| TO: | Honorable Joe Deshotel, Chair, House Committee on Business & Industry |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB699 by Zerwas (Relating to the appointment of an attorney for a workers' compensation claimant in certain judicial review proceedings initiated by a workers' compensation insurance carrier.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| 2013 | $0 |
| 2014 | $0 |
| Fiscal Year | Probable Savings from Subsequent Injury Fund 5101 |
Probable (Cost) from Subsequent Injury Fund 5101 |
|---|---|---|
| 2010 | $647,500 | ($1,007,000) |
| 2011 | $647,500 | ($1,007,000) |
| 2012 | $647,500 | ($1,007,000) |
| 2013 | $647,500 | ($1,007,000) |
| 2014 | $647,500 | ($1,007,000) |
The bill would amend the Labor Code to allow the appointment of an attorney for a workers' compensation claimant in certain judicial review proceedings initiated by a workers' compensation insurance carrier. The bill would make the Subsequent Injury Fund liable for the appointed attorney’s reasonable and necessary fees on any issue on which the insurance carrier prevails. The bill would make the insurance carrier liable for the appointed attorney's fees on any issue on which the claimant prevails.
The bill would take effect on September 1, 2009.
Based on the analysis provided by the Texas Department of Insurance (TDI), it is estimated that carriers will initiate approximately 140 judicial appeals involving claimants annually and carriers prevail in 50 percent of these cases. It is estimated that the average attorney fees are $19,000 per case. The analysis is based on a court appointed attorney representing the claimant in 75 percent of the cases, resulting in an estimated annual cost to the Subsequent Injury Fund for attorney fees of $1,007,000 annually.
TDI indicates that currently approximately 27 carrier-initiated appeals annually do not have a claimant attorney involved, and therefore resolve in favor of the carrier through a no evidence summary judgment. These cases result in the subsequent injury fund reimbursing carriers approximately $1,000,000 annually for carrier overpayment of benefits. TDI assumes that this bill will result in an attorney being appointed to represent the claimant in 75 percent of the cases. Attorney representation will reduce the number of no evidence summary judgements and consequently reduce the subsequent injury fund reimbursements made for overpayment of benefits. It is anticipated that the claimant with attorney representation will prevail in about half of these cases, resulting in $370,000 not being reimbursed to the carriers. Among the cases that resolve in favor of the carrier, TDI estimates that 75 percent would settle. Because the Subsequent Injury Fund does not reimburse carriers for overpayment of benefits in judicial appeals that resolve in favor of the claimant or that settle, an additional $277,500 annually would not be reimbursed by the fund, resulting in a net savings to the fund of approximately $647,500.
Based on the analysis by the State Office of Risk Management, the University of Texas System, and the Texas A&M University System, any costs associated with implementing this bill as it relates to these agencies could be absorbed within existing agency resources.
| Source Agencies: | 304 Comptroller of Public Accounts, 454 Department of Insurance, 479 State Office of Risk Management, 710 Texas A&M University System Administrative and General Offices, 720 The University of Texas System Administration
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| LBB Staff: | JOB, JRO, MW, CH
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