The Tale of Two Workers' Compensation Bills in Texas

The Texas Legislature was in session from noon on January 12, 2021 until May 31, 2021 and met under the shadow of the COVID-19 pandemic. Texas Legislators filed 7,148 bills that included 38 pieces of workers’ compensation legislation.

The workers’ compensation legislation filed during the recent session of the Texas Legislature included bills that addressed issues ranging from cost-of-living increases for workers’ compensation death benefits, to creating a COVID-19 presumption for specific classes of workers.

However, the Texas Legislative session only passed four of the workers’ compensation bills during its regular session. Two of the bills passed were Senate Bill 22 (SB 22) and House Bill 1752 (HB 1752). The first bill, SB 22, provides for a COVID-19 presumption for law enforcement officers, first responders, and correctional officers with a provision that allows denied COVID-19 claims to be resubmitted with a presumption that the virus was contracted in the course and scope of work. The second bill, HB 1752, prohibits the Texas Department of Insurance’s Division of Workers’ Compensation (DWC) from conducting a benefit review conference (BRC) in person unless the DWC determines that there is good cause to hold an in-person BRC.

Senate Bill 22 – COVID-19 Presumption Bill

Senate Bill 22 (SB 22) was just one of several bills filed to provide for a COVID-19 presumption for a specific class of workers. SB 22 established a statutory presumption for first responders who die from or are disabled by complications related to any disease that is the basis for a disaster declared by the governor. Therefore COVID-19-related first responder deaths or illnesses are line-of-duty deaths under the legislation.

SB 22 was initially opposed by political subdivisions and their respective insurance pools. The bill in its final form was negotiated. The most controversial provision of the bill provides for a retroactive application of the revised law which allows previously denied first responders workers’ compensation claims to be refiled with the presumption. The retroactive provision of the law has been questioned by some insurance defense attorneys as being unconstitutional. Only time will tell if a constitutionality challenge of the new law is filed by interested system stakeholders.

Texas political subdivisions are bracing for what many system-participants fear will be an exceptionally large number of refiled claims numbering in the thousands. Defense attorneys are wrestling with how best to represent their political subdivision clients in claims with a COVID-19 presumption. The disputes could result in unpaid income benefits and medical bills being paid by the political subdivisions’ risk pools. Another unresolved question is whether or not DWC will take enforcement action against any political subdivision if the original claim is found to be within the course and scope of employment. 

House Bill 1752 – BRC Bill

House Bill 1752 (HB 1752) was filed in response to one of DWC’s legislative recommendations. A discussion of the background on this legislative change is necessary to tell the story about this legislative development.

Benefit Review Conference Evolved from the “Old Law” Prehearing Conference

The Pre-Senate Bill 1 “Old Law” and related rules include a provision for Prehearing Conferences which provide disputing parties with an informal process for discussing and resolving disputed claims issues. Chapter 61 of the “Old Law” rules set out the process for the Prehearing Conference.

The Prehearing Conference process was carried forward when the Texas Legislature passed Senate Bill 1 (SB1) in the form of a Benefit Review Conference in 1989 during its second special session. SB 1, an omnibus bill that was the Texas Legislature’s attempt to fix a dysfunctional workers’ compensation system, abolished the former Industrial Accident Board and replaced it with a six member Texas Workers’ Compensation Commission. SB 1 also provided for Benefit Review Conferences (BRC). The BRCs are presided over by Benefit Review Officers (BROs). SB 1 provided the BROs with the authority to include recommendations on how to resolve the disputed issues that remained unresolved after the BRC. The BRO, who has always been instrumental in the success of a BRC, assists the disputing parties with preparing an agreement when disputed issues are resolved.

In the early years of the BRC process, akin to mediation, a high number of disputed issues were resolved. However, a recent requirement by DWC to address extent of injury issues during a BRC, when those issues have not been raised for the BRC, has resulted in a significant drop in the dispute resolution rates.

Flash Forward to COVD-19, Remote BRCs, and DWC’s Recommendation

After the onset of the COVID-19 pandemic, DWC moved to remote BRC proceedings using Zoom to make the process safer for the disputing parties. While most system stakeholders supported what was believed to be a temporary move to remote BRCs during the pandemic, the DWC’s legislative recommendation to make remote BRCs permanent was not supported by all system participants.

Attorneys have said that DWC did not engage attorneys who represent injured employees and those representing insurance carriers in a dialogue about making the remote BRCs permanent prior to making their legislative recommendation. In the past, DWC has reached out to attorneys to seek their input on changes being proposed to the dispute resolution and hearing processes.

To be fair to DWC, no stakeholder group spoke out against the proposed recommendation to make BRC remote permanently when the agency held a stakeholder meeting to layout their legislative recommendations.

Attorneys and DWC Exchange Letters and But Do Not Meet to Discuss HB 1752

Prior to HB 1752 being considered by the House Business & Industry Committee, a group of lawyers submitted a letter to Commissioner of Workers’ Compensation Cassie Brown. The author of the joint letter, Brandi Prejean, of Thornton, Biechlin, Reynolds & Guerra, L.C., wrote, “As representatives on both sides of the docket, we believe BRCs are most productive when conducted in person. There may be circumstances where that does not make sense. The parties are the best judges of when this may be true and should be afforded the opportunity to prosecute their claims in the manner they deem best for their clients.”

On April 9, 2021, Commissioner Brown responded to the attorneys’ letter. Commissioner Brown wrote, “Regarding your comments on benefit review conferences (BRCs), a bill has been filed this session based on a DWC recommendation to allow BRCs to be held remotely on a permanent basis while providing good cause exceptions for a BRC to be held in person. DWC will wait for guidance on this issue from the Legislature.”

Several of the attorneys who were listed on the joint letter have expressed their disappointment that the staff of DWC and Commissioner Brown did not offer to host a remote meeting to discuss their concerns.

After HB 1752 was passed out of the House Business & Industry Committee, passed by the House of Representatives, and referred to the Senate Business & Commerce Committee, several attorneys reached out via email to the office of Sen. Charles Schwertner (R-Georgetown) to express their opposition to the bill. Sen. Schwertner was the Senate sponsor of HB 1752.

Most of the attorney emails to Sen. Schwertner’s office expressed concern about remote BRCs and their belief that fewer disputes will be resolved at remote BRCs than during in-person proceedings.

After the receipt of the attorney emails sent to Sen. Schwertner’s office, Jeff Nelson, DWC’s Director of External Relations, authored and sent a letter to the concerned stakeholders. In his letter, Nelson stated, “On December 1, 2020, DWC held a stakeholder meeting with over 150 attendees. This was a meeting that was rescheduled from earlier in November. At the meeting, no concerns were raised with the recommendation.”

Nelson said, HB 1752 “received its first hearing in the House Business and Industry Committee on March 30. There was no registered opposition at this meeting, and there was broad support from our stakeholders including employer groups (Texas Association of Business), the AFL-CIO who represents workers in Texas, health care providers, insurance associations (APCIA, AFACT), and Texas Mutual.” Nelson noted that around the same time DWC received the joint attorneys letter mentioned above.

HB 1752 was passed by the Senate on  May 19, 2021 and signed into law by Gov. Greg Abbott on June 4, 2021.

Many of the attorneys who objected to the legislation said that the disputing parties, not DWC, should be deciding how best to proceed with their cases. Since the passage of HB 1752, many attorneys have criticized the bill as stripping the right of the injured employee to face their insurance carrier to resolve claims disputes. Insurance defense attorneys have raised a similar issue on behalf of their clients.

It is possible that the system stakeholders who supported the passage of the bill would have taken a different stance on the bill had they become aware of the concerns of the legal community.

Anticipated Impact of SB 22 and HB 1752

The passage and implementation of SB 22 will likely result in the refiling of thousands of previously-denied first responder COVID-19 claims. Those claims will likely include several correctional officers’ death-claims that were denied by the State Office of Risk Management. The DWC can also expect to receive a significant number of COVID-19 related requests for medical dispute resolution associated with the previously denied claims. In instances where a group-health insurer paid for the healthcare treatment associated with what is determined to have been a compensable claim, there could be requests made to political subdivision for reimbursement of the payments made by group-health insurers.

Without doubt, the number of workers’ compensation claims disputes will be higher after the COVID-19 pandemic ends and workers return to their jobs. The disputed issues will likely be more complex in many cases as compared to the disputes seen during the pandemic. There will likely be disputes associated with the refiling of previously denied first responder COVID-19 claims. Those claims alone could drive down the BRC resolution rate and increase the number of Contested Case Hearings held by DWC.

While in-person BRCs have historically resulted in a high percentage of disputes being resolved, the change to remote BRCs will likely result in more unresolved disputes and an increase in the number of contested case hearings.

Should there be fewer disputes resolved at the BRC level, there will be more contested case hearings, and injured employees will be the big loser. Injured employees who retain attorneys pay those fees out of their income benefits. That will result in a greater percentage of injured employee income benefits being paid out as attorney fees. Contested case hearings are much more time consuming than BRCs and more costly for the disputing parties.    

What Can DWC Do to Mitigate the Impact of the Legislative Changes

As the reader reads this article, DWC is in the process of implementing both SB 22 and HB 1752. DWC is working to update forms, plain language notices, and their rules.

There are steps DWC can take to improve the outcomes of BRCs. DWC could curtail their practice of adding extent of injury disputes to BRCs when no party has requested an extent of injury dispute be included as an issue at the BRC. Additionally, DWC could grant requests for in-person BRCs when both parties request a personal appearance, which would increase the percentage of disputes resolved.

Only time will tell what impact these bills have on the Texas workers’ compensation system. It is likely that we could witness a negative impact on the system as both bills are implemented and play out.

By Steve Nichols

Steve Nichols is the President of Sentinel Governmental Affairs. Nichols served as the manager of workers’ compensation services at the Insurance Council of Texas (ICT) for almost 20 years where he represented insurance companies, third party administrators, and utilization review companies before the Texas Department of Insurance (TDI) and TDI’s Division of Workers’ Compensation. Prior to his tenure at ICT, Nichols was a member of the staff of the Texas Workers’ Compensation Commission (DWC’s predecessor agency). He retired from the Navy Reserves with 26 years of service (10 years active-duty Army and 16 years in the Navy Reserves). Sentinel Government Affairs provides business development, consulting services, and lobbying services to a wide range of clients.

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