HBA-DMD C.S.H.B. 2508 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2508 By: George Business & Industry 4/12/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE The Texas Workers' Compensation Act requires that all income benefits, with the exception of Supplemental Income Benefits, be paid to injured workers on a weekly basis, and that income benefits that have not been paid as ordered by the Texas Workers' Compensation Commission (commission) should include interest. However, in the past the commission hearing officers have issued orders to pay benefits without including interest, and as a result insurance carriers have been reluctant to include interest in their payments to workers in these situations. Currently, Texas physicians use the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (3rd edition, 2nd printing, February 1989) to assign impairment ratings to permanently impaired injured workers. However, there are several medical conditions for which this version does not provide an impairment rating. Additionally, under current law, the burial benefit is $2,500, however, the National Funeral Directors Association has estimated that the national average for the cost of a burial in 1997 was $5,543. C.S.H.B. 2508 requires interest payments from unpaid income benefits to be made weekly and authorizes the commission to establish requirements which would allow the commission to pay income benefits monthly. This bill requires the commission to use the fourth edition of AMA's Guides to the Evaluation of Permanent Impairment or another appropriately determined publication. This bill also authorizes an insurance carrier to pay lifetime income benefits through an annuity, which does not relieve the insurance carrier of liability for ensuring that lifetime income benefits are paid. Additionally, this bill increases the amount that the insurance carrier may pay for burial costs from $2,500 to $6,000. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Workers' Compensation Commission in SECTIONS 1, 3, 4 and 5 (Sections 408.081, 408.124, 408.161, and 408.181, Labor Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 408.081, Labor Code, as follows: Sec. 408.081. INCOME BENEFITS. (a) Makes no change. (b) Requires that income benefits and interest on accrued but unpaid income benefits be paid weekly as and when they accrue without an order from the Texas Workers' Compensation Commission (commission), except as provided by this section or this subtitle, rather than this subtitle. (c) Requires the commission, by rule, to establish requirements for agreements which authorize income benefits to be paid monthly only on the mutual agreement of the employee and the insurance carrier and in compliance with the requirements adopted by the commission. (d) Redesignated from Subsection (c). SECTION 2. Amends Section 408.103, Labor Code, by amending Subsections (a), (b), and (d), and adding Subsection (f) as follows: (a) Provides that, except as otherwise provided by this section, the amount of temporary income benefits is subject to Sections 408.061 (Maximum Weekly Benefit) and 408.062 (Minimum Weekly Income Benefit), Labor Code, and sets forth the amount of a temporary income benefit. (b) Renames Texas Employment Commission as Texas Workforce Commission and makes conforming changes. (d) Makes a conforming change. (f) Provides that the amount of the temporary income benefit of an employee who has returned to work at a reduced wage is computed as specified by Subsection (a), and that the minimum weekly income benefit established under Section 408.062 does not apply. SECTION 3. Amends Section 408.124, Labor Code, by amending Subsection (b) and adding Subsection (c), as follows: (b) Requires the commission, for determining the existence and degree of an employee's impairment, to use "Guides to the Evaluation of Permanent Impairment," fourth edition, rather than third edition, second printing, dated February 1989, published by the American Medical Association. Requires the commission to use the range of motion model contained in that publication, for determining the existence and degree of an employee's impairment relating to a back injury. Makes conforming and nonsubstantive changes. (c) Authorizes the commission, notwithstanding Subsection (b), to adopt by rule a later edition of the "Guides to the Evaluation of Permanent Impairment" or its successor publication as published by the American Medical Association or another analogous publication published by a nationally recognized medical organization as necessary to appropriately determine the existence and degree of an employee's impairment for purposes of this title. SECTION 4. Amends Section 408.161, Labor Code, by adding Subsection (d), as follows: (d) Authorizes an insurance carrier to pay lifetime income benefits through an annuity provided that the annuity agreement meets the terms and conditions for annuity agreements adopted by the commission by rule. Provides that the establishment of an annuity under this subsection does not relieve the insurance carrier of the liability under this title for ensuring that the lifetime income benefits are paid. SECTION 5. Amends section 408.181, Labor Code, by adding Subsections (c) and (d) as follows: (c) Requires the commission, by rule, to establish requirements for agreements under which death benefits may be paid monthly. Authorizes death benefits to be paid monthly only on the mutual agreement of the legal beneficiary and the insurance carrier and in compliance with the requirements adopted by the commission. (d) Authorizes an insurance carrier to pay death benefits through an annuity if the annuity agreement meets the terms and conditions for annuity agreements adopted by the commission by rule. Provides that the establishment of an annuity under this subsection does not relieve the insurance carrier of the liability under this title for ensuring that the death benefits are paid. SECTION 6. Amends Section 408.186(a), Labor Code, to require an insurance carrier to pay the person who incurred liability for the costs of burial, if the death of an employee results from a compensable injury, in the amount of the actual costs incurred for reasonable burial expenses or $6,000, rather than $2,500, whichever is less. SECTION 7. (a) Effective date: September 1, 1999. Applies only to an agreement regarding payment of workers' compensation income benefits that is entered into on or after the effective date. (b) Makes application of Section 408.103, Labor Code, as amended by this Act, prospective, applying only to a claim for workers' compensation temporary income benefits based on a compensable injury that occurs on or after the effective date of the Act. (c) Makes application of Section 401.124, Labor Code, as amended by this Act, prospective, applying only to the determination of an impairment rating for workers' compensation benefits that is finally adopted under Subchapter G (Impairment Income Benefits), Chapter 408 (Workers' Compensation Benefits), Labor Code, on or after January 1, 2000. (d) Makes application of Section 408.186(a), Labor Code, as amended by this Act, prospective, applying only to a claim for workers' compensation burial benefits based on a compensable injury that occurs on or after the effective date of this Act. SECTION 8.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE This substitute differs from the original bill in SECTION 1 (Section 408.081, Labor Code), by including the specification that interest on accrued but unpaid income benefits, rather than solely interest, is required to be paid weekly as and when they accrue without order from the Texas Workers' Compensation Commission (commission). This substitute redesignates SECTIONS 2-6 from the original bill to SECTIONS 3, 4, 6-8, respectively. This substitute adds new SECTION 2 to amend Section 408.103, Labor Code, to provide that, the amount of temporary income benefits is subject to Sections 408.061 (Maximum Weekly Benefit) and 408.062 (Minimum Weekly Income Benefit), Labor Code, and set forth the amount of a temporary income benefit. It changes references to the Texas Employment Commission to the Texas Workforce Commission. It provides that the amount of the temporary income benefit of an employee who has returned to work at a reduced wage is computed as specified by this section, and that the minimum weekly income benefit established under Section 408.062 does not apply. It also makes conforming changes. This substitute adds new SECTION 5 (proposed Sections 408.181(c) and (d), Labor Code), which requires the commission, by rule, to establish requirements for agreements under which death benefits may be paid monthly. It authorizes death benefits to be paid monthly only on the mutual agreement of the legal beneficiary and the insurance carrier and in compliance with the requirements adopted by the commission. It also authorizes an insurance carrier to pay death benefits through an annuity if the annuity agreement meets the terms and conditions for annuity agreements adopted by the commission by rule. It provides that the establishment of an annuity under this subsection does not relieve the insurance carrier of the liability under this title for ensuring that the death benefits are paid. This substitute differs from the original bill in SECTION 7, by redesignating Subsections (b) and (c) of the original bill to Subsections (c) and (d) of the substitute, respectively. The substitute adds new Subsection (b) to make application of Section 408.103, Labor Code, prospective. It also makes nonsubstantive changes.