your comments by rule chapter. You may
also comment by emailing your comments to RuleComments@ twcc.state.tx.us or
by mailing or delivering your comments to Nell Cheslock at the Office of the
General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield
Building, 4000 South IH-35, Austin, Texas 78704-7491.
Commenters are requested to clearly identify by number the specific rule
and paragraph commented upon. The commission may not be able to respond to
comments that cannot be linked to a particular proposed rule. Along with your
comment, it is suggested that you include the reasoning for the comment in
order for commission staff to fully evaluate your recommendations.
Based upon various considerations, including comments received and the
staff's or commissioners' review of those comments, or based upon the commissioners'
action at the public meeting, the rule as adopted may be revised from the
rule as proposed in whole or in part. Persons in support of the rule as proposed,
in whole or in part, may wish to comment to that effect.
Subchapter A. GENERAL RULE FOR REQUIRED REPORTS
28 TAC §133.2
The amendment is proposed under the Texas Labor Code, §402.061,
which authorizes the Commission to adopt rules necessary to administer the
Act; the Texas Labor Code, §402.072, which mandates that only the Commission
can impose sanctions which deprive a person of the right to practice before
the Commission, receive remuneration in the workers' compensation system,
or revoke a license, certification or permit required for practice in the
system; the Texas Labor Code, §408.022, which requires an employee receiving
treatment under the workers' compensation system to choose a doctor from a
list of doctors approved by the Commission and establishes the extent of an
employee's option to select an alternate doctor; the Texas Labor Code §408.026,
(as amended by HB-2600, 2001 Texas Legislature) that requires the preauthorization
of non-emergency spinal surgery; the Texas Labor Code Chapter 410, which provides
procedures for the adjudication of disputes; the Texas Labor Code §413.014
(as amended by HB-2600, 2001 Texas Legislature) that requires the commission
to specify by rule, except for treatments and services required to treat a
medical emergency, which health care treatments and services require express
preauthorization and concurrent review by the carrier as well as allowing
health care providers to request precertification and allowing the carriers
to enter agreements to pay for treatments and services that do not require
preauthorization or concurrent review. This mandate also states the carrier
is not liable for the cost of the specified treatments and services unless
preauthorization is sought by the claimant or health care provider and either
obtained or ordered by the commission; the Texas Labor Code §413.031,
which provides a process for dispute resolution for disputes involving medical
services; the Texas Labor Code, §415.034, which allows a party charged
with an administrative violation or the Executive Director of the Commission
to request a hearing with the State Office of Administrative Hearings; and
the Texas Government Code, §2003.021(c), which requires the State Office
of Administrative Hearings to conduct hearings under the Texas Labor Code,
Title 5, in accordance with the applicable substantive rules and policies
of the Texas Workers' Compensation Commission.
No other code, statute, or article is affected by this rule action.
§133.2.Sharing Medical Reports and Test Results.
(a)
The treating doctor within 10 days of receipt of a written
request shall forward to a
referral doctor,
consulting doctor,
designated doctor, [
(b)
When the claimant changes treating doctors, the subsequent
treating doctor will contact, in writing, the previous doctor or, if unable
to contact the previous doctor, will contact the carrier to obtain copies
of all required written medical reports pertinent to the injury and test results
submitted to the carrier. The written request will include a signed waiver
from the claimant releasing the claimant's medical records to the subsequent
treating doctor. The previous doctor will send all information to the subsequent
doctor within 10 days of receipt of the written request.
(c)
The previous treating doctor shall charge the carrier no
more than the fair and reasonable cost as specified in §133.106(f) of
this title (relating to Fair and Reasonable Fees for Required Reports and
Records) for copies of required reports and test results when the copies are
forwarded to the subsequent treating doctor. The carrier shall reimburse the
reasonable copying charge for records provided to designated doctors, or a
doctor performing a required medical examination.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 24, 2003.
TRD-200301889
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 804-4287
28 TAC §133.206
(Editor's note: The text of the following section proposed
for repeal will not be published. The section may be examined in the offices
of the Texas Workers' Compensation Commission or in the Texas Register office,
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
This repeal is proposed under the Texas Labor Code, §402.061,
which authorizes the Commission to adopt rules necessary to administer the
Act; the Texas Labor Code, §402.072, which mandates that only the Commission
can impose sanctions which deprive a person of the right to practice before
the Commission, receive remuneration in the workers' compensation system,
or revoke a license, certification or permit required for practice in the
system; the Texas Labor Code, §408.022, which requires an employee receiving
treatment under the workers' compensation system to choose a doctor from a
list of doctors approved by the Commission and establishes the extent of an
employee's option to select an alternate doctor; the Texas Labor Code §408.026,
(as amended by HB-2600, 2001 Texas Legislature) that requires the preauthorization
of non-emergency spinal surgery; the Texas Labor Code Chapter 410, which provides
procedures for the adjudication of disputes; the Texas Labor Code §413.014
(as amended by HB-2600, 2001 Texas Legislature) that requires the commission
to specify by rule, except for treatments and services required to treat a
medical emergency, which health care treatments and services require express
preauthorization and concurrent review by the carrier as well as allowing
health care providers to request precertification and allowing the carriers
to enter agreements to pay for treatments and services that do not require
preauthorization or concurrent review. This mandate also states the carrier
is not liable for the cost of the specified treatments and services unless
preauthorization is sought by the claimant or health care provider and either
obtained or ordered by the commission; the Texas Labor Code §413.031,
which provides a process for dispute resolution for disputes involving medical
services; the Texas Labor Code, §415.034, which allows a party charged
with an administrative violation or the Executive Director of the Commission
to request a hearing with the State Office of Administrative Hearings; and
the Texas Government Code, §2003.021(c), which requires the State Office
of Administrative Hearings to conduct hearings under the Texas Labor Code,
Title 5, in accordance with the applicable substantive rules and policies
of the Texas Workers' Compensation Commission.
No other code, statute, or article is affected by this rule action.
§133.206.Spinal Surgery Second Opinion Process.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed
with the Office of the Secretary of State on March 24, 2003.
TRD-200301888
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: May 4, 2003
For further information, please call: (512) 804-4287
Part 2.
TEXAS WORKERS' COMPENSATION COMMISSION
(a)
] This rule applies to employers
whose employees are not exempt from coverage under the Workers' Compensation
Act (the Act), and to insurance carriers. It does not apply to employers whose
only employees are exempt from coverage under the Act. Certified Self Insurers
are also subject to requirements specified in Chapter 114 of this title (relating
to Self-Insurance).
(b)
] Employers and insurance carriers
shall submit to the commission, or its designee, insurance coverage information
in the form and manner prescribed by the commission. The commission may designate
and contract with a data collection agency to collect and maintain
insurance
coverage information.
(c)
] Employers
who do not have
workers' compensation insurance coverage
are required to provide
insurance coverage
[
notice of non-coverage
] information
in the form of a notice of non-coverage,
in accordance with subsection
(d)
[
(b)
] of this section as follows:
(d)
]When an employer elects to cancel
coverage, the effective date of that cancellation shall be the later of:
(e)
] The
workers' compensation
insurance coverage shall be extended until the effective date of withdrawal
as established in subsection
(f)
[
(d)
] of this section,
and the employer is obligated to pay premiums which accrue during this period.
(f)
] Insurance carriers are required
to provide
insurance
coverage information for insured Texas employers
in accordance with subsection
(d)
[
(b)
] of this rule
as follows:
,
]
the workers'
compensation insurance coverage,
[
or
] does not renew
the workers' compensation insurance coverage
[
, an employer's workers'
compensation coverage
] on the anniversary date
, or cancels a binder
before it issues a policy;
[
or
]
.
]
(g)
]
Workers' compensation
insurance
[
Insurance
] coverage remains in effect until the
later of:
(h)
] "Claim administration contact"
as it applies to this chapter is the person responsible for identifying or
confirming an employer's coverage information with the commission. Each insurance
carrier shall file a notice with the commission of their designated claim
administration contact not later than the 10th day after the date on which
the coverage or claim administration agreement takes effect. A single administration
address for the purpose of identifying or confirming an employer's coverage
status shall be provided. If the single claims administration contact address
changes, the insurance carrier shall provide the new address to the commission
at least 30 days in advance of the change taking effect. This information
shall be filed in the form and manner prescribed by the commission.
(i)
] An insurance carrier may elect
to have a servicing agent process and file all coverage information, but the
insurance carrier remains responsible for meeting all filing requirements
of this rule.
(j)
] Notwithstanding the other provisions
of this section, if an employer switches workers' compensation insurance carriers,
the original policy is considered canceled as of the date the new coverage
takes effect. Employers shall notify the prior insurance carrier of the cancellation
date of the original policy, in writing, within ten days of the effective
date.
Chapter 124.
CARRIERS: REQUIRED NOTICES AND MODE OF PAYMENT
as needed
] and any change in a claimant or employer mailing
address within 7 days of receipt of the new address.
Chapter 126.
GENERAL PROVISIONS APPLICABLE TO ALL BENEFITS
spinal surgery section of the commission
] or a decision from the appeal process finding the insurance carrier
liable for the reasonable costs of spinal surgery. Any extension of the date
of maximum medical improvement ordered by the commission must be to a specific
and certain date.
specified in §134.1001 of this title (relating
to the Spine Treatment Guideline) or
] that may impact recovery times
as provided by the treating doctor or the surgeon;
concurrence finding
] to a benefit contested case
hearing, any extension of the date of maximum medical improvement ordered
by the commission shall be conditional pending final decision under the commission's
jurisdiction of the liability for spinal surgery. If spinal surgery is not
performed within six weeks after the date the final decision of the commission
is issued, the order for the extension of the date of maximum medical improvement
shall be null and void.
Chapter 133.
GENERAL MEDICAL PROVISIONS
a doctor performing a second opinion on spinal surgery,
] and a doctor that is examining the claimant under a medical examination
order, copies of reports required in any rules in this part, radiographic
films, and test results, to prevent unnecessary duplication of tests and examinations.
An attending emergency doctor or facility will send copies of medical reports
and other information to the treating doctor upon request.
Subchapter C. SECOND OPINIONS FOR SPINAL SURGERY
Chapter 165.
REJECTED RISK: INJURY PREVENTION SERVICES