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Property and Casualty Insurance · Texas statutes and rules pertinent to property and casualty insurance · 9 min read

Texas workers' compensation and the guaranty associations

In this lesson you will
  • Identify statutory definitions, employer liability standards, and employee rights under the Texas workers' compensation system.
  • Explain the medical benefit requirements, physician selection rules, and non-subscriber liability conditions under the Texas Labor Code.
  • Describe the organization, assessment rules, governance, and dispute procedures of the Texas Property and Casualty Insurance Guaranty Association.

Foundational Definitions in Texas Workers' Compensation

To understand the Texas workers' compensation system, you must know how key terms are defined under Texas law. An adjuster is a person licensed under Chapter 4101 of the Insurance Code (Tex. Lab. Code §401.011(1)). A certified self-insurer is a private employer granted a certificate of authority to self-insure for the payment of compensation (Tex. Lab. Code §401.011(6)). When parties resolve a dispute, an agreement is the resolution by the parties of one or more issues regarding an injury, death, coverage, compensability, or compensation, but an agreement does not include a settlement (Tex. Lab. Code §401.011(3)). An administrative violation is a violation of Subtitle A, a rule adopted under Subtitle A, or an order or decision of the commissioner subject to penalties and sanctions (Tex. Lab. Code §401.011(2)). An alien is a person who is not a citizen of the United States (Tex. Lab. Code §401.011(4)).

Compensation under the Texas Labor Code specifically means the payment of a benefit (Tex. Lab. Code §401.011(11)). A benefit means a medical benefit, an income benefit, a death benefit, or a burial benefit based on a compensable injury (Tex. Lab. Code §401.011(5)). An income benefit is a payment made to an employee for a compensable injury that does not include a medical benefit, death benefit, or burial benefit (Tex. Lab. Code §401.011(25)). When benefits are paid in a single lump sum rather than weekly installments, Texas law states that the term commute means to pay in a lump sum (Tex. Lab. Code §401.011(9)). A child includes an adopted child or a stepchild who is a dependent of the employee (Tex. Lab. Code §401.011(7)).

A compensable injury is an injury that arises out of and in the course and scope of employment for which compensation is payable (Tex. Lab. Code §401.011(10)). Disability is defined strictly as the inability because of a compensable injury to obtain and retain employment at wages equivalent to the preinjury wage (Tex. Lab. Code §401.011(16)). A doctor means a doctor of medicine, osteopathic medicine, optometry, dentistry, podiatry, or chiropractic who is licensed and authorized to practice (Tex. Lab. Code §401.011(17)). In Texas workers' compensation, health care does not include vocational rehabilitation (Tex. Lab. Code §401.011(19)).

Impairment means any anatomic or functional abnormality or loss existing after maximum medical improvement that results from a compensable injury and is reasonably presumed to be permanent (Tex. Lab. Code §401.011(23)). An impairment rating is the percentage of permanent impairment of the whole body resulting from a compensable injury (Tex. Lab. Code §401.011(24)). Maximum medical improvement is the earliest of the date after which, based on reasonable medical probability, further material recovery or lasting improvement can no longer reasonably be anticipated; the expiration of 104 weeks from the date income benefits begin to accrue; or the date determined under Section 408.104 (Tex. Lab. Code §401.011(30)).

Exam tip. Look closely at the definition of maximum medical improvement. One statutory date for maximum medical improvement is the expiration of 104 weeks from the date income benefits begin to accrue, but maximum medical improvement is the earliest of that date, the medically determined date, or the date determined under Section 408.104. Also note that vocational rehabilitation is excluded from the statutory definition of health care.

Common mistakes

  • In an action described by Section 406.033(a), the employer cannot assert contributory negligence, assumption of the risk, or a fellow employee’s negligence as defenses, but may defend on the ground that the employee intended to bring about the injury or was intoxicated (Tex. Lab. Code §406.033(a), (c)).
  • Believing an employee can change treating doctors at will to get a more favorable disability evaluation; a change of doctor may not be made to secure a new impairment rating or medical report (Tex. Lab. Code §408.022(d)).
  • Assuming ocean marine, life, or disability insurance are covered by the Texas Property and Casualty Insurance Guaranty Act; except as provided by Subchapter F, the act expressly does not apply to life, annuity, health, disability, or ocean marine insurance (Tex. Ins. Code §462.007(b)).
  • Believing that an insurance carrier can buy out or settle future medical benefits; an insurance carrier's liability for medical benefits may not be limited or terminated by agreement or settlement (Tex. Lab. Code §408.021(d)).

Key points

  • Workers' compensation medical benefits are payable from the date of the compensable injury, and an insurance carrier’s liability for medical benefits cannot be limited or terminated by agreement or settlement (Tex. Lab. Code §408.021(b), (d)).
  • Maximum medical improvement is the earliest of the date after which, based on reasonable medical probability, further material recovery or lasting improvement can no longer reasonably be anticipated; the expiration of 104 weeks from the date income benefits begin to accrue; or the date determined under Section 408.104 (Tex. Lab. Code §401.011(30)).
  • Carriers are not liable for compensation if the injury occurred while the employee was intoxicated or if horseplay was a producing cause (Tex. Lab. Code §406.032(1)(A), (2)).
  • Uninsured employers lose the common-law defenses of contributory negligence, assumption of the risk, and negligence of a fellow employee (Tex. Lab. Code §406.033(a)).
  • The Property and Casualty Insurance Guaranty Association board consists of nine members: five industry employees and four public representatives (Tex. Ins. Code §462.052).
  • The commissioner may fine a member insurer failing to pay an assessment up to the lesser of five percent of the unpaid assessment per month or $100 per month (Tex. Ins. Code §462.016(b)).
  • An aggrieved member insurer may appeal a final association action or decision to the commissioner not later than the 30th day after that action or decision; venue is in Travis County for a suit by or against the commissioner or association relating to an action or ruling of either under Chapter 462 (Tex. Ins. Code §§462.103(a)(3)(B), 462.017(b)).
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