GEC H.B. 3137 75(R) BILL ANALYSIS BUSINESS & INDUSTRY H.B. 3137 By: Solomons 4-1-97 Committee Report (Unamended) BACKGROUND Chapter 410 of the Labor Code currently allows insurance carriers engaged in a workers' compensation lawsuit to settle their case and then claim that the settlement agreement reverses or modifies an Appeals Panel decision awarding benefits. Carriers also use judgments based on default or on an agreement of the parties to accomplish the same end. Additionally, carriers sometimes attempt to use these settlement agreements and judgments to seek reimbursement through the Subsequent Injury Fund for any benefits they may have provided to a claimant. This proposed legislation prevents both of these practices. It also applies some of the Section 410.256 requirements with regard to court approval of settlements to a new Section 410.257 on court approval of judgments. Finally, this proposed legislation would make any judgment entered or settlement approved without complying with Sections 410.256, 410.257, or 410.258 void. This places the burden of compliance with these provisions on the litigating parties rather than the Commission. PURPOSE HB 3137 prevents the use of settlement agreements, and judgments based on default or on an agreement of the parties, to overturn Appeals Panel decisions. HB 3137 also prevents carriers from using these types of judgments and settlements to seek reimbursement from the Subsequent Injury Fund for benefit payments made to a claimant. HB 3137 also ensures that the Commission has notice and an opportunity to intervene in a workers' compensation lawsuit to explain why a judgment or settlement should not be approved by a court. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends and renumbers Section 410.256, Labor Code. Section 410.256. Court Approval of Settlement. Establishes that an appeals panel decision cannot be modified or reversed by settlement of a claim or issue reached by the parties in a workers' compensation lawsuit unless a party to the proceeding has first filed for judicial review under Subchapter F or Subchapter G, Chapter 410, Labor Code. Denies reimbursement from the Subsequent Injury Fund in cases where a claim or issue is settled and not adjudicated. Makes a settlement void if it does not comply with all appropriate provisions of the law including Section 410.258. SECTION 2. Amends Subchapter F, Chapter 410, Labor Code by adding a new Section 410.257 and a new Section 410.258. Section 410.257. Judgment After Judicial Review. (a) Establishes that a judgment entered by a court on judicial review of an appeals panel decision under Subchapter F or Subchapter G, Chapter 410, Labor Code, must comply with all appropriate provisions of the law. (b) Establishes that a judgment entered into under this section may not provide for (1) payment of benefits in a lump sum except as provided by Section 408.128, or (2) the limitation or termination of a claimants right to medical benefits under Section 408.021. (c) Establishes that a judgment resolving an issue of impairment may not be entered before a claimant reaches maximum medical improvement. Requires a judgment resolving an issue of impairment to adopt an impairment rating under Subchapter G, Chapter 408, Labor Code, except to the extent that the claimant has experienced a substantial change of condition such that Section 410.307 applies. (d) Establishes that a judgment under this section may not order reimbursement from the Subsequent Injury Fund. (e) Establishes that a default judgment or a judgment derived through an agreement of the parties does not constitute a modification or reversal of an appeals panel decision awarding benefits for the purposes of obtaining reimbursement from the Subsequent Injury Fund under Section 410.205. (f) Establishes that a judgment that on its face does not comply with Section 410.257 is void. Section 410.258. Notification of Commission of Proposed Judgments and Settlements; Right to Intervene. (a) Requires a party who initiates judicial review of an appeals panel decision under either Subchapter F or Subchapter G, Chapter 410, Labor Code, to file with the executive director of the Commission any proposed judgment or settlement made by the parties to the proceeding, including a proposed default judgment, not later than 30 days before the court is scheduled to enter the judgment or approve the settlement. Requires that the proposed judgment or settlement be mailed to the executive director by certified mail, return receipt requested. (b) Authorizes the Commission to intervene in a proceeding under Subsection (a) not later than the 30th day after the date of receipt of the proposed judgment or settlement. (c) Requires the Commission to review a proposed judgment or settlement received under Subsection (a) to determine compliance with all appropriate provisions of the law. Authorizes the Commission to intervene as a matter of right in the proceeding not later than the 30th day after the date it receives a proposed judgment or settlement if the Commission determines that the proposal is not in compliance with the law. Authorizes a court to limit the extent of the Commission's intervention to providing the information described in Subsection (e). (d) Authorizes a court to enter a judgment or approve a settlement if the court determines that the proposed judgment or settlement is in compliance with the law, and the Commission has not intervened before the 31st day after receipt of the proposal. (e) Requires the Commission to inform a court of each reason why the Commission believes a proposed judgment or settlement is not in compliance with the law, if the Commission chooses to intervene in a proceeding. Requires a court to give full consideration to the information provided by the Commission before entering a judgment or approving a settlement. (f) Establishes that a judgment entered or a settlement approved without complying with the requirement of Section 410.258 is void. SECTION 3. Establishes the effective date of the Act as September 1, 1997. SECTION 4. Suspends the three-day rule.