By Van de Putte S.B. No. 943
77R7186 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to monitoring of the conduct of insurers that engage in
1-3 the business of workers' compensation insurance in this state;
1-4 providing penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter D, Chapter 5, Insurance Code, is
1-7 amended by adding Article 5.55A to read as follows:
1-8 Art. 5.55A. WORKERS' COMPENSATION MONITORING DIVISION. The
1-9 commissioner by rule may establish a division within the department
1-10 to enforce the provisions of:
1-11 (1) this code or the other insurance laws of this
1-12 state that relate to workers' compensation insurance; and
1-13 (2) Subtitle A, Title 5, Labor Code, that affect the
1-14 operations of persons or organizations regulated by the department.
1-15 SECTION 2. Article 5.68-1, Insurance Code, is amended to read
1-16 as follows:
1-17 Art. 5.68-1. PROHIBITED CONDUCT BY WORKERS' COMPENSATION
1-18 INSURANCE CARRIER; PENALTIES [PENALTY] FOR VIOLATION [OF ACT].
1-19 Sec. 1. DEFINITIONS. In this article:
1-20 (1) "Benefits" means workers' compensation benefits
1-21 subject to Subtitle A, Title 5, Labor Code.
1-22 (2) "Insurance carrier" means:
1-23 (A) an insurance company;
1-24 (B) a self-insurer for workers' compensation
2-1 insurance who is certified under Chapter 407, Labor Code; or
2-2 (C) a governmental entity that self-insures,
2-3 either individually or collectively.
2-4 (3) "Insurance company" means a person authorized and
2-5 admitted by the department to engage in the business of insurance
2-6 in this state under a certificate of authority that includes
2-7 authorization to write workers' compensation insurance.
2-8 Sec. 2. PROHIBITED CONDUCT. (a) An insurance carrier or its
2-9 representative may not:
2-10 (1) misrepresent a provision of Subtitle A, Title 5,
2-11 Labor Code, to an employee, an employer, a health care provider, or
2-12 a legal beneficiary;
2-13 (2) terminate or reduce benefits that the carrier is
2-14 obligated to pay without substantiating evidence that the action is
2-15 reasonable and authorized by law;
2-16 (3) instruct an employer not to file a document
2-17 required to be filed with the Texas Workers' Compensation
2-18 Commission;
2-19 (4) instruct or encourage an employer to violate a
2-20 claimant's right to medical benefits under Subtitle A, Title 5,
2-21 Labor Code;
2-22 (5) fail to tender promptly full death benefits if a
2-23 legitimate dispute does not exist as to the liability of the
2-24 insurance carrier;
2-25 (6) allow an employer, other than a self-insured
2-26 employer, to dictate the methods by which and the terms on which a
2-27 claim is handled and settled;
3-1 (7) fail to confirm medical benefits coverage to a
3-2 person or facility providing medical treatment to a claimant if a
3-3 legitimate dispute does not exist as to the liability of the
3-4 insurance carrier;
3-5 (8) fail, without good cause, to attend a workers'
3-6 compensation dispute resolution proceeding within the Texas
3-7 Workers' Compensation Commission or the State Office of
3-8 Administrative Hearings;
3-9 (9) attend a workers' compensation dispute resolution
3-10 proceeding within the Texas Workers' Compensation Commission or the
3-11 State Office of Administrative Hearings without complete authority
3-12 or fail to exercise authority to effectuate an agreement or
3-13 settlement;
3-14 (10) adjust a workers' compensation claim in a manner
3-15 contrary to the license requirements for an insurance adjuster,
3-16 including the requirements of Chapter 407, Acts of the 63rd
3-17 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
3-18 Insurance Code), or the rules of the commissioner;
3-19 (11) fail to process claims promptly in a reasonable
3-20 and prudent manner;
3-21 (12) fail to initiate or reinstate benefits when due
3-22 if a legitimate dispute does not exist as to the liability of the
3-23 insurance carrier;
3-24 (13) misrepresent the reason for not paying benefits
3-25 or terminating or reducing the payment of benefits;
3-26 (14) date documents to misrepresent the actual date of
3-27 the initiation of benefits;
4-1 (15) make a notation on a draft or other instrument
4-2 indicating that the draft or instrument represents a final
4-3 settlement of a claim if the claim is still open and pending before
4-4 the Texas Workers' Compensation Commission;
4-5 (16) fail or refuse to pay benefits from week to week
4-6 as and when due directly to the person entitled to the benefits;
4-7 (17) fail to pay an order awarding benefits;
4-8 (18) controvert a claim if the evidence clearly
4-9 indicates liability;
4-10 (19) unreasonably dispute the reasonableness and
4-11 necessity of health care;
4-12 (20) violate a rule of:
4-13 (A) the Texas Workers' Compensation Commission
4-14 regarding the activities of insurance carriers under Subtitle A,
4-15 Title 5, Labor Code; or
4-16 (B) the commissioner; or
4-17 (21) fail to comply with a provision of Subtitle A,
4-18 Title 5, Labor Code, that specifically applies to insurance
4-19 carriers.
4-20 (b) An insurance carrier shall pay a health care provider
4-21 promptly as provided by Article 21.55 of this code. An insurance
4-22 carrier may not refuse payment at the agreed rate for services that
4-23 the carrier has preauthorized. In addition to any other penalty to
4-24 which the carrier may be subject, a carrier that violates this
4-25 subsection is subject to an administrative penalty in the amount of
4-26 $50,000.
4-27 (c) An insurance carrier or its representative does not
5-1 violate Subsection (a) of this section by allowing an employer to:
5-2 (1) freely discuss a claim;
5-3 (2) assist in the investigation and evaluation of a
5-4 claim; or
5-5 (3) attend a proceeding of the Texas Workers'
5-6 Compensation Commission or the State Office of Administrative
5-7 Hearings and participate at the proceeding in accordance with this
5-8 article and Subtitle A, Title 5, Labor Code.
5-9 Sec. 3. ENFORCEMENT; PENALTIES. (a) The commissioner may
5-10 impose an administrative penalty on an insurance carrier described
5-11 by Section 1(2)(B) or (C) of this article that violates Section
5-12 2(a) of this article. An administrative penalty under this
5-13 subsection is subject to Chapter 84 of this code.
5-14 (b) An insurance carrier described by Section 1(2)(A) of
5-15 this article that violates Section 2(a) or (b) of this article
5-16 commits an unfair and deceptive act in violation of Article 21.21
5-17 of this code. In addition to the disciplinary actions and
5-18 penalties imposed under Article 21.21 of this code, the insurance
5-19 carrier, as determined by the commissioner, is subject to
5-20 additional sanctions under Chapter 82 of this code and
5-21 administrative penalties under Chapter 84 of this code [Any officer
5-22 or representative of any insurance company or association
5-23 authorized to write workmen's compensation insurance in this State,
5-24 who shall violate any provision of the laws relating to such
5-25 business contained in chapter 10, Title "Insurance" of the Revised
5-26 Statutes, relating to the State Insurance Commission and such
5-27 business, shall be fined not less than one hundred nor more than
6-1 five hundred dollars].
6-2 SECTION 3. Sections 414.002(a) and (b), Labor Code, are
6-3 amended to read as follows:
6-4 (a) The division shall monitor for compliance with
6-5 commission rules, this subtitle, and other laws relating to
6-6 workers' compensation the conduct of persons subject to this
6-7 subtitle, other than persons monitored by the division of medical
6-8 review. Persons to be monitored include:
6-9 (1) persons claiming benefits under this subtitle;
6-10 (2) employers; and
6-11 (3) [insurance carriers; and]
6-12 [(4)] attorneys and other representatives of parties.
6-13 (b) The division shall monitor conduct described by Sections
6-14 415.001[, 415.002,] and 415.003 and refer persons engaging in that
6-15 conduct to the division of hearings.
6-16 SECTION 4. Section 415.003, Labor Code, is amended to read as
6-17 follows:
6-18 Sec. 415.003. ADMINISTRATIVE VIOLATION BY HEALTH CARE
6-19 PROVIDER. (a) A health care provider commits an administrative
6-20 violation if the person wilfully or intentionally:
6-21 (1) submits a charge for health care that was not
6-22 furnished;
6-23 (2) administers improper, unreasonable, or medically
6-24 unnecessary treatment or services;
6-25 (3) makes an unnecessary referral;
6-26 (4) violates the commission's fee and treatment
6-27 guidelines;
7-1 (5) violates a commission rule; or
7-2 (6) fails to comply with a provision of this subtitle.
7-3 (b) A health care provider commits an administrative
7-4 violation if the health care provider:
7-5 (1) fails or refuses to timely file required reports
7-6 or records; or
7-7 (2) fails to file with the commission the annual
7-8 disclosure statement required by Section 413.041.
7-9 SECTION 5. Section 415.004, Labor Code, is amended to read as
7-10 follows:
7-11 Sec. 415.004. PENALTY SPECIFIED IN OTHER LAW. If an act that
7-12 is an administrative violation under Section 415.001[, 415.002,] or
7-13 415.003 is expressly made an administrative violation of a
7-14 particular class or subject to a specified penalty in another
7-15 section of this subtitle, the administrative penalty assessed under
7-16 that section, and not under Section 415.001[, 415.002,] or 415.003,
7-17 prevails.
7-18 SECTION 6. Section 415.023(a), Labor Code, is amended to read
7-19 as follows:
7-20 (a) A person who commits an administrative violation under
7-21 Section 415.001[, 415.002,] or 415.003 as a matter of practice is
7-22 subject to an applicable rule adopted under Subsection (b) in
7-23 addition to the penalty assessed for the violation.
7-24 SECTION 7. The following laws are repealed:
7-25 (1) Section 415.002, Labor Code; and
7-26 (2) Section 415.0035; Labor Code.
7-27 SECTION 8. This Act takes effect September 1, 2001, and
8-1 applies only to an act by an insurance carrier regarding a claim
8-2 for workers' compensation benefits based on a compensable injury
8-3 that occurs on or after that date. An act regarding a claim based
8-4 on a compensable injury that occurs before that date is governed by
8-5 the law in effect on the date that the compensable injury occurred,
8-6 and the former law is continued in effect for that purpose.