LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 18, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1151 by Van de Putte (Relating to the duties of
employers and insurance carriers in a workers'
compensation proceeding.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1151, As Introduced: negative impact of $(2,051,800) through *
* the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(1,028,700) *
* 2003 (1,023,100) *
* 2004 (1,023,100) *
* 2005 (1,023,100) *
* 2006 (1,023,100) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* General Revenue Fund *
* 0001 *
* 2002 $(1,028,700) *
* 2003 (1,023,100) *
* 2004 (1,023,100) *
* 2005 (1,023,100) *
* 2006 (1,023,100) *
*****************************************************
Fiscal Analysis
The bill would expand the duties of employers and carriers regarding
notification to employees of benefits and rights on workers'
compensation. The bill would require employers to provide information to
employees in any language requested about the benefits available: right
to legal counsel or ombudsman assistance at Texas Workers' Compensation
Commission (TWCC), assistance completing and filing forms, an employee's
right to see a doctor of their choice and to change treating doctor, an
employee's right to reasonable medical care, and a right to keep records
confidential. Many of these notifications currently exist in TWCC rules.
Carriers and employers would be required to identify themselves and
inform the employee whenever making inquiries, gathering information or
conducting investigations connected with a claim. The bill would also
require employers and carriers to inform employees and TWCC when claims
investigations include surveillance. The bill would require carriers'
staffs involved in the investigation of claims to be licensed with the
Texas Commission on Private Security.
The bill would take effect immediately with a two-thirds vote in each
house, or on September 1, 2001.
Methodology
The State Office of Risk Management (SORM) estimates a total cost to the
state of approximately $5 million to implement the bill.
SORM estimates the requirements to provide information and assistance to
employees would create a one-time cost of approximately $2,000 to print
written materials and have translations in the ten most common languages
in Texas.
SORM estimates the licensure of its 35 employees involved in claims
information gathering and investigation with the Texas Commission on
Private Security, which includes training and examination, would create
an initial cost of $3,500, with a recurring cost of $1,100 each year due
to training and examination of new employees. The recurring costs are
based on a 31 percent turnover rate equaling training and examination of
11 new employees each year. The renewal of all licenses each year would
cost $1,750 per year. One SORM employee would be required to hold a Class
A license from the Texas Commission on Private Security, under which all
other employees would operate, and would cost $100 for initial training
and $250 per year for license renewal.
SORM also estimates a total loss of $800,000 per year due to a decreased
ability to successfully investigate and deter workers' compensation
fraud. The agency estimates $300,000 per year loss would be attributable
to undetected fraudulent claims being paid, and an additional $500,000
from additional fraud benefits being paid due to a lack of deterrence.
SORM further estimates a loss of $220,000 each year in cost containment
savings currently experienced through the agency's cost containment
vendor. SORM interprets that the bill would prohibit the fee SORM
currently pays to the vendor for participation in a Preferred Provider
Organization (PPO).
Local Government Impact
No significant fiscal implication to units of local government is
anticipated. Any costs would be due to slightly increased duties to
notify and assist employees.
Source Agencies: 453 Texas Workers' Compensation Commission, 479
State Office of Risk Management
LBB Staff: JK, JO, RT, KM