TITLE 28. INSURANCE

PART 1. TEXAS DEPARTMENT OF INSURANCE

CHAPTER 3. LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES

SUBCHAPTER W. MISCELLANEOUS RULES FOR GROUP AND INDIVIDUAL ACCIDENT AND HEALTH INSURANCE

28 TAC §3.3602

The Commissioner of Insurance adopts new 28 TAC §3.3602, relating to requirements for short-term limited-duration coverage. Section 3.3602 implements Senate Bill 1852, 86th Legislature, Regular Session (2019). The new section also provides consumer protections related to renewability and provides consumers notice of the protections they have when purchasing such products. The new section is adopted with changes to the proposed text published in the November 8, 2019, issue of the Texas Register (44 TexReg 6686). The rules will be republished. The changes to the proposed text are made in response to public comments and also include other minor changes to add clarity and consistency in the rule text and form and conform with the department's current writing style. These changes do not materially alter issues raised in the proposal, introduce new subject matter, or affect people other than those previously on notice.

The department revised Figure: 28 TAC §3.3602(e) to clarify the instructions in paragraph 6 stating the maximum amount the policy will pay within the policy term, or if applicable, on a lifetime basis. This change was necessary to provide consistent language to describe policy limits.

The department revised Figure: 28 TAC §3.3602(e) to clarify in paragraph 8 that the term "PPO" refers to a preferred provider benefit plan and the term "EPO" refers to an exclusive provider benefit plan.

The department revised Figure: 28 TAC §3.3602(e) to reword the question in paragraph 9. The department replaced "What services does the plan cover?" with "What type of care will this plan cover?" to conform to other language in the form.

In response to a comment, the department revised §3.3602(d)(2) to clarify that renewal does not permit new underwriting.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to include the plan marketing name and the name of the insurer that is underwriting the coverage above paragraph 1. The department made conforming changes to §3.3602(f)(5)(A), which requires issuers to include these elements in a combined disclosure form.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to use plain language in its terminology in paragraph 1. The department changed paragraph 1, to remove language stating that "ACA plans cover hospital, medical, and surgical expenses due to an injury or sickness." The department reformatted the information using bullets and added language to indicate that, unlike ACA plans, a short-term limited-duration plan may not cover all injuries or sicknesses a prospective enrollee had before applying, and it does not allow a prospective enrollee to get federal assistance with premiums or out-of-pocket costs, such as tax credits and cost-sharing reductions.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to add the word "to" between the words "right" and "renew" in paragraph 3.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to add information about applying for an ACA plan outside of the open enrollment period. The department changed paragraph 4 of the disclosure form to provide information on how to find out about a qualifying life event and provided examples of such events.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to clarify the instructions in paragraph 7 to state that if the deductible can reset more frequently than annually, then issuers must disclose that information.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to inform consumers in paragraph 8 about the potential of balance billing in an indemnity plan.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to require issuers to include in paragraph 8 a website address to the plan directory or other information on how to locate providers, for any plan that has a provider network.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to clarify in paragraph 9 that short-term limited-duration plans limit coverage for some types of care.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to instruct the consumer in paragraph 9 to ask the agent for cost-sharing information if it is not included in the chart.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to clarify that the chart in paragraph 9 must include any applicable benefit maximums.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to clarify that row (o) of the chart in paragraph 9 relates to outpatient drug coverage. The department clarified the instructions for row (o) to specify that if prescription drug coverage is limited by a formulary, that information must be stated, and a link to the formulary must be provided. The department also clarified that a discount plan should not be represented as prescription drug coverage.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to include a statement in Spanish and English in paragraph 10 before the signature line. This statement instructs the prospective enrollee not to sign the document if they do not understand it.

In response to a comment, the department revised Figure: 28 §3.3602(e) to include information in the affirmation statement in paragraph 10 about receiving the disclosure form in writing before completing the application or making any payment.

In response to a comment, the department revised Figure: 28 TAC §3.3602(e) to include the department's consumer help line phone number and website address under paragraph 11 so that consumers know who to contact if they experience problems with the plan. The addition of this information necessitated that the federal notice to be renumbered as paragraph 12. The department also revised §3.3602(f)(5)(G) to clarify that a combined disclosure form and outline of coverage must include paragraph 12 of the disclosure form about the federal notice. This change was necessary due to the addition of the department's contact information in paragraph 11 of the disclosure form.

In response to a comment, the department revised §3.3602(f)(5)(A) to clarify that a combined disclosure form must include the title of the form.

REASONED JUSTIFICATION. New §3.3602 is necessary to implement SB 1852. Insurance Code §1509.002(a) requires the Commissioner, by rule, to prescribe a disclosure form to be provided with a short-term limited-duration insurance policy and application. Insurance Code §1509.002(c) also requires an insurer issuing a short-term limited-duration insurance policy to adopt procedures in accordance with the rule to obtain a signed form from the insured acknowledging that the insured received the disclosure form. Section 1509.002(c) requires the rule to allow for electronic acknowledgment.

Section 3.3602(a). New §3.3602(a) describes the purpose of the section, which is to define short-term limited-duration insurance and requirements for short-term limited-duration coverage. New §3.3602(a) also provides that the section applies to any individual or group accident and health insurance policy or certificate issued under Insurance Code Chapter 1201 or 1251.

Section 3.3602(b). New §3.3602(b) provides that, for purposes of 28 TAC Chapters 3, 21, and 26, short-term limited-duration insurance has the meaning given in Insurance Code §1509.001. Insurance Code §1509.001 states that, in Chapter 1509, "short-term limited-duration insurance" has the meaning assigned by 26 C.F.R. §54.9801-2. Title 26 C.F.R. §54.9801-2, which defines "short-term, limited-duration insurance" to mean "health insurance coverage provided pursuant to a contract with an issuer that: [h]as an expiration date specified in the contract that is less than 12 months after the original effective date of the contract and, taking into account renewals or extensions, has a duration of no longer than 36 months in total," and displays a specified notice along with any additional information required by state law.

Section 3.3602(c). New §3.3602(c) provides that a policy or certificate must provide benefits consistent with the minimum standards for the type of coverage offered, and it clarifies that the rules in the subchapter are not inclusive of all requirements that apply to short-term limited-duration plans. For example, many requirements in Title 8 of the Insurance Code (concerning Health Insurance and Other Health Coverages) apply, including general provisions in Chapters 1201 and 1251, and mandated benefit requirements under Title 8, Subtitle E.

Section 3.3602(d). New §3.3602(d) provides the requirements for individual and group short-term limited-duration coverage.

New §3.3602(d)(1) provides that short-term limited-duration coverage may not be marketed as guaranteed renewable because, by definition, under Insurance Code §1509.001, short-term limited-duration insurance cannot be renewed for a total duration that exceeds 36 months. Since the term "guaranteed renewable" implies a continuous right to renew, use of the term with short-term limited-duration insurance would be misleading.

New §3.3602(d)(2) provides that short-term limited-duration coverage must be marketed either as "nonrenewable," or as "renewable (without new underwriting)" at the option of the policyholder or enrollee, if the enrollee contributes to the premium. Section 3.3602(d)(2) allows issuers to choose whether to issue short-term limited-duration plans that are either nonrenewable or renewable and ensures that plans are marketed consistent with the terms of the policy. To avoid misleading prospective enrollees, if an issuer opts to permit renewability it must do so at the option of the policyholder. In a group policy in which the enrollee contributes to the premium, the enrollee controls the renewal option.

New §3.3602(d)(3) provides that short-term limited-duration coverage must clearly state the duration of the initial term and the total maximum duration, including renewal options. Section 3.3602(d)(3) helps ensure that prospective enrollees are fully informed regarding how long they can keep the coverage.

New §3.3602(d)(4) provides that short-term limited-duration coverage may not be modified after the date of issue, except by signed acceptance of the enrollee. Section 3.3602(d)(4) ensures that the enrollee is informed and accepts the changes in coverage, and also ensures that an issuer does not circumvent the policy terms of renewability by unilaterally modifying the coverage.

New §3.3602(d)(5) provides requirements for renewable, short-term limited-duration coverage. Section 3.3602(d)(5)(A) provides that a short-term limited-duration individual policy or group certificate must include a statement that the enrollee has a right to continue the coverage in force by timely payment of premiums for the number of terms listed. Section 3.3602(d)(5)(A) also provides for the enrollee to be informed about the enrollee's right to continue coverage when timely premium payments are made.

New §3.3602(d)(5)(B) provides that a short-term limited-duration individual policy or group certificate must include a statement that the issuer will not increase premium rates or make changes in provisions in the policy or certificate on renewal based on individual health status. Section 3.3602(d)(5)(B) ensures that coverage that is marketed as renewable at the option of the enrollee does not require additional underwriting or change the terms of coverage at renewal.

New §3.3602(d)(5)(C) provides that, if applicable, a short-term limited-duration individual policy or group certificate must include a statement that the issuer retains the right, at the time of policy renewal, to make changes to premium rates by class. Section 3.3602(d)(5)(C) makes clear that a renewable policy is not subject to individual rating adjustments at renewal. The statement would not be required when an issuer chooses to offer a fixed premium for the life of the policy.

New §3.3602(d)(5)(D) provides that if a short-term limited-duration individual policy or group certificate is renewable, it must include a statement that the issuer, at the time of renewal, may not deny renewal based on individual health status. Section 3.3602(d)(5)(D) helps ensure that coverage that is marketed as renewable at the option of the enrollee provides contractual terms that are consistent with that marketing.

Section 3.3602(e). New §3.3602(e) provides that an issuer offering short-term limited-duration insurance must include a written disclosure form that is consistent with the form in Figure: 28 TAC §3.3602(e) and the requirements of §3.3602. Section 3.3602(e) is necessary because Insurance Code §1509.002(a) requires the Commissioner by rule to prescribe a disclosure form to be provided with a short-term limited-duration insurance policy and application.

In addition to the elements specifically required by Insurance Code §1509.002(b), the disclosure form includes a statement that the plan is exempt from the federal Affordable Care Act (ACA) and may not cover all necessary care. This information informs prospective enrollees about possible benefit limitations.

Along with information about renewability, the form states that "[t]he amount of your premium payment might change after you renew this plan. But the amount can't go up because of a change in your health. A change in your health can't affect your benefits or your right to renew." These statements are included for consistency with new §3.3602(d)(2) and (5).

Along with the open enrollment information, the form includes an explanation that prospective enrollees can sign up for a plan not covered by the ACA at any time, but that they can be denied for health reasons when they sign up for a new plan. This information is provided to inform prospective enrollees about underwriting that may occur during the initial application for short-term limited-duration coverage.

The form also references Healthcare.gov. This information provides prospective enrollees with a resource to research open enrollment information, including eligibility information about qualifying life events for enrollment at other times.

Following information on the plan's deductible, the form includes information on whether the plan uses a provider network and how to access the provider directory, if applicable. This information helps to ensure prospective enrollees understand the nature of coverage and whether limits apply based on their choice of provider. For indemnity plans, the form also clarifies that providers have not agreed to a set price with the plan and can charge the consumer for any amount not paid by the plan.

The form uses a chart to describe covered services and any limits that apply to those services. This information is necessary because Insurance Code §1509.002(b)(7)(A)-(H) and (8) require that the disclosure form state whether certain health care services are covered, specifically: prescription drug coverage, mental health services, substance abuse treatment, maternity care, hospitalization, surgery, emergency health care, preventive health care, and any other information the Commissioner determines is important for a purchaser of a short-term limited-duration policy.

Within the chart of covered services, the form expands categories required under Insurance Code §1509.002(b)(7)(B), (C), (D), (E), and (F) in order to separate coverage for facility fees and physician fees. In describing maternity care coverage, the form also separates prenatal visits from physician services at delivery. The form expands on emergency health care to identify coverage for urgent care and ambulance services. The form adds primary care and specialist care office visits.

Issuers are permitted, but not required, to include cost-sharing information in the benefits chart. This flexibility allows an issuer to incorporate key plan summary information within the disclosure document, rather than producing and delivering a separate document that may be repetitive. If the issuers do not include cost-sharing information, the form instructs the consumer that they may request the information.

The form includes the department's contact information through which a consumer can file a complaint or verify an agent's license number. The form also includes a signature line on which the consumer verifies that they received the form before applying or paying for coverage and that they understand the information.

The form also includes the text of the federally required notice. This is included because Insurance Code §1509.001 defines short-term limited-duration insurance based on the federal definition, at 45 C.F.R. Section 54.9801-2. The federal regulation defining "short-term, limited-duration insurance" includes the requirement to provide a specific notice.

Section 3.3602(f). New §3.3602(f) provides the disclosure form requirements. Section 3.3602(f) is necessary because Insurance Code §1509.002(b) provides the information that the disclosure form must include.

New §3.3602(f) provides that in creating the disclosure form, issuers must follow all instructions in the subsection. Section 3.3602(f) ensures that issuers produce the disclosure form correctly and accurately.

New §3.3602(f)(1) provides that a disclosure form must be produced for each plan option that the issuer makes available and reflect the specific terms of the plan. New §3.3602(f)(1) is included because the nature of the information required by Insurance Code §1509.002(b) varies across plan offerings. For example, the plan's duration, renewal options, benefits, deductible, coverage maximum, and coverage for preexisting conditions can vary across different issuers and plans offered by an individual issuer. In order to accurately educate the prospective enrollee regarding the plan or plans available, a single disclosure form should not be used to reflect multiple plans.

New §3.3602(f)(2) provides that the disclosure form must accurately represent the short-term limited-duration coverage. Section 3.3602(f)(2) is provided to fully inform the prospective enrollee about the coverage offered.

New §3.3602(f)(3) provides that if the disclosure form in new Figure 28 TAC §3.3602(e) does not accurately represent the plan being offered, the issuer may modify the form as necessary. When filing the form with the department, the issuer must clearly identify any changes made and explain the reason for modifying the form. Section 3.3602(f)(3) provides flexibility to ensure the disclosure form does not provide inaccurate information. In reviewing filed disclosures, the department will ensure that the changes made accurately represent the terms of the plan.

New §3.3602(f)(4) provides that the chart under disclosure form paragraph (9) may be supplemented to include cost-sharing information for each benefit. Section 3.3602(f)(4) provides flexibility for issuers that wish to use the disclosure form as a primary plan summary document, rather than creating a separate document that may duplicate much of the information in the form.

New §3.3602(f)(5) provides that the disclosure form in Figure: 28 TAC §3.3602(e) may be combined with the outline of coverage required under Insurance Code §1201.107 and 28 TAC §3.3093(4), if certain requirements are met. Section 3.3602(f)(5) provides flexibility for issuers in the individual market, which are required to provide an outline of coverage document that includes much of the same information that is contained in the disclosure form. Allowing issuers to combine the documents eliminates what would otherwise be duplicative disclosure requirements and enables a more streamlined approach.

Section 3.3602(g). New §3.3602(g)(1) provides that the disclosure form must be filed with the department for review before use, consistent with filing procedures in 28 TAC Chapter 3, Subchapter A.

New §3.3602(g)(2) requires that a disclosure form must be provided in writing to a prospective enrollee before the individual completes an application or makes an initial premium payment, application fee, or other fee; and again at the time the policy or certificate is issued. This makes clear that the disclosure should be available in writing before, and not after, a prospective enrollee submits an application. Section 3.3602(g)(2) is necessary because Insurance Code §1509.00(2)(a) requires a disclosure form to be provided with a short-term limited-duration policy and application.

New §3.3602(g)(3) provides that the disclosure form must be signed by the enrollee to acknowledge receipt at the time of application. An electronic signature is acceptable if the issuer's procedures comply with Insurance Code Chapter 35.

New §3.3602(g)(1) through (3) are necessary because Insurance Code §1509.002(c) provides that an issuer issuing a short-term limited-duration insurance policy adopt procedures in accordance with the rule to obtain a signed form from the enrollee acknowledging that the enrollee received the disclosure form. Insurance Code §1509.002(c) also provides that the rule must allow for electronic acknowledgment.

SUMMARY OF COMMENTS AND AGENCY RESPONSE.

Commenters: The department received three written comments, and two oral comments. Commenters in support of the proposal with changes were: AARP Texas; American Cancer Society Cancer Action Network, Inc.; American Diabetes Association; American Lung Association; Center for Public Policy Priorities; Children's Defense Fund-Texas; National Association of Social Workers, Texas Chapter; National Multiple Sclerosis Society; The Leukemia & Lymphoma Society; UnidosUS; and Young Invincibles.

Comment on §3.3602. A commenter appreciates the department's commitment to the use of plain language to promote transparency.

Agency Response. The department appreciates the support.

Comment on §3.3602. A commenter cites a study that found that consumers have "significant difficulty in understanding short-term limited-duration plans cost implications." The commenter encourages the department to develop educational resources for short-term limited-duration plans similar to its "Health Insurance Shopping Guide" and to provide the link to the resource on the disclosure form.

Agency Response. The department appreciates the comment and will take it into consideration. The department does agree that it is important to connect consumers with educational resources to improve health insurance literacy. The department declines to develop a shopping guide as part of this rulemaking, since it is outside the scope of Insurance Code §1509.002(a), which requires the Commissioner, by rule, to prescribe a disclosure form to be provided with a short-term limited-duration insurance policy and application.

Comment on 3.3602(d)(2). A commenter states that plans sold as renewable should not engage in medical underwriting or deny coverage at renewal.

Agency Response. The department agrees that a fair understanding of the right to renew should not expose an individual to additional underwriting. The department changed §3.3602(d)(2) to clarify that renewal does not permit new underwriting.

Comment on 3.3602(d)(5)(B). A commenter states that while premium rates may not increase based on a change to an individual's health status, other criteria, like occupation and gender, could still be used as factors to modify rates. Another commenter stated that plans sold as renewable should not change the premium rate or policy terms based on individual risk characteristics. A commenter states that the department should provide more explicit guidelines for premium rate and policy changes to protect the value of these products to those consumers who purchase them.

Agency Response. The department agrees that a fair understanding of the right to renew is that renewal should not expose an individual to additional underwriting. The department modified §3.3602(d)(2) to clarify that renewal does not permit new underwriting.

Comment on §3.3602(e). A commenter states that the requirement that all companies selling short-term limited-duration plans must comply with the disclosure forms should remain in the adopted rule. The commenter states that this requirement maintains a level playing field for the benefit of consumers.

Agency Response. The department appreciates the support.

Comment on Figure: 28 TAC §3.3602(e). A commenter states that the heading for the disclosure form ("Is this short-term health insurance plan right for me?"), should remain in the adopted rule. The commenter states that question is at the core of the disclosure form itself.

Agency Response. The department appreciates the support.

Comment on Figure: 28 TAC §3.3602(e). A commenter recommends adding information to the disclosure form that will help the applicant understand any fees in addition to the monthly premium that may be charged for the plan, such as application fees, association membership fees, and miscellaneous administrative fees.

Agency Response. The department declines to add this information to the form at this time, because it appears that current marketing practices provide consumers with sufficient information about how much their coverage will cost. The department will monitor the issue and consider future changes to the rule if complaints are received.

Comment on Figure: 28 TAC §3.3602(e). A commenter recommends that the form have a required space for the name of the insurer, the marketing name of the plan, and the agent's name and license number.

Agency Response. The department agrees in part and modifies the disclosure form to include the plan marketing name and the name of the issuer that is underwriting the coverage above paragraph 1. The department declines to require the agent's name and license number at this time, due to the administrative complexity and cost that would add. The department will continue to monitor this issue. In addition, the department modified paragraph 11 to provide the department's contact information and how to check if an agent has a license.

Comment on Figure: 28 TAC §3.3602(e). A commenter recommends that paragraph 1 of the disclosure use more plain language to describe the differences between ACA plans and short-term plans. The commenter suggested alternate language to state, "ACA plans cover preexisting conditions and comprehensive health benefits such as hospitalization, emergency services, maternity care, preventive care, prescription drugs and mental health and substance use disorder services," or "ACA plans have comprehensive coverage."

Agency Response. The department agrees that paragraph 1 of the disclosure form should use more plain language in its terminology. The department changed paragraph 1 to explain that, unlike ACA plans, a short-term limited-duration plan may not cover all injuries or sicknesses, including any that a prospective enrollee may have before applying. The department also reformatted the information using bullets and added a statement to indicate that short-term plans don't qualify for tax credits and cost-sharing reductions.

Comment on Figure: 28 TAC §3.3602(e). A commenter raises a concern that the language in paragraph 3 concerning an individual's right to renew a plan and protection against health-based rate increases may blur the lines between short-term limited-duration insurance and qualified health plan coverage.

Agency Response. The department disagrees and declines to make a change to the disclosure form. The language as written accurately describes the protections put in place under §3.3602(d). Paragraph 1 of the form highlights key differences between short-term limited-duration insurance and ACA plans and paragraphs 4, 9, and 12 also clarify how the short-term limited-duration insurance plan is different from an ACA plan.

Comment on Figure: 28 TAC §3.3602(e). Two commenters suggest informing consumers that subsidies may be available for consumers to enroll in an ACA plan.

Agency Response. The department agrees and changed paragraph 1 of the disclosure form to indicate that short-term limited-duration plans are not eligible for federal assistance.

Comment on Figure: 28 TAC §3.3602(e). A commenter states that the word "to" is missing in paragraph 3 between the words "right" and "renew."

Agency Response. The department agrees and added the word "to."

Comment on Figure: 28 TAC §3.3602(e). One commenter recommends including more information on qualifying life events that enable an individual to get an ACA plan, special enrollment periods, and subsidies. The commenter also recommends adding information to better understand about a potential gap in coverage. The commenter recommends language that states "If you want to sign up for a health plan covered by ACA laws: You can sign up for another plan only during open enrollment or if you have a qualifying life event, such as losing coverage from a job or having a baby. You may be able to get extra help paying for premiums and out-of-pockets costs that are not available with short-term plans. The next open enrollment dates for ACA plans are: (dates listed). When you sign up for a plan during HealthCare.gov open enrollment dates, your insurance coverage will start on the following January 1. To find out if you have a qualifying life event (such as losing coverage through your job, parent or spouse or changes to your family like getting married or having a baby) talk to your insurance agent or go to HealthCare.gov. The end of this short-term plan is not a qualifying life event, so you may have to wait until the next open enrollment period to sign up for an ACA plan."

Agency Response. The department agrees that additional information about applying for an ACA plan outside of the open enrollment period is important information for a consumer to understand. The department changed paragraph 4 of the disclosure form to provide information on how to find out about a qualifying life event and examples of those events.

Comment on Figure: 28 TAC §3.3602(e). Two commenters emphasize the importance of helping consumers understand the risk of balance billing in indemnity plans. Another commenter states the importance of balance billing information with respect to "(m) primary care" and a "(n) specialist office visit." One commenter also states that the first and third answers fail to provide consumers with information regarding the fact that their provider or specialty facility may be entirely out-of-network, leaving the consumer with the responsibility of paying the entire cost of care. One commenter recommends language for paragraph 8 in the disclosure form that states, "No. Your coverage is the same, no matter what doctor/provider you use. No providers have agreed in advance to accept the reimbursement from this short-term plan as payment in full. Doctors/providers can bill you directly for any amount the plan does not pay."

Agency Response. The department agrees that it's important that consumers understand the potential of balance billing in an indemnity plan and changed the information in Section 8. Other disclosure requirements regarding balance billing apply to short term plans that constitute preferred provider benefit plans (PPOs) and exclusive provider benefit plans (EPOs) under 28 TAC §3.3705 and Insurance Code Chapters 1301 and 1456.

Comment on Figure: 28 TAC §3.3602(e). A commenter states that Section 8 of the disclosure form requires insurers to state whether a provider network exists for a given plan, but it does not tell consumers where to look for more information about the comprehensiveness of the networks. The commenter states that the department should require insurers to make information about provider networks available prior to purchase, which could include a link to their online provider-lookup tool. Two commenters recommend requiring issuers to include information about provider networks and the URL to the online provider directory within the disclosure form.

Agency Response. The department agrees that this is important information for a consumer purchasing a short-term limited-duration plan and notes that Insurance Code §1451.505 requires health plans to provide an online directory and to include a link to the directory in the electronic summary of benefits and coverage. Since federal law does not require a short-term limited-duration plan to provide a summary of benefits and coverage, it is appropriate to include the network information in this disclosure document.

Comment on Figure: 28 TAC §3.3602(e). A commenter expresses concern for the question asking about the maximum amount the plan will pay for services. The commenter explains that this question can be misleading to consumers. As an example, the commenter explains that many short-term limited-duration plans may have a maximum cap of $2 million for covered services, which will sound reasonable to a consumer. However, the commenter states that it is unlikely that any consumer would ever reach that cap due to the inadequacy of the plan's benefit design and likelihood that a consumer would pay for most of their care out-of-pocket if diagnosed with a serious illness.

Agency Response. The department declines to make a change to paragraph 6, because this information is required by Insurance Code §1509.002(b)(5). The information in the chart in paragraph 9 provides more detailed information about plan limits and the department clarified that the chart must include any applicable benefit maximums.

Comment on Figure: 28 TAC §3.3602(e). One commenter states that it should be clear to the consumer whether the deductible applies for the term of the plan or on an annual basis. The commenter also states that consumers should be informed if the deductible resets during the plan's duration.

Agency Response. The department agrees and clarified the instructions to state that if the deductible can reset more frequently than annually, this must be disclosed.

Comment on Figure: 28 TAC §3.3602(e). A commenter raises concern about consumers understanding that in some cases the consumer would be responsible for the entire cost of care if their provider, or specialty facility, is entirely out-of-network.

Agency Response. The department declines to make a change. The EPO statement makes clear that the plan covers care only from in-network providers, with the exception of emergency care and some other situations.

Comment on Figure: 28 TAC §3.3602(e). A commenter recommends that insurers be instructed to include any specific dollar cap on per-service reimbursement within the table. For example, if a plan will cover only $100 per day for a hospital stay and cover only a total of $1,500 per confinement, the table must indicate that.

Agency Response. The department agrees and modified the instructions in the chart to clarify that applicable limitations include benefit maximums.

Comment on Figure: 28 TAC §3.3602(e). A commenter states that several short-term limited-duration plans only cover prescription drugs during an inpatient hospitalization, and recommends that the language for row (o) clarify that the coverage in question is for outpatient prescription drugs. Two commenters recommend requiring formulary information, including a URL link to the formulary, to be included in the chart. One commenter recommends that if the plan uses a discount card or similar model, the consumer must be informed that they may be responsible for out-of-pocket costs.

Agency Response. The department agrees and expands the description for row (o) to read "drugs ordered by your doctor (outpatient prescription drugs)." The department clarifies that if the outpatient drug coverage is limited by a formulary, that information must be stated, and a link to the formulary must be provided. Since a discount card is not insurance coverage, the instructions clarify that it should not be represented as such, but the availability of the discount plan may be stated.

Comment on Figure: 28 TAC §3.3602(e). A commenter states that, although short-term limited-duration plans do offer prescription drug coverage, the cap can be as low as seven thousand dollars for the duration of the plan. The cost of a drug for cancer treatment could easily reach that cap in a month. The commenter recommends requiring issuers to provide dollar amounts and certain types of contextual details in the disclosure plan.

Agency Response. The department declines to make this change to row (o) in the chart. The disclosure form requires issuers to explain any applicable limitations, exceptions, or other important information about the nature of coverage. The department added clarification to the instructions for the chart explaining that applicable limitations include benefit maximums.

Comment on Figure: 28 TAC §3.3602(e). A commenter references paragraph 9 of the disclosure form, which states that "[w]hile ACA plans cover all listed benefits with few limits, this plan may limit coverage for some types of care." The commenter states that considering that every short-term limited-duration plan on the market in Texas limits some aspect of coverage, and says the department should change "may limit" to "limits."

Agency Response. The department agrees with the recommendation and has modified paragraph 9 by replacing "may limit" with "limits."

Comment on Figure: 28 TAC §3.3602(e). A commenter recommends requiring issuers to include cost-sharing information in the chart for each benefit. The commenter notes that as proposed, including cost-sharing information in the disclosure document is optional.

Agency Response. The department declines to require inclusion of cost-sharing information, since issuers may use other documents to describe the coverage. However, the department did change paragraph 9 to inform the consumer that they may ask for this information if it is not included in the chart. Issuers are also permitted to include cost-sharing information and to combine the disclosure form with the outline of coverage under new 28 TAC §3.3602(f)(4) and (5).

Comment on Figure: 28 §3.3602(e), §3.3602(g)(2), and (3). A commenter states support for the requirement to provide the disclosure form to the prospective enrollee in writing before the individual completes an application or makes an initial payment. The commenter recommends that either, as part of the affirmation that a consumer read and understood the disclosure form, or separately, a consumer should affirm that they received the disclosure form in writing before they completed the application or made any payment.

Agency Response. The department appreciates the support. The department also agrees about the affirmation and changed paragraph 10 of the disclosure form to include information about receiving the disclosure form in writing before completing the application or making any payment.

Comment on Figure: 28 TAC §3.3602(e). A commenter urges the department to include the department's contact information on the disclosure form so that consumers know who to contact if they experience problems with the plan.

Agency Response. The department agrees with the recommendation and has modified the disclosure form to include the department's consumer help line phone number and website address under paragraph 11.

Comment on Figure: 28 TAC §3.3602(e). A commenter requests that the department ensure language access as part of the disclosure rule, by: translating the final disclosure to Spanish and requiring insurers to complete and make the disclosure available in Spanish, at a minimum; on the English-language form, including a short note in Spanish that the consumer may request the alternate Spanish-language disclosure; and requiring agents who are communicating with a consumer in a language other than English to automatically provide the disclosure in that language without the consumer having to request it, if the department has made a disclosure form in that language available.

Agency Response. The department agrees in part and has modified the disclosure to include a statement in Spanish and English before the signature line that states, "Don't sign this document if you don't understand it." The department also encourages issuers to produce and file translated versions of the form and to ensure agents provide appropriate assistance to consumers. Consistent with §3.4004(h), foreign language versions of a previously approved form can be filed on an exempt basis.

Comment on §3.3602(f)(1). Two commenters state that the requirement of one disclosure form for each plan option should remain. A commenter states that this requirement will help reduce confusion as consumers compare products.

Agency Response. The department appreciates the support.

Comment on §3.3602(f)(3). A commenter states that the requirement in §3.3602(f)(3) providing that if a carrier modifies the disclosure form it must clearly identify and explain changes to facilitate the department's review should remain.

Agency Response. The department appreciates the support.

Comment on §3.3602(f)(3). A commenter raises concern that the ability of issuers to modify the disclosure form could lead to confusion for consumers. The commenter requests that the department remove the modification provision or, if the provision must be kept, to allow form modifications only during a predetermined annual period, to require public disclosure of requested modifications, and to clarify the factors to be used in evaluating modification requests.

Agency Response. The department declines to make a change. Since the form must be filed for review, the department can ensure that modifications only serve to more accurately describe the coverage, and do not create confusion for consumers.

Comment on §3.3602(f)(5). A commenter states that the requirement in §3.3602(f)(5) providing the required order of a combined disclosure and outline of coverage should remain.

Agency Response. The department appreciates the support.

Comment on §3.3602(f)(5). A commenter recommends clarifying the title from the short-term plan disclosure on any combined document.

Agency Response. The department agrees to make a change, and it has changed the instructions in §3.3602(f)(5)(A) for combining the forms, to include the title, the plan marketing name, and name of the issuer. This change clarifies that this information must precede paragraph 1 of the outline of coverage.

Comment on §3.3602(g)(1). A commenter states that the requirement to file the disclosure form for department review before use should remain.

Agency Response. The department appreciates the support.

Comment on §3.3602(g)(2). A commenter states that the requirement to provide a disclosure form in writing to a prospective enrollee before completing an application or paying any fees should remain.

Agency Response. The department appreciates the support.

Comment on §3.3602(g)(3). A commenter states that the requirement for the enrollee's signature on the disclosure at application should remain.

Agency Response. The department appreciates the support.

STATUTORY AUTHORITY. The Commissioner adopts 28 TAC §3.3602 under Insurance Code §§1201.006, 1201.101(a), 1201.108(b), 1202.051, 1251.008, 1509.002, and 36.001.

Insurance Code §1201.006 provides that the Commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Chapter 1201.

Insurance Code §1201.101(a) provides that the Commissioner adopt reasonable rules establishing specific standards for the content of an individual accident and health insurance policy and the manner of sale of an individual accident and health insurance policy, including disclosures required to be made in connection with the sale.

Insurance Code §1201.108(b) provides that the Commissioner prescribe the format and content of an outline of coverage required by §1201.107.

Insurance Code §1202.051(d) provides that the Commissioner adopt rules necessary to implement §1202.051 and to meet the minimum requirements of federal law, including regulations.

Insurance Code §1251.008 provides that the Commissioner may adopt rules necessary to administer Chapter 1251.

Insurance Code §1509.002 provides that the Commissioner by rule prescribe a disclosure form to be provided with a short-term limited-duration insurance policy and application, that the disclosure form prescribed by rule may include any other information the Commissioner determines is important for a purchaser of a short-term limited-duration insurance policy, and that the rule must allow for electronic acknowledgement.

Insurance Code §36.001 provides that the Commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the department under the Insurance Code and other laws of this state.

§3.3602.Requirements for Short-Term Limited-Duration Coverage.

(a) The purpose of this section is to define short-term limited-duration insurance and address requirements for short-term limited-duration coverage. This section applies to any individual or group accident and health insurance policy or certificate issued under Insurance Code Chapters 1201 or 1251.

(b) For the purposes of Chapters 3, 21, and 26 of this title, "short-term limited-duration insurance" has the meaning given in Insurance Code §1509.001.

(c) An individual policy or group certificate of short-term limited-duration insurance must provide benefits consistent with the minimum standards for the type of coverage offered.

(d) Short-term limited-duration coverage, including individual policies and group certificates:

(1) may not be marketed as guaranteed renewable;

(2) must be marketed either as nonrenewable, or renewable (without new underwriting) at the option of the policyholder or enrollee, if the enrollee contributes to the premium;

(3) must clearly state the duration of the initial term and the total maximum duration including any renewal options;

(4) may not be modified after the date of issue, except by signed acceptance of the policyholder or the enrollee, if the enrollee contributes to the premium; and

(5) if coverage is renewable, a short-term limited-duration individual policy or group certificate must:

(A) include a statement that the enrollee has a right to continue the coverage in force by timely payment of premiums for the number of terms listed;

(B) include a statement that the issuer will not increase premium rates or make changes in provisions in the policy, or certificate, on renewal based on individual health status;

(C) if applicable, include a statement that the issuer retains the right, at the time of policy renewal, to make changes to premium rates by class; and

(D) include a statement that the issuer, at the time of renewal, may not deny renewal based on individual health status.

(e) An issuer offering short-term limited-duration insurance must include an accurate written disclosure form that is consistent with the form and instructions prescribed in Figure: 28 TAC §3.3602(e) and the requirements of this section.

Figure: 28 TAC §3.3602(e) (.pdf)

(f) In creating a disclosure form, issuers must follow all instructions provided in this subsection:

(1) The disclosure must be produced for each plan option that the issuer makes available and reflect the specific terms of the plan.

(2) The disclosure form must accurately represent the short-term limited-duration coverage being provided.

(3) If the disclosure form provided in Figure 28 TAC §3.3602(e) does not accurately represent the plan being offered, the issuer may modify the form as necessary. When filing the form with the department, the issuer must clearly identify any changes made and explain the reason for modifying the form.

(4) The chart under disclosure form paragraph (9) may be supplemented to include cost-sharing information for each benefit.

(5) The disclosure form provided in Figure 28 TAC §3.3602(e) (the disclosure form) may be combined with the outline of coverage required under §3.3093(4) of this title (the outline of coverage) only if the combined disclosure form and outline of coverage is assembled and combined in the following order:

(A) "Is this short-term health insurance plan right for me?" followed by the plan marketing name, name of issuer, and paragraph (1) of the outline of coverage;

(B) paragraph (2) of the outline of coverage is replaced with paragraphs (1) through (8) of the disclosure form;

(C) paragraph (3) of the outline of coverage is combined with paragraph (9) of the disclosure form, using as a minimum, the information contained in the chart in paragraph (9) of the disclosure form;

(D) paragraph (4) of the outline of coverage;

(E) paragraph (5) of the outline of coverage may be removed, as it is addressed in paragraph (3) of the disclosure form;

(F) paragraph (6) of the outline of coverage; and

(G) paragraphs (10), (11), and (12) of the disclosure form.

(g) A disclosure form under this section must be:

(1) filed with the department for review before use, consistent with filing procedures in Subchapter A of this chapter;

(2) provided in writing to a prospective enrollee:

(A) before the individual completes an application or makes an initial premium payment, application fee, or other fee; and

(B) at the time the policy or certificate is issued; and

(3) signed by the enrollee to acknowledge receipt at the time of application. An electronic signature is acceptable if the issuer's procedures comply with Insurance Code Chapter 35.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 27, 2019.

TRD-201905008

Justin Beam

Chief Clerk and Assistant General Counsel

Texas Department of Insurance

Effective date: January 16, 2020

Proposal publication date: November 8, 2019

For further information, please call: (512) 676-6584


PART 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

CHAPTER 124. CARRIERS: REQUIRED NOTICES AND MODE OF PAYMENT

28 TAC §124.2, §124.3

The Texas Department of Insurance, Division of Workers' Compensation (DWC) adopts amendments to §124.2 (concerning General Rules for Written Communications to and from the Commission) and §124.3 (concerning Investigation of an Injury and Notice of Denial/Dispute). The proposed amendments were published on October 25, 2019, in the Texas Register (44 TexReg 6214). The amendments are adopted with changes. These rules will be republished.

REASONED JUSTIFICATION

These rules are adopted as required under Senate Bill (SB) 2551, 86th Legislature (2019). Senate Bill 2551 amended both the Workers' Compensation Act, Labor Code Title 5 (Act), and Government Code Chapter 607, Subchapter B (Subchapter B) (relating to Diseases and Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians (EMTs) (collectively "first responders")). A separate bill, SB 1582, added peace officers to the list of first responders covered by Subchapter B. As these adopted rules will apply uniformly to all first responders covered by Subchapter B, no additional rulemaking is required to implement SB 1582. These amendments address both an insurance carrier's obligation to investigate and the notification process for presumption claims for first responders. These amendments are adopted concurrently with amendments to Chapter 180, which address enforcement. The reasoned justifications for the amendments to Chapters 124 and 180 are meant to be read together, and each is incorporated by reference into the other.

Subchapter B applies to certain occupational diseases or illnesses suffered by first responders who meet the qualifications set forth. Subchapter B applies to first responders who received a physical examination upon or during employment that did not reveal evidence of the illness or disease for which benefits or compensation is sought, who have been employed for five years or more as a first responder, and who seek benefits or compensation for a disease or illness covered by the subchapter that is discovered during employment as a first responder. Gov't Code §607.052(a). The diseases and illnesses covered by Subchapter B are smallpox, reactions to vaccinations, tuberculosis or other respiratory illness, cancer (firefighters and EMTs only), and acute myocardial infarction or stroke. §§607.053-607.056.

The presumptions under Subchapter B do not apply to a determination of a survivor's eligibility for benefits under Government Code Chapter 615 (relating to Financial Assistance to Survivors of Certain Law Enforcement Officers, Fire Fighters, and Others), in a cause of action brought in court except for judicial review of a grant or denial of employment-related benefits or compensation, to a determination regarding benefits or compensation under a life or disability insurance policy. Furthermore, a presumption does not apply if the disease or illness for which benefits or compensation is sought is known to be caused by the use of tobacco and if either the first responder is or has been a user of tobacco or if their spouse has, during the marriage, smoked tobacco. §607.052(b). The presumptions under Subchapter B apply to a determination of whether a first responder's disability or death resulted from a disease or illness contracted in the course and scope of employment for purposes of benefits or compensation. §607.057.

Senate Bill 2551 amended Subchapter B to direct that four specified types of cancer and cancers originating in seven specified organs might trigger the presumption under Government Code §607.055. Senate Bill 2551 also amended the requirements for rebutting a presumption. A presumption can be rebutted through showing, by a preponderance of the evidence, that a risk factor, accident, hazard, or other cause not associated with an individual's service as a first responder was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred. §607.058(a). A rebuttal must include a statement that describes, in detail, the evidence that the person reviewed before making the determination that a cause not associated with the individual's service as a first responder was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred. §607.058(b).

Senate Bill 2551 also amended the Act to provide an insurance carrier with an additional option at the 15th day after receiving written notice of a first responder's disability or death for which a presumption may be applicable under Subchapter B. Labor Code §409.021(a-3). Generally, at the 15th day, an insurance carrier must either begin the payment of benefits or notify the injured employee and DWC in writing of its refusal to pay. §409.021(a). An insurance carrier now has the option, at the 15th day, of providing a first responder and DWC with a notice, referred to in these rules as a "Notice of Continuing Investigation," that describes all steps taken by the insurance carrier to investigate the disability or death before notice was given and the information the insurance carrier reasonably believes is necessary to complete its investigation of the compensability of the injury. §409.021(a-3).

The bill also amended Labor Code §415.021 to require that the commissioner consider whether an injured employee cooperated with the insurance carrier's investigation of the claim and whether the employee timely authorized access to relevant medical records when determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided a Notice of Continuing Investigation. The commissioner shall also consider whether the insurance carrier conducted an investigation of the claim, applied the statutory presumptions under Subchapter B, and expedited medical benefits under Labor Code §504.055 (relating to Expedited Provision of Medical Benefits for Certain Injuries Sustained by First Responder in Course and Scope of Employment).

An insurance carrier's existing duty to investigate a claim is described under the Act. Labor Code 409.021 establishes the foundation for an insurance carrier's duty to investigate a claim prior to a refusal to pay benefits. Section 409.021(a-3) specifically provides that a Notice of Continuing Investigation must "describe all steps taken by the insurance carrier to investigate the injury before the notice was given and the evidence that the carrier reasonably believes is necessary to complete its investigation of the compensability of the injury." Section 409.021(c) provides that an insurance carrier has a right to continue to investigate the compensability of an injury during the 60-day period. Section 409.021(d) provides that an insurance carrier may reopen the issue of compensability if evidence is later found that could not be reasonably discovered earlier. This language plainly reflects a recognized obligation to reasonably investigate a claim in a timely manner. Upon receipt of written notice of injury, an insurance carrier shall conduct an investigation relating to the compensability of the injury, the insurance carrier's liability for the injury, and the accrual of benefits. A notice of refusal to pay benefits must specify the reasonable grounds for the refusal. §409.022(a) and (c).

If an insurance carrier intends to rely on information discovered after the denial of a claim to support a reason for denial not described in the notice of denial, the insurance carrier must show that the information could not have been reasonably discovered at an earlier date. §409.022(b). When reviewing a health care provider's claim, an insurance carrier can request additional documentation necessary to clarify the provider's charges and, when disputing payment, an insurance carrier must submit a report that sufficiently explains the reasons for the reduction or denial of payment. §408.027(b) and (e). An insurance carrier commits an administrative violation for any of 22 specified actions, including failing to process claims promptly and in a reasonable and prudent manner, misrepresenting the reason for not paying benefits or terminating or reducing payments of benefits, controverting a claim if the evidence clearly indicates liability, and failing to comply with the Act. §415.002(a). Conversely, an insurance carrier is authorized to allow an employer to assist in the investigation and evaluation of a claim. §415.002(b)(2). The unambiguous meaning of these statutory provisions is that an insurance carrier is expected to conduct a reasonable investigation to establish grounds for refusing to pay benefits. Rule 124.3(a) sets forth the procedures for carrying out these statutory requirements for investigating claims.

As noted by the Texas Supreme Court in Texas Mutual Insurance Company v. Ruttiger, 381 SW3d 430, 448-449 (Tex. 2012), an insurance "carrier has statutory and regulatory duties to promptly conduct adequate investigations and reasonably evaluate and expeditiously pay workers' legitimate claims or face administrative penalties." The court further noted, "The Act's requirements include time limits for payment of benefits, giving notice of a compensability contest and the specific reason for the contest, and necessarily subsume the requirement of proper investigation and claims processing." Id. at 445 (citing §409.021(a)). The court observed that "[k]ey parts of the [workers' compensation] system are the amount and types of benefits, the delivery systems for benefits, the dispute resolution processes for inevitable disputes that arise among participants, the penalties imposed for failing to comply with legislatively mandated rules, and the procedures for imposing such penalties." Id. at 450. The court recognized that DWC's pervasive authority to regulate and penalize insurance carriers for inadequate investigations eliminated the need for private causes of action. Id. at 449-450.

Insurance carriers have additional investigative responsibilities specific to designated claims advanced by first responders or their beneficiaries. As provided by SB 2551, an insurance carrier is relieved of the duty to either initiate payment or provide notice of its refusal to pay within 15 days of receiving written notice of a qualifying injury to a first responder, if it provides a Notice of Continuing Investigation "that describes all steps taken by the insurance carrier to investigate the injury before notice was given and the evidence that the carrier reasonably believes is necessary to complete its investigation of the compensability of the injury." §409.021(a-3). An insurance carrier's notice of refusal to pay benefits must explain why a presumption under Subchapter B, does not apply and must describe the evidence that the carrier reviewed in making that determination. §409.022(d). In determining whether to assess an administrative penalty for a claim involving a first responder, the commissioner must consider whether "the insurance company conducted an investigation of the claim [and] applied the statutory presumption under Subchapter B." §415.021(c-2).

For claims concerning first responders, Subchapter B provides elements necessary to qualify for a presumption under the subchapter, as well as a disqualification for tobacco use. Gov't Code §607.052(a) and (b)(4). At a later hearing, an insurance carrier may rebut any presumption established under Subchapter B "through a showing by a preponderance of the evidence that a risk factor, accident, hazard, or other cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred." §607.058. These provisions establish the evidentiary standard applicable to rebuttal of the presumption and require that an insurance carrier investigate a first responder's qualification for a presumption under Subchapter B.

The Legislature has directed that DWC adopt rules necessary to implement SB 2551 no later than January 1, 2020. The implementation of SB 2551 will provide an amended process for claim notification including an allowance for issuance of a Notice of Continuing Investigation. Upon issuance of a Notice of Continuing Investigation, an insurance carrier will have more time to investigate a claim before taking action. The adopted amendments also describe an insurance carrier's obligation to investigate when it receives notice of an injury for which a presumption may apply on a claim and the process the carrier must follow when investigating a presumption claim under Subchapter B.

The changes in law made by SB 2551 apply to a claim for benefits filed on or after June 10, 2019, the effective date of SB 2551. Section 8 of SB 2551 provides that the amendments to Government Code §607.055 and §607.058 apply only to a claim for benefits filed on or after June 10, 2019. Section 10 of SB 2551 provides that Labor Code §504.053(e)(1) applies only to administrative violations that occur filed on or after June 10, 2019. The amendments will not apply to a claim for benefits filed before June 10, 2019.

DWC posted an informal draft of these amendments on its website for comment and hosted a stakeholder meeting on Wednesday, August 21, 2019. Subsequently, and in response to the comments received, DWC published proposed amendments in the Texas Register and held a public hearing on Wednesday, November 20, 2019. Section 409.021(a-3), as amended by SB 2551, directs that an insurance carrier need not comply with the established 15-day pay or deny obligation if it issues a described notice. As adopted, Rule 124.2 identifies this notice as a Notice of Continuing Investigation and requires that insurance carriers use a plain language format and no less than a 12-point font.

The adopted amendments to Rule 124.2 add subsections (f) - (h) to establish the notice requirements provided for under §409.021(a-3). Subsection (f) details the choice of actions that an insurance carrier may take during the first 15 days following receipt of a written notice of injury. Subsection (f)(3) provides that notice must be provided to both the claimant and DWC, as required under §409.021(a-3). This requirement is also consistent with DWC's responsibility to monitor the workers' compensation system, as set forth in Chapter 414 (relating to Enforcement of Compliance and Practice Requirements).

Subsection (g) clarifies that a "claim for benefits" means the first written notice of injury as provided in Rule 124.1 (concerning Notice of Injury). A written notice of injury can include DWC Form-001, Employer's First Report of Injury or Illness, or if that form has not been filed, any other written communication, regardless of the source, which informs the carrier of the name of the injured employee, the identity of the employer, the approximate date of the injury, and information which asserts the injury is work related. The filing of a DWC Form-041, Employee's Claim for Compensation for a Work-related Injury or Occupational Disease, or a DWC Form-042, Claim for Workers' Compensation Death Benefits, by an injured employee or their beneficiary would fulfill this requirement if it is the first written notice of injury.

Subsection (h) describes what must be included in a Notice of Continuing Investigation. The elements of a Notice of Continuing Investigation provide an outline for what constitutes a reasonable investigation and the relevant and necessary information for that investigation. An insurance carrier may request that an injured employee provide releases required to obtain information and specified information or documents within their custody or control reasonably believed to be necessary to complete its investigation of the compensability of an injury. An insurance carrier must continue to pursue its own investigation, seeking to obtain information directly from health care providers, employers, and other sources. This is consistent with an insurance carrier's existing duty under law to investigate a claim as discussed above. Senate Bill 2551 did not create any additional duty for an injured employee to respond to production requests from an insurance carrier.

Subsection (h)(3) provides a description of information or documents that may not be identified by the insurance carrier as reasonably necessary to complete its investigation through a Notice of Continuing Investigation, such as a request for additional diagnostic testing, mental health records, generic requests, or requests for records that are not directly related to either the disease or illness or eligibility for a statutory presumption under Subchapter B. The workers' compensation system provides other opportunities for an insurance carrier to obtain additional diagnostic testing. Mental health records have no apparent relevance to an investigation involving any of the diseases or illnesses identified under Subchapter B. As described under §409.021(a-3), the Notice of Continuing Investigation provides an insurance carrier with the opportunity to identify the claim-specific information that the insurance carrier reasonably believes is necessary to complete its investigation of the compensability of an injury.

Subsection (j) describes additional requirements for an insurance carrier when issuing a denial notice on a claim where the insurance carrier issued a Notice of Continuing Investigation. Subsection (j)(2) clarifies if the insurance carrier concludes that a statutory presumption applies, but still denies the claim, the notice of denial must include a statement explaining why and describing the claim-specific evidence or documentation reviewed prior to issuance of the notice. The notice of denial should demonstrate a rational conclusion based on claim-specific evidence or documentation as justification for denial of the claim for benefits. These requirements are consistent with §409.022 and §415.021.

Subsection (s) establishes minimum standards for plain language notices including that a minimum font size of 12-point be used in all plain language notices. The requirement for a 12-point font is consistent with other guidelines and requirements for readability and plain language. For example, the Texas Department of Insurance requires that a notice of network requirements and employee information form must "be printed in not less than 12-point type." 28 TAC §10.63;see also Federal Plain Language Guidelines (May 2011), available at plainlanguage.gov. The requirements for 12-point font will apply to all plain language notices. The requirements in Subsection (s) will go into effect on April 1, 2020, providing insurance carriers with additional time to update their automated systems.

Throughout Rule 124.2, additional non-substantive editorial changes are adopted to correct errors of grammar and punctuation, clarify wording, and to conform to the agency's style guidelines.

The amendments to Rule 124.3(a)(1-4) address the use of the Notice of Continuing Investigation as now allowed under §409.021(a-3). As provided by SB 2551, by issuing a timely Notice of Continuing Investigation, an insurance carrier is allowed additional time to investigate a claim before deciding to pay or deny a claim on or before the 60th day from written notice of injury. §409.021(a-3). Under Rule 124.3(a)(4), if a Notice of Continuing Investigation is issued after the 15th day from receipt of written notice of injury, the insurance carrier is liable for accrued or payable income and medical benefits prior to a timely denial.

The amendments to Rule 124.3 delete penalty provisions in subsection (a)(4)(A-C) in order to conform with House Bill (HB) 7, enacted by the 79th Legislature, Regular Session, effective September 1, 2005. House Bill 7 amended Labor Code §415.021 to delete a limitation that an administrative penalty should not exceed $10,000. Section 415.021 permits DWC to assess administrative penalties of up to $25,000 per violation in addition to any other sanctions authorized by the Act. Section 415.021 also states that each day of noncompliance constitutes a separate violation and lists the factors that DWC must use when determining penalty amounts. Additionally, §415.025 provides that a reference in the Labor Code or other law to a particular class of violation or administrative penalty must be construed as a reference to an administrative penalty, and except as otherwise provided in the Act, an administrative penalty may not exceed $25,000 per day per occurrence, and each day of noncompliance constitutes a separate violation in accordance with §415.021.

The amendments to subsections (d) and (e) are required to provide for the use of a Notice of Continuing Investigation in claims involving death or burial benefits. Subsection (d) is amended to clarify, for purposes of death benefits, when an insurance carrier may issue a Notice of Continuing Investigation in accordance with the provisions of §124.2(f) and §124.3. Subsection (e) provides that, notwithstanding the requirements of §132.13 (concerning Burial Benefits), when an insurance carrier issues a Notice of Continuing Investigation, the insurance carrier must either pay or deny a claim for burial benefits within seven days from the initiation of benefits or the issuance of a notice of denial.

The transition language in prior subsection (f) is now obsolete and has been deleted as all claims prior to September 1, 2003, have exceeded the 15 days provided in subsection (a).

Subsection (g) provides that if an insurance carrier receives written notice of injury for a disease or illness identified by Subchapter B, it is required to investigate the applicability of the statutory presumption in addition to investigating the compensability of the injury, liability for the injury, and the accrual of benefits. Subsection (g)(1) provides that a claimant is not required to expressly claim the applicability of a statutory presumption in order for the statutory presumption to apply.

As described in subsection (g)(2), a presumption under Subchapter B is claimed to be applicable upon a first responder's written notice of injury for a disease or illness identified by Subchapter B. As a written notice of injury constitutes a claim for any presumption under Subchapter B, an insurance carrier has the duty of investigating whether a presumption does or does not apply to an individual claim. This is consistent with the provisions of Government Code §607.057 and §607.058 and Labor Code §409.021 and §415.021, as well as with an insurance carrier's duty to investigate a claim as discussed above. Subsection (g)(2) is also consistent with the Legislature's intent that DWC "effectively educate and clearly inform each person who participates in the system as a claimant, employer, insurance carrier, health care provider, or other participant of the person's rights and responsibilities under the system and how to appropriately interact within the system." Labor Code §402.021 (relating to Goals; Legislative Intent; General Workers' Compensation Mission of Department).

As described in subsection (g)(3), whether a presumption does or does not apply has no direct bearing on issues relating to compensability, liability for the injury, and the accrual of benefits. For instance, if an injured employee is a smoker, the employee nonetheless may have suffered a compensable injury even if the presumption under Government Code §607.054 does not apply. Accordingly, as set forth in subsection (g)(3), an insurance carrier has a continuing obligation to conduct a reasonable investigation even when a presumption does not apply or may be rebuttable.

Throughout Rule 124.3, additional non-substantive editorial changes are adopted to correct errors of grammar and punctuation, clarify wording, renumber subsections, and to conform to the agency's style guidelines.

Finally, SB 2551 required that DWC adopt rules necessary to implement the bill. DWC adopts these amendments to implement SB 2551.

SUMMARY OF COMMENTS AND AGENCY RESPONSE

Texas Mutual Insurance Company and the Office of Injured Employee Counsel submitted comments offering general support of the implementation of SB 2551 and against the adoption of certain specific provisions.

The City of San Antonio, Insurance Council of Texas, and Liberty Mutual Insurance Company offered comments against specific statements in the preamble and rule provisions.

General Comments

Comment: Two commenters offered general support for the proposed rules.

Response: DWC appreciates the supportive comments.

Comment: One commenter challenged the following statement in the preamble regarding Labor Code §409.022(b): "If an insurance carrier intends to rely on evidence discovered after the denial of a claim, the insurance carrier must show that the evidence could not have been reasonably discovered at an earlier date." The commenter characterized this statement as an incorrect evidentiary bar and stated that §409.022(b) does not bar new evidence based on different arguments that may be raised to address the certified issues and that failure to comply with such requirements is an administrative violation.

Response: DWC agrees in part. Section 409.022(b) reads "The grounds for the refusal specified in the notice [of refusal to pay benefits] constitute the only basis for the insurance carrier's defense on the issue of compensability in a subsequent proceeding, unless the defense is based on newly discovered evidence that could not reasonably have been discovered at an earlier date" (emphasis added). Statutes are to be read according to their plain meaning, "giv[ing] effect to the Legislature's intent as expressed by the language of the statute." State Office of Risk Management v. Martinez, 539 SW3d 266, 270 (Tex. 2017),quoting City of Rockwell v. Hughes, 246 SW3d 621, 625 (Tex. 2008);see also Code Construction Act, Government Code §§311.021, 311.023. The plain meaning of §409.022(b) is that the grounds for refusing to pay benefits is the only basis for a defense of compensability in a subsequent proceeding, "unless the defense is based on newly discovered evidence that could not reasonably have been discovered at an earlier date." The Legislature expanded the basic rules for a notice of refusal to pay benefits in SB 2551 by adding §409.021(a-3) and §409.022(d-1) to provide for the Notice of Continuing Investigation. Section 409.021(a-3) provides that "a notice ... describes all steps taken by the insurance carrier to investigate the injury before the notice was given and the evidence the carrier reasonably believes is necessary to complete its investigation of the compensability of the injury."

DWC does, however, recognize the need to clarify this statement from the preamble. So, it has been revised to note that "[i]f an insurance carrier intends to rely on information discovered after the denial of a claim to support a reason for denial not described in the notice of denial, the insurance carrier must show that the information could not have been reasonably discovered at an earlier date." During the dispute resolution process, parties have the opportunity to continue to investigate and develop evidence in support of stated reasons for denial.

Comment: One commenter asked DWC to address an apparent conflict between Labor Code §409.021(a-3), as added by SB 2551, and §408.027 (relating to Payment of Health Care Provider) to reconcile the 60 days an insurance carrier is allowed to investigate a claim under §409.021(a-3) with the requirement that an "insurance carrier must pay, reduce, deny, or determine to audit the health care provider's claim not later than the 45th day after the date of receipt by the carrier of the provider's claim" in §408.027. The commenter recommended that DWC read the requirements of §409.021(a-3) to override the requirements of §408.027, arguing that the former provision is both more specific in nature and more recently enacted. The commenter also requested that DWC add language to allow an insurance carrier an additional 45 days to process a medical bill following the 60 days provided through issuance of a Notice of Continuing Investigation.

Response: DWC appreciates the comment. The statutes referenced by the commenter can be reconciled. The statutorily mandated time frames have different triggers and run independently. The 60 days to investigate a claim under §409.021(a-3) is measured from the first written report of injury. Under Rule 124.1, first written report of injury could take several forms, including the employer first report of injury, notification to an insurance carrier by DWC, or other communications, including a medical bill. The 45 days to process a medical bill under §408.027 is triggered by receipt of a complete medical bill from a health care provider. Insurance carriers are not required to take the full time allowed. Currently, insurance carriers may process and make payments for some medical services while they continue to investigate a claim for compensability, For network claims under Insurance Code Chapter 1305 (relating to Workers' Compensation Health Care Networks), insurance carriers have an existing duty to notify health care providers of compensability denials and must pay for medically necessary services that are provided to an injured employee before notification of a compensability dispute.

If DWC were to accept the commenter's suggestion, that a medical bill need not be paid until 45 days after a decision to initiate benefits, it would conflict with the Legislative intent expressed in §408.027. Under that scenario, a health care provider might wait up to 105 days for a medical bill to be processed by an insurance carrier. That would clearly contradict the prompt payment intent of §408.027. Statutes are to be read as a whole, giving effect to every part. Railroad Comm'n of Texas v. Texas Citizens for a Safe Future and Clean Water, 336 SW3d 619, 628 (Tex. 2011). In a complex administrative scheme, such as the workers' compensation system, deference is to be granted to an agency's construction of the statute as long as that construction is reasonable and in alignment with the statute's meaning. Id. at 629-630; see Martinez, 539 SW3d at 270-271. No change was made in response to this comment.

§124.2

Comment: One commenter said DWC exceeded its statutory authority by equating "claim for benefits" with the insurance carrier's first written notice of injury, noting that "claim" is an affirmative act. The commenter further argued that the definition of "claim for benefits" in §124.2(g) exceeded the statutory authority, noting that "claim for benefits" was not previously defined in either the Act or Subchapter B. The commenter noted that Merriam-Webster's definition of "claim" as an affirmative act is more analogous to §409.003, and as such, Subchapter B claims should have a different trigger than all other workers' compensation claims.

Response: DWC appreciates the comment. The provision for a Notice of Continuing Investigation created by SB 2551 clearly attaches to receipt of the written notice of injury. Section 402.00128 describes the general powers and duties of the commissioner, including assessing and enforcing penalties and prescribing the form, manner, and procedure for the transmission of information to DWC. Section 402.061 provides that the commissioner shall adopt rules as necessary for the implementation and enforcement of the Act. Furthermore, the Texas Supreme Court has held that "an agency's interpretation of a statute it is charged with enforcing is entitled to 'serious consideration,' so long as the construction is reasonable and does not conflict with the statute's language" and courts should defer to an agency's interpretation of a statute it is charged with enforcing. Railroad Comm'n, 336 SW3d at 624. An agency, such as DWC, with expertise in a certain area is usually granted latitude in the methods used to accomplish its administrative functions. Mid-Century Insurance Co. v. Texas Workers' Compensation Comm'n, 187 SW3d 754, 757-758 (Tex. App. - Austin 2006).

Under the Act and DWC rules, specifically §124.1, an insurance carrier must initiate claim processing upon receipt of notice of an injury. A notice of injury may take the form of an employer's first report of injury, notification from DWC, or any other communication, regardless of source, which fairly informs the carrier of pertinent information surrounding an injury including a bill from a health care provider. Revising the language as suggested, from first notice of injury to a "claim for compensation," would result in requiring injuries under Subchapter B to be noticed through a specific DWC Form-041, Employee's Claim for Compensation for a Work-Related Injury or Occupational Disease, which can be filed up to one year from the date of injury. Using the suggested language would allow an insurance carrier to delay investigation up to one year after the date of injury. This would conflict with the general premise in §415.002 that an insurance carrier must process claims promptly and with the prioritization of claims for medical benefits to first responders under §504.055 (relating to Expedited Provision of Medical Benefits for Certain Injuries Sustained by First Responder in Course and Scope of Employment). No change was made in response to this comment.

Comment: A commenter states that DWC has exceeded its statutory authority by requiring that the Notice of Continuing Investigation be received by DWC since Labor Code §409.021(a-3) states that the insurance carrier must "provide" the notice to the injured employee and DWC and that "provided" and "received" are different concepts. The commenter further states that the insurance carrier does not have to prove when DWC receives the notice and that DWC Rule 102.5 adequately addresses written communications to and from DWC. The commenter recommends revising §124.2(h) to say: "The notification requirements of this section are not considered complete until the insurance carrier provides a copy of the notice to both the claimant and the division."

Response: DWC appreciates the comment. The requirement in Subsection (h) that the notification requirements for a Notice of Continuing Investigation are not considered complete until a copy of the notice is received by DWC is the same as the notification requirements for claim denials under Subsection (k) that have been in place since 1999. DWC must be able to monitor Notices of Continuing Investigation submitted by insurance carriers the same way it monitors claim denials, ensuring that these notices comply with the statute and DWC rules. DWC notes that §402.00128 outlines the commissioner's authority to "prescribe the form, manner, and procedure for the transmission of information to the division" and §§414.002-414.003 outline DWC's authority to monitor insurance carriers for compliance with DWC rules and to compile and maintain information as necessary to detect noncompliance. Rule 102.5 clarifies the requirements for written communications to and from DWC, including the requirement that electronic communications, including facsimile, shall be filed in the "format, form, and manner prescribed" by DWC and are considered filed or sent on the date received by DWC. Section 409.021(a-3) states that "the insurance carrier has provided notice to the employee and the division." DWC has the authority to interpret and define this statutory language consistent with the Act and DWC rules. Railroad Comm'n, 336 SW3d at 629-630; Mid-Century, 187 SW3d at 758-759. No change was made in response to this comment.

Comment: One commenter asked that DWC clarify whether a description is required for all claim-specific evidence or documentation the insurance carrier believes relevant and necessary to complete its investigation or if the duty to describe evidence is limited to the additional claim-specific evidence or documentation the insurance carrier reasonably believes is both relevant and necessary to complete its investigation.

Response: DWC appreciates the comment but disagrees that clarification of the rule text is needed. The requirements for an insurance carrier's Notice of Continuing Investigation are stated in §409.021(a-3). Relatedly, §124.2(h)(1)(A) requires a description of all investigative steps taken prior to the issuance of a Notice of Continuing Investigation. Paragraph (B) requires "a list of any claim-specific evidence, releases, or documentation the insurance carrier reasonably believes is both relevant and necessary to complete its investigation." An insurance carrier is only required to identify or list the missing information needed to complete its investigation. No change was made in response to this comment.

Comment: One commenter said that proposed §124.2(h)(2) could be interpreted to impose an "unduly burdensome" deadline for an injured employee to "marshal all claim-specific evidence and documentation an insurance carrier reasonably believes to be reasonable and necessary," and that an injured employee's failure to respond to the notice could result in a denial of claim, loss of benefits (medical and income), and preclude any administrative violation against the insurance carrier.

Response: DWC appreciates the comment. Subsection (h)(2) directly reflects the statutory command and does not impose burdens or consequences upon an injured employee. Under SB 2551, §409.021(a-3) requires that an insurance carrier's Notice of Continuing Investigation describe "the evidence the carrier reasonably believes is necessary to complete its investigation of the compensability of the injury," and §415.021(c-2) provides that, before assessing an administrative penalty, DWC must "consider whether (1) the employee cooperated with the insurance carrier's investigation of the claim; (2) the employee timely authorized access to the applicable medical records before the insurance carrier's deadline to: (A) begin payment of benefits; or (B) notify the division and the employee of the insurance carrier's refusal to pay benefits." Senate Bill 2551 placed no affirmative duty on an injured employee to provide requested information or to do so within a specified timeframe. Senate Bill 2551 simply states that, for an enforcement action, DWC must consider if the injured employee "timely authorized access." What is now required under §409.021(a-3) is notice to a first responder of the evidence the insurance carrier reasonably believes is necessary to complete its investigation of the compensability of the injury. Accordingly, this rule places no new or additional requirement on an injured employee to respond to a request for information from an insurance carrier. The rule simply specifies that if an insurance carrier issues a Notice of Continuing Investigation, the first responder must be offered a reasonable amount of time to respond, should the injured first responder choose to do so. No change was made in response to this comment.

Comment: One commenter challenged proposed §124.2(h)(3) and its directive that the statement of evidence that the insurance carrier reasonably believes is necessary may not be limited by a "directly related" standard. Medical records, the commenter asserts, generally may contain information that may be admissible in a dispute resolution proceeding or that may lead to identification of other records that are relevant and admissible. In addition, medical records frequently contain references to the existence of risk factors for the development of an injury or disease, including references to the occurrence or cause of the disease, injury, or cause of death of family members.

Response: DWC appreciates the comment. A Notice of Continuing Investigation is not a discovery request, does not create a discovery request standard nor does it limit the discovery process available to parties throughout the dispute resolution process or subsequent litigation. The purpose of a Notice of Continuing Investigation is to provide an injured first responder with notice of matters remaining to be investigated. In accordance with §409.021(a-3), a Notice of Continuing Investigation must explain the steps the insurance carrier has taken to date regarding their investigation of a claim under Subchapter B and what additional information is necessary to complete the investigation of that claim. The investigation occurs outside of, and before, any dispute resolution process and does not include the full array of discovery that is available during formal dispute resolution. To state, as Rule 124.2(h) does, that a Notice of Continuing Investigation may not request additional diagnostic testing, mental health records or include a generic request to "send all your healthcare records" does not prescribe any limitations on a party's opportunity to assert in subsequent contested case proceedings that a given request for production is or is not reasonably calculated to lead to the discovery of admissible evidence. No change was made in response to this comment.

Comment: One commenter said that DWC's discussion of proposed §124.2(h)(3) in the preamble misstates the test for relevance in the investigation or discovery process, arguing that the test for relevance in this context is whether the request is "reasonably calculated to lead to the discovery of admissible evidence." The commenter requested that DWC revise this statement to reflect the correct test for relevance in the carrier's investigation or discovery process to read: "Subsection (h)(3) provides a description of information or documents that may not be identified by the insurance carrier as reasonably necessary to complete its investigation through a Notice of Continuing Investigation such as a request ... for records that are not reasonably calculated to lead to the discovery of admissible evidence in a claim for a disease or illness or for eligibility for a statutory presumption under Government Code, Chapter 607, Subchapter B."

Response: DWC appreciates the comment but disagrees that 124.2(h)(3) should be revised or that it reflects an inappropriate discovery standard. Although DWC does limit the use of a Notice of Continuing Investigation to request certain records and information, such notice is issued prior to the initiation of a formal dispute and, as previously addressed, a Notice of Continuing Investigation is not a discovery request, does not create a discovery request standard, nor limit the discovery process available to parties throughout the dispute resolution process or subsequent litigation. As part of the Act's dispute resolution and discovery process, an insurance carrier can seek medical records, evidence, or other documentation, including through application of Rule 142.13 (concerning Discovery).

The purpose of a Notice of Continuing Investigation is to provide an injured first responder with notice of matters remaining to be investigated. The notice is an option for insurance carriers to delay the requirement in §409.021(a) to either, within 15 days of written notice of injury, initiate payment or refuse to make payment and provide the injured employee with notice of the opportunity to request a benefit review conference and of how to obtain additional information from DWC. As part of a Notice of Continuing Investigation, an insurance carrier must describe the evidence it reasonably believes is necessary to complete its investigation. No change was made in response to this comment.

Comment: One commenter asserted that the phrase "reasonable steps" in proposed §124.2(h)(4) and §124.3(g)(3) is too vague. The commenter stated that the facts and circumstances of each claim determine what is reasonable and pointed out that DWC has previously declined to mandate the manner in which insurance carriers conduct investigations. The commenter recommended DWC revise §124.2(h)(4) to use "investigate the claim" in place of "taking reasonable steps to acquire claim-specific evidence and documentation necessary to complete its investigation of the claim" and that, in §124.3(g)(3), "reasonable" should be deleted as a modifier of "investigation."

Response: DWC appreciates the comment. First, DWC believes that the language of §415.002(a) encourages reasonable and prudent conduct by an insurance carrier when handling claims, including during the investigation of claims. See also §409.021;Ruttiger, 381 SW3d at 448-449 ("The carrier has statutory and regulatory duties to promptly conduct adequate investigations and reasonably evaluate and expeditiously pay workers' legitimate claims or face administrative penalties). Through the Act, the Legislature has "remove[d] insurer's exclusive control over the processing of claims." Ruttiger, Id. at 449. Furthermore, because "reasonable" is a generally accepted legal and insurance concept that has been used by the Legislature to describe insurance carrier conduct, DWC disagrees that "reasonable steps" is an impermissibly vague direction relating to the investigation of a claim. See Black's Law Dictionary 1272-1273 (7th ed. 1999). DWC agrees that the facts and circumstances of each claim determine what is reasonable to investigate a claim.

Rules 124.2(h)(4) and 124.3(g)(3) merely direct that an insurance carrier's investigation be a systematic inquiry into the specific facts and circumstances of a claim. Last, and fundamentally, DWC disagrees with the commenter's observation that §124.2(h)(4) "mandates the manner in which insurance carriers conduct investigations." To direct, as the rules does, that insurance carriers continue to take reasonable steps to acquire claim-specific evidence and documentation does not mandate the manner in which they do so. Subject to oversight by DWC, an insurance carrier is free to conduct a claim investigation as it sees fit.

However, upon full consideration of the comment, DWC recognizes that the phrase "evidence and documentation" as used in the rule may suggest that a reasonable investigation must produce more developed information than is necessary for making an initial decision on a claim. Consequently, in §124.2(h)(4), "information" has been substituted for "evidence and documentation."

Comment: Two commenters asserted that DWC exceeded its statutory authority by requiring an insurance carrier to provide the detail specified under proposed Rule 124.2(j) at the time of the denial notice when claiming an applicable statutory presumption has been rebutted. The commenters acknowledge that §409.022(d) requires that an insurance carrier include additional detail in its Notice of Denial that explains "why the insurance carrier determined a presumption under that subchapter does not apply to the claim for compensation." However, one commenter argued that neither §409.022 nor §607.058 require an insurance carrier to provide the detail required by proposed Rule 124.2(j)(2) at the time of the denial notice. The commenters urged that Rule 124.2(j)(2) be deleted.

Response: DWC appreciates the comment but disagrees that the challenged statements must be removed from the preamble or that the subsection (j)(2) should be deleted. The statutory authority for implementing these rules includes §§402.061, 409.021, and 409.022. Appropriate and reasonable notice to injured employees of the reasons a carrier is denying or not paying a claim is necessary information regarding the status of their claim and provides injured employees with an informed opportunity to dispute a denial.

The requirements of appropriate and reasonable notice are clear in §§409.021(a) and (c), 409.022(d)(1), and within the amendments to §409.021(a)(3) in SB 2551, as well as additional guidance specified in Subchapter B for first responders. An insurance carrier has the right to refuse to initiate benefits after receiving a notice of injury, but under the Act and rules, an insurance carrier must also communicate the reasons for its actions with sufficient information and clarity.

However, DWC has concluded that the comments indicate that the duty under proposed Rule 124(j) was unclear. Where a statutory presumption under Subchapter B applies, in a notice of denial, an insurance carrier must provide the injured first responder with notice of the claim-specific information supporting denial. Accordingly, the rule has been amended to better align rule text with §409.022 and to delete reference to Government Code §607.058.

Comment: One commenter said that there appeared to be no statutory authority for the requirement in §124.2(s) on the use of an insurance company's letterhead on a plain language notice.

Response: DWC appreciates the comment but disagrees. As described in the discussion of statutory authority in the preamble for the proposed rule, §409.013 authorizes DWC to develop plain language information to provide the public with information on the benefit process and compensation procedures, §402.00128 describes the commissioner's powers and duties to prescribe the form, manner, and procedure for the transmission of information to DWC, §402.061 provides the commissioner with the authority to adopt rules as necessary for the implementation and enforcement of the Act, and §414.002 provides that DWC shall monitor the workers' compensation system for compliance with the Act. These provisions authorize DWC to adopt rules regarding the form and manner of plain language notices. No change was made in response to this comment, but as described elsewhere, the letterhead requirement is no longer included in the rule as adopted.

Comment: Three commenters urged that the requirement in proposed §124.2(s) for the use of an insurance carrier's letterhead for plain language notices be deleted. They argued that it would be costly and inefficient, particularly for insurance carriers that operate in more than one jurisdiction and for third-party administrators that work with more than one insurance carrier. Two commenters suggested that the requirement might create confusion for injured employees when an insurance carrier is working with a third-party representative.

Response: DWC agrees in part. DWC believes that an insurance carrier's notice to an injured employee regarding a claim action should be on the insurance carrier's letterhead because it makes it clear to the injured employee who is taking the action on their claim. DWC recognizes that some insurance carriers use third party administrators to perform claims adjusting responsibilities on their behalf, but it is the insurance carrier's responsibility under the Act to ensure that a claim is processed correctly and that benefits are paid to the injured employee as and when they are due. DWC recognizes that requiring the addition of the insurance carrier's letterhead on all notices presents certain implementation challenges and the current notices require the name of the insurance carrier to be inserted in the body of the notice. As a result, DWC has removed the letterhead requirement from §124.2(s). However, DWC's long-standing recommendation will remain in place that the insurance carrier's letterhead be used for plain language notices to injured employees. DWC may revisit this issue in the future.

Comment: One commenter stated that the requirements of §124.2(s) seem to ignore that the plain language notices are DWC forms that an insurance carrier is required to complete and share with an injured worker.

Response: DWC appreciates the comment. The plain language notices issued by insurance carriers are distinct from DWC's forms which are designed to facilitate communication within the workers' compensation system. Plain language notices are templates for an insurance carrier to use when communicating with an injured employee. The forms used by DWC are standardized to facilitate communication by system participants, many of them professionals. The DWC forms and plain language notices also are distinctly numbered and grouped on the DWC web site (compare DWC Form-153 with PLN-14). No change was made in response to this comment.

§124.3

Comment: One commenter asserted that proposed 124.3(g) is inconsistent with the conjunctive nature of the eligibility standard under Subchapter B. The commenter stated that if an insurance carrier determines that a claim fails to meet one required element, then the insurance carrier should not be required to investigate the other elements of the presumption since, generally, a claimant must meet all elements for a presumption to apply. Further, the commenter asserts that the reference to "each element" obligates an insurance carrier to expend unnecessary time and resources during the course of an investigation. The commenter recommended that DWC revise the rule to remove "each element of the applicable statutory presumption" and replace it with "the applicability of the statutory presumption."

Response: DWC agrees in part. Per §415.002 (relating to Administrative Violation by Insurance Carrier), insurance carriers are expected to process claims "promptly in a reasonable and prudent manner" and not misrepresent "the reasons for not paying benefits." DWC also notes that SB 2551 amended §415.021 to require DWC to consider, when determining whether to assess an administrative violation, whether the insurance carrier "applied the statutory presumptions under Subchapter B" among other factors. As such, it is the insurance carrier's responsibility to conduct a proper investigation when it receives a written notice of injury, apply any applicable presumptions under Subchapter B, and to accordingly initiate or deny benefits.

In addition, §409.022(b) and (c) require an insurance carrier to have reasonable grounds for not paying benefits and to communicate those reasons as part of its decision to not pay benefits. If an insurance carrier chooses not to evaluate the applicability of a statutory presumption holistically and bases its determination on only one element of the presumption, then the insurance carrier risks limiting its ability to later argue other reasons why the presumption should not apply. However, to keep the language of §124.3(g) consistent with the language of §415.021, DWC agrees to make the recommended change.

Comment: One commenter asserted that Rule 124.3(g)(1) is contrary to statutory language in §607.052 and unnecessary. More specifically, the assertion is that the presumption applies only to a first responder who affirmatively seeks benefits. The commenter further asserted that a statutory presumption applies "regardless of an assertion of its applicability."

Response: DWC appreciates the comment but disagrees that there is a conflict between the requirements of §607.052 and Rule 124.3(g)(1). The requirement for a first responder to seek benefits or claim compensation is distinct from the applicability of a presumption. A statutory presumption applies regardless of whether it is asserted. DWC also disagrees that this rule should be deleted and continues to believe that system participants would benefit from the rule.

Last, if a first responder "seeks benefits or compensation for a disease or illness covered by [Subchapter B]," as described under §607.052(a)(3), they have made a claim for all of the benefits available under Subchapter B, triggering any available presumption. See §409.021(a-3). Any other interpretation would be contrary to the plain meaning of the Act and Subchapter B. See also our response to the comment on Rule 124.2(g), regarding "claim for benefits." No change was made in response to this comment.

STATUTORY AUTHORITY

The adopted rules are authorized by Texas Labor Code §§402.00111, 402.00116, 402.00128, 402.021, 402.061, 409.013, 409.021, 409.022, 414.002, and 415.021; Government Code §607.052 and §607.058; and SB 2551 §9.

Section 402.00111(a) provides that the commissioner of workers' compensation "shall exercise all executive authority, including rulemaking authority under [the Act]."

Section 402.00116 provides that the commissioner is the chief executive and administrative officer of the agency with all the powers and duties vested under the Act.

Section 402.00128 describes the general powers and duties of the commissioner, including assessing and enforcing penalties, prescribing the form, manner, and procedure for the transmission of information to DWC, and exercising other powers and duties as necessary to implement and enforce the Act.

Section 402.021 provides that a basic goal of the Texas workers' compensation system is that each employee shall be treated with dignity and respect when injured on the job and that it is the intent of the Legislature that the workers' compensation system must minimize the likelihood of disputes and resolve them promptly and fairly when identified and effectively educate and clearly inform each system participant of their rights and responsibilities under the system and how to appropriately interact within the system.

Section 402.061 provides that "[t]he commissioner shall adopt rules as necessary for the implementation and enforcement of [the Act]."

Section 409.013 authorizes DWC to develop plain language information to provide the public with information on the benefit process and compensation procedures.

Section 409.021(a) sets forth the general rule that "[n]ot later than the 15th day after the date on which an insurance carrier receives written notice of injury, the insurance carrier shall [either]: (1) begin payment of benefits as required by [the Act]; or (2) notify the division and the employee in writing of its refusal to pay and [their procedural rights]." Section 409.021(a-3) provides that "[a]n insurance carrier is not required to comply with Subsection (a) if the claim results from an injured employee's disability or death for which a presumption is claimed to be applicable under Subchapter B ... and, not later than the 15th day after the date on which the insurance carrier received written notice of the injury, the insurance carrier has provided the employee and the division with a notice that describes all steps taken by the insurance carrier to investigate the injury. Section 409.021(a-3) also requires the commissioner to adopt rules as necessary to implement that subsection. Section 409.021(d) provides that "[a]n insurance carrier may reopen the issue of the compensability of an injury if there is a finding of evidence that could not reasonably have been discovered earlier."

Section 409.022(c) provides that "[a]n insurance carrier commits an administrative violation if the insurance carrier does not have reasonable grounds for a refusal to pay benefits, as determined by the commissioner. Section 409.022(d) provides that, "if an insurance carrier's notice of refusal to pay benefits under Section 409.021 is sent in response to a claim for compensation resulting from [a first responder's] disability or death for which a presumption is claimed to be applicable under Subchapter B, ... the notice must include a statement by the insurance carrier that: (1) explains why the carrier determined a presumption under that subchapter does not apply to the claim for compensation; and (2) describes the evidence that the carrier reviewed in making the determination described by Subdivision (1)."

Section 414.002 provides that DWC shall monitor the system for compliance with the Act and rules as well as other laws relating to workers' compensation.

Section 415.021(c-2) provides that "[i]n determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided notice under Section 409.021(a-3), the commissioner shall consider whether: (1) the employee cooperated with the insurance carrier's investigation of the claim; and (2) the employee timely authorized access to the applicable medical records."

Government Code §607.052(a) provides that "[n]otwithstanding any other law, this subchapter applies only to a firefighter, peace officer, or [EMT] who: (1) on becoming employed or during employment as a firefighter, peace officer, or [EMT], received a physical examination that failed to reveal evidence of the illness or disease for which benefits or compensation are sought using a presumption established by this subchapter; (2) is employed for five or more years as a firefighter, peace officer, or [EMT]; and (3) seeks benefits or compensation for a disease or illness covered by this subchapter that is discovered during employment as a firefighter, peace officer, or [EMT]."

Section 607.052(b) provides that "[a] presumption under this subchapter does not apply: (1) to a determination of a survivor's eligibility for benefits under Chapter 615; (2) in a cause of action brought in a state or federal court except for judicial review of a proceeding in which there has been a grant or denial of employment-related benefits or compensation; (3) to a determination regarding benefits or compensation under a life or disability insurance policy purchased by or on behalf of the firefighter, peace officer, or [EMT] that provides coverage in addition to any benefits or compensation required by law; or (4) if the disease or illness for which benefits or compensation is sought is known to be caused by the use of tobacco and: (A) the firefighter, peace officer, or [EMT] is or has been a user of tobacco; or (B) their spouse has, during the marriage, been a user of tobacco that is consumed through smoking."

Section 607.058(a) provides that "[a] presumption under §§607.053, 607.054, 607.055, or 607.056 may be rebutted through a showing by a preponderance of the evidence that a risk factor, accident, hazard, or other cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred." Subsection (b) provides that "[a] rebuttal offered under [§607.058] must include a statement by the person offering the rebuttal that describes, in detail, the evidence that the person reviewed before making the determination that a cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness without which the disease or illness would not have occurred."

Finally, §9 of SB 2551 requires that the commissioner adopt rules as required by or necessary no later than January 1, 2020.

The adopted amendments support implementation of the Workers' Compensation Act, Labor Code Title 5, Subtitle A.

§124.2.Insurance Carrier Reporting and Notification Requirements.

(a) An insurance carrier shall notify the division and the claimant of actions taken on or events occurring in a claim as required by this title.

(b) The division shall prescribe the form, format, and manner of required electronic submissions through publications such as advisory(ies), instructions, specifications, the Texas Electronic Data Interchange Implementation Guide, and trading partner agreements. Trading partners will be responsible for obtaining a copy of the International Association of Industrial Accident Boards and Commissions (IAIABC) Electronic Data Interchange Implementation Guide.

(c) The insurance carrier shall electronically file, as that term is used in §102.5(e) of this title (concerning General Rules for Written Communications to and from the Commission), with the division:

(1) the information from the original Employer's First Report of Injury; the insurance carrier's Federal Employer Identification Number (FEIN); and the policy number, policy effective date, and policy expiration date reported under §110.1 of this title (concerning Insurance Carrier Requirements for Notifying the Division) for the employer associated with the claim, not later than the seventh day after the later of:

(A) receipt of a required report where there is lost time from work or an occupational disease; or

(B) notification of lost time if the employer made the Employer's First Report of Injury prior to the employee experiencing absence from work as a result of the injury;

(2) any correction of division-identified errors in a previously accepted electronic record as provided in §102.5(e) of this title (Correction);

(3) information regarding a compensable death with no beneficiary (Compensable Death No Beneficiaries/Payees) not later than the 10th day after determining that an employee whose injury resulted in death had no legal beneficiary; and

(4) a change in an electronic record initiated by the insurance carrier (Change), the coverage information required by paragraph (1) of this subsection if not available when the First Report of Injury was submitted to the division and any change in a claimant or employer mailing address within seven days of receipt of the new address.

(d) The insurance carrier shall notify the division and the claimant of a denial of a claim (Denial) based on non-compensability or lack of coverage in accordance with this section and as otherwise provided by this title.

(e) The insurance carrier shall notify the division and the claimant of the following:

(1) first payment of indemnity benefits on a claim (Initial Payment) within 10 days of making the first payment;

(2) change in the net benefit payment amount caused by a change in the employee's post-injury earnings (Reduced Earnings) within ten days of making the first payment reflecting the change;

(3) change in the net benefit payment amount that was not caused by a change in employee's post-injury earnings, this includes but is not limited to subrogation, attorney fees, advances, and contribution (Change in Benefit Amount), and the notice must be made within 10 days of making the first payment which reflects the change;

(4) change from one income benefit type to another or to death benefits (Change in Benefit Type) within 10 days of making the first payment reflecting the change;

(5) resumption of payment of income or death benefits (Reinstatement of Benefits) within 10 days of making the first payment;

(6) termination or suspension of income or death benefits (Suspension) within 10 days of making the last payment for the benefits; or

(7) employer continuation of salary equal to or exceeding the employee's Average Weekly Wage as defined by this title (Full Salary) within:

(A) seven days of receipt of the Employer's First Report of Injury or a Supplemental Report of Injury (if the report included information that salary would be continued) if the insurance carrier has not initiated temporary income benefits; or

(B) 10 days of making the last payment of temporary income benefits due to the employer's continuation of full salary.

(f) If an insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, or Emergency Medical Technicians), the insurance carrier shall take one of the following actions no later than the 15th day following receipt of the notice of injury:

(1) initiate benefits as required by the Workers' Compensation Act and the division's rules;

(2) file a notice of denial as described in this section; or

(3) provide the claimant and the division with notice as required under Labor Code §409.021(a-3) (Notice of Continuing Investigation) for a claim for benefits received on or after June 10, 2019.

(g) When applying subsection (f) of this section and Government Code, Chapter 607, Subchapter B, a "claim for benefits" means the first written notice of injury as provided in §124.1 of this title (concerning Notice of Injury).

(h) The insurance carrier shall issue a Notice of Continuing Investigation as a plain language notice in the form and manner prescribed by the division. The notification requirements of this section are not considered complete until a copy of the notice provided to the claimant is received by the division.

(1) A Notice of Continuing Investigation shall include the following:

(A) a statement describing all steps taken by the insurance carrier to investigate the disease or illness before the notice was given;

(B) a list of any claim-specific evidence, releases, or documentation the insurance carrier reasonably believes is both relevant and necessary to complete its investigation; and

(C) contact information for the adjuster, including the adjuster's email address, facsimile number, and telephone number.

(2) An insurance carrier shall provide a reasonable amount of time for a claimant to respond to the notice.

(3) The notice may not include a request for additional diagnostic testing, mental health records, generic requests (such as "the claimant's medical records"), or requests for records that are not directly related to either the disease or illness or eligibility for application of a statutory presumption.

(4) Notwithstanding the issuance of a Notice of Continuing Investigation, an insurance carrier must continue taking reasonable steps to acquire claim-specific information necessary to complete its investigation of the claim.

(i) Notification to the claimant as required by subsections (d) - (h) of this section requires the insurance carrier to use plain language notices in the form and manner prescribed by the division. These notices shall provide a full and complete statement describing the insurance carrier's action and rationale. The statement must contain sufficient claim-specific substantive information to enable the claimant to understand the insurance carrier's position or action taken on the claim. A generic statement that simply states the insurance carrier's position with phrases such as "employee returned to work," "adjusted for light duty," "liability is in question," "compensability in dispute," "under investigation," or other similar phrases with no further description of the factual basis for the action taken does not satisfy the requirements of this section.

(j) In addition to the denial notice requirements in subsection (i), if the insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, or Emergency Medical Technicians), the denial must also include the following:

(1) If the insurance carrier asserts that a statutory presumption does not apply, a statement explaining why and describing the claim-specific information that the insurance carrier reviewed.

(2) Alternatively, based upon its investigation, if the insurance carrier concludes that a statutory presumption applies, but that a notice of denial will be issued, a statement explaining why and describing the claim-specific information reviewed prior to issuance of the notice, that supports a reasonable belief that risk factors, accidents, hazards, or other causes not associated with their employment were a substantial factor in bringing about the injured employee's disease or illness, without which the disease or illness would not have occurred.

(3) If the insurance carrier provided a timely Notice of Continuing Investigation as permitted by law, the denial notice must also include a statement describing whether the claimant provided a timely response to the notice.

(k) Notification to the division as required by subsections (c) - (h) of this section requires the insurance carrier to use electronic filing, as that term is used in §102.5(e) of this title (concerning General Rules for Written Communications to and from the Commission).

(1) In addition to the electronic filing requirements of this subsection, when an insurance carrier notifies the division of a denial as required by this section, it must provide the division a written copy of the notice provided to the claimant as described under subsections (i) - (j) of this section, as applicable.

(2) The notification requirements of this section are not considered completed until the copy of the notice provided to the claimant is received by the division.

(l) Notification to the division and the claimant of a dispute of disability, extent of injury, or eligibility of a claimant to receive death benefits shall be made as otherwise prescribed by this title and requires the insurance carrier to use plain language notices in the form and manner prescribed by the division. These notices shall provide a full and complete statement describing the insurance carrier's action and its reason(s) for such action. The statement must contain sufficient claim-specific substantive information to enable the claimant to understand the insurance carrier's position or action taken on the claim. A generic statement that simply states the insurance carrier's position with phrases such as "no medical evidence to support disability," "not part of compensable injury," "liability is in question," "under investigation," "eligibility questioned," or other similar phrases with no further description of the factual basis for the action taken does not satisfy the requirements of this section.

(m) The division shall send an acknowledgment to the transmitting trading partner detailing whether an electronically submitted record was accepted, accepted with errors, or rejected. The acknowledgment shall be provided directly to the trading partner submitting the transmission, not through the Austin representative box identified in §102.5 of this title. If the record was accepted with errors in conditional elements, the insurance carrier must correct the errors in accordance with §102.5 of this title.

(n) Except as otherwise provided by this title, insurance carriers shall not provide notices to the division that explain that:

(1) benefits will be paid as they accrue;

(2) a wage statement has been requested;

(3) temporary income benefits are not due because there is no lost time;

(4) the insurance carrier is disputing some or all medical treatment as not reasonable or necessary;

(5) compensability is not denied but the insurance carrier disputes the existence of disability (if there are no indications of lost time or disability and the employee is not claiming disability); or

(6) future medical benefits are disputed (notices of which shall not be provided to anyone in the system).

(o) Written requests for a waiver of the electronic filing requirement for the Employer's First Report of Injury may be submitted to the commissioner or their designee for consideration. Waivers must be requested at least annually, and the requests must include a justification for the waiver, the volume of the insurance carrier's claims and total premium amounts, current automation capabilities, Electronic Data Interchange (EDI) programming status, and a specific target date to implement EDI. Waivers require written approval and shall be granted at the discretion of and for the time frame noted by the commissioner or their designee.

(p) If specifically directed by the division, such as through division advisory or the Texas Electronic Data Interchange Guide, the insurance carrier may provide the information required in subsections (c) - (g) of this section to the division in hardcopy or paper format.

(q) Notifications to the claimant and the claimant's representative shall be filed by facsimile or electronic transmission unless the recipient does not have the means to receive such a transmission in which case the notifications shall be personally delivered or sent by mail.

(r) Each insurance carrier shall provide to the division, through its Austin representative in the form and manner prescribed by the division, the contact information for all workers' compensation claim service administration functions performed by the insurance carrier either directly or through third parties.

(1) The contact information for each function shall include mailing address, telephone number, facsimile number, and email address as appropriate. This contact information may be provided either in the form of a single Uniform Resource Locator (URL) for a web page created and maintained by the insurance carrier that contains the required information or through an online submission to the division.

(A) Coverage verification (policy issuance and effective dates of policy);

(B) Claim adjustment;

(C) Medical billing;

(D) Pharmacy billing (if different from medical billing); and

(E) Preauthorization.

(2) If the web page option is used the page shall contain the date on which it was last updated and an email address or other contact information to which a user may report problems or inaccuracies.

(3) The insurance carrier shall update the contact information or URL within 10 working days after any such change is made.

(s) All notices to a claimant required under this section must be stated in plain language and in no less than 12-point font. This subsection applies to notices sent on or after April 1, 2020.

§124.3.Investigation of an Injury and Notice of Denial or Dispute.

(a) Except as provided in subsection (b) of this section, upon receipt of written notice of injury as provided in §124.1 of this title (relating to Notice of Injury) the insurance carrier shall conduct an investigation relating to the compensability of the injury, the insurance carrier's liability for the injury, and the accrual of benefits. If the insurance carrier believes that it is not liable for the injury or that the injury was not compensable, the insurance carrier shall file the notice of denial of a claim (Notice of Denial) in the form and manner required by Labor Code §409.022 (relating to Refusal to Pay Benefits; Notice; Administrative Violation) and §124.2 of this title (concerning Insurance Carrier Reporting and Notification Requirements).

(1) If the insurance carrier does not file a Notice of Denial by the 15th day after receipt of the written notice of injury or does not file a Notice of Continuing Investigation as described under Labor Code §409.021(a-3) (relating to Initiation of Benefits; Insurance Carrier's Refusal; Administrative Violation), the insurance carrier is liable for any benefits that accrue and shall initiate benefits in accordance with this section.

(2) If the insurance carrier files a Notice of Denial after the 15th day but on or before the 60th day after receipt of written notice of the injury:

(A) The insurance carrier is liable for and shall pay all income benefits that had accrued and were payable prior to the date the insurance carrier filed the Notice of Denial and only then is it permitted to suspend payment of benefits; and

(B) The insurance carrier is liable for and shall pay for all medical services, in accordance with the Act and rules, provided prior to the filing of the Notice of Denial.

(3) The insurance carrier shall not file notice with the division that benefits will be paid as and when they accrue with the division.

(4) An insurance carrier's failure to file a Notice of Denial or a Notice of Continuing Investigation by the 15th day after it receives written notice of an injury constitutes the insurance carrier's acceptance of the claim as a compensable injury, subject to the insurance carrier's ability to contest compensability on or before the 60th day after receipt of written notice of the injury. In the event of such a failure, the insurance carrier is liable for and shall pay all income and medical benefits that have accrued or become payable, subject to the insurance carrier's right to contest compensability on or before the 60th day.

(5) The insurance carrier commits an administrative violation if, not later than the 15th day after it receives written notice of the injury, it does not begin to pay benefits as required, file a Notice of Denial of the compensability of a claim, or file a Notice of Continuing Investigation in the form and manner required by §124.2 of this title. The division will send periodic notifications to all insurance carriers regarding the amount of penalties owed and the proper way to submit and document the payments.

(b) Except as provided by subsection (c), the insurance carrier waives the right to contest compensability of or liability for the injury, if it does not contest compensability on or before the 60th day after the date on which the insurance carrier receives written notice of the injury.

(c) If the insurance carrier wants to deny compensability of or liability for the injury after the 60th day after it received written notice of the injury:

(1) the insurance carrier must establish that it is basing its denial on evidence that could not have reasonably been discovered earlier; and

(2) the insurance carrier is liable for and shall pay all benefits that were payable prior to and after filing the Notice of Denial until the division has made a finding that the evidence could not have been reasonably discovered earlier.

(d) If the claim involves the death of an injured employee, investigations, denials of compensability or liability, and disputes of the eligibility of a potential beneficiary to receive death benefits are governed by §132.17 of this title (concerning Denial, Dispute, and Payment of Death Benefits). Notwithstanding §132.17(f)(1) and (2) of this title, the insurance carrier may issue a Notice of Continuing Investigation in accordance with the provisions of §124.2(f) and this section.

(e) Notwithstanding §132.13 of this title (concerning Burial Benefits), if an insurance carrier has issued a Notice of Continuing Investigation in accordance with the provisions of §124.2(f) and this section, the insurance carrier shall either pay or deny a claim for burial benefits within seven days from the date the insurance carrier either initiated benefits or filed a notice of denial in accordance with §124.2(f) of this title.

(f) Labor Code §409.021 and subsection (a) of this section do not apply to disputes of extent of injury. If an insurance carrier receives a medical bill that involves treatment(s) or service(s) that the insurance carrier believes is not related to the compensable injury, the insurance carrier shall file a notice of dispute of extent of injury (notice of dispute). The notice of dispute shall be filed in accordance with §124.2 of this title and be filed not later than the earlier of:

(1) the date the insurance carrier denied the medical bill; or

(2) the due date for the insurance carrier to pay or deny the medical bill as provided in Chapter 133 of this title (concerning General Medical Provisions).

(g) If the insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians), it shall investigate the applicability of the statutory presumption as well as compensability of the injury, liability for the injury, and the accrual of benefits.

(1) A claimant is not required to expressly claim the applicability of a statutory presumption in order for the statutory presumption to apply.

(2) A presumption under Government Code, Chapter 607, Subchapter B, is claimed upon an insurance carrier's receipt of a written notice of injury which identifies:

(A) the injured or deceased employee's occupation as a firefighter, peace officer, or emergency medical technician, and

(B) the injured or deceased employee's disease or illness is a medical condition identified by Subchapter B.

(3) A determination that the statutory presumption does not apply does not relieve the insurance carrier of its continuing obligation to conduct a reasonable investigation relating to the compensability of the injury, liability for the injury, and accrual of benefits.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 23, 2019.

TRD-201904990

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers’ Compensation

Effective date: January 12, 2020

Proposal publication date: October 25, 2019

For further information, please call: (512) 804-4703


CHAPTER 180. MONITORING AND ENFORCEMENT

The Texas Department of Insurance, Division of Workers' Compensation (DWC) adopts amendments to §180.8 (concerning Notices of Violation; Notices of Hearing; Default Judgment) and §180.26 (concerning Criteria for Imposing, Recommending and Determining Sanctions; Other Remedies). The amendments are adopted without changes to the text as published in the October 25, 2019, issue of the Texas Register (44 TexReg 6226). The rules will not be republished.

REASONED JUSTIFICATION

These rules are adopted as required under Senate Bill (SB) 2551, 86th Legislature (2019). Senate Bill 2551 amended both the Workers' Compensation Act, Labor Code Title 5 (Act), and Government Code Chapter 607, Subchapter B (Subchapter B) (relating to Diseases and Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians (EMTs) (collectively "first responders")). A separate bill, SB 1582, added peace officers to the list of first responders covered by Subchapter B. As these adopted rules will apply uniformly to all first responders covered by Subchapter B, no additional rulemaking is required to implement SB 1582. These amendments are adopted concurrently with amendments to Chapter 124, which address both an insurance carrier's obligation to investigate and the notification process for presumption claims for first responders. The adopted amendments to Chapter 180 conform the rules regarding the factors DWC must consider when assessing an administrative violation with statutory changes made by SB 2551. The reasoned justifications for the amendments to Chapters 124 and 180 are meant to be read together, and each is incorporated by reference into the other.

Subchapter B applies to certain occupational diseases or illnesses suffered by first responders who meet the qualifications set forth. Subchapter B applies to first responders who received a physical examination upon or during employment that did not reveal evidence of the illness or disease for which benefits or compensation is sought, who have been employed for five years or more as a first responder, and who seek benefits or compensation for a disease or illness covered by the subchapter that is discovered during employment as a first responder. Gov't Code §607.052(a). The diseases and illnesses covered by Subchapter B are tuberculosis or other respiratory illness, smallpox, reactions to vaccinations, cancer (firefighters and EMTs only), and acute myocardial infarction or stroke. §§607.053-607.056.

The presumptions under Subchapter B do not apply to a determination of a survivor's eligibility for benefits under Government Code Chapter 615, (relating to Financial Assistance to Survivors of Certain Law Enforcement Officers, Fire Fighters, and Others), in a cause of action brought in court except for judicial review of a grant or denial of employment-related benefits or compensation, to a determination regarding benefits or compensation under a life or disability insurance policy. Furthermore, a presumption does not apply if the disease or illness for which benefits or compensation is sought is known to be caused by the use of tobacco and if either the first responder is or has been a user of tobacco or if the their spouse has, during the marriage, smoked tobacco. §607.052(b). The presumptions under Subchapter B apply to a determination of whether a first responder's disability or death resulted from a disease or illness contracted in the course and scope of employment for purposes of benefits or compensation. §607.057.

Senate Bill 2551 amended Subchapter B to direct that four specified types of cancer and cancers originating in seven specified organs might trigger the presumption under Government Code §607.055. Senate Bill 2551 also amended the requirements for rebutting a presumption. A presumption can be rebutted through showing, by a preponderance of the evidence, that a risk factor, accident, hazard, or other cause not associated with an individual's service as a first responder was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred. §607.058(a). A rebuttal must include a statement that describes, in detail, the evidence that the person reviewed before making the determination that a cause not associated with the individual's service as a first responder was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred. §607.058(b).

Senate Bill 2551 also amended the Act to provide an insurance carrier with an additional option at the 15th day after receiving written notice of a first responder's disability or death for which a presumption may be applicable under Subchapter B. Labor Code §409.021(a-3). Generally, at the 15th day, an insurance carrier must either begin the payment of benefits or notify the injured employee and DWC in writing of its refusal to pay. §409.021(a). An insurance carrier now has the option, at the 15th day, of providing a first responder and DWC with a notice, referred to in these rules as a "Notice of Continuing Investigation," that describes all steps taken by the insurance carrier to investigate the disability or death before notice was given and the information the insurance carrier reasonably believes is necessary to complete its investigation of the compensability of the injury. §409.021(a-3).

The bill also amended Labor Code §415.021, to require that the commissioner consider whether the employee cooperated with the insurance carrier's investigation of the claim and whether the employee timely authorized access to the relevant medical records when determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided a Notice of Continuing Investigation. The commissioner shall also consider whether the insurance carrier conducted an investigation of the claim, applied the statutory presumptions under Subchapter B, and expedited medical benefits under Labor Code §504.055 (relating to Expedited Provision of Medical Benefits for Certain Injuries Sustained by First Responder in Course and Scope of Employment).

The changes in law made by SB 2551 apply to a claim for benefits filed on or after June 10, 2019, the effective date of SB 2551. Section 8 of SB 2551 provides that the amendments to Government Code §607.055 and §607.058 apply only to a claim for benefits filed on or after June 10, 2019. Section 10 of SB 2551 provides that Labor Code §504.053(e)(1) applies only to administrative violations that occur on or after June 10, 2019. The adopted amendments will not apply to a claim for benefits filed before June 10, 2019.

DWC posted an informal draft of these amendments on its website for comment and hosted a stakeholder meeting on Wednesday, August 21, 2019. Subsequently, and in response to the comments received, DWC published proposed amendments in the Texas Register and held a public hearing on Wednesday, November 20, 2019.

Pursuant to the directives of SB 2551, DWC is conforming existing rules with new statutory language. The amendments to Rule 180.8(b) describe the requirements for a Notice of Violation (NOV). The adopted amendments to subsection (b)(4)(A)-(B) incorporate by reference a new factor under §415.021(c-2). Under the adopted amendments, if applicable, an NOV will demonstrate that DWC considered the factors in §415.021(c-2) before determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided notice under §409.021(a-3).

In addition, the amendments to Rule 180.26 implement the criteria for imposing, recommending, and determining sanctions. The amendments include a subsection (f), which provides that DWC shall consider the factors in Labor Code §415.021(c-2) when determining which sanction to impose in claims where the insurance carrier provided a Notice of Continuing Investigation.

Throughout Rules 180.8 and 180.26, additional non-substantive editorial changes are adopted to correct errors of grammar and punctuation, clarify wording, and to conform to the agency's style guidelines.

Finally, SB 2551 required that DWC adopt rules as required by or necessary to implement the bill. DWC adopts these amendments to implement SB 2551.

SUMMARY OF COMMENTS AND AGENCY RESPONSE

Texas Mutual Insurance Company and the Office of Injured Employee Counsel submitted comments offering general support of the implementation of SB 2551 and against the adoption of certain specific provisions.

Comment: Two commenters offered general support for the proposed rules.

Response: DWC appreciates the supportive comments.

Comment: One commenter raised a specific question regarding the amendments to §124.2(h)(1)(B) and (h)(2) and the "application of these subsections" to §180.8 and §180.26. The commenter states that the proposed amendments to §124.2 could be interpreted as imposing a deadline on the injured employee to provide the insurance carrier with evidence or documentation to support their claim, which is unduly burdensome. Further, the commenter suggests that failure for an injured employee to comply with the insurance carrier's request may result in a denial of the claim, loss of benefits, and precludes any administrative violation against the insurance carrier.

Response: DWC appreciates the comment but disagrees that it has applied the requirements of §124.2(h)(1)(B) and (h)(2) to §180.8 and §180.26. The adopted amendments to §180.8 and §180.26 simply conform the language in these rules with changes made to Labor Code §415.021(c-2) by SB 2551, which requires the commissioner to consider additional factors when assessing administrative penalties in claims involving a presumption under Subchapter B. Failure by an injured employee to provide information requested by an insurance carrier does not preclude any administrative violation against the insurance carrier for noncompliance with the Act and DWC rules. DWC notes that amendments to §124.2(h)(1)(B) and (h)(2), address the contents of a Notice of Continuing Investigation and an insurance carrier's obligation to provide a claimant with a reasonable amount of time to respond. These amendments do not impose deadlines on injured employees. Rather, they provide an injured employee with plain language information about the steps the insurance carrier has taken to investigate their claim and a description of the information the insurance carrier believes it needs to complete the investigation, including any information needed from the injured employee. No changes were made as a result of this comment.

SUBCHAPTER A. GENERAL RULES FOR ENFORCEMENT

28 TAC §180.8

Statutory Authority

The adopted rules are authorized by Texas Labor Code §§402.00111, 402.00116, 402.00128, 402.021, 402.061, 409.021, 409.022, 414.002, and 415.021; Government Code §607.052 and §607.058; and SB 2551 §9.

Section 402.00111(a) provides that the commissioner of workers' compensation "shall exercise all executive authority, including rulemaking authority under [the Act]."

Section 402.00116 provides that the commissioner is the chief executive and administrative officer of the agency with all the powers and duties vested under the Act.

Section 402.00128 describes the general powers and duties of the commissioner, including assessing and enforcing penalties and prescribing the form, manner, and procedure for the transmission of information to DWC.

Section 402.021 provides that a basic goal of the Texas workers' compensation system is that each employee shall be treated with dignity and respect when injured on the job and that it is the intent of the Legislature that the workers' compensation system must minimize the likelihood of disputes and resolve them promptly and fairly when identified and effectively educate and clearly inform each system participant of their rights and responsibilities under the system and how to appropriately interact within the system.

Section 402.061 provides that "[t]he commissioner shall adopt rules as necessary for the implementation and enforcement of [the Act]."

Section 409.021(a) sets forth the general rule that "[n]ot later than the 15th day after the date on which an insurance carrier receives written notice of injury, the insurance carrier shall [either]: (1) begin payment of benefits as required by [the Act]; or (2) notify the division and the employee in writing of its refusal to pay and [their procedural rights]." Section 409.021(a-3) provides that "[a]n insurance carrier is not required to comply with Subsection (a) if the claim results from an injured employee's disability or death for which a presumption is claimed to be applicable under Subchapter B " ... and, not later than the 15th day after the date on which the insurance carrier received written notice of the injury, the insurance carrier has provided the employee and the division with a notice that describes all steps taken by the insurance carrier to investigate the injury. Section 409.021(a-3) also requires the commissioner to adopt rules as necessary to implement that subsection. Section 409.021(d) provides that "[a]n insurance carrier may reopen the issue of the compensability of an injury if there is a finding of evidence that could not reasonably have been discovered earlier."

Section 409.022(c) provides that "[a]n insurance carrier commits an administrative violation if the insurance carrier does not have reasonable grounds for a refusal to pay benefits, as determined by the commissioner. Section 409.022(d) provides that, "if an insurance carrier's notice of refusal to pay benefits under Section 409.021 is sent in response to a claim for compensation resulting from [a first responder's] disability or death for which a presumption is claimed to be applicable under Subchapter B, ... the notice must include a statement by the insurance carrier that: (1) explains why the carrier determined a presumption under that subchapter does not apply to the claim for compensation; and (2) describes the evidence that the carrier reviewed in making the determination described by Subdivision (1)."

Section 414.002 provides that DWC shall monitor the system for compliance with the Act and rules as well as other laws relating to workers' compensation.

Section 415.021(c-2) provides that "[i]n determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided notice under Section 409.021(a-3), the commissioner shall consider whether: (1) the employee cooperated with the insurance carrier's investigation of the claim; and (2) the employee timely authorized access to the applicable medical records."

Government Code §607.052(a) provides that "[n]otwithstanding any other law, this subchapter applies only to a firefighter, peace officer, or [EMT] who: (1) on becoming employed or during employment as a firefighter, peace officer, or [EMT], received a physical examination that failed to reveal evidence of the illness or disease for which benefits or compensation are sought using a presumption established by this subchapter; (2) is employed for five or more years as a firefighter, peace officer, or [EMT]; and (3) seeks benefits or compensation for a disease or illness covered by this subchapter that is discovered during employment as a firefighter, peace officer, or [EMT]."

Section 607.052(b) provides that "[a] presumption under this subchapter does not apply: (1) to a determination of a survivor's eligibility for benefits under Chapter 615; (2) in a cause of action brought in a state or federal court except for judicial review of a proceeding in which there has been a grant or denial of employment-related benefits or compensation; (3) to a determination regarding benefits or compensation under a life or disability insurance policy purchased by or on behalf of the firefighter, peace officer, or [EMT] that provides coverage in addition to any benefits or compensation required by law; or (4) if the disease or illness for which benefits or compensation is sought is known to be caused by the use of tobacco and: (A) the firefighter, peace officer, or [EMT] is or has been a user of tobacco; or (B) their spouse has, during the marriage, been a user of tobacco that is consumed through smoking."

Section 607.058(a) provides that "[a] presumption under §§607.053, 607.054, 607.055, or 607.056 may be rebutted through a showing by a preponderance of the evidence that a risk factor, accident, hazard, or other cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred." Subsection (b) provides that "[a] rebuttal offered under [§607.058] must include a statement by the person offering the rebuttal that describes, in detail, the evidence that the person reviewed before making the determination that a cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness without which the disease or illness would not have occurred."

Finally, §9 of SB 2551 requires that the commissioner adopt rules as required by or necessary no later than January 1, 2020.

The adopted amendments support implementation of the Workers' Compensation Act, Labor Code Title 5, Subtitle A.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 23, 2019.

TRD-201904991

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Effective date: January 12, 2020

Proposal publication date: October 25, 2019

For further information, please call: (512) 804-4703


SUBCHAPTER B. MEDICAL BENEFIT REGULATION

28 TAC §180.26

The adopted rules are authorized by Texas Labor Code §§402.00111, 402.00116, 402.00128, 402.021, 402.061, 409.021, 409.022, 414.002, and 415.021; Government Code §607.052 and §607.058; and SB 2551 §9.

Section 402.00111(a) provides that the commissioner of workers' compensation "shall exercise all executive authority, including rulemaking authority under [the Act]."

Section 402.00116 provides that the commissioner is the chief executive and administrative officer of the agency with all the powers and duties vested under the Act.

Section 402.00128 describes the general powers and duties of the commissioner, including assessing and enforcing penalties and prescribing the form, manner, and procedure for the transmission of information to DWC.

Section 402.021 provides that a basic goal of the Texas workers' compensation system is that each employee shall be treated with dignity and respect when injured on the job and that it is the intent of the Legislature that the workers' compensation system must minimize the likelihood of disputes and resolve them promptly and fairly when identified and effectively educate and clearly inform each system participant of their rights and responsibilities under the system and how to appropriately interact within the system.

Section 402.061 provides that "[t]he commissioner shall adopt rules as necessary for the implementation and enforcement of [the Act]."

Section 409.021(a) sets forth the general rule that "[n]ot later than the 15th day after the date on which an insurance carrier receives written notice of injury, the insurance carrier shall [either]: (1) begin payment of benefits as required by [the Act]; or (2) notify the division and the employee in writing of its refusal to pay and [their procedural rights]." Section 409.021(a-3) provides that "[a]n insurance carrier is not required to comply with Subsection (a) if the claim results from an injured employee's disability or death for which a presumption is claimed to be applicable under Subchapter B ... and, not later than the 15th day after the date on which the insurance carrier received written notice of the injury, the insurance carrier has provided the employee and the division with a notice that describes all steps taken by the insurance carrier to investigate the injury. Section 409.021(a-3) also requires the commissioner to adopt rules as necessary to implement that subsection. Section 409.021(d) provides that "[a]n insurance carrier may reopen the issue of the compensability of an injury if there is a finding of evidence that could not reasonably have been discovered earlier."

Section 409.022(c) provides that "[a]n insurance carrier commits an administrative violation if the insurance carrier does not have reasonable grounds for a refusal to pay benefits, as determined by the commissioner. Section 409.022(d) provides that, "if an insurance carrier's notice of refusal to pay benefits under Section 409.021 is sent in response to a claim for compensation resulting from [a first responder's] disability or death for which a presumption is claimed to be applicable under Subchapter B, ...the notice must include a statement by the insurance carrier that: (1) explains why the carrier determined a presumption under that subchapter does not apply to the claim for compensation; and (2) describes the evidence that the carrier reviewed in making the determination described by Subdivision (1)."

Section 414.002 provides that DWC shall monitor the system for compliance with the Act and rules as well as other laws relating to workers' compensation.

Section 415.021(c-2) provides that "[i]n determining whether to assess an administrative penalty involving a claim in which the insurance carrier provided notice under Section 409.021(a-3), the commissioner shall consider whether: (1) the employee cooperated with the insurance carrier's investigation of the claim; and (2) the employee timely authorized access to the applicable medical records."

Government Code §607.052(a) provides that "[n]otwithstanding any other law, this subchapter applies only to a firefighter, peace officer, or [EMT] who: (1) on becoming employed or during employment as a firefighter, peace officer, or [EMT], received a physical examination that failed to reveal evidence of the illness or disease for which benefits or compensation are sought using a presumption established by this subchapter; (2) is employed for five or more years as a firefighter, peace officer, or [EMT]; and (3) seeks benefits or compensation for a disease or illness covered by this subchapter that is discovered during employment as a firefighter, peace officer, or [EMT]."

Section 607.052(b) provides that "[a] presumption under this subchapter does not apply: (1) to a determination of a survivor's eligibility for benefits under Chapter 615; (2) in a cause of action brought in a state or federal court except for judicial review of a proceeding in which there has been a grant or denial of employment-related benefits or compensation; (3) to a determination regarding benefits or compensation under a life or disability insurance policy purchased by or on behalf of the firefighter, peace officer, or [EMT] that provides coverage in addition to any benefits or compensation required by law; or (4) if the disease or illness for which benefits or compensation is sought is known to be caused by the use of tobacco and: (A) the firefighter, peace officer, or [EMT] is or has been a user of tobacco; or (B) their spouse has, during the marriage, been a user of tobacco that is consumed through smoking."

Section 607.058(a) provides that "[a] presumption under §§607.053, 607.054, 607.055, or 607.056 may be rebutted through a showing by a preponderance of the evidence that a risk factor, accident, hazard, or other cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness, without which the disease or illness would not have occurred." Subsection (b) provides that "[a] rebuttal offered under [§607.058] must include a statement by the person offering the rebuttal that describes, in detail, the evidence that the person reviewed before making the determination that a cause not associated with the individual's service as a firefighter, peace officer, or [EMT] was a substantial factor in bringing about the individual's disease or illness without which the disease or illness would not have occurred."

Finally, §9 of SB 2551 requires that the commissioner adopt rules as required by or necessary no later than January 1, 2020.

The adopted amendments support the implementation of the Workers' Compensation Act, Texas Labor Code Title 5, Subtitle A.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 23, 2019.

TRD-201904992

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Effective date: January 12, 2020

Proposal publication date: October 25, 2019

For further information, please call: (512) 804-4703