Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Jackson H.B. No. 2133
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation, powers, and duties of the State Office of
1-3 Risk Management; provisions of workers' comp insurance coverage for
1-4 state employees.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 412, Labor Code, is deleted and a new
1-7 Chapter 412 is added:
1-8 CHAPTER 412. STATE OFFICE OF RISK MANAGEMENT
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Sec. 412.001. DEFINITIONS. In this chapter:
1-11 (1) "Board" means the risk management board.
1-12 (2) "Director" means the executive director of the
1-13 office.
1-14 (3) "Office" means the State Office of Risk
1-15 Management.
1-16 (4) "State agency" means a board, commission,
1-17 department, office or other agency in the executive, judicial, or
1-18 legislative branch of state government that has five or more
1-19 employees, was created by the constitution or a statute of this
1-20 state, and has authority not limited to a specific geographical
1-21 portion of the state.
1-22 (Sections 412.002-412.010 reserved for expansion
1-23 SUBCHAPTER B. OFFICE
1-24 Sec. 412.011. OFFICE. (a) The State Office of Risk
2-1 Management is created to administer the government employee's
2-2 workers' compensation insurance and the state risk management
2-3 programs.
2-4 (b) The office shall:
2-5 (1) administer guidelines adopted by the board for a
2-6 comprehensive risk management program applicable to all state
2-7 agencies to reduce property and liability losses, including
2-8 workers' compensation losses;
2-9 (2) review, verify, monitor, and approve risk
2-10 management programs adopted by state agencies;
2-11 (3) assist a state agency that has not implemented an
2-12 effective risk management program to implement a comprehensive
2-13 program that meets the guidelines established by the board; and
2-14 (4) shall administer the workers' compensation
2-15 insurance program for state employees established under Chapter
2-16 501.
2-17 (c) The office is administratively attached to the
2-18 commission and the commission shall provide the facilities for the
2-19 office, but the office shall be independent of the commission's
2-20 direction.
2-21 Sec. 412.012. FUNDING. (a) The office shall be
2-22 administered through money appropriated by the legislature and
2-23 through (1) interagency contracts for the risk management program
2-24 and (2) the allocation program for the financing of state workers'
2-25 compensation benefits.
2-26 (b) Interagency Contracts. (1) Each state agency shall
2-27 enter into an interagency contract with the office under Chapter
2-28 771, Government Code, to pay the costs incurred by the office in
2-29 administering this chapter for the benefit of that state agency.
2-30 Costs payable under the contract include the cost of:
3-1 (A) services of office employees;
3-2 (B) materials; and
3-3 (C) equipment, including computer hardware and
3-4 software.
3-5 (2) The amount of the costs to be paid by a state
3-6 agency under the interagency contract is based on:
3-7 (A) the number of employees of the agency
3-8 compared with the total number of employees of all state agencies
3-9 to which this chapter applies;
3-10 (B) the dollar value of the agency's property
3-11 and asset and liability exposure compared to that of all state
3-12 agencies to which this chapter applies; and
3-13 (C) the number and aggregate cost of claims and
3-14 losses incurred by the state agency compared to those incurred by
3-15 all state agencies to which this chapter applies.
3-16 (c) State Self-Insuring: Allocation Program for Financing
3-17 of State Workers' Compensation Benefits. (1) The state is
3-18 self-insuring with respect to an employee's compensable injury.
3-19 The legislature shall appropriate the total amount designated for
3-20 the payment of state workers' compensation claims costs to the
3-21 office. This section does not affect the reimbursement of claims
3-22 costs by funds other than general revenue funds, as provided by the
3-23 General Appropriations Act.
3-24 (2) The office shall establish an allocation program
3-25 for the payment of workers' compensation claims costs incurred by
3-26 state agencies subject to Chapter 501. The money appropriated by
3-27 the legislature for workers' compensation for state employees shall
3-28 be allocated under that program as provided by Subsection (c).
3-29 (3) Based on the information reported to the office
3-30 under Sections 412.032 and 501.048, at the beginning of each state
4-1 fiscal biennium the office shall determine which state agencies
4-2 accounted for 90 percent of the state's workers' compensation
4-3 claims costs for the preceding state fiscal biennium. Those state
4-4 agencies are required to participate in the allocation program for
4-5 the next state fiscal biennium. The office shall establish a
4-6 formula for allocating the state's workers' compensation costs
4-7 among those agencies, based on the claims experience of the
4-8 agencies and the related costs incurred by administering the
4-9 claims.
4-10 (4) A state agency that is required to participate in
4-11 the allocation program shall be rewarded or penalized for its
4-12 actual performance against expected workers' compensation losses as
4-13 provided by Subsection (c).
4-14 (5) The office shall receive the amount appropriated
4-15 for workers' compensation claims. The office shall:
4-16 (A) monitor workers' compensation expenses
4-17 incurred by each state agency required to participate in the
4-18 allocation program; and
4-19 (B) compare and report to each of those agencies
4-20 the difference between the allocated amount and the agency's actual
4-21 expenses for workers' compensation.
4-22 (6) If, based on the comparison performed under
4-23 Subsection (5)(B), the office determines that an agency's
4-24 performance resulted in workers' compensation claims costs that
4-25 were higher than the amount allocated to that agency, the agency is
4-26 not entitled to additional state funds for those costs beyond the
4-27 initial allocation and shall pay the additional costs from the
4-28 agency's regular appropriated funds as listed in the General
4-29 Appropriations Act. The agency shall reimburse the office for the
4-30 additional costs through interagency contracts, from the agency's
5-1 regular appropriated funds.
5-2 (7) If, based on the comparison performed under
5-3 Subsection (5)(B) the office determines that an agency's
5-4 performance resulted in workers' compensation claims costs that
5-5 were lower than the amount allocated to that agency, the agency is
5-6 entitled to retain a portion of the savings. The office shall
5-7 determine the amount of the savings that the agency may retain.
5-8 (8) A state agency that is determined by the office to
5-9 be exempt from participation in the allocation program shall
5-10 receive full coverage for workers' compensation costs incurred by
5-11 that agency from the office.
5-12 (d) State Workers' Compensation Account.
5-13 (1) All money recovered by the director from a third
5-14 party through subrogation shall be deposited into the state
5-15 workers' compensation account in general revenue.
5-16 (2) Funds deposited under this section may be used for
5-17 the payment of compensation and other benefits to state employees.
5-18 (Sections 412.013 - 412.020 reserved for expansion.
5-19 SUBCHAPTER C. BOARD
5-20 Sec. 412.021 (a) The office is governed by the risk
5-21 management board. Members of the board must have demonstrated
5-22 experience in the field of workers' compensation and risk
5-23 management administration.
5-24 (b) The board is composed of six members as follows:
5-25 (1) three members appointed by the lieutenant
5-26 governor; and
5-27 (2) three members appointed by the speaker of the
5-28 house of representatives.
5-29 (c) Members of the board hold office for staggered terms of
5-30 six years with two members' terms expiring February 1 of each
6-1 odd-numbered year. A member appointed to fill a vacancy shall hold
6-2 office for the remainder of that term.
6-3 (d) The lieutenant governor and speaker of the house of
6-4 representatives shall designate one member of the board as
6-5 presiding officer on an alternating basis. The presiding officer
6-6 shall serve in that capacity for a two-year term.
6-7 (e) The board is subject to Chapters 552 and 2001,
6-8 Government Code.
6-9 (f) The board is subject to Chapter 325, Government Code,
6-10 (Texas Sunset Act). Unless continued in existence as provided by
6-11 that chapter, the board is abolished and this section expires
6-12 September 1, 2009.
6-13 Sec. 412.022. TRAINING PROGRAM FOR BOARD MEMBERS. (a)
6-14 Before a member of the board may assume the member's duties, the
6-15 member must complete the training program established under this
6-16 section.
6-17 (b) A training program established under this section must
6-18 provide information to the member regarding:
6-19 (1) the enabling legislation that created the board;
6-20 (2) the program operated by the board;
6-21 (3) the role and functions of the board;
6-22 (4) the rules of the board, with an emphasis on the
6-23 rules that relate to disciplinary and investigatory authority;
6-24 (5) the current budget for the board;
6-25 (6) the results of the most recent formal audit of the
6-26 board;
6-27 (7) the requirements of:
6-28 (A) the open meetings law, Chapter 551,
6-29 Government Code;
6-30 (B) the open records law, Chapter 552,
7-1 Government Code; and
7-2 (C) the administrative procedure law, Chapter
7-3 2001, Government Code;
7-4 (8) the requirements of the conflict of interest laws
7-5 and other laws relating to public officials; and
7-6 (9) any applicable ethics policies adopted by the
7-7 board or the Texas Ethics Commission.
7-8 Sec. 412.023. EFFECT OF LOBBYING ACTIVITY. A person may not
7-9 serve as a member of the board or act as the general counsel to the
7-10 board if the person is required to register as a lobbyist under
7-11 Chapter 305, Government Code, because of the person's activities
7-12 for compensation on behalf of a profession that is regulated by or
7-13 that has fees regulated by the board.
7-14 Sec. 412.024. GROUNDS FOR REMOVAL FROM BOARD. (a) It is a
7-15 ground for removal from the board if a member:
7-16 (1) does not have at the time of appointment the
7-17 qualifications required for appointment to the board;
7-18 (2) does not maintain during service on the board the
7-19 qualifications required for appointment to the board;
7-20 (3) violates a prohibition established by Section
7-21 412.023;
7-22 (4) cannot because of illness or incapacity discharge
7-23 the member's duties for a substantial part of the term for which
7-24 the member is appointed; or
7-25 (5) is absent from more than half of the regularly
7-26 scheduled board meetings that the member is eligible to attend
7-27 during a calendar year.
7-28 (b) If the director knows that a potential ground for
7-29 removal exists, the director shall notify the presiding officer of
7-30 the board of the potential ground. The presiding officer shall
8-1 then notify the lieutenant governor, speaker of the house of
8-2 representatives, and the attorney general that a potential ground
8-3 for removal exists. If the potential ground for removal involves
8-4 the presiding officer, the director shall notify the next highest
8-5 officer of the board, who shall notify the lieutenant governor,
8-6 speaker of the house of representatives, and the attorney general
8-7 that a potential ground for removal exists.
8-8 (Sections 412.025 - 412.030 reserved for expansion
8-9 SUBCHAPTER D. GENERAL POWERS AND DUTIES OF BOARD
8-10 Sec. 412.031. RULEMAKING AUTHORITY. The board shall adopt
8-11 rules as necessary to implement this chapter and Chapter 501,
8-12 including rules relating to reporting requirements for a state
8-13 agency.
8-14 Sec. 412.032. BOARD'S REPORT TO LEGISLATURE. (a) Based on
8-15 the recommendations of the director, the board shall report to each
8-16 legislature relating to:
8-17 (1) methods to reduce the exposure of state agencies
8-18 to the risks of property and liability losses, including workers'
8-19 compensation losses;
8-20 (2) the operation, financing, and management of those
8-21 risks; and
8-22 (3) the handling of claims brought against the state.
8-23 (b) The report must include:
8-24 (1) the frequency, severity, and aggregate amount of
8-25 open and closed claims in the preceding biennium by category of
8-26 risk, including final judgments;
8-27 (2) the identification of each state agency that has
8-28 not complied with the risk management guidelines and reporting
8-29 requirements of this chapter; and
8-30 (3) recommendations for the coordination and
9-1 administration of a comprehensive risk management program to serve
9-2 all state agencies, including recommendations for any necessary
9-3 statutory changes.
9-4 Sec. 412.033. The board shall hire a qualified person to
9-5 serve as director of the office. The director serves at the
9-6 pleasure of the board.
9-7 (Sections 412.034 - 412.040 reserved for expansion.
9-8 SUBCHAPTER E. DIRECTOR
9-9 Sec. 412.041. DUTIES; RESPONSIBILITIES. (a) The director
9-10 serves as the state risk manager.
9-11 (b) The director shall supervise the development and
9-12 administration of systems to:
9-13 (1) identify the property and liability losses,
9-14 including workers' compensation losses, of each state agency;
9-15 (2) identify the administrative costs of risk
9-16 management incurred by each state agency;
9-17 (3) identify and evaluate the exposure of each state
9-18 agency to claims for property and liability losses, including
9-19 workers' compensation; and
9-20 (4) reduce the property and liability losses,
9-21 including workers' compensation, incurred by each state agency.
9-22 (c) In addition to other duties provided by this chapter,
9-23 Chapter 501, and by the board, the director shall:
9-24 (1) keep full and accurate minutes of the transactions
9-25 and proceedings of the board;
9-26 (2) be the custodian of the files and records of the
9-27 board;
9-28 (3) prepare and recommend to the board plans and
9-29 procedures necessary to implement the purposes and objectives of
9-30 this chapter and Chapter 501, including rules and proposals for
10-1 administrative procedures consistent with this chapter and Chapter
10-2 501;
10-3 (4) hire staff as necessary to accomplish the
10-4 objectives of the board, and may delegate powers and duties to
10-5 members of that staff as necessary;
10-6 (5) be responsible for the investigation of complaints
10-7 and for the presentation of formal complaints;
10-8 (6) attend all meetings of the board as a nonvoting
10-9 participant; and
10-10 (7) handle the correspondence of the board and obtain,
10-11 assemble, or prepare the reports and information that the board may
10-12 direct or authorize.
10-13 (d) If necessary to the administration of this chapter, and
10-14 Chapter 501, the director, with the approval of the board, may
10-15 secure and provide for services that are necessary and may employ
10-16 and compensate within available appropriations professional
10-17 consultants, technical assistants, and employees on a full-time or
10-18 part-time basis.
10-19 (e) The director also serves as the administrator of the
10-20 government employee's workers' compensation insurance program.
10-21 (f) In administering and enforcing Chapter 501, the director
10-22 shall act in the capacity of employer and insurer. (effective for
10-23 dates of injury before September 1, 1995.)
10-24 (1) The director shall act as an adversary before the
10-25 commission and courts and present the legal defenses and positions
10-26 of the state as an employer and insurer.
10-27 (2) For the purposes of this subsection and Chapter
10-28 501, the director is entitled to the legal counsel of the attorney
10-29 general.
10-30 (3) The director is subject to the rules, orders, and
11-1 decisions of the commission in the same manner as a private
11-2 employer, insurer, or association.
11-3 (g) In administering and enforcing Chapter 501, the director
11-4 shall act in the capacity of insurer. (effective for dates of
11-5 injury on or after September 1, 1995.)
11-6 (1) The director shall act as an adversary before the
11-7 commission and courts and present the legal defenses and positions
11-8 of the state as an insurer.
11-9 (2) For purposes of this subsection and Chapter 501,
11-10 the director is entitled to legal counsel of the attorney general.
11-11 (3) The director is subject to the rules, orders, and
11-12 decisions of the commission in the same manner as an insurer or
11-13 association.
11-14 (h) (1) The director shall prepare for adoption by the board
11-15 procedural rules and prescribe forms necessary for the effective
11-16 administration of this chapter and Chapter 501 (effective for dates
11-17 of injury before September 1, 1995.); and
11-18 (2) prepare for adoption by the board and enforce
11-19 reasonable rules for the prevention of accidents and injuries;
11-20 (3) prepare for adoption by the board procedural rules
11-21 and prescribe forms necessary for the effective administration of
11-22 this chapter and Chapter 501. (effective for dates of injury on or
11-23 after September 1, 1995.)
11-24 (i) The director shall hold hearings on all proposed rules
11-25 and provide reasonable opportunity for the officers of state
11-26 agencies to testify at hearings on all proposed rules under this
11-27 chapter and Chapter 501.
11-28 (j) The director shall furnish copies of all rules to the
11-29 commission and to the administrative heads of all state agencies
11-30 affected by this chapter and Chapter 501.
12-1 Sec. 412.042. REPORTS TO THE LEGISLATURE. (a) The director
12-2 shall report to the legislature at the beginning of each regular
12-3 session.
12-4 (b) The report required under this subsection shall be dated
12-5 January 1 of the year in which the regular session is held and must
12-6 include:
12-7 (1) a list of all persons who have received benefits
12-8 under Chapter 501, the nature and cause of each injury, and the
12-9 amounts paid weekly in income benefits and for medical, hospital
12-10 and other services;
12-11 (2) a summary of administrative expenses;
12-12 (3) a statement:
12-13 (A) showing the amount of the money appropriated
12-14 by the preceding legislature that remains unexpended on the date of
12-15 the report; and
12-16 (B) estimating the amount of that balance
12-17 necessary to administer Chapter 501 for the remainder of that
12-18 fiscal year; and
12-19 (C) an estimate, based on experience factors, of
12-20 the amount of money that will be required to administer Chapter 501
12-21 and pay for the compensation and services provided under Chapter
12-22 501 during the next succeeding biennium.
12-23 (c) The director shall report to the legislature a state
12-24 agency that fails to meet its obligation regarding the prevention
12-25 of accidents and injuries to state employees.
12-26 (Sections 412.043 - 412.050 reserved for expansion
12-27 SUBCHAPTER F. STATE AGENCIES
12-28 Sec. 412.051. DUTIES OF STATE AGENCIES. Each state agency
12-29 subject to this chapter shall actively manage the risks of that
12-30 agency by developing, implementing, and maintaining programs
13-1 designed to assist employees who sustain compensable injuries to
13-2 return to work.
13-3 Sec. 412.052. PROVISIONAL EXEMPTION OF CERTAIN STATE
13-4 AGENCIES. (a) This chapter does not apply to a state agency that
13-5 had medical malpractice insurance coverage, workers' compensation
13-6 insurance coverage, or other self-insurance coverage with
13-7 associated risk management programs before January 1, 1989.
13-8 (b) The office shall evaluate biennially the effectiveness
13-9 of the risk management program operated by a state agency. If,
13-10 based on that evaluation, the director determines that the program
13-11 operated by the state agency is not effective in reducing losses,
13-12 the director shall revoke the exemption granted under this section,
13-13 and the state agency shall comply with the requirements of this
13-14 chapter on notification by the director that the exemption has been
13-15 revoked.
13-16 (c) By January 1, 1999, the board shall have in place rules
13-17 to authorize and provide procedures for the revocation of an
13-18 agency's exemption.
13-19 Sec. 412.053. ANNUAL REPORT BY STATE AGENCY. (a) Each
13-20 state agency shall report to the director for each fiscal year:
13-21 (1) the location, timing, frequency, severity, and
13-22 aggregate amounts of losses by category of risk, including open and
13-23 closed claims and final judgments;
13-24 (2) loss information obtained by the state agency in
13-25 the course of its administration of the workers' compensation
13-26 program;
13-27 (3) detailed information on existing and potential
13-28 exposure to loss, including property location and values,
13-29 descriptions of agency operations, and estimates of maximum
13-30 probable and maximum possible losses by category of risk;
14-1 (4) estimates by category of risk of losses incurred
14-2 but not reported;
14-3 (5) information the director determines necessary to
14-4 prepare a Texas Workers' Compensation Unit Statistical Report; and
14-5 (6) additional information that the director
14-6 determines to be necessary.
14-7 (b) The information shall be reported on or before 60 days
14-8 after the close of each fiscal year.
14-9 SECTION 2. Section 501.001, Labor Code is amended by
14-10 amending Subdivisions (3) and (4) and by adding Subdivision (7) to
14-11 read as follows:
14-12 (3) "Director" means the director of the State Office
14-13 of Risk Management [workers' compensation division of the attorney
14-14 general's office].
14-15 (4) "Office" ["Division"] means the State Office of
14-16 Risk Management [workers' compensation division of the attorney
14-17 general's office].
14-18 (7) "Board" means the risk management board.
14-19 SECTION 3. Section 501.002 (c), Labor Code, is amended to
14-20 read as follows:
14-21 (c) For the purpose of applying the provisions listed by
14-22 Subsection (a) to this chapter, "insurer" or "employer" means
14-23 "state", "office," ["division," or] "director," or "state agency,"
14-24 as applicable.
14-25 SECTION 4. Section 501.003 (a), Labor Code, is amended to
14-26 read as follows:
14-27 (a) The provisions of this chapter and the rules of the
14-28 board [director] affecting an employee also apply to the legal
14-29 beneficiary of a deceased employee.
14-30 SECTION 5. Section 501.046, Labor Code, is amended to read
15-1 as follows:
15-2 Reports of Termination or Continuation of Injuries. In
15-3 addition to other reports required by the board [commission], the
15-4 director shall file a subsequent report not later than the 10th day
15-5 after the date of the termination of the injured employee's
15-6 incapacity. If the employee's incapacity extends beyond 60 days,
15-7 the director shall file a subsequent report before the 70th day
15-8 after the date the employee's incapacity began.
15-9 SECTION 6. The following laws are repealed:
15-10 (1) Section 501.023, Labor Code;
15-11 (2) Section 501.041, Labor Code;
15-12 (3) Section 501.042 (effective for dates of injury
15-13 before September 1, 1995); Section 501.042 (effective for dates of
15-14 injury on or after September 1, 1995), Labor Code;
15-15 (4) Section 501.043, Labor Code;
15-16 (5) Section 501.047, Labor Code;
15-17 (6) Section 501.049, Labor Code.
15-18 SECTION 7. Section 402.021 (a), Labor Code is amended to
15-19 read as follows:
15-20 (a) The commission shall have:
15-21 (1) a division of workers' health and safety;
15-22 (2) a division of medical review;
15-23 (3) a division of compliance and practices; and
15-24 (4) a division of hearings[; and]
15-25 [(5) a division of risk management].
15-26 SECTION 8. Section 403.003(b), Labor Code, is amended to
15-27 read as follows:
15-28 (b) In setting the rate of assessment, the commission may
15-29 not consider revenue or expenditures related to:
15-30 (1) the State Office of Risk Management [the division
16-1 of risk management];
16-2 (2) the research and oversight council on workers'
16-3 compensation [the research center]; or
16-4 (3) any other revenue or expenditure excluded from
16-5 consideration by law.
16-6 SECTION 9. Except as provided by Section 17 of this Act, the
16-7 change in law made by this Act to Chapter 501, excluding
16-8 Sec. 501.022, Labor Code, applies only to a claim for workers'
16-9 compensation benefits based on a compensable injury that occurs on
16-10 or after September 1, 1997. A claim based on a compensable injury
16-11 that occurs before that date is governed by the law in effect on
16-12 the date that the injury occurred, and the former law is continued
16-13 in effect for that purpose.
16-14 SECTION 10. (a) The division of workers' compensation in
16-15 the office of attorney general and the division of risk management
16-16 in the Texas Workers' Compensation Commission are abolished on the
16-17 effective date of this Act. All employees, records, equipment, and
16-18 supplies in the custody of those divisions, as those divisions
16-19 existed on August 31, 1997, shall be transferred to the State
16-20 Office of Risk Management not later than December 31, 1997.
16-21 (b) In making the initial appointments to the risk
16-22 management board, the lieutenant governor and the speaker of the
16-23 house of representatives shall each appoint:
16-24 (1) one member for a term expiring February 1, 1999;
16-25 (2) one member for a term expiring February 1, 2001;
16-26 and
16-27 (3) one member for a term expiring February 1, 2003.
16-28 (c) The lieutenant governor shall appoint the first
16-29 presiding officer to serve in that capacity for a term expiring
16-30 February 1, 1999.
17-1 SECTION 11. This Act takes effect September 1, 1997.
17-2 SECTION 12. The importance of this legislation and the
17-3 crowded condition of the calendars in both houses create an
17-4 emergency and an imperative public necessity that the
17-5 constitutional rule requiring bills to be read on three several
17-6 days in each house be suspended, and this rule is hereby suspended.