BILL ANALYSIS
C.S.H.B. 1589
By: Jackson, Eiland
4-4-95
Committee Report (Substituted)
BACKGROUND
The state's risk management functions are performed by the Risk
Management division at the Texas Workers' Compensation Commission
(TWCC). The Risk Management division is responsible for collecting
data on state agency losses -- including workers' compensation,
property, and liability losses. The division also: assists
agencies in developing risk management programs, writes risk
management guidelines, and reports to each Legislature on the
state's risk management program.
The workers' compensation division of the Office of the Attorney
General (OAG) handles the workers' compensation claims for all
state employees, other than those covered by Chapters 502, 503, and
505 of the Labor Code.
As an interim study for the 74th Legislature, the House Business
and Industry Committee was charged with studying the method by
which the state provides workers' compensation insurance coverage
to its employees. The Committee examined the functions performed
by the Risk Management and workers' compensation divisions and made
recommendations for the administration of those functions. The
Legislative Oversight Committee on Workers' Compensation also made
recommendations regarding the state's workers' compensation
program. This legislation contains the recommendations made by
those two committees.
PURPOSE
The purpose of this bill is to improve the effectiveness and
efficiency of the state's workers' compensation system. The major
modifications proposed by this bill:
- create the State Office of Risk Management;
- combine the responsibilities of the Risk Management
Division at the Texas Workers' Compensation Commission
with the workers' compensation division of the Office
of the Attorney General;
- require all state agencies, including the University of
Texas System, the Texas A&M University System, Texas
Tech University, and the Texas Department of
Transportation, to report to the Office of Risk
Management;
- evaluate state agencies exempt from the risk management
program, biennially. If an agency's program is not
effective, authorize the Office of Risk Management to
revoke the exemption;
- authorize the Office of Risk Management to review and
approve agency risk management plans;
- make state agencies directly responsible for managing
worker injuries by defining each individual agency as
the employer for workers' compensation purposes;
- require a state agency to maintain an employee on the
agency's payroll for the first thirty days after a
compensable injury;
- require the Office of Risk Management to establish an
allocation program for agencies comprising the top
ninety percent of the state's workers' compensation
claims costs;
- make the sick leave policies consistent in Chapters 501,
502, 503, and 505 of the Labor Code; and
- delete language that is inconsistent with the Americans
with Disabilities Act.
RULEMAKING AUTHORITY
It is the opinion of this committee that rulemaking authority
is granted under SECTION 1, in Chapter 412, Section 412.015 of the
Labor Code, where the Risk Management Board shall adopt rules
necessary to implement this chapter. Also, under SECTION 1, in
Chapter 415, Section 412. 036 of the Labor Code, rulemaking
authority is transferred to Risk Management Board from the Texas
Workers' Compensation Commission. The Board may adopt rules
necessary to implement this chapter, including rules relating to
reporting requirements for a state agency.
Under SECTION 12, in Chapter 412, Section 501.043 of the Labor
Code, rulemaking authority is granted to the Risk Management Board
which will adopt procedural rules and prescribe forms necessary for
the effective administration of this chapter
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 412, Labor Code by adding
Subchapters A, B, and C.
Subchapter A. GENERAL PROVISIONS
Section 412.001. Defines "board," "director," "office," and
"state agency."
Sections 412.002-412.010. These sections are reserved for
expansion under this subchapter.
Subchapter B. STATE OFFICE OF RISK MANAGEMENT
Section 412.011. (a) Creates the Office of Risk
Management; requires the Office to be governed by risk management
board; requires board members to have experience in workers'
compensation and risk management.
(b) Establishes the composition of the board to be three
appointees of the lieutenant governor and three appointees of the
speaker of the house of representatives.
(c) Establishes staggered six-year terms for the board
members.
(d) Requires the presiding officer to be designated by the
lieutenant governor and speaker of the house on a rotating basis
and to serve for a two-year term.
(e) Makes the board subject to the open records and
administrative procedures laws.
(f) Makes the board subject to the Texas Sunset Act.
Establishes a sunset date of September 1, 2007.
Section 412.012. Establishes a training program which board
members must complete.
Section 412.013. Prohibits a person required to register as
a lobbyist to serve as a board member or a general counsel to the
board.
Section 412.014. (a) Establishes the grounds for removal from
the board.
(b) Establishes the reporting procedures to be followed if a
ground for removal exists.
Sec. 412.015. Authorizes the board to adopt rules.
Sec. 412.016. (a) Establishes that the office will be
administratively attached to the Texas Workers' Compensation
Commission. Authorizes the board to secure and pay for
professional consultants, technical assistants, and full-time or
part-time employees.
(b) Requires the board to appoint a director and establishes
the director's duties.
Sections 412.017-412.030. These sections are reserved for
expansion under this subchapter.
Subchapter C. RISK MANAGEMENT ADMINISTRATION
Sec. 412.031. Renumbers and amends Sec. 412.002. Adds
subsection (b) to require all state agencies report to the office.
Adds subsection (c) to authorize the office to biennially evaluate
and revoke a risk management program operated by an agency exempt
from the state's risk management program.
Sec. 412.032. Requires state agencies to actively monitor
their risks by developing, implementing, and maintaining health and
safety programs and return-to-work programs.
Sec. 412.033. Renumbers and amends Sec. 412.003. (a)
Authorizes the office to administer risk management guidelines
adopted by the board. Requires the office to review, verify,
monitor, and approve risk management programs adopted by state
agencies.
(b) Requires the office to assist state agencies to implement
risk management programs that meet the guidelines established by
the board.
(c) Requires the office to administer the state employees'
workers' compensation program.
Sec. 412.034. Renumbers Sec. 412.004.
Sec. 412.035. Renumbers and amends Sec. 412.005. Defines the
University of Texas System, the Texas A&M University System, Texas
Tech University institutions, and the Texas Department of
Transportation as state agencies for risk management reporting
purposes.
Sec. 412.036. Renumbers and amends Sec. 412.006. Transfers
the rulemaking authority for the risk management program from the
Texas Workers' Compensation Commission to the board.
Sec. 412.037. Renumbers and amends Sec. 412.007. (a)
Requires the board to report to each legislature.
(b) Requires the report to include information on claims, the
identification of state agencies that do not comply with the risk
management guidelines and statutory requirements, and
recommendations for the state's risk management program.
Sec. 412.038. Renumbers and amends Sec. 412.008. (a)
Requires state agencies to enter into an interagency contract with
the office and the Texas Workers' Compensation Commission to cover
the costs of the risk management program.
(b) Provides the basis for the costs paid by state agencies
under the interagency contracts.
SECTION 2. Amends Section 402.021(a), Labor Code. Deletes
the division of risk management from the commission's organization.
SECTION 3. Amends Sec. 403.003(b), Labor Code. Makes a
technical change to refer to the State Office of Risk Management.
SECTION 4. Amends Sec. 501.001, Labor Code. Adds
subdivisions (3), (4), and (7) which define "director," "office,"
and "board".
SECTION 5. Amends Sections 501.002 (b) and (c), Labor Code.
(b) Defines state agencies as employers for purposes of workers'
compensation insurance.
(c) Makes a technical change.
SECTION 6. Amends Sec. 501.003(a), Labor Code. Technical
change.
SECTION 7. Subchapter B, Chapter 501, Labor Code. Adds
Section 501.0215. Requires a state agency to maintain an employee
on its payroll for the first thirty days after a compensable
injury. The requirement does not affect entitlement to benefits or
the agency's reporting duties.
SECTION 8. Amends Section 501.022, Labor Code. Adds language
defining Texas Tech University and Texas Tech University Health
Sciences Center as the employer for purposes of workers'
compensation insurance.
SECTION 9. Amends Section 501.023, Labor Code. (a) Requires
the legislature to appropriate money for the payment of workers'
compensation costs to the office. Clarifies that the new language
does not affect the reimbursement of claims costs by funds other
than general revenue funds.
(b) Requires the office to develop an allocation program for
the state agencies' workers' compensation claims costs.
(c) Requires the office, each fiscal biennium, to determine
the agencies constituting the top ninety percent of the state's
total workers' compensation claims costs for participation in the
allocation program. Requires the office to establish an allocation
formula for the state's workers' compensation costs based on agency
claims experience and related costs.
(d) Allows a state agency participating in the allocation
program to be rewarded or penalized based on actual performance.
(e) Requires the office to receive the amount appropriated
for workers' compensation claims and to monitor the agencies'
claims costs against the allocated amounts and to report to the
agencies on the difference.
(f) Requires an agency whose workers' compensation claims
costs are higher than the allocated amount to pay the additional
costs from the agency's appropriated funds. Requires the payment
of additional costs to be handled through interagency contracts
with the office.
(g) Allows an agency whose workers' compensation claims costs
are lower than the allocated amount to retain a portion of the
savings. Authorizes the office to determine the amount of savings
retained.
(h) Requires the office to provide full coverage of workers'
compensation costs for agencies exempt from the allocation program.
SECTION 10. Amends Section 501.041, Labor Code. Makes
technical changes to delete language regarding the workers'
compensation division of the Office of the Attorney General.
SECTION 11. Amends Section 501.042, Labor Code. Deletes
language defining the director as the employer for purposes of
workers' compensation insurance.
SECTION 12. Amends Section 501.043, Labor Code. (a) Requires
the board to adopt rules and to prescribe forms.
(b) Requires the director to hold hearings on proposed rules.
(c) Requires the director to provide copies of rules to the
commission and all agencies under the state's workers' compensation
program.
SECTION 13. Amends Section 501.044, Labor Code. Amends the
state's sick leave policy to allow an employee to elect to use
annual leave as well as sick leave before receiving workers'
compensation benefits.
SECTION 14. Amends Sec. 501.046, Labor Code. Technical
change.
SECTION 15. Amends Sec. 501.048, Labor Code. Technical
change.
SECTION 16. Amends Section 502.002(a), Labor Code. Makes
Chapter 451 (regarding discriminatory discharge) of the Labor Code
applicable to Texas A & M University System's workers' compensation
program.
SECTION 17. Amends Section 502.041, Labor Code. Makes A & M
University's sick leave and annual leave policy, in relation to
workers' compensation, consistent with the policy for state
employees under Chapter 501, as amended in Section 13.
SECTION 18. Subchapter C, Chapter 502, Labor Code. Adds
Section 502.042. Requires A & M University institutions to
maintain an employee on payroll for the first thirty days after a
compensable injury. Clarifies that the new requirement does not
affect benefit entitlement or the institutions' reporting duties.
SECTION 19. Amends Section 503.002(a), Labor Code. Makes
Chapter 451 (regarding discriminatory discharge) of the Labor Code
applicable to the University of Texas System's workers'
compensation program.
SECTION 20. Amends Section 503.041, Labor Code. Makes the
University of Texas System's sick leave policy and annual leave
policy, in relation to workers' compensation, consistent with the
policy for state employees under Chapter 501, as amended in Section
13.
SECTION 21. Subchapter C, Chapter 503, Labor Code. Adds
Section 503.042. Requires University of Texas institutions to
maintain an employee on payroll for the first thirty days after a
compensable injury. Clarifies that the new requirement does not
affect benefit entitlement or the institutions' reporting duties.
SECTION 22. Subchapter B, Chapter 505, Labor Code. Adds
Section 505.014 and 505.015.
Section 505.014. Makes the Texas Department of
Transportation's sick leave and annual leave policies, in relation
to workers' compensation, consistent with the policy for state
employees under Chapter 501, as amended in Section 13.
Section 505.015. Requires the Texas Department of
Transportation to maintain an employee on payroll for the first
thirty days after a compensable injury. Clarifies that the new
requirement does not affect benefit entitlement or the department's
reporting duties.
SECTION 23. Repeals Sections 502.024, 502.064, 503.024,
503.064, 503.070, and 505.054 of the Labor Code. Repeals
provisions which are inconsistent with the Americans With
Disabilities Act of 1990.
SECTION 24. Specifies that changes in the law apply only to
workers' compensation claims based on compensable injuries
occurring on or after September 1, 1995. Claims based on injuries
prior to September 1, 1995 are governed by the law in effect at the
time of injury.
SECTION 25. Specifies that the repeal of Sections 502.024,
502.064, 503.024, 503.064, 503.070, and 505.054 apply to claims
based on compensable injuries occurring on or after July 26, 1992
-- effective date for the Americans With Disabilities Act of 1990.
Claims based on injuries occurring before July 26, 1992 are
governed by the law in effect at the time of injury.
SECTION 26. (a) Specifies that the workers' compensation
division of the Office of the Attorney General and the risk
management division of the Texas Workers' Compensation Commission
are abolished as of September 1, 1995. Specifies that all the
divisions' employees, records, equipment, and supplies shall be
transferred to the State Office of Risk Management by December 31,
1995.
(b) Specifies that the lieutenant governor and speaker of the
house shall each make one appointment for a term to expire February
1, 1997, February 1, 1999, and February 1, 2001.
(c) Specifies that the lieutenant governor shall appoint the
first presiding officer for a term expiring February 1, 1997.
SECTION 27. Specifies the effective date of the Act as
September 1, 1995.
SECTION 28. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The major points of difference between H.B. 1589, as
introduced and the committee substitute are as follows:
1. The Committee Substitute establishes the State Office of Risk
Management as a separate agency responsible for the combined
activities of TWCC's risk management division and the OAG's
workers' compensation division. The Office will be governed
by a six-member board appointed by the Lieutenant Governor and
Speaker of the House of Representatives.
The Office will still be administratively attached to the TWCC
for administrative purposes, as the division was in the
original bill.
2. SECTION 8 of the Committee Substitute establishes Texas Tech
University and Texas Tech University Health Science Center as
the employer for the purposes of workers' compensation. The
original bill defined the board of regents of Texas Tech
University as the employer.
The change in the substitute makes the bill consistent with
the language contained in House Bill 1089 (the Texas Workers'
Compensation Commission Sunset bill).
3. SECTION 9, Sec. 501.023(a), Labor Code, the Substitute
clarifies that the allocation program for the payment of
workers' compensation benefits does not affect the
reimbursement of claims costs by funds other than general
revenue funds.
4. SECTION 9, Sec. 501.023(f), Labor Code, the Substitute
clarifies that any additional funds that an agency has to pay
because it exceeds its allocated amount will be paid to the
Office of Risk Management through interagency contract.
5. In SECTIONS 13, 17, 20, and 22, the Substitute changes the
sick leave provisions in each of the four statutes to allow an
employee to elect to use annual leave as well as sick leave
before receiving workers' compensation benefits.
SUMMARY OF COMMITTEE ACTION
H.B. 1589 was considered in a public hearing on April 4, 1995. No
one testified on, in support, or against H. B. 1589. The Committee
on Business and Industry considered a complete committee substitute
to H.B. 1589. Without objection, the complete committee substitute
to H.B. 1589 was adopted. A motion to report H.B. 1589, as
substituted to the full House with the recommendation that it do
pass and be printed carried with a record vote of 8 (eight) ayes,
0 (zero) nays, 0 (zero) present-not-voting, and 1 (one) absent.