BILL ANALYSIS
H.B. 1090
By: Brimer, et al. (Armbrister)
State Affairs
04-25-95
Senate Committee Report (Unamended)
BACKGROUND
The Texas Workers' Compensation Insurance Fund (fund) is
responsible for serving as an issuer of last resort; establishing
workers' compensation insurance (insurance) rates; administering
insurance claims and paying benefits to injured workers; educating
policyholders, agents, and the general public regarding workers'
compensation issues; instituting policies designed to combat fraud
and increase health and safety in the work place. The fund carries
out its programs and functions through underwriting, account
services and marketing, benefit and loss prevention, research and
development, report and analysis, finance and administration,
legal, and internal audit services. The fund had a budget of $145
million and 1,264 employees in 1994 to carry out its duties.
PURPOSE
As proposed, H.B. 1090 amends the functions of the Texas Workers'
Compensation Insurance Fund and its board of directors.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 1(4), Article 5.76-3, Insurance Code, to
make a nonsubstantive change.
SECTION 2. Amends Section 2, Article 5.76-3, Insurance Code, as
follows:
Sec. 2. CREATION; OPERATION. (a) Makes no change.
(b) Subjects the Texas Workers' Compensation Insurance Fund
(fund), except as otherwise provided by this subsection, to
the open meetings law, Chapter 551, Government Code, and the
open records law, Chapter 552, Government Code.
(c) Makes no change.
(d) Subjects a decision of the board of directors of the
fund (board) under this section, rather than subsection, to
review by the commissioner of insurance. Provides that the
commissioner's review of a decision by the board does not
suspend the operation of any act, ruling, decision, or order
of the fund unless the commissioner specifically orders on
a showing by an aggrieved party of immediate loss or damage
and probable success on the merits.
(e) Makes a conforming change.
(f) Provides that the fund is abolished September 1, 2007,
unless continued by the Texas Sunset Act.
(g) Redesignates existing Subsection (e).
(h) Requires the fund to annually prepare a written report
accounting for all funds received and disbursed by the fund
during the preceding fiscal year. Requires the annual
report to meet the reporting requirements applicable to
financial reporting provided by the General Appropriations
Act.
SECTION 3. Amends Section 3, Article 5.76-3, Insurance Code, as
follows:
Sec. 3. BOARD OF DIRECTORS. (a)-(c) Make no changes.
(d) Requires appointments to the board to be made regardless
of race, color, disability, sex, religion, age, or national
origin of appointees.
(e) Deletes Subdivision (6) prohibiting a person, someone
related to a person, or the living partner of a person who
is registered as a lobbyist under Chapter 305, Government
Code, from serving as a member of the board.
(f) Sets forth grounds for removal from the board.
(g) Provides that the validity of an action of the board is
not affected even if it is taken when a potential ground for
removal of a board member exists.
(h) Requires the president of the board to notify the
chairman of the board of any potential ground for removal.
Requires the chairman to notify the governor and the
attorney general of the potential ground for removal.
Requires the president to notify the next highest officer
who is required to notify the governor and the attorney
general if a potential ground for removal involves the
chairman of the board.
(i)-(k) Redesignate existing Subsections (f)-(h).
(l) Requires the governor to designate a member of the board
as a chairman of the board. Requires the members of the
board to elect a vice-chairman from their number.
(m)-(p) Redesignate existing Subsections (j)-(m).
(q) Prohibits a person from serving as a member of the board
or general counsel to the board if that person is required
to register as a lobbyist under Chapter 305, Government
Code, because of the person's activities for compensation on
behalf of any person or entity other than the fund.
(r) Requires the board to develop and implement policies
that separate the policymaking responsibilities of the board
and the management responsibilities of the president and
staff of the fund.
SECTION 4. Amends Article 5.76-3, Insurance Code, by adding Section
3A, as follows:
Sec. 3A. TRAINING PROGRAM FOR BOARD MEMBERS. (a) Requires
a board member to complete the training program of this
section before assuming any duties.
(b) Sets forth information the training program must
provide.
SECTION 5. Amends Section 4, Article 5.76-3, Insurance Code, by
adding Subsections (c)-(e), as follows:
(c) Requires the board to appoint an internal auditor in
compliance with Chapter 2102, Government Code.
(d) Requires the attorney general to annually review the use
of outside counsel by the fund, if one is used, to ensure that
there was no conflict of interest and that the person used as
outside counsel complied with all state and federal policies
regarding the treatment of persons who are members of minority
groups.
(e) Requires the board to provide requested information to
appropriate legislative committees in a manner requested by
the committees.
SECTION 6. Amends Section 6, Article 5.76-3, Insurance Code, by
adding Subsections (f)-(l), as follows:
(f) Requires the president to develop a career ladder program
that shows opportunities for advancement for employees in the
fund. Requires the program to require internal posting of all
positions concurrently with any public posting.
(g) Requires the president to develop a system of annual
performance evaluations based on documented performance.
Requires all merit pay for fund employees to be based on the
performance evaluation system.
(h) Requires the president to prepare and maintain a written
policy statement to assure implementation of a program of
equal employment opportunity under which all employment
transactions are made without regard to personal
characteristics. Sets forth information the policy statement
must include.
(i) Requires the policy statement to cover an annual period,
be updated annually, be reviewed annually by the Commission on
Human Rights, and be filed in the governor's office.
(j) Requires the governor's office to deliver a biennial
report to the legislature based on information from Subsection
(i). Authorizes the report to be made separately or as a part
of a larger biennial report.
(k) Requires the president to provide to the members of the
board and to fund employees information regarding their
qualification for office or employment and their
responsibilities relating to standards of conduct for board
members and employees.
(l) Requires the president to ensure that the fund complies
with minority hiring practices guidelines adopted for state
agencies and institutions by the General Appropriations Act.
SECTION 7. Amends Section 7, Article 5.76-3, Insurance Code, by
adding Subsections (f) and (g), as follows:
(f) Provides that the fund is not required to appoint a local
recording agent to act as the agent of the fund,
notwithstanding any other provision of this code or another
insurance law of this state. Provides that an agent
transacting business of the fund does so as an agent for the
applicant, not as an agent of the fund.
(g) Prohibits the fund from using information that is the work
of a licensed agent submitted to the fund by an agent on
behalf of an employer, including a policy expiration date, for
any marketing or direct sales activity. Prohibits the fund
from providing information obtained from a licensed agent to
any other licensed agent. Provides that this subsection does
not prevent an employer from designating another licensed
agent or the fund as agent of record and does not prevent the
fund from using the information submitted to the fund under
this subsection for the purpose of underwriting or fraud
investigation. Requires the fund to adopt reasonable
guidelines in the plan of operation to implement this
subsection.
SECTION 8. Amends Sections 10(k) and (l), Article 5.76-3, Insurance
Code, as follows:
(k) Requires the Texas Workers' Compensation Commission to
charge the policyholder for reasonable cost of services
provided under Subsections (e), (f), and (h).
(l) Makes a nonsubstantive change.
SECTION 9. Amends Sections 11(a) and (b), Article 5.76-3, Insurance
Code, as follows:
(a) Requires the fund to develop and implement a program to
identify and investigate fraud and violations of workers'
compensation insurance by, among others, a health care
provider, or other person. Makes a nonsubstantive change.
(b) Authorizes the fund to conduct investigations of suspected
cases of fraud and violations of this code. Requires the fund
to handle cases in a certain manner.
SECTION 10. Amends Article 5.76-3, Insurance Code, by adding
Section 11A, as follows:
Sec. 11A. INVESTIGATION OF FILES CONFIDENTIAL. (a) Provides
that information maintained in the investigation files of the
fund is confidential. Prohibits disclosure of the information
except under certain conditions.
(b) Provides that fund investigation files are not open for
purposes of the open records law, Chapter 552, Government
Code.
(c) Provides that information in an investigation file that
is information in or derived from a claim file, employer
injury report, or occupational disease report is governed by
the confidentiality provisions relating to that information.
(d) Defines "investigation file."
SECTION 11. Amends Section 16, Article 5.76-3, Insurance Code,
to make a conforming change.
SECTION 12. Amends Section 17(a), Article 5.76-3, Insurance
Code, to require the board to publish a report by March 1 of each
subsequent year which shows the fund's activities during the
preceding fiscal year and requires the report to be filed with the
Texas Department of Insurance. Makes a conforming change.
SECTION 13. Amends Article 5.76-3, Insurance Code, by adding
Section 17A, as follows:
Sec. 17A. ADDITIONAL AUDIT REQUIREMENTS; INTERNAL AUDIT
REPORT. (a) Requires the state auditor to periodically
identify issues related to the operational efficiency,
effectiveness, and statutory compliance of the fund. Requires
the fund to include these issues in the fund's annual
independent and internal audit plans.
(b) Requires each person who does an independent or internal
audit to send a copy of the audit report to the office of
the state auditor. Requires the state auditor to prepare a
summary of all the audit reports in an annual memorandum to
the Legislative Audit Committee.
(c) Requires an internal auditor to submit the internal
audit report directly to the board and to provide a summary
to the governor, lieutenant governor, and speaker of the
house of representatives. Requires the summary report to
include an analysis of the use by the fund of historically
underutilized businesses. Defines "historically
underutilized business."
SECTION 14. Amends Article 5.76-3, Insurance Code , by adding
Sections 19A and 19B, as follows:
Sec. 19A. PUBLIC INFORMATION; ACCESSIBILITY. (a) Requires
the fund to prepare information of the public interest
describing functions of the fund and procedures by which
complaints are filed and resolved by the fund. Requires the
fund to make the information accessible to the public and
appropriate state agencies.
(b) Requires the board to establish methods by which
consumers of the fund may direct complaints to the fund.
Authorizes the board to provide this notification by a
supplement to a written policy, a sign displayed in the
business place of each regional office of the fund, or in a
service bill.
(c) Requires the fund to comply with federal and state laws
related to program and facility accessibility. Requires the
president to prepare and maintain a written plan explaining
how non-English speaking persons can be provided access to
the fund's programs and services.
(d) Requires the board to develop and implement policies
that provide the public with an opportunity to appear before
the board to speak on an issue under the jurisdiction of the
fund.
Sec. 19B. COMPLAINT RESOLUTION. (a) Requires the fund to
keep certain information about each written complaint
submitted to the fund.
(b) Requires the fund to provide its policies and procedures
pertaining to complaint investigation and resolution to the
person filing the compliant and to the person or entity
about which was complained. Requires the fund to notify, at
least quarterly, each party to the complaint of the status
of the complaint unless the notice would jeopardize an
undercover investigation.
SECTION 15. Amends Section 21(a), Article 5.76-3, Insurance
Code, to make a conforming change.
SECTION 16. Amends Article 5.76-4, Insurance Code, by adding
Subsections (g) and (h), as follows:
(g) Authorizes the fund to require the applicant for workers'
compensation insurance coverage who is considered a high risk
under Subsection (b) to insure all business entities that are
commonly owned or controlled by the applicant if the fund
suspects fraud.
(h) Requires the fund to report statistical and other
information developed under Subsection (c) on request of the
Texas Workers' Compensation Research Center and the
legislative oversight committee on workers' compensation or to
any successor entity for research and oversight of the
workers' compensation system.
SECTION 17. (a) Provides that the training program applies only
to a board member appointed on or after September 1, 1995.
(b) Requires the president of the fund to adopt personnel
policies by January 1, 1996.
(c) Provides that the change in law made to Section 10(k),
Article 5.76-3, Insurance Code, applies only to a fee for a
follow-up inspection on or after the effective date of this
Act.
(d) Provides that the change made to Section 11A, Article
5.76-3, Insurance Code, applies to information maintained in
the investigation files of the fund without regard to the date
the information was collected.
(e) Requires the board of the fund to adopt a public
information system by January 1, 1996.
SECTION 15. Effective date: September 1, 1995.
SECTION 16. Emergency clause.