GEC H.B. 2133 75(R) BILL ANALYSIS
BUSINESS & INDUSTRY
H.B. 2133
By: Jackson
3-26-97
Committee Report (Amended)
BACKGROUND
This bill is based on legislation proposed last session in House Bill
1589. House Bill 1589 was based on recommendations made by both the
Legislative Oversight Committee on Workers' Compensation in its Biennial
Report to the 74th Legislature and by the House Business and Industry
Committee in its Interim Report to the 74th Legislature.
These committees studied the methods by which the state provides workers'
compensation insurance coverage to its employees and risk management
programs to reduce losses. They determined that changes in the
organization and management of the state risks and claims payments would
reduce injuries, improve loss control and claims handling, and otherwise
enhance the quality and effectiveness of the state's risk management and
claims processing programs.
The studies concluded that (1) agencies had, at the time, no financial
incentive for holding down workers' compensation claims costs. Salary
replacement and medical costs were paid through an appropriation to the
Attorney General's Workers' Compensation Division, rather than with funds
coming from the agencies' own budgets; (2) low priority was generally
given to health, safety, and loss programs because only the Attorney
General's office and not agencies receive the program savings; and (3) a
premium allocation system should be mandated to ensure accountability by
each agency.
In 1995, as a result of the Sunset process, the first step was taken to
accomplish some of these goals. State agencies became the "employers" for
purposes of workers' compensation, rather than the Attorney General. The
Attorney General's Workers' Compensation Division was allocated 75% of all
claims costs, and each state agency had to pay the remaining 25% out of
its budget.
The need for legislation remains to provide total responsibility to state
agencies for risk and claims cost, in addition to providing a more
equitable funding mechanism for payment of workers' compensation claim
costs.
PURPOSE
House Bill 2133 streamlines the state's risk management and claims
processing programs by creating a new State Office of Risk Management
(SORM) by combining the Texas Workers' Compensation Commission's Division
of Risk Management (Title 5, Subtitle A, Section 412, Texas Labor Code)
with the Workers' Compensation Division of the Attorney General's Office
(Title 5, Subtitle A, Section 501, Texas Labor Code).
RULEMAKING AUTHORITY
The bill delegates rulemaking authority to the State Office of Risk
Management in SECTION 1 - Section 412.031, Section 412.041(c)(3), and
Section412.041 (h).
SECTION BY SECTION ANALYSIS
Section 1. Deletes Chapter 412, Labor Code and adds a new Chapter 412.
SUBCHAPTER A. GENERAL PROVISIONS
412.001. Definitions: Adds four new definitions for the (1) risk
management board, (2) director, (3) state office of risk management,
and (4) state agency.
SUBCHAPTER B. OFFICE
412.011. Office. Creates State Office of Risk Management, sets out
general duties, and attaches office for administrative purposes only
to the Texas Workers' Compensation Commission.
412.012. Funding. In addition to (a) monies appropriated by the
Legislature, the office is funded by three mechanisms: through (b)
interagency contracts with state agencies for the risk management program,
(c) an allocation program for the payment of workers' compensation claims
costs incurred by state agencies, and (d) monies recovered from a third
party though subrogation and deposited in a state workers' compensation
account that may be used to pay claims.
SUBCHAPTER C. BOARD
412.021. Sets out the required board member qualifications and
appointment procedures.
412.022. Training for Board Members. Requires that board member
complete a training program prior to assuming duties.
412.023. Effect of Lobbying Activity. Prohibits a person from serving
on board if person is registered as a lobbyist.
412.024. Grounds for Removal from Board. Sets out grounds for removal
from board.
SUBCHAPTER D. GENERAL POWERS AND DUTIES OF BOARD.
412.031. Rulemaking Authority. Grants board rulemaking authority for
Chapters 412 (risk management) and 501 (government employees' workers'
compensation insurance program).
412.032. Board's Report to Legislature. Requires board to submit
report to the legislature, based on recommendations by director, on risk
management program.
412.033. Requires board to hire qualified person as director who serves
at pleasure of the board.
SUBCHAPTER E. DIRECTOR
412.041. Duties; Responsibilities.
(a) Designates director as state risk manager;
(b) requires director to supervise the development and
administration
of risk management program systems to accomplish four goals;
(c) sets out general powers and duties of director in administering
Chapters 412 and 501;
(d) allows director, with board's approval, to hire consultants,
technical assistants, and full- or part-time employees;
(e) designates director as administrator of the government
employees'
workers' compensation insurance program;
(f) designates director as employer and insurer for purposes of
administering and enforcing Chapter 501 (for dates of injury prior to
September 1, 1995);
(g) designates director as insurer for purposes of administering and
enforcing Chapter 501 (for dates of injury on or after September 1,
1995);
(h) requires director to prepare for adoption by board rules for
Chapters 412 and 501;
(i) requires director to hold hearings for all rules and to provide
state agencies opportunity to testify; and
(j) requires director to furnish copies of rules to TWCC and
administrative heads of state agencies.
412.042. Reports to Legislature. (a) Requires director to report to
legislature at beginning of each regular session;
(b) Requires director to submit biennial report on January 1 to
legislature to include:
(1) a list of all people receiving benefits, the nature and cause
of each injury, and amounts paid weekly in income and medical
benefits;
(2) a summary of administrative expenses for claims
administration under Chapter 501;
(3) a statement of: (A) unexpended funds, (B) an estimate of
balance necessary for remainder of that fiscal year under Chapter
501, and (C) an estimate of funds needed to administer Chapter 501 for
the succeeding biennium.
(c) a report by the director on those agencies that failed to meet
their obligation to prevent accidents and injuries.
SUBCHAPTER F. STATE AGENCIES
412.051. Duties of State Agencies. Requires state agencies to actively
manage risks by developing, implementing, and managing
programs to assist employees with injuries.
412.052. Exemption of Certain State Agencies. Exempts from application
of this chapter certain state agencies.
412.053. Annual Report by State Agency. Requires state agencies
to report on losses to director 60 days before close of each
fiscal year.
SECTION 2. Amends Section 501.001, Labor Code, Definitions by adding
definitions for "director", "office", and "board".
SECTION 3. Amends Section 501.002(c), Labor Code, Application of General
Workers'
Compensation Laws, Limit on Action and Damages by substituting
"office"
for "division" and adding "state agency".
SECTION 4. Amends Section 501.003(a), Labor Code, Legal Beneficiary of
Deceased Employee, by substituting "board" for "director".
SECTION 5. Amends Section 501.046, Labor Code, Reports of Termination or
Continuation
of Injuries, by substituting "board" for "commission".
SECTION 6. Repeals the following sections of Chapter 501:
Section 501.023, Labor Code, State Self-Insuring (amended and
moved to
Chapter 412)
Section 501.041, Labor Code, Workers' Compensation Division,
Director
Section 501.042, Labor Code, Director as Employer and Insurer
[effective
for dates of injury before September 1, 1995] (moved to
Chapter 412);
Section 501.042, Labor Code, Director as Insurer, Director as
Insurer [effective
for dates of injury on or after September 1, 1995] (moved to
Chapter 412);
Section 501.043, Labor Code, Director's Powers and Duties
(moved to
Chapter 412);
Section 501.047, Labor Code, Reports to Legislature (moved to
Chapter 412);
Section 501.049, Labor Code, State Workers' Compensation
Account (moved
to Chapter 412).
SECTION 7. Amends Section 402.021(a) Labor Code, to delete the risk
management division
from the list of TWCC divisions.
SECTION 8. Amends Section 403.003(b), Labor Code, to correct the names of
the agencies
whose revenues or expenditures may not be included in TWCC's rate of
assessment (SORM and Research and Oversight Council).
SECTION 9. Provides that changes to law made by this bill apply only to
claims that occur on or after September 1, 1997.
SECTION 10. Abolishes the TWCC Division of Risk Management and the
Workers'
Compensation Division of the Attorney General's Office, and requires
both
agencies to transfer employees, records, equipment, and supplies to SORM
not later than December 31, 1997. Also sets expiration dates for
initial
appointees to board.
SECTION 11. Effective date of Act: September 1, 1997.
SECTION 12. Suspends three-day rule.
EXPLANATION OF AMENDMENTS
Committee Amendment #1 amends Section 412.052, Labor Code. This amendment
keeps current law by deleting language that would have allowed the State
Office of Risk Management to evaluate biennially the exempt agencies.
Committee Amendment #2 amends Section 412.012, Labor Code by allowing the
Legislature to appropriate the amount designated for the payment of state
workers' compensation claims costs to the office, by the appropriation
structure.