State News : Texas

The Division is accepting comment through November 9th on proposed Rule changes to Labor Code
Section 408.103 from the 84th legislature. Now, to be eligible for the higher (75%) rate of TIBs
during the first 26 weeks, a worker’s wages must be below $10.00 per hour instead of the current
$8.50. The proposed changes to Rules 129.3 and 129.11 implement this statutory change. The
amended rules will apply to injuries on or after September 1, 2015.

In a ruling that many might find counterintuitive, a New Jersey court has ruled that an adult dancer
is an employee of the establishment where she danced, and not an independent contractor, for
purposes of workers’ compensation. The court found that the establishment had the right to exercise
control over the injured worker. Despite the fact that the injured worker was free to set her own
schedule and worked solely for tips, she “was not free to come and go as she pleased” once her shift
began, and she “was required to perform both pole and couch dances.”

A controversial deal between the Travis County District Attorney’s Office and Texas Mutual
Insurance Company has been suspended. Going back to at least 2000, Texas Mutual has paid the
DA’s office to prosecute “crimes committed against the company,” such as fraud. Under the
arrangement, investigators directly employed by Texas Mutual gather information and provide a
referral to the DA. The controversy surrounds the fact that only crimes committed against Texas
Mutual, and not all insurers, are being pursued. In 2014, payments from Texas Mutual to the DA’s
office totaled $430,000.

A Cautionary Tale for Non-Subscribers – The Houston Court of Appeals recently affirmed
a $680,000 judgment in a negligence suit against Katy Springs & Manufacturing, Inc. Had the
company acquired workers’ compensation insurance for its employees, the suit would have been
barred by the exclusive remedy provisions of the Labor Code. The accident involved what the
opinion describes to be a company-made wire real that lacked any safety features and which was
recognized by several Katy Springs employees as being unsafe. Katy Springs & Manufacturing, Inc.
V. Joseph Favolora, Houston Court of Appeals – 14th Dist. 2015 WL 5093232.
Big Brother is Watching – Dr. Howard Douglas is the co-founder and medical director of
Western Medical Evaluators, Inc. (WME), a company that provided medical services in workers’
compensation disputes to entities insured by Texas Mutual Insurance Company. WME contracted
with designated doctors to perform designated doctor exams for workers’ compensation claims. Dr.
Douglas routinely billed the maximum compensation of four hours for every functional capacity
evaluation (FCE) performed, even though Texas Mutual’s investigation revealed that the average
time for an FCE by a WME technician was only thirty-nine minutes. Dr. Douglas was convicted
of defrauding Texas Mutual, a third degree felony, and the Court of Criminal Appeals affirmed.
Douglas v. State, No. 03-13-00092-CR, 2105 WL 5097573 (Tex. App.– Dallas August 26, 2015).
Employers and Carriers Beware – Remember that in In re XL Specialty Ins. Co., the Texas
Supreme Court determined that in the statutory workers’ compensation insurance policy context,
the insurer is not the representative of the insured; rather, the insurer is the client and party to a
pending workers’ compensation matter and retains counsel on its own behalf. In a lawsuit involving
a standard liability insurance policy, only the insured is a party to the case, and the insurer retains
counsel on the insured’s behalf. So, in workers’ compensation cases, the communication between
the insurer and the employer is not privileged, but in other cases involving employer liability
coverage, such communications are privileged. We note that attempts at legislation to have the
privilege apply in workers’ compensation failed this past legislative session.

Arthur S. Hernandez, M.D. is forbidden to provide treatment to workers’ compensation patients
beginning March 16, 2016. Chiropractor Hank K. Miller has been removed from the Designated
Doctor list and the MMI/IR certification list as of September 10, 2015. The removal appears to be
permanent.

The new state AWW for dates of injury from October 1, 2015 through September 30, 2016 is
$895.08. The maximum and minimum weekly benefit rates based on the new wage are $895 and
$134, respectively.

It has been the long-time practice of TPAs and insurance carriers to assign their own identifying
number to workers’ compensation claims. This caused problems for DWC in its attempts to link
medical bills to specific workers’ compensation claims. It is often the case that an insurance carrier
will change its TPA during the course of a claim, and thus the identifying number would change in
the EDI transmission. DWC has plans to require the same number to be used throughout the life of
a claim in submitting EDI data, but system participants are balking, given the problems the midstream
change will cause. But the agency is convinced that this will assist it in monitoring treatment

A new BRC pilot program has been implemented in the Dallas field office wherein the parties are
put into different rooms and the BRO shuttles between rooms to facilitate potential agreements as
to the issues. Given that BRCs are typically allotted only 45 minutes, it will be interesting to see
if this type of mediation, which is called “caucus based,” is more effective than what the parties have
come to expect after 25 years of practice before the Division.

The much awaited coding change from ICD 9 to ICD 10 is finally here. It is hard to say what
impact it will have on adjusters and other system participants, but change of any kind has unintended
consequences. And many of us are, frankly, resistant to change! One obvious difference is that
diagnoses will now be even more specific, resulting in more care being taken in evaluating initial
claims of injury. And evaluating extent of injury issues, and the relationship between disability and
the accepted or disputed claimed diagnoses,will require an even higher level of expertise. ICD 10
codes can be accessed on the internet, and we will be keeping the sites busy. There are several
sites, such as www.icd10data.com/Convert that provide crosswalks between ICD 9 codes and ICD
10 codes and descriptions for the new codes.
Here are a couple of entertaining examples of the trend toward specificity: W51.XXA: Accidental
striking against or bumped into by another person, V97.33XD: Sucked into jet engine, subsequent
encounter, S10.87XA: Other superficial bite of other specified part of neck, initial encounter, R46.1:
Bizarre personal appearance. Over time you may be lucky enough to see one of these in a comp
case. After all, there are now well over 60,000 codes in ICD 10, compared to around 13,000 codes
in ICD 9.

Our new Commissioner made some personnel changes at DWC. Barbara Salyers is the new Chief
Deputy. Her stated job duties are management and oversight of DWC operations and liaison with
TDI-Hobby administration and operations. Amy Lee and the Research and Evaluation Group now
report directly to Ms. Salyers. Patricia Gilbert, former Executive Deputy Commissioner for
Operations retired and Joe McElrath is now the Deputy Commissioner for Business Process, a
position similar to that previously held by Ms. Gilbert. Kathy McMaster will serve in a new position
called Deputy Commission of Claims and Customer Services (previously Field Operations). Kristen
Harmon is the new Director of External Relations. It remains to be seen what the impact of all of
these changes will be, but we will continue to keep an eye on things over at the Division.