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THE STATE
OF TEXAS
Provided by
Texas Department of Insurance
Division of Workers’ Compensation

Quick for Designated Doctors
The Texas Department of Insurance, Division of Workers’ Compensation’s (TDIDWC)
medical treatment guideline is the Official Disability Guidelines – Treatment
in Workers’ Comp, excluding the return to work pathways, (ODG) [137.100]. Health
care provided in accordance with the TDI-DWC treatment guidelines is presumed
reasonable. The TDI-DWC disability duration guideline is The Medical Disability
Advisor, Workplace Guidelines for Disability Duration, excluding all sections and
tables relating to rehabilitation, (MDA) [137.10]. These guidelines should be used
for the evaluation of expected or average return to work time frames. Workers’
Compensation Health Care Networks may adopt different treatment and disability
duration guidelines. If reference to such treatment and disability duration guidelines
is appropriate, and the Designated Doctor does not follow the TDI-DWC guidelines,
the Designated Doctor should provide an explanation with references to the
guidelines. Designated doctors should render opinions based on a reasonable medical
probability.
When performing an examination, a designated doctor should consider the following
information in order to properly address any of the following issues. The sections
below correspond to the “Reason For Request” section of DWC Form-032, Request
for Designated Doctor.
A. Maximum Medical Improvement (MMI)
• MMI is defined in part as the earliest date after which, based on reasonable
medical probability, further material recovery from or lasting improvement to an
injury can no longer be reasonably anticipated [401.011(30)(A)].
• The date of MMI may not be prospective or conditional, but it may be before the
date of the certifying exam [130.1(b)(4)(C)].
• Do not conduct an IR exam if you find the injured employee is not at MMI.
Designated Doctors cannot be paid for IR exams for an injured employee that is
not at MMI.
When documenting the exam:
• If the determination is that the injured employee has not reached MMI, give the
reasons you believe the injured employee has not reached MMI [130.6(b)(1)].
These reasons should be either consistent with the ODG or sufficient rationale
should be provided why the ODG does
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• If there was a prior certification of an MMI date by an authorized doctor and you find that the injured employee either was not at MMI or reached MMI on a different date, provide an explanation with clinical documentation to support your MMI date [130.6(b)(2)].
B. Impairment Rating (IR)
• The IR is based on the injured employee’s condition as of the MMI date or the statutory MMI date, which ever is the earliest [130.1(c)(3)]. The statutory MMI date is 104 weeks after the 8th day of disability.
• Impairment is any anatomic or functional abnormality or loss existing after MMI which results from a compensable injury and is reasonably presumed to be permanent [401.011(23)].
• The appropriate edition of the AMA Guides for certifying examinations on or after October 15, 2001, is the fourth edition (1st, 2nd, 3rd, or 4th printing, including corrections and changes as issued by the AMA prior to May 16, 2000) [130.1(c) (2)(B)(i)]. If you are addressing an injury in which the first certifying examination was made before October 15, 2001, the appropriate edition of the AMA Guides is the third edition [130.1(c)(2)(B)(ii)].
• If you were asked to address MMI in addition to IR and determine that the injured employee has not reached MMI at this time, you should not assign an IR [130.6(b)(4)]. Also, do not conduct an IR exam if you find the injured employee is not at MMI. Designated Doctors cannot be paid for IR exams for an injured employee that is not at MMI.
When documenting the exam:
• An IR is the percentage of permanent impairment of the whole body resulting from a compensable injury [401.011(24)]. Assign a whole body IR for the entire compensable injury. Also, rate all parts of the compensable injury and give a 0% IR for parts with no permanent impairment.
• Include a description and explanation of clinical findings related to each impairment and describe how the findings relate to the criteria in the AMA Guides [130.1(c)(3)(D)].
• If you are asked to address an IR in addition to an extent of injury dispute, provide multiple certifications that take into account the various interpretations of the extent of injuries [130.6(b)(5)].
C. Extent of Injury
• An extent of injury question arises when there is a dispute as to whether the claimed compensable injury or established compensable injury includes additional body parts or injury conditions.
• An injury means damage or harm to the physical structure of the body and a disease or infection naturally resulting from the damage or harm. The term includes an occupational disease [401.011(26)].
• An aggravation of a pre-existing condition is included in the compensable injury. An aggravation is an enhancement, acceleration, or worsening of the underlying condition.
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• Further harm caused by medical care for the compensable injury is part of the compensable injury.
• If a condition arises out of or naturally results from the compensable injury, it extends to and is included in the compensable injury.
When documenting the exam:
• Include in your report the claimed compensable injury or established compensable injury as identified by the information provided by the requestor or other parties. That information should also describe the incident(s) that were a cause of the injury.
• For the extent of injury question, explain whether the work incident that was a cause of the injury was also a cause of the additional injury or condition, or whether the additional injury or condition was a natural progression of the injury.
D. Disability a Direct Result of the Injury
• Disability is an economic concept which means the inability because of a compensable injury to obtain and retain employment at wages equivalent to the pre-injury wage [401.011(16)].
• Direct result may be established by evidence that an injured employee sustained an injury with lasting effects and could not reasonably perform the pre-injury employment.
• The compensable or claimed injury need only be a cause of disability.
When documenting the exam:
• Include in your report the claimed compensable injury or established compensable injury as identified by the information provided by the requestor or other parties. From this information determine and state in your report what the compensable or claimed injury is. Base your direct result determination on your determination of the claimed compensable injury or established compensable injury.
• Explain how the employee’s inability to perform the pre-injury employment is or is not a direct result of the compensable injury.
E. Return to Work
When documenting the exam:
• Explain whether the injured employee can return to any form of employment, and if so, identify any restrictions.
• When applicable reference the MDA in determining the injured employee’s capacity to return to work and explain how the MDA was used in making the determination.
• If it is determined that the employee can return to work, with or without restrictions, file a Work Status Report (DWC Form-73) within seven days of the
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exam [126.7(o)].
• If you change the injured employee’s work status, provide an explanation on the change in the employee’s condition to support the change in work status. Also, file a Work Status Report (DWC Form-73) within seven days of the exam [126.7(o)].
F. Return to Work for Supplemental Income Benefits
When documenting the exam:
• For the dates covered by the parties, if the injured employee was unable to perform any type of work in any capacity, specifically explain in your report how the injury causes a total inability to work.
• For the dates covered by the request, if the injured employee has any ability to work, describe what the injured employee can do and complete a Work Status Report (DWC Form-73).
G. Other Similar Issues
• When the compensability of the injury has been denied or disputed, determine if there is an injury resulting from the claimed incident.
• An injury means damage or harm to the physical structure of the body and a disease or infection naturally resulting from the damage or harm. The term includes an occupational disease [401.011(26)].
This reference guide refers to Texas Labor Code §401.011 (General Definitions), and 28 Texas Administrative Code §§126.7 (Designated Doctor Examinations: Requests and General Procedures), 130.1 (Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment), 130.6 (Designated Doctor Examinations for Maximum Medical Improvement and/or Impairment Rating), 137.10 (Return to Work Guidelines) and 137.100 (Treatment Guidelines).

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

IN THE SUPREME COURT OF TEXAS

NO. 09-0340

INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, PETITIONER,
v.
CARMEN MURO, RESPONDENT

ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS

Argued March 3, 2011
JUSTICE MEDINA delivered the opinion of the Court.
The Texas Workers’ Compensation Act authorizes the award of lifetime income benefits to
employees who lose certain body parts or suffer certain injuries in work-related accidents. The
specific body parts and injuries that qualify an employee for this type of benefit are enumerated in
section 408.161 of the act. See TEX. LAB. CODE § 408.161(a)(1)–(7). That enumeration includes,
among others, “loss [or lost use] of both feet at or above the ankle.” Id. § 408.161(a)(2), (b).
The question here concerns the standard for awarding lifetime income benefits under section
408.161. The employee in this case injured her hips, an injury and body part not enumerated in
section 408.161. The hip injuries, however, affected the use of her feet to the extent that she could
no longer work. Although her feet were not injured, per se, the employee was awarded lifetime
income benefits because her hip injuries prevented her from continuing to work. The issue then is
whether the statute authorizes the award of lifetime benefits for injuries to body parts not
enumerated in the statute, that is, whether the occurrence of one of the injuries identified in section
408.161 is a prerequisite to the award of lifetime benefits or whether other injuries that result in the
employee’s total and permanent incapacity, such as the hip injuries here, are enough.
Affirming the employee’s award of lifetime income benefits, the court of appeals concluded
that section 408.161 does not limit the award of lifetime income benefits to the specific injuries and
body parts enumerated in the statute. 285 S.W.3d 524, 529 (Tex. App.—Dallas 2009). We
conclude, however, that section 408.161 limits the award of lifetime benefits to the injuries
enumerated therein and that an employee does not lose the use of a body part, within the statute’s
meaning, without some evidence of an injury to that body part. Because there is no evidence that
the employee suffered one of the enumerated injuries in this case, we reverse and render.
I
Carmen Muro was seriously injured at work in 1996. She slipped and fell on a restroom
floor, injuring her hips, lower back, right shoulder, and neck. Her injuries resulted in several
surgeries, including the replacement of both her hips, a surgical repair of her right shoulder, and a
cervical fusion. Complications with her left hip required additional surgery and the replacement of
her first artificial hip. During this period, she received workers’ compensation benefits. Muro
eventually returned to her job in revenue management with her employer but left again in 1999
because she had difficulty walking from the parking lot and sitting at her desk. Unable to work,
Muro sought lifetime income benefits.
2
The workers’ compensation act enumerates certain catastrophic injuries for which an
employee may recover lifetime income benefits. TEX. LAB. CODE § 408.161(a). The enumerated
injuries include the loss of both feet, the loss of both hands, or the loss of a hand and a foot, among
others. Id. § 408.161(a)(2), (3), (4). Muro asserted that she was entitled to lifetime benefits because
her workplace accident caused her to lose the use of her right hand and both feet. Her employer’s
workers’ compensation carrier, the Insurance Company of the State of Pennsylvania, disagreed. It
refused to pay benefits beyond 401 weeks, asserting that Muro’s circumstances did not qualify her
for lifetime income. To resolve this dispute over benefits, the Texas Workers’ Compensation
Commission (“TWCC”) scheduled a contested case hearing.
The TWCC hearing officer concluded that Muro was entitled to lifetime income benefits
“based on the total and permanent loss of use of both feet at or above the ankle, or one foot at or
above the ankle and one hand at or above the wrist.” The TWCC appeals panel declined to reverse
the hearing officer’s decision, and the carrier, having exhausted the administrative process, appealed
to the district court. See id. § 410.251 (authorizing judicial review).
In the district court, a jury heard testimony from several witnesses regarding the nature and
extent of Muro’s injuries and disability. Dr. Hooman Sedighi, a TWCC-appointed physician,
testified that the injuries to, and surgeries on, Muro’s hips and right shoulder limited her ability to
use her legs and right arm and that these limitations likewise affected the use of her feet and right
hand. Muro’s feet and hands, however, were, according to the doctor, “functioning fine” and “near
normal function.” Dr. Sedighi’s neurological exam revealed Muro’s motor assessment to be “fourplus
out of five in both upper and lower extremities without any focal myotomal deficits.” He
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explained that such testing utilizes a gradation that “goes from zero, meaning absolutely no motor
strength whatsoever, to five, being normal.” Dr. Sedighi further testified that pinprick or sensation
testing indicated that Muro had normal sensation in her feet and hands. Although her feet and right
hand were functional, Dr. Sedighi concluded that the injury to Muro’s shoulder and hips had
“diminished the ability to use both lower extremities and the right upper extremity” to the extent that
she “would be considered totally disabled from any and all work.”
Dr. Charles Crane, Muro’s treating physician, also testified that Muro was completely
disabled. In his opinion, the injury to Muro’s hips had impaired the use of her feet to the extent that
she could no longer obtain and retain employment requiring their use. Finally, Muro and her
daughter testified about Muro’s daily life, her limitations, and her inability to function without
assistance.
The jury found that Muro had the “total and permanent loss of use of both feet at or above
the ankle” and the “total and permanent loss of use of one foot at or above the ankle and one hand
at or above the wrist.” On this verdict, the district court rendered judgment for Muro, awarding her
lifetime income benefits and attorney’s fees. The insurance carrier appealed, and the court of
appeals affirmed the district court’s judgment. 285 S.W.3d 524. A petition for review to this Court
followed, and we granted the petition to consider the requirements of section 408.161 and Muro’s
award of lifetime income benefits.
II
Lifetime income is the greatest income benefit a worker can receive under the workers’
compensation act. In addition to lifetime income, the act provides for three lesser awards: temporary
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income benefits, impairment income benefits, and supplemental income benefits. See TEX. LAB.
CODE §§ 408.101, 408.121, 408.142, 408.161. These benefits accrue when a compensable injury
causes a decrease in the employee’s earnings and are generally paid weekly by the insurance carrier
“as and when they accrue.” Id. §§ 401.011(25), 408.081(b). A claimant’s combined eligibility for
temporary income benefits, impairment income benefits, and supplemental income benefits
generally terminates 401 weeks after the date of injury. Id. § 408.083(a). But the 401-week
limitation does not apply to lifetime income benefits, which, as the name implies, are payable until
the injured employee’s death. Id. § 408.161(a).
Section 408.161(a) provides for the payment of lifetime income benefits under seven
circumstances:
(1) total and permanent loss of sight in both eyes;
(2) loss of both feet at or above the ankle;
(3) loss of both hands at or above the wrist;
(4) loss of one foot at or above the ankle and the loss of one hand at or above the
wrist;
(5) an injury to the spine that results in permanent and complete paralysis of both
arms, both legs, or one arm and one leg;
(6) a physically traumatic injury to the brain resulting in incurable insanity or
imbecility; or
(7) third degree burns that cover at least 40 percent of the body and require grafting,
or third degree burns covering the majority of either both hands or one hand and the
face.
Id. § 408.161(a)(1)–(7). The statute equates the loss of the use of an enumerated body part with its
loss, stating that “the total and permanent loss of use of a body part is the loss of that body part.”
Id. § 408.161(b). The statute does not elaborate further on what it means to lose the use of one of
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the enumerated body parts, but we have written on the question under an earlier version of the
workers’ compensation act. See Travelers Ins. Co. v. Seabolt, 361 S.W.2d 204 (Tex. 1962).
III
In Seabolt, the Court “sought to clarify the law regarding the total loss of use” of specific
body parts identified in the workers’ compensation act. Angelina Cas. Co. v. Holt, 362 S.W.2d 99,
100 (Tex. 1962). The act at that time used the term “member” instead of “body part,” but otherwise
equated the loss of use of a member or body part with its loss, as it does now. See Seabolt, 361
S.W.2d at 205 (citing former act).1 Seabolt observed that the phrase “total loss of the use of a
member” embraced two concepts, one narrow, relating to the absence of any utility in the body part,
and the other “somewhat broader concept,” recognizing that the member might possess some utility
as a part of the body and yet “its condition be such as to prevent the workman from procuring and
retaining employment requiring the use of the injured member.” Id. at 205–06.
Seabolt then proposed the following definition:
A total loss of the use of a member exists whenever by reason of injury, such
member no longer possesses any substantial utility as a member of the body, or the
condition of the injured member is such that the workman cannot procure and retain
employment requiring the use of the member.
1 The former act provided that for purposes of lifetime benefits “the total and permanent loss of use of a member
shall be considered to be the total and permanent loss of the member” and that the “total loss of use” of a member is
“equivalent to” and is to “draw the same compensation” as the “total and permanent loss of such member.” TEX. REV.
CIV. STAT.ANN. art. 8306, §§ 10(b), 11a (repealed by Acts 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7)–(9), 1989 Tex.
Gen. Laws 114). The act now provides that the “total and permanent loss of use of a body part is the loss of that body
part.” TEX. LAB. CODE § 408.161(b).
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Id. at 206.2 The insurance carrier points out that this definition uses the adjective “injured” to
describe the affected member, indicating that the enumerated member must itself be injured before
a loss of use can occur. The carrier submits that an employee therefore does not lose the use of an
enumerated body part without some evidence of an injury to it.
The carrier requested a jury instruction on this principle, tendering the Seabolt definition,
but the court refused, submitting the following instruction instead: “‘Loss of use’ means the
condition of the body part is such that the Defendant cannot get and keep employment requiring the
use of that body part. Loss of use does not require amputation.” Because the court’s charge omitted
any requirement of injury to a statutory body part, the carrier complains that Muro was able to
recover lifetime benefits for the total loss of use of her feet and her right hand, even though these
body parts remained uninjured and functional.
Muro responds that the statute does not expressly require evidence of an injury to a statutory
body part but rather only the “total and permanent loss of use” of such body part. See TEX. LAB.
CODE § 408.161(b). Muro submits that any injury that results in the “total and permanent loss of
use” of a statutory body part is enough. Therefore, evidence of her hip and shoulder injuries and
their effect on her feet and right hand are enough to satisfy the statute.
The court of appeals agreed that Muro did not need evidence of an injury to her right hand
and feet to support the jury’s finding of lost use. 285 S.W.3d at 529. Citing five cases from other
courts of appeals, the court concluded “that injury to one part of the body can support a loss of use
2 This definition was subsequently incorporated into the Texas Pattern Jury Charges. See COMM. ON PATTERN
JURY CHARGES,STATE BAR OF TEX.,TEXAS PATTERN JURY CHARGES–WORKMEN’S COMPENSATION PJC 26.04 (1970).
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finding for another part of the body, bringing the injury within the category of injuries encompassed
by the [lifetime income benefits] statute.” Id. (citing Galindo v. Old Republic Ins. Co., 146 S.W.3d
755, 760 (Tex. App.—El Paso 2004, pet. denied); Hartford Underwriters Ins. Co. v. Burdine, 34
S.W.3d 700,705-06 (Tex. App.—Fort Worth 2000, no pet.); Second Injury Fund of the State of Tex.
v. Avon, 985 S.W.2d 93, 95 (Tex. App.—Eastland 1998, pet. denied); Tex. Gen. Indem. Co. v.
Martin, 836 S.W.2d 636, 638 (Tex. App.—Tyler 1992, no writ); Tex. Employers’ Ins. Ass’n v.
Gutierrez, 795 S.W.2d 5, 6 (Tex. App.—El Paso 1990, writ denied)). In short, the court of appeals
concluded that Muro was entitled to lifetime income benefits because injuries to her hips and right
shoulder affected her ability to use her feet and right hand to the extent that she could not continue
to work.
A
Four of the five cases on which the court of appeals relies were decided under article 8306
of the Texas Revised Civil Statutes, an earlier version of the workers’ compensation act. See TEX.
REV. CIV. STAT. ANN. art. 8306 (repealed by Acts 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01, 1989
Tex. Gen. Laws 114). The Legislature repealed that version of the act when it reformed the
workers’ compensation system in 1989. These reforms created a new regulatory agency, benefits
structure, and dispute resolution process. See generally Tex. Workers’ Comp. Comm’n v. Garcia,
893 S.W.2d 504, 510–16 (Tex. 1995) (discussing changes). The changes were subsequently codified
in Title 5 of the Texas Labor Code. Act of May 22, 1993, 73rd Leg., R.S., ch. 269 § 1, 1993 Tex.
Gen. Laws 987, 1173.
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Injuries occurring before January 1, 1991 (the effective date of the reform bill), are
commonly referred to as “old-law cases.” Injuries occurring on or after January 1, 1991, are
commonly referred to as “new-law cases.” Old-law cases can be useful in understanding the new
act, but their relevance to any particular provision requires a careful comparison of the old and new
law.
Although the new law significantly changed the workers’ compensation system, it did not
wholly replace the old law’s treatment of lifetime income benefits. The old law enumerated six
injuries for which lifetime income benefits were to be paid, describing the enumerated injuries as
conclusively establishing a worker’s total and permanent incapacity. See TEX. REV. CIV. STAT.
ANN. art. 8306, §§ 10(b), 11a (repealed by Acts 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7)–(9),
1989 Tex. Gen. Laws 114). Section 408.161 of the new law incorporates these same six injuries,
adding serious burns as a seventh specific injury qualifying for lifetime benefits. TEX. LAB. CODE
§ 408.161(a)(1)–(7). Section 408.161, however, no longer expressly equates the enumerated injuries
with total and permanent incapacity. Id. § 408.161. But, under either version of the act, lifetime
benefits are payable for certain statutory injuries, such as the loss of both feet, the loss of both hands,
or a combination of the two. Compare TEX. LAB. CODE § 408.161(a)(2)–(4), with TEX. REV. CIV.
STAT.ANN. art. 8306, § 11a(2)–(4) (repealed). And as already mentioned, both versions equate the
total and permanent loss of use of an enumerated body part with its loss. Compare TEX.LAB.CODE
§ 408.161(b), with TEX. REV. CIV. STAT. ANN. art. 8306, §§ 10(b), 11a (repealed).3
3 See supra note 1.
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The respective laws differ, however, in their approach to other serious injuries, resulting in
a workers’ total incapacity. The new law does not directly address any other serious injuries not
enumerated in the act, while the old law does address the subject, but does so inconsistently.
The old law indicates that the six enumerated injuries are the exclusive means of proving a
worker’s entitlement to lifetime benefits, but the old law also states that the enumeration is a nonexclusive
list. For example, section 10(b) provides that, if the claimant’s injury is “one of the six
(6) enumerated in Section 11a,” the claimant is entitled to lifetime benefits; however, “in no other
case of total and permanent incapacity” can the claimant recover benefits for a period in excess of
401 weeks from the date of injury. TEX. REV. CIV. STAT. ANN. art. 8306, § 10(b) (repealed).
Section 10(b) thus indicates that the nature of the injury (its enumeration in the statute) is more
important than the extent of the incapacity resulting from the injury.
Section 11a, however, indicates the opposite. After enumerating the six injuries, that section
concludes with the following paragraph, commonly referred to as the “other loss” clause:
The above enumeration is not to be taken as exclusive but in all other cases
the burden of proof shall be on the claimant to prove that his injuries have resulted
in permanent, total incapacity.
Id. art. 8306, § 11a (repealed). In contrast to section 10(b), the “other loss” clause focuses on the
nature of the worker’s incapacity, rather than the injury itself, suggesting that the injury’s nature (its
enumeration in the statute) is less important than the degree of incapacity or disability the injury
produces. Clearly, the old law is conflicted on the purpose served by its six enumerated injuries.
Given this inconsistency in the old law, a number of courts opted to apply section 11a’s “other loss”
clause to extend lifetime benefits to workers whose non-enumerated injuries resulted in total and
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permanent incapacity. See, e.g., City of Del Rio v. Contreras, 900 S.W.2d 809, 810–11 (Tex.
App.—San Antonio 1995, pet. denied) (holding the old law to be “at best ambiguous” on the issue
of exclusivity and resolving the ambiguity in the worker’s favor).
Most of the court of appeals’ case authority here is premised on this application of the “other
loss” clause. See 285 S.W.3d at 529 (citing Avon, 985 S.W.2d at 95 (jury’s finding of total and
permanent loss of use of both legs supports recovery of lifetime income under the provision for the
“loss of both feet at or above the ankle”); Martin, 836 S.W.2d at 638 (total and permanent loss of
use of a leg “necessarily inflicts” the loss of use of the attached foot at or above the ankle);
Gutierrez, 795 S.W.2d at 6 (finding of the total loss of use of a leg encompasses the loss of a foot
at or above the ankle)). The “other loss” clause, however, did not survive the act’s reformation.
Because this provision is not part of the current act, the old-law cases that apply it are neither
relevant nor useful to our understanding of section 408.161.
B
The court of appeals does cite one new-law case that applies section 408.161 under
circumstances similar to the present case. See Galindo, 146 S.W.3d 755. In Galindo, the worker
sought an award of lifetime income benefits after an exposure to sulfur dioxide gas rendered him
a “pulmonary invalid.” Galindo, 146 S.W.3d at 759–60. Pulmonary injuries are not mentioned in
section 408.161. See TEX. LAB. CODE § 408.161(a)(1)–(7) (enumerating the seven injuries that
qualify for lifetime benefits). Because the worker’s injury was not one enumerated in the statute,
the trial court summarily denied the worker’s claim. The court of appeals, however, reversed the
summary judgment, concluding that the worker’s pulmonary injury raised fact questions about
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whether the worker had permanently lost the use of both hands, or both feet, “or even all four
extremities.” Galindo, 146 S.W.3d at 760. The Galindo court thus focused on the workers’ total
and permanent incapacity rather than the nature of the injury producing that incapacity, just as oldlaw
cases had done when applying the “other loss” clause. Similarly, the court here focuses on
Muro’s incapacity or disability and, as in Galindo, that disability stems from a non-statutory injury
or impairment.
Concepts of “impairment” and “disability” are not interchangeable under the new law,
however. The act defines “impairment” as “any anatomic or functional abnormality or loss existing
after maximum medical improvement that results from a compensable injury and is reasonably
presumed to be permanent.” TEX. LAB. CODE § 401.011(23). “Disability,” on the other hand, is
defined as “the inability because of a compensable injury to obtain and retain employment at wages
equivalent to the preinjury wage.” Id. § 401.011(16). The injuries enumerated in section 408.161
all result in impairments, but whether they also result in disabilities will “depend upon the nature
of the employee’s pre-injury job.” Mid-Century Ins. Co. v. Tex. Workers’ Comp. Comm’n, 187
S.W.3d 754, 760 (Tex. App.—Austin 2006, no pet.). Section 408.161 therefore defines lifetimeincome-
benefits eligibility in terms of specific impairments rather than general disabilities. See id.
(noting that § 408.161 defines eligibility without regard to the existence of a disability); cf. Consol.
Underwriters v. Langley, 170 S.W.2d 463, 464 (Tex. 1943) (noting that “[w]here injury results to
a particular member of the body, compensation for the loss of which is specifically provided by
statute, the liability of the insurer is limited to that amount, even though the loss of or injury to that
particular member actually results in total permanent incapacity of the employee to labor”).
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The statute merely provides that lifetime income benefits are to be paid for the seven injuries
or conditions enumerated in section 408.161. Compare TEX.LAB.CODE § 408.161, with TEX.REV.
CIV. STAT.ANN. art. 8306, § 11a (repealed). Had the Legislature intended for total and permanent
incapacity to serve generally as the basis for the award of lifetime income benefits under the new
law, it would have retained the old law’s “other loss” clause or replaced the specific injuries and
conditions enumerated in section 408.161 with a disability system focused on the worker’s inability
to work. Because the Legislature chose both to retain the enumerated injuries and to repeal the
“other loss” clause, it clearly did not intend to continue the broader application of lifetime income
benefits formerly recognized by some courts of appeals under the old-law’s “other loss” clause.
C
The evidence in this case indicates that physical injuries to Muro’s hips, shoulder, back, and
neck limited or impaired her ability to use her feet and right hand. There was no evidence, however,
that these physical injuries extended to the hand or feet, either directly or indirectly as was the case
in Burdine, another decision on which the court of appeals relies. See 285 S.W.3d at 529 (citing
Burdine, 34 S.W.3d at 707).
In Burdine, the worker’s injury involved her back and “the associated nerve roots” which
extended “down the legs into the feet.” Burdine, 34 S.W.3d at 706. The treating physician testified
that the injury had caused a “muscular malfunction” rendering the worker unable to lift her feet, a
condition referred to as “footdrop.” Id. The physician further testified that the worker was totally
disabled and that the loss of her legs and feet at or above the ankles was a permanent condition for
which he had prescribed an electric wheelchair. Id. at 706–07. The injury in Burdine therefore
13
extended to the worker’s feet and resulted in her inability to “get and keep employment requiring
[their] use.” Burdine, 34 S.W.3d at 707 (quoting Seabolt’s definition of “total loss of use”). This
evidence of an injury to a body part enumerated in the statute distinguishes Burdine from the present
case.4
Under the old law, we said that an injury to one body part or system could extend to and
affect another body part or system and thereby amplify the benefits otherwise due an injured worker.
Tex. Employers’ Ins. Ass’n v. Wilson, 522 S.W.2d 192, 194 (Tex. 1975); Travelers Ins. Co. v.
Marmolejo, 383 S.W.2d 380, 381–82 (Tex. 1964). But Muro does not contend that her injuries
extended to her feet or right hand. The expert testimony confirms that they did not. Muro urges
instead that injuries to her hips, back, neck, and shoulder were sufficient to support the underlying
award of lifetime income benefits. We cannot agree.
The Legislature has limited the award of lifetime income benefits to the specific injuries and
body parts enumerated in section 408.161; nothing in the statute authorizes the substitution of other
injuries or body parts for those enumerated. TEX.LAB.CODE § 408.161. The injury to the statutory
body part may be direct or indirect, as in Burdine, but the injury must extend to and impair the
statutory body part itself to implicate section 408.161. Because there is no contention here that
Muro’s feet and right hand ceased to possess “any substantial utility as a member of the body”5 and
no evidence of injury to these body parts that prevented her from procuring and retaining
4 Burdine is also an old-law case, and the result in the case might also be justified under the former act’s “other
loss” clause. TEX. REV. CIV. STAT. ANN. art. 8306, § 11a (repealed).
5 Seabolt recognized this as an alternative definition for the “total loss of use of a member.” The Division of
Workers’ Compensation adjudicated the “substantial utility” theory of recovery against Muro, and it is not an issue in
this appeal. See Seabolt, 361 S.W.2d at 205–06.
14
employment requiring their use, we conclude that Muro is not entitled to the award of lifetime
income benefits. See Seabolt, 361 S.W.2d at 206.
III
The insurance carrier also complains about the award of attorney’s fees. An insurance carrier
that seeks judicial review of a TWCC appeals panel’s final decision regarding, among other things,
benefits eligibility is liable for reasonable and necessary attorney’s fees incurred by a prevailing
claimant in the appeal. TEX. LAB. CODE § 408.221(c). Muro was accordingly awarded attorney’s
fees because she prevailed in the district court, and the court of appeals affirmed that award. Our
determination that Muro is not entitled to lifetime income benefits under section 408.161 requires
that we also reverse her award of attorney’s fees.
* * *
The court of appeals’ judgment is reversed and judgment is rendered denying the claimant
an award of lifetime income benefits under section 408.161 of the workers’ compensation act.
_____________________________
David M. Medina
Justice
Opinion Delivered: August 26, 2011

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

July 25, 1988

Mr. Joseph C. Gagen

Chairman

Texas Industrial Accident Board

200 East Riverside

Austin, Texas 78704

Opinion No. JM-931

Re: Authority of the Industrial Accident Board to approve a settlement agreement that would terminate liability for future medical expenses (RQ-1353)

Dear Mr. Gagen:

You ask:

Does the authority of the Industrial Accident Board over medical expenses incurred after a final award, judgment, or settlement, extend to approving compromise settlement agreements that would terminate all liability for future medical expenses?

The Industrial Accident Board (the “board”) is an administrative body created by statute and possessing only those powers conferred on it by statute. Commercial Casualty Insurance Co. v. Hilton, 87 S.W.2d 1081 (Tex.1935). V.T.C.S. art. 8307, s 1.

We believe that the determination of the board’s authority to approve a compromise settlement agreement subsequent to a final award of the board or a judgment of a court is governed by different statutory provisions than those apposite to the determination of the board’s authority to approve compromise settlement agreement subsequent to an original compromise settlement agreement. We will therefore treat these two elements of your question separately.

AUTHORITY OF BOARD TO APPROVE COMPROMISE SETTLEMENT AGREEMENT REGARDING FUTURE

MEDICAL EXPENSES SUBSEQUENT TO FINAL AWARD OF BOARD OR JUDGMENT OF COURT.

Attorney General Opinion JM-361 (1985) dealt with the question of whether the board may approve, while a case is pending before the board, a compromise settlement agreement which terminates liability for future medical expenses, if the carrier had admitted liability and the injury was one conclusively held to be total and permanent pursuant to article 8306, section 11a, V.T.C.S.

Noting that section 12 of article 8307, V.T.C.S., authorized the board to approve a compromise settlement agreement “[w]here the liability of the association or the extent of the injury is uncertain,” JM-361 concluded that where the carrier had admitted liability and where the injury was one for which as a matter of law incapacity was total and permanent, there was no “uncertainty” as to liability or extent of injury within the meaning of section 12. The opinion ruled that uncertainty as to amounts of future medical expenses was not “uncertainty” within the meaning of section 12 such that the board would be authorized to approve a compromise settlement agreement regarding only future medical expenses, where liability and extent of injury had been established.

In our opinion, it follows from the ruling in JM-361 that the board has no authority to approve a compromise settlement agreement that would terminate liability for future medical expenses after a final award of the board or a judgment of a court, because the proceedings of the board or a court in rendering a final award or judgment would necessarily have determined “liability” and “extent of injury” such that there would be no remaining “uncertainty” within the meaning of section 12 which would authorize the board to approve a compromise settlement agreement regarding future medical expenses. That a final award by the board or a judgment of a court [FN1] would have resolved uncertainty as to liability or extent of injury is apparent from a reading of pertinent parts of section 5 of article 8307:

All questions arising under this law, if not settled by agreement of the parties interested therein and within the provisions of this law, shall, except as otherwise provided, be determined by the Board. Any interested party who is not willing and does not consent to abide by the final ruling and decision of said Board shall, within twenty (20) days after the rendition of said final ruling and decision by said Board, file with said Board notice that he will not abide by said final ruling and decision. And he shall within twenty (20) days after giving such notice bring suit in the county where the injury occurred, or in the county where the employee resided at the time the injury occurred (or, if such employee is deceased, then in the county where the employee resided at the time of his death), to set aside said final ruling and decision, and said Board shall proceed no further toward the adjustment of such claim, other than hereinafter provided…. Whenever such suit is brought, the rights and liability of the parties thereto shall be determined by the provisions of this law. (Emphasis added.)

The liability of the association and the extent of the injury are the two key issues to be determined by the board or by a court in a worker’s compensation case. We find no provision of law relieving the board or a court from the duty to determine liability and extent of injury in rendering a final award or judgment. Once liability and extent of injury are finally determined by the board or by a court, there would remain no uncertainty as to the liability or extent of injury that would authorize the board under section 12 to approve a subsequent compromise settlement agreement regarding future medical expenses.

Moreover, section 5 makes the only specific provision for the board’s handling of medical expense claims after a final award by the board or a judgment of a court.

Notwithstanding any other provision of this law, as amended, no award of the Board, and no judgment of the court, having jurisdiction of a claim against the association for the cost or expense of items of medical aid, hospital services, nursing, chiropractic services, medicines or prosthetic appliances furnished to an employee under circumstances creating a liability therefor on the part of the association under the provisions of this law, shall include in such award or judgment any cost or expense of any such items not actually furnished to and received by the employee prior to the date of said award or judgment. The first such final award or judgment rendered on such claim shall be res judicata of the liability of the association for all such cost or expense which could have been claimed up to the date of said award or judgment and of the issue that the injury of said employee is subject to the provisions of this law with respect to such items, but shall not be res judicata of the obligation of the association to furnish or pay for any such items after the date of said award or judgment. After the first such final award or judgment, the Board shall have continuing jurisdiction in the same case to render successive awards to determine the liability of the association for the cost or expense of any such items actually furnished to and received by said employee not more than six (6) months prior to the date of each such successive award, until the association shall have fully discharged its obligation under this law to furnish all such medical aid, hospital services, nursing, chiropractic services, medicines or prosthetic appliances to which said employee may be entitled; provided, each such successive award of the Board shall be subject to a suit to set aside said award by a court of competent jurisdiction, in the same manner as provided in the case of other awards under this law. (Emphasis added.)

The board possesses only those powers conferred on it by statute. We have found no provisions authorizing the board to approve compromise settlements subsequent to board awards or court judgments, or to take other action regarding future medical expenses. Section 5 provides a procedure the board may utilize for the disposition of claims for medical expenses incurred subsequent to a board award or court judgment.

AUTHORITY OF THE BOARD TO APPROVE COMPROMISE SETTLEMENT AGREEMENTS REGARDING

FUTURE MEDICAL EXPENSES SUBSEQUENT TO AN ORIGINAL COMPROMISE SETTLEMENT

AGREEMENT.

We note at the outset that we have found no reported cases dealing with a compromise settlement agreement made subsequent to an original compromise settlement agreement. Many courts have stated that once an original compromise settlement agreement is approved by the board, the agreement is binding on the parties until the original settlement agreement is lawfully set aside by a court. See, e.g., Luersen v. Transamerica Insurance Co., 550 S.W.2d 171 (Tex.Civ.App.–Austin 1977, writ ref’d n.r.e.); Pearce v. Texas Employers Insurance Association, 403 S.W.2d 493 (Tex.Civ.App.–Dallas 1966, writ ref’d n.r.e.), reh’g denied, 412 S.W.2d 647 (Tex.1967), and the authorities cited therein.

In this vein, section 12b of article 8307, V.T.C.S., now specifically provides that the board “shall have no jurisdiction to rescind or set aside any compromise settlement agreement approved by the board or any agreed judgment approved by the court.” Acts 1983, 68th Leg., ch. 501, section 1.

Section 12b now also provides a specific procedure for the board’s resolving disputes as to medical expenses arising pursuant to compromise settlement agreements approved by the board or agreed judgments approved by the court:

Whenever in any compromise settlement agreement approved by the board or in any agreed judgment approved by the court, any dispute arises concerning the payment of medical, hospital, nursing, chiropractic or podiatry services or aids or treatment, or for medicines or prosthetic appliances for the injured employee as provided in Section 7, Article 8306, Revised Statutes, as amended, or as provided in such compromise settlement agreements or agreed judgments, all such disputes concerning the payment thereof shall be first presented by any party to the Industrial Accident Board within six months from the time such dispute has arisen (except where ‘good cause’ is shown for any delay) for the board’s determination….

It is our opinion that approval of a compromise settlement agreement regarding medical expenses subsequent to an original approved compromise settlement agreement would necessarily have the effect of rescinding or setting aside, at least to some extent, the original compromise settlement agreement and would thus be barred by section 12b. Section 12b provides a procedure for the board’s dealing with questions of medical expenses pursuant to a compromise settlement agreement or agreed judgment approved by a court.

SUMMARY

After a final award of the board, court judgment, or compromise settlement agreement which has not been lawfully set aside, the Industrial Accident Board has no authority to approve a compromise settlement agreement to terminate liability for future medical expenses.

Very truly yours,

Jim Mattox

Attorney General of Texas

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

To: Texas Workers’ Compensation System Participants

From: Patricia Gilbert, Executive Deputy Commissioner for Operations

Date: July 14, 2015

RE: Medical Records for Designated Doctor Examinations

The Division of Workers’ Compensation (DWC) reminds all system participants that 28 Texas Administrative Code § 127.10(a)(3) requires treating doctors and insurance carriers to provide all required medical records and any analyses to the designated doctor no later than three business days prior to a designated doctor examination. Additionally, if the required medical records are not received within one business day prior to an examination, the designated doctor shall reschedule the exam to occur no later than 21 days after receipt of the records. A new e-mail address for system participants to request assistance with medical records is listed at the end of this memorandum. Failure to provide medical records in accordance with the agency rule is an administrative violation and prevents the designated doctor from completing a certifying examination of the injured employee. Rescheduled examinations may result in unnecessary delays when processing a claim and bring increased cost to the system. Designated doctors are encouraged to reach out to the DWC for assistance obtaining medical records prior to examinations. DWC staff may contact treating doctors and insurance carriers that have not yet provided a complete set of required medical records to the designated doctor at any time before a scheduled examination, and will take necessary action to ensure all required medical records are received. The DWC asks all insurance carriers and treating doctors for full cooperation when contacted for assistance in obtaining medical records. Please contact DWC staff via e-mail at DDRecords@tdi.texas.gov for any questions.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Chapter 12

– Independent Review Organizations

SUBCHAPTER A. GENERAL PROVISIONS 28 TAC §12.1 AND §§12.3 – 12.6 SUBCHAPTER B. CERTIFICATE OF REGISTRATION FOR INDEPENDENT REVIEW 28 TAC §§12.101 – 12.111 SUBCHAPTER C. GENERAL STANDARDS OF INDEPENDENT REVIEW 28 TAC §§12.201 – 12.208 SUBCHAPTER D. ENFORCEMENT OF INDEPENDENT REVIEW STANDARDS 28 TAC §§12.301 – 12.303 SUBCHAPTER E. FEES AND PAYMENT 28 TAC §§12.401 – 12.406 SUBCHAPTER F. RANDOM ASSIGNMENT OF INDEPENDENT REVIEW ORGANIZATIONS 28 TAC §12.501 and §12.502

1. INTRODUCTION. The Texas Department of Insurance (TDI) adopts amendments to 28 TAC §§12.1, 12.3 – 12.6, 12.101 – 12.110, 12.201 – 12.208, 12.301 – 12.303, 12.401 – 12.406, 12.501, 12.502, and new §12.111, concerning independent review organizations (IROs). TDI adopts the new section and amendments with changes to the proposed text published in the November 28, 2014, issue of the Texas Register (39 TexReg 9310). Two correction of error notices were published in the December 12, 2014, (39 TexReg 9738) and December 19, 2014, (39 TexReg 10083) issues of the Texas Register to correct errors in the proposal published in the November 28, 2014, issue of the Texas Register (39 TexReg 9310). In response to comments on the proposal, TDI added the phrase “if any” in §12.103(4)(A) to track Insurance Code §4202.004(6)(B). Also in response to comments, TDI deleted “a letter from the Texas Secretary of State” and added “a copy of the Certificate of Formation from the Secretary 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 2 of 139 Chapter 12 – Independent Review Organizations of State” in §12.103(8)(a) to reflect the formation and existence requirements of Business Organizations Code §3.001. In addition to changes made in response to comments and to conform to the agency’s current style guidelines, TDI deleted “as of September 1, 2013,” in §12.1. TDI deleted “applications for a certificate of registration as an IRO, and for a renewal of a certificate of registration as an IRO” and “April 1, 2015,” and added “This chapter is effective on July 7, 2015,” and “July 7, 2015” in §12.4 to clarify that all of 28 TAC Chapter 12 is effective on July 7, 2015. TDI revised §§12.5(20), 12.5(22), 12.101, 12.103, 12.104, 12.107, 12.108, 12.111, 12.206(d)(7), 12.208(f), 12.302(f), 12.401(a), and 12.406 to replace “certified,” “renew,” and “certification.” The term “certification” refers to an issuance of the certificate of registration. For consistency of terminology throughout 28 TAC Chapter 12, TDI removed references to the term “certification,” instead referring to a “certificate of registration.” As a conforming change, TDI also changed the title of Subchapter B. TDI deleted “pertaining to” and added “on” in §12.5(15) to conform to current agency writing style. TDI deleted “including” and added “includes” in §12.5(23)(a) to conform to current agency writing style. TDI capitalized deleted “Federal” and added “federal” in §12.5(25)(E)(i) to conform to current agency writing style. TDI deleted “pertaining to” and added “about” in §12.5(32) to conform to current agency writing style. TDI deleted “where the activities and computer systems described in” and “are maintained, performed, and located” and added “the IRO’s primary office” in §12.5(30) 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 3 of 139 Chapter 12 – Independent Review Organizations to implement Insurance Code §4202.002(c)(2)(A)(i), which requires the IRO to maintain a physical address in Texas, and Insurance Code §4202.002(c)(2)(A)(iv), which requires the IRO to maintain its primary offices in this state. TDI also made these changes throughout 28 TAC Chapter 12 for consistency. TDI added “in Texas” in §12.5(32) for clarity and to implement Insurance Code §4202.002(c)(2)(A)(i). TDI deleted “pertaining to” and added “about” in §12.5(32) to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.5(35). TDI deleted “Certification” and “Organizations” and added “Certificate” and “IROs” in the title of subchapter B to correct the existing title and to comply with current agency writing style. TDI deleted “to” and added “in an IRO application form for” in §12.102(a) to be consistent throughout 28 TAC Chapter 12. TDI made nonsubstantive corrections to punctuation throughout §12.103. TDI deleted “title” and added “chapter” in §12.103(1)(E) to conform to current agency writing style. TDI deleted “title” and added “chapter” in §12.103(1)(E) to conform to current agency writing style. TDI deleted “above” and added “in subparagraph (A)” in §12.103(4)(B) to conform to current agency writing style. TDI moved “for an applicant that is publicly held” from the end to the beginning of §12.103(8)(B) to better track Insurance Code §4202.004(a)(1). TDI deleted “IRO” and added “applicant” in §12.103(8)(D), §12.103(8)(E), and §12.103(11)(D) to be consistent with existing language. TDI deleted “subchapter” and added “chapter” in §12.103(11) to conform to current agency writing style. TDI deleted “noted on the application” and added “included on the IRO application form” in §12.103(13)(A) for consistency and to conform to current agency 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 4 of 139 Chapter 12 – Independent Review Organizations writing style. TDI made a nonsubstantive amendment to renumber the paragraphs in §12.104 by deleting “4” and adding “3.” TDI replaced “will” with “may” in §12.106(a) to clarify that TDI conducts examinations at its discretion. TDI made a nonsubstantive correction to punctuation in §12.104(2)(B). TDI deleted “or the commissioner’s designee” in §12.106(a) because the commissioner’s designee is included in the definition of commissioner in §12.5(8). TDI deleted “Prior to” and added “Before” to the title of §12.107 to conform to current agency writing style. TDI added “of” to §12.108(a) to correct a grammatical error. TDI moved “Every two years” to the beginning of the sentence in §12.108(a) to conform to current agency writing style. TDI deleted “not” and added “no” in §12.108(a) to conform to current agency writing style. TDI deleted “responses” and added “responded” in §12.108(e)(2) to correct a grammatical error. TDI replaced “may” with “must” in §12.110(a) for consistency with §12.102(a), which requires the use of the IRO application form for reporting a material change. TDI also deleted “applicant’s” and added “purchaser’s” in §12.110(a) for consistency. TDI replaced “addresses” with “address” to clarify that the IRO is only required to maintain one physical address under Insurance Code §4202.0029(a)(2)(A). TDI deleted “not” and added “no” in §12.110(a) to conform to current agency writing style. TDI deleted “prior to” and added “before” in §12.110(c) to conform to current agency writing style. TDI deleted “§12.102” and added “§12.103” in §12.111(a) to cite to the correct section about reporting a material change. TDI deleted “not” and added “no” in §12.111(a) to conform to current agency writing style. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 5 of 139 Chapter 12 – Independent Review Organizations TDI deleted “A” and added “a” in §12.201(1) to conform to current agency writing style. TDI deleted “utilize” and added “use” in §12.201(3)(A) to conform to current agency writing style. TDI deleted “utilize” and added “use” in §12.201(4)(A) to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.202(a). TDI deleted “the” and added “who are” in §12.202(d) to conform to current agency writing style. TDI deleted “by” in §12.202(d) to conform to current agency writing style. TDI made a nonsubstantive change to the requirement in §12.202(d)(1) for readability and clarity. TDI deleted “screening criteria” and added “review criteria” in §12.202(c)(1). Proposed §12.202(c)(1) referred to the term “screening criteria” to describe the criteria used in the IRO’s review process. However, screening criteria applies more appropriately to the utilization review process than the independent review process, while review criteria is more reflective of the independent review process. TDI deleted “prior to” and “being” and added “before” and “is” in §12.202(g)(4) to conform to current agency writing style. TDI moved language about the definition of control from §12.203(b) to §12.5(9) to clarify that the language applies to the entire chapter, and further defines the term “control.” TDI removed the subsection numbering because there are no longer subsections within §12.203. Also in §12.203, TDI replaced “pursuant to” with “under” to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.203. TDI added “and Relationships” to the title of §12.204 to correct the existing title. TDI deleted “not” and added “no” in §12.206(b) to conform to current agency writing style. TDI deleted “not” and added “no” in §12.206(c) to conform to 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 6 of 139 Chapter 12 – Independent Review Organizations current agency writing style. TDI deleted “prior to” and added “before its” in §12.206(d)(11)(F) to conform to current agency writing style. TDI made nonsubstantive corrections to punctuation throughout §12.208. TDI deleted “as” in §12.302(a) to conform to current agency writing style. TDI deleted “a” and “case” and added “cases” in §12.302(c) to conform to current agency writing style. TDI deleted “prior to” and added “before” in §12.502(f)(1) to conform to current agency writing style. 2. REASONED JUSTIFICATION. The amendments and new section are necessary to implement HB 2645, 83rd Legislature, Regular Session (2013), which amended Insurance Code Chapter 4202, relating to the certification and operation of IROs in Texas. HB 2645 allows TDI to continue to regulate IROs after January 1, 2016. It also establishes an advisory group. In addition, TDI has determined that other amendments are necessary to enforce Insurance Code Chapter 4202. The entire adoption order is part of the reasoned justification for the amendments and new section. Insurance Code §4202.002, concerning adoption of standards for IROs, requires the commissioner to adopt standards and rules for the certification, selection, and operation of IROs that perform independent reviews described by Insurance Code Chapter 4201, Subchapter I; and for the suspension and revocation of the certificate of registration issued to IROs. Insurance Code §4202.002(c) specifies that the commissioner must adopt standards and rules that prohibit an individual who serves as an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 7 of 139 Chapter 12 – Independent Review Organizations contractor of another IRO. Amendments to §12.204(d) implement the prohibition of persons from serving in certain positions with other IROs mandated in Insurance Code §4202.002(c). HB 2645 amends Insurance Code §4202.002, in part, to require an IRO to maintain a physical address and a mailing address in this state, to notify TDI of an agreement to sell the IRO or shares in the IRO, and to complete the transfer of ownership after TDI has sent written confirmation that the requirements are satisfied. Amendments to §12.103(13)(A) provide that an IRO must locate and maintain its primary office at the physical address in this state as noted on its application. Amendments to §12.103(13)(A) further require, as a condition of holding a certificate of registration to conduct the business of independent review in this state, that the physical address of the IRO’s primary office be maintained in this state. New §12.5(30) defines “physical address.” The existing definition of “primary office” is redesignated in §12.5(32) and adds the requirement that an IRO “maintain its physical address in Texas.” These amendments are necessary to implement Insurance Code §4202.002(c), which requires an IRO to maintain its primary office at a physical address in this state. Amendments to §12.110 are necessary to ensure TDI receives notice of an agreement to sell or transfer the ownership or shares in the IRO, and require the IRO to release certain information to TDI. HB 2645 adds Insurance Code §4202.002(f), which, in part requires the commissioner to adopt standards that require that the IRO’s primary office is equipped with a computer system capable of processing requests for independent review, that all 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 8 of 139 Chapter 12 – Independent Review Organizations records are maintained electronically, that records are made available to TDI on request, and that independent review offices located in residences are located in a room set aside for business purposes to ensure confidentiality of medical records. Amendments to §12.103(13) add a new subparagraph (B) to require an applicant for an initial or renewal certificate of registration to submit as part of the application process evidence that the applicant’s primary office is equipped with a computer system capable of certain requirements. Amendments to §12.103(13)(D) require that if the IRO’s primary office is in a residence, dedicated space is set aside for business purposes. HB 2645 amends Insurance Code §4202.003, which requires each IRO to make the IRO’s determination for a life-threatening condition, as defined by Insurance Code §4201.002, no later than the earlier of the third day (rather than the fifth day) after the date the IRO receives the information necessary to make the determination. With respect to a review of a health care service provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination for a lifethreatening condition by the eighth day after the date the IRO receives the request that the determination be made. HB 2645 amends Insurance Code §4202.004, which requires a description of any relationship the applicant or the named individual has with specified entities. It also requires the IRO application form to include information about an applicant’s procedures for verifying physician and provider credentials, including the computer processes, electronic databases, and records used, if any, and the software used by the credentialing manager for managing the processes, databases, and records. Insurance 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 9 of 139 Chapter 12 – Independent Review Organizations Code §4202.004(a)(8) requires the IRO application form to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. Insurance Code §4202.004 also requires the commissioner to establish certifications for independent review of health care services provided to persons eligible for workers’ compensation medical benefits and other health care services, after considering accreditation, if any, by a nationally recognized accrediting organization that imposes requirements for accreditation that are the same as, substantially similar to, or more stringent than TDI’s requirements for a certificate of registration. HB 2645 amends Insurance Code §4202.004(g), which requires that the certification be renewed biennially. HB 2645 amends Insurance Code §4202.005(c), which requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. If the material change is a relocation, §4202.005(c) requires the IRO to inform TDI that the new location is available for inspection by TDI before the date of the relocation, and that an officer of the IRO must attend the inspection on TDI’s request. Amendments to §12.5(22) define “IRO application form” to include that the IRO application form must be used to report a material change to TDI. Amendments to §12.102(a) require an IRO to report a material change in an IRO application form by submitting the IRO application form to TDI. In compliance with new Insurance Code §4202.011, the commissioner appointed an IRO advisory group on July 31, 2014, composed of members as required by Insurance Code §4202.011(a). 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 10 of 139 Chapter 12 – Independent Review Organizations TDI has also determined that other amendments are necessary to enforce Insurance Code Chapter 4202. Insurance Code §4202.002(a) requires the commissioner to adopt “standards and rules for…the certification, selection, and operation of independent review organizations.” Under Insurance Code §4202.002(b), these standards must ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and that the procedures maintain the confidentiality of medical records transmitted to an IRO. TDI adopts amendments throughout the rule text to correct grammar and punctuation, and to make other nonsubstantive changes to update and conform rule text to the current agency writing style. TDI posted a concept draft of these rules to its website and held a public stakeholder meeting on November 20, 2013; posted to its website an informal draft of the rules on August 5, 2014; and held a public hearing on the proposed rules on December 15, 2014, under Docket Number 2776. In response to both written comments and comments made at the hearing, TDI made several changes to the proposal, but none of the changes made to the proposed text or form in this adoption materially alter issues raised in the proposal, introduce new subject matter, or affect persons other than those previously on notice. Section §12.1. Statutory Basis. Section 12.1 changes the existing provisions relating to the statutory basis for the rules in Subchapters A through F to reflect that the adopted rule amendments incorporate the most recent amendments to Insurance Code 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 11 of 139 Chapter 12 – Independent Review Organizations Chapter 4202. TDI adopts nonsubstantive amendments to §12.1 to conform to current agency writing style. Section §12.3. Effects of Chapter. TDI adopts nonsubstantive amendments to §12.3 to conform to current agency writing style. Section §12.4. Applicability. Section 12.4(b) specifies the applicability of Insurance Code Chapter 4202 to independent review requests filed with TDI before the effective date of the rules. The effective date of July 7, 2015, in §12.4(b) gives IROs time to comply with the amendments and new sections in 28 TAC Chapter 12, and allows time for IROs to complete any remaining reviews assigned to them under the current rules. TDI also adopts nonsubstantive amendments to §12.4 to conform to current agency writing style. Section 12.5. Definitions. New §12.5(4) adds the definition for “biographical affidavit.” This new definition is necessary to specify that the biographical affidavit form used in IRO applications must be the National Association of Insurance Commissioners biographical affidavit form. This amendment establishes the standardized form for submitting biographical information as required under Insurance Code §4202.004(4). New §12.5(9) adds the definition of “control.” This new definition is necessary to clarify how an IRO may comply with Insurance Code §4202.008, which prohibits an IRO from being a subsidiary of, or in any way owned or controlled by, a payor or a trade or professional association of payors. The definition of “control” is also necessary to clarify the use of the term in the existing definition of “affiliate” in §12.5(2), for disclosure to TDI 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 12 of 139 Chapter 12 – Independent Review Organizations in the original application under §12.103(10), and for determining whether control exists under §12.203. Insurance Code §4202.002(a)(1) requires the commissioner to adopt “standards and rules for … the certification, selection, and operation of independent review organizations.” The definition of “control” under new §12.5(9) will assist TDI in its goal to ensure compliance with Insurance Code Chapter 4202, and also to ensure that there are no conflicts of interest involving an IRO being controlled by a payor or professional association of payors. TDI defined this new term based on its rulemaking authority under Insurance Code §4202.002(a)(1). New §12.5(22) adds the definition of “IRO application form.” The definition is necessary to clarify the form to use to apply for a certificate of registration as an IRO in Texas, for renewal of a certificate of registration, and for reporting a material change to an IRO application for a certificate of registration previously submitted to TDI. Insurance Code §4202.004 requires an organization to submit an application in the form required by the commissioner. This definition also implements Insurance Code §4202.005(c), which provides that an IRO shall report any material change to the information submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. New §12.5(30) adds the definition of “physical address.” This definition is necessary to clarify the use of the term in amended §12.103(13)(A), which implements the requirements in Insurance Code §4202.002(c)(2)(A)(i) and (f). Insurance Code §4202.002(c)(2)(A)(i) requires the commissioner to adopt rules that require IROs to 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 13 of 139 Chapter 12 – Independent Review Organizations maintain a physical address in this state. Insurance Code §4202.002(f) requires the commissioner to adopt standards requiring an officer of an organization to attest that the organization’s office is located at a physical address in its application for certification. The requirement in new §12.5(30) that the IRO have personnel reasonably available by telephone at least 40 hours per week during normal business hours is an existing requirement in existing §12.207(a). Amendments to the definition of “primary office” in §12.5(32) delete “based upon the totality of the business activities related to independent review performed under this chapter” and add “maintains its physical address in Texas” to implement the requirements in Insurance Code §4202.002(c)(2)(A)(i) and (f). Insurance Code §4202.002(c) requires the commissioner to adopt standards and rules that require an IRO to maintain a physical address in this state. Insurance Code §4202.002(f) requires the commissioner to adopt standards requiring that, on application for certification, an officer of the IRO attest that the office is located at a physical address. TDI clarifies that the primary office cannot be virtual and must be at a physical address. Amendments to §12.5(32) also replace the term “stored” with the phrase “maintained and accessible” regarding the IRO’s books and records. These amendments are necessary for TDI staff to conduct on-site examinations that include an examination of the IRO’s records as part of its ongoing oversight requirement under Insurance Code §4202.007, and to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 14 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.5 to conform to current agency writing style. Section 12.6. Independent Review of Adverse Determinations of Health Care Provided Under Labor Code Title 5 or Insurance Code Chapter 1305. TDI adopts nonsubstantive amendments to §12.6 to conform to current agency writing style. Section 12.101. Certificate of Registration for Independent Review. Amendments to §12.101 change the heading of the section from “Where to File Application” to “Certificate of Registration for Independent Review” to more accurately reflect the content of the section. TDI also adopts nonsubstantive amendments to §12.101 to conform to current agency writing style. Section §12.102. IRO Application Form. Amendments to §12.102 include changing the title of the section to “IRO Application Form,” and other amendments to conform to current agency writing style. Amendments to §12.102(a) delete the adoption by reference of Form No. LHL006 (IRO Application Form). Amendments to §12.102(a) also instruct applicants to use the IRO application form to report a material change to a certificate of registration and require IRO applicants to use the IRO application form prescribed by TDI. These amendments are necessary to implement Insurance Code §4202.005(c), which requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. Insurance Code §4202.005(c) also provides that if the material change is a relocation of the IRO, the IRO must inform TDI that the location is available for inspection by TDI before the date of the relocation, and an IRO officer must attend 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 15 of 139 Chapter 12 – Independent Review Organizations the inspection on TDI’s request. Amendments to §12.102(c) are necessary to provide the correct Internet and mailing addresses from which an applicant may obtain the form. TDI also adopts nonsubstantive amendments to §12.102 to conform to current agency writing style. Section §12.103. Information Required in Original Application for Certificate of Registration. Amendments to §12.103 change the name of the section from “Information Required in Application and Renewal Form” to “Information Required in Original Application for Certificate of Registration” to distinguish the requirements for an original application for certificate of registration from the requirements for a renewal of a certificate of registration. Amendments to §12.103 also delete the reference to Form No. LHL006 to conform to adopted amendments to §12.102. Amendments to §12.103(1)(C) replace “an authorized representative” with “the IRO’s medical director” as the person who must sign the certification that criteria and review procedures for review determinations are established with input from appropriate health care providers and physicians under existing §12.201(3). The requirement that a medical director sign the certification ensures that an appropriately qualified individual approves criteria for a higher quality of review. These amendments are necessary to implement Insurance Code §4202.002(b)(3) and (4), which require the commissioner to adopt standards to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. They are also necessary to implement Insurance Code §4202.007, which requires TDI to maintain oversight of 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 16 of 139 Chapter 12 – Independent Review Organizations IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Amendments to §12.103(1)(D) delete “§12.105(d)” and add “§12.111(a)” to more accurately reflect the new content of the section. New §12.103(1)(E) requires an IRO applicant to include a summary of the description of criteria and review procedures to be used by the medical director to conduct quality assurance audits under §12.202(c)(2). As in the paragraph above, new §12.103(1)(E) is also necessary to implement Insurance Code §4202.002(b)(3) and (4), and §4202.007. Amendments to §12.103(3) require an officer, director, or owner of the IRO to certify compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12, instead of only an authorized representative. The officer, director, or owner of the IRO must also certify that any party that performs an IRO function through contracts and subcontracts will comply with Insurance Code Chapter 4202 and 28 TAC Chapter 12. The certification must also state that the IRO retains responsibility to ensure compliance. Insurance Code §4202.002(a), in part, authorizes the commissioner to adopt standards and rules for the certification, selection, and operation of IROs to perform independent review. As outlined in paragraphs above, these amendments are also necessary to implement Insurance Code §4202.002(b)(3) and (4), and §4202.007. Amendments to §12.103(4) replace “credentialing” with “their credentials” for clarity and delete “relating to Personnel and Credentialing” to conform to agency writing style. New §12.103(4)(A) and (B) require an IRO applicant to include in the original 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 17 of 139 Chapter 12 – Independent Review Organizations application for a certificate of registration a description of the credentialing and recredentialing procedures, computer processes, electronic databases, records, and software used by the applicant to verify physician and provider credentials. These amendments are necessary to implement the requirements in Insurance Code §4202.004(a)(6)(B) and (C), which require the IRO application form to include a description of the procedures used by the applicant to verify physician and provider credentials, including the computer processes, electronic databases, and records used, if any, and the software used by the credentialing manager for managing those processes, databases, and records. New §12.103(6) requires the applicant to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. This amendment is necessary to implement Insurance Code §4202.004(a)(8), which requires the IRO application to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. New §12.103(7) requires the applicant to include a description and evidence of accreditation from a nationally recognized accrediting organization, if any, that imposes the same, substantially similar to, or stricter requirements than TDI’s certificate of registration in the IRO application form. Section 12.103(7) provides that TDI will maintain evidence of accreditation on file for the applicant, and allows the applicant to request expedited approval of the application for a certificate of registration based on the evidence of accreditation. These amendments are necessary to implement 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 18 of 139 Chapter 12 – Independent Review Organizations Insurance Code §4202.004(b), (e) and (f), which establish requirements for certifications for independent review of health care services provided to persons eligible for workers’ compensation medical benefits and other health care services after considering accreditation, if any, by a nationally recognized accrediting organization that imposes the same, substantially similar to, or stricter requirements than TDI’s requirements for accreditation. Insurance Code §4202.004(e), in part, requires that an IRO that applies for a certificate of registration to review health care services that is accredited by an organization described Insurance Code §4202.004(b) provide TDI with evidence of the accreditation. Insurance Code §4202.004(e) requires the commissioner to consider the evidence if the accrediting organization publishes and makes available to the commissioner the accrediting organization’s requirements for and methods used in the accreditation process, and authorizes an accredited IRO to request that TDI expedite the application process. HB 2645 amended Insurance Code §4202.004(f), in part, to authorize a certified IRO that becomes accredited by certain organizations to provide evidence of that accreditation to TDI and requires that evidence be maintained in TDI’s file related to the IRO’s certification. Amendments to redesignated §12.103(8)(A) require the applicant to submit written evidence that the applicant is incorporated in this state, which may include a copy of the Certificate of Formation from the Secretary of State. These amendments are necessary to implement Insurance Code §4202.002(c)(2)(A)(ii), which requires an IRO to be incorporated in this state. Amendments to §12.103(8)(A) also delete language requiring the applicant to submit documents relating to its internal affairs, such 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 19 of 139 Chapter 12 – Independent Review Organizations as bylaws, because TDI has included more specific requirements about the information necessary for the commissioner to determine whether an applicant is qualified to obtain a certificate of registration as an IRO in amended §12.103. Amendments to §12.103(8)(B) require the applicant to submit the address and Federal Employer Identification Number (EIN) for each stockholder or owner of more than 5 percent of the applicant’s stock or options if the applicant is publicly held. These amendments are necessary under Insurance Code §4202.002, §4202.004, §4202.005, and §4202.007 for TDI staff reviewing IRO applications for certificates of registration, renewals of certificates of registration, and reports of material changes to quickly and efficiently verify the identification information submitted by the applicant in the IRO application form. TDI recognizes that IROs and IRO applicants benefit from a more efficient process. Amendments to §12.103(8)(D) clarify the contents of the chart of contractual arrangements to include contracts between the applicant and any persons and all subcontracts with other persons to perform any business or daily functions of an IRO. New §12.103(8)(E) requires the applicant to submit copies of the contract and subcontract the applicant has with any person who will perform IRO functions, and new §12.103(8)(E)(i) – (iv) lists the elements those contracts must include. These amendments are necessary to implement Insurance Code §4202.002(a) and §4202.007, ensuring that the IRO is responsible for compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12 and to ensure TDI is aware of the actual parties conducting IRO functions. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 20 of 139 Chapter 12 – Independent Review Organizations Amendments to redesignated §12.103(10) require the applicant to submit the address and EIN of any organization the applicant controls or is affiliated with. These amendments also implement Insurance Code §4202.002(a) and are necessary for TDI staff reviewing IRO applications for certificates of registration to quickly and efficiently verify the identification information submitted by the applicant in the IRO application form. TDI recognizes that IROs and IRO applicants benefit from a more efficient process. Amendments to redesignated §12.103(11) change “Form No. FIN311 (Biographical Affidavit)” to “biographical affidavit” to conform to new §12.5(4). New §12.103(11)(A) requires the applicant to submit fingerprints for each director, officer, executive, owner, or shareholder of the applicant. These amendments are necessary to implement Insurance Code §4202.004(d), which, in part, requires the commissioner to obtain from each officer of the applicant and each owner or shareholder of the applicant, or, if the purchaser is publicly held, each owner or shareholder of more than 5 percent of any of the applicant’s stock or options, a complete and legible set of fingerprints for obtaining criminal history record information from the Texas Department of Public Safety (DPS) and the FBI. It also requires TDI to conduct a criminal history check of each applicant using information provided under this section, by obtaining information made available to TDI by the DPS, the FBI, and any other criminal justice agency under Government Code Chapter 411. Additionally, 28 TAC §1.501(b)(1)(B) authorizes TDI to determine a person’s fitness for holding a certification or registration or a person’s fitness to have the ability to control entities when that person has committed a criminal 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 21 of 139 Chapter 12 – Independent Review Organizations offense or has engaged in fraudulent or dishonest activity, including applicants for a certificate of registration under Insurance Code Chapter 4202. Title 28 TAC §1.503, in part, provides that the fingerprint requirement in 28 TAC §1.504(a) applies to applicants for certificates of registration under Insurance Code Chapter 4202. Amendments to redesignated §12.103(11)(B) delete the application of the fingerprint requirement because that requirement is found in new §12.103(11)(A). Amendments to §12.103(11)(D) require the applicant to submit a list of any outstanding loans or contracts to provide service to “any other person relating to any functions performed by or on behalf of the applicant.” These amendments are necessary to implement Insurance Code §4202.004(d). New §12.103(12) requires the applicant to submit documentation from the comptroller demonstrating the applicant’s good standing and the right to transact business in this state. This amendment is necessary to implement Insurance Code §4202.002(c)(2)(A)(iii), which specifies that the commissioner must adopt standards and rules that, among other things, require the IRO to be in good standing with the comptroller. Amendments to redesignated §12.103(13) require a sworn statement from an officer of the IRO. The information required in the sworn statement in amendments to §12.103(13)(A) – (D) is necessary to implement Insurance Code §4202.002(f), which requires the commissioner to adopt standards requiring that: (i) on application for certification, an officer of the IRO attest that the office is located at a physical address; (ii) the office be equipped with a computer system capable of processing requests for 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 22 of 139 Chapter 12 – Independent Review Organizations independent review and accessing all electronic records related to the review and the independent review process; (iii) all records be maintained electronically and made available to TDI on request; and (iv) in the case of an office located in a residence, the working office be located in a room set aside for independent review business purposes and in a manner to ensure confidentiality. New §12.103(13)(E) adds a requirement for the sworn statement that medical records be maintained according to §12.208. This amendment is necessary to implement Insurance Code §4202.002(e), which requires that the standards to ensure the confidentiality of medical records transmitted to an IRO under Insurance Code §4202.002(b)(2) require IROs and utilization review agents (URAs) to transmit and store records in compliance with the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.)(HIPAA) and the regulations and standards adopted under that Act. TDI also adopts nonsubstantive amendments to §12.103 to conform to current agency writing style. Section 12.104. Review of Original Application. TDI changed the title of the section from “Review of Application” to “Review of Original Application” to reflect that the content of the section is for review of an original application. New §12.104(1) and §12.104(2)(a) – (c) delete the current process for TDI’s review of an original application and replace it with a new process that mirrors TDI’s review of certification or registration of URAs in 28 TAC §19.1704(e) and (f), and §19.2004(e) and (f). These amendments are necessary to maintain consistency across TDI’s processes. TDI has determined 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 23 of 139 Chapter 12 – Independent Review Organizations that the process for reviewing original applications for certificates of registration as IROs should be consistent with the process for review of applications for certification or registration of URAs. This change streamlines processes and enables TDI to process both types of applications efficiently for the benefit of regulated entities. TDI recognizes that uniform standards offer a more consistent process for ease of stakeholder interpretation and compliance. New §12.104(1) provides that TDI will grant or deny an original certificate of registration within 60 days of receipt of a complete original application. This section also provides an applicant the right to waive the 60-day time limit. New §12.104(2)(A) provides that TDI will send the applicant written notice of any omissions or deficiencies in the original application. New §12.104(2)(B) changes the requirement in existing §12.104(2) by lessening the number of days that an applicant has to correct any omissions or deficiencies in the application from 30 days to 15 days from the date of TDI’s latest notice of the omissions or deficiencies. This reduction in applicant response time is necessary to streamline the application process by providing TDI with necessary information more quickly. These amendments implement Insurance Code §4202.002, which requires the commissioner to adopt standards to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. They are also necessary to implement Insurance Code §4202.007, which requires TDI to maintain oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. New 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 24 of 139 Chapter 12 – Independent Review Organizations §12.104(2)(B) also provides that the applicant may request in writing additional time to correct the omissions or deficiencies in the application. TDI clarifies that the request for additional time must be approved by TDI in writing for the requested extension to be effective. New §12.104(2)(C) provides that an applicant’s failure to correct omissions or deficiencies within the time frame provided will result in the application being closed as incomplete and provides that the application fee is not refundable. This amendment is adopted under the commissioner’s authority in Insurance Code §4202.004(a) to prescribe the application form and its authority to adopt standards and rules for the certification, selection, and operation of IROs to perform independent review, and the requirement in Insurance Code §4202.007 for TDI to maintain oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI also adopts nonsubstantive amendments to §12.104 to conform to current agency writing style. Section 12.105. Revisions During Review Process. Amendments to §12.202(b) include renumbering subsections. Amendments to §12.105 clarify that revisions made by the applicant must be submitted electronically in the manner specified by TDI in correspondence with the applicant or sent by mail. Amendments to §12.105 also correct the mailing address where applicants send revisions to TDI. Amendments to redesignated §12.105(b) make a conforming change to delete the requirement that revisions to bylaws be accompanied by a notarized certification 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 25 of 139 Chapter 12 – Independent Review Organizations because the requirement to submit bylaws in existing §12.103(8)(A) is also adopted for deletion. Amendments to redesignated §12.105(b) also delete “to be,” “all copies of,” and the quotes around “red-lined” to conform to current agency writing style. Additionally, amendments to redesignated §12.105(b) delete “or otherwise clearly designated” after “red-lined” to ensure that all revisions submitted to TDI are uniform and easily understood. Amendments to §12.105(d) – (f) delete the requirements for an applicant to report material changes to the application because that information is in new §12.111. TDI also adopts nonsubstantive amendments to §12.105 to conform to current agency writing style. Section 12.106. Examinations. TDI adopts an amendment to this section’s title from “Qualifying Examinations” to “Examinations” to reflect that this section applies to all IRO examinations. Amendments to §12.106 include reformatting to add subsections. New §12.106(a) also clarifies that the examination will be at the applicant’s primary office and is necessary to implement Insurance Code §4202.013, which requires an IRO to maintain its primary office in this state. New §12.106(b) clarifies that TDI may conduct examinations as often as the commissioner deems necessary to determine compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 26 of 139 Chapter 12 – Independent Review Organizations New §12.106(c) deletes “Documents that support the application for the certificate of registration of renewal of the certificate of registration” and adds “The following documents.” New §12.106(c)(1)-(8) are documents that an IRO must make available for review during the examinations. New §12.106(d) requires the IRO’s owner and staff to be available at the IRO’s primary office during the on-site examination. These amendments implement Insurance Code §4202.002(a) and Insurance Code §4202.007 and are necessary for TDI staff conducting on-site examinations to quickly and efficiently verify the IRO is in compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI also adopts nonsubstantive amendments to §12.106 to conform to current agency writing style. Section 12.107. Withdrawal of an Original Application Before Granting a Certificate of Registration and Subsequent Renewal Applications. Amendments to §12.107 revise the section title to more accurately reflect the content of the section. TDI also adopts nonsubstantive amendments to §12.107 to conform to current agency writing style. Section 12.108. Renewal of Certificate of Registration. Amendments to §12.108(a) and (b) change the requirement that an IRO must apply for renewal of its certification of registration from every year to requiring renewal every two years to implement Insurance Code §4202.004(g), as amended. Amendments to §12.108(b) replace references to “Form No. LHL006” and “renewal form” with “IRO application form” to conform the new reference to language in the adopted amended §12.102. TDI 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 27 of 139 Chapter 12 – Independent Review Organizations adopts amendments to §12.108(b) and the deletion of sections (e) – (g) to remove the requirements about reporting material changes because those requirements are adopted in new §12.111. Amendments to §12.108(b) and (d) delete the requirement that an IRO submit a summary of their current review criteria with the completed IRO application form. This summary submission will be unnecessary because TDI will already have this information from either the original application for a certificate of registration or the IRO reporting it as a material change required under new §12.111. TDI also adopts nonsubstantive amendments to §12.108 to conform to current agency writing style. Section 12.109. Appeal of Denial of Application or Renewal. TDI adopts nonsubstantive amendments to §12.109 to conform to current agency writing style. Adopted §12.110. Effect of Sale or Transfer of Ownership of an Independent Review Organization. Amendments to §12.110 replace existing requirements for the sale of an IRO and the prohibition on transferring an IRO with requirements for the sale or transfer of ownership of an IRO to implement Insurance Code §4202.002(c)(2)(C), as amended. New §12.110(a) requires the IRO to notify TDI of the agreement to sell or transfer the ownership of the IRO no later than 60 days before the date of the sale or transfer of ownership, and provides the TDI address where the owner must send the notification. New §12.110(a)(1) requires the IRO to submit the name of the purchaser and a complete set of fingerprints for each officer, owner, and shareholder of the purchaser. New §12.110(b) provides that TDI will send the IRO written confirmation that the requirements under Insurance Code Chapter 4202 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 28 of 139 Chapter 12 – Independent Review Organizations and 28 TAC Chapter 12 have been satisfied before the sale can be completed. These sections are necessary to implement amendments to Insurance Code §4202.002(c)(2)(C), which require an IRO to: (i) notify TDI of an agreement to sell the IRO or shares in the IRO; (ii) no later than the 60th day before the date of the sale, submit the name of the purchaser and a complete and legible set of fingerprints for each officer of the purchaser and for each owner or shareholder of the purchaser or, if the purchaser is publicly held, each owner or shareholder of more than 5 percent of the IRO’s stock or options, and any additional information necessary to comply with Insurance Code §4202.004(d); and (iii) complete the transfer of ownership after TDI has sent written confirmation that the requirements of 28 TAC Chapter 12 have been satisfied. Amendments to §12.110 also delete existing requirements for sale of an IRO and the prohibition on transferring an IRO to implement Insurance Code §4202.004, as amended. New §12.110 (a)(2) requires an IRO to notify TDI of any material changes in its notice of intent to sell or transfer ownership. Insurance Code §4202.005(c) requires the IRO to submit information about a material change to TDI no later than the 30th day after the date the material change occurs. In the case of a sale or transfer of ownership of an IRO, TDI has determined that this rule is necessary under TDI’s rulemaking authority in Insurance Code §4202.002(a), the requirement under Insurance Code §4202.007 to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12, and for TDI staff to review all changes about an IRO sale or transfer of ownership at the same time for the sake of 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 29 of 139 Chapter 12 – Independent Review Organizations efficiency. The amendments to redesignated §12.110(c) add the phrase “the sale or transfer of ownership” for consistency throughout §12.110. TDI also adopts nonsubstantive amendments to §12.110 to conform to current agency writing style. Section 12.111. Regulatory Requirements Subsequent to Certificate of Registration. New §12.111(a) adds the requirement that an IRO must report to TDI a material change in the information required in the IRO application form no later than the 30th day after the date the change takes effect. New §12.111(b) contains the requirements for reporting a material change if the material change is a relocation of the IRO’s primary office. These sections are necessary to implement Insurance Code §4202.005(c), which, in part, requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. Insurance Code §4202.005 also requires the IRO, if the material change is a relocation of the IRO, to inform TDI that the location is available for inspection by TDI before the date of the IRO’s relocation, and that an officer of the IRO attend the inspection on TDI’s request. New §12.111(c), an existing requirement that was formerly in deleted §12.108(f), exempts IROs from compliance with §12.111(a) in the event a contracted specialist IRO reviewer is unavailable and immediate contracting with a new specialist is necessary to complete an independent review. New §12.111(d), an existing requirement that was formerly in deleted §12.108(g), requires the IRO to notify TDI within 10 days after it 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 30 of 139 Chapter 12 – Independent Review Organizations enters into any new contracts under subsection (c), and requires the notification to include a complete explanation of the circumstances. TDI also adopts nonsubstantive amendments to §12.111 to conform to current agency writing style. Adopted §12.201. Independent Review Plan. Amendments to §12.201 delete “a physician” and adds “the IRO’s medical director” to clarify that the medical director must review and approve the IRO’s independent review plan. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. These amendments are necessary because TDI has determined that a physician medical director is best qualified to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. These are standards for which the commissioner must adopt rules under Insurance Code §4202.002(b). TDI adopts nonsubstantive amendments to §12.201 to conform to current agency writing style. Adopted §12.202. Personnel and Credentialing. New §12.202(a)(1) requires personnel conducting independent reviews for health services to hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty health services by a licensing agency in the United States. New §12.202(a)(2) requires personnel conducting independent reviews for workers’ 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 31 of 139 Chapter 12 – Independent Review Organizations compensation health services to hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty health services by a licensing agency in this state. Amendments to §12.202(b)(1) require the IRO to provide the commissioner, in addition to the existing requirements, the name, license number, state of licensure, and date of contract of personnel employed or under contract to perform independent reviews. Amendments to §12.202(b) include reformatting to add paragraphs. New §12.202(b)(2) deletes language about the IRO’s maintenance of reviewer qualification records and profiles of reviewers. These requirements are now in §12.202(d). Amendments to §12.202(c) add “medical director who is a” before “physician,” and add “The medical director functions must include, but are not limited to, conducting.” New §12.202(c)(1) – (3) describe the functions of the IRO’s medical director. These functions include, but are not limited to, the annual review and approval of review criteria, annual quality assurance audits of at least 25 percent of all decisions, and annual quality assurance audits of at least 25 percent of all assignments. New §12.202(d) requires the IRO to maintain credentialing and recredentialing files of personnel employed or under contract to perform independent reviews. This is an existing requirement moved from §12.202(b)(2). New §12.202(d)(1) – (4) lists the minimum types of credentialing and recredentialing information that the IRO must maintain current and that must be available for review by TDI. Amendments to §12.202(d) also delete existing language about the IRO’s credentialing requirements because they are redundant in light of the more detailed credentialing requirements in 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 32 of 139 Chapter 12 – Independent Review Organizations amended §12.202. New §12.202(g) requires the providers conducting independent review to sign and date the certification of independence and qualifications of the reviewer in the format prescribed by TDI. New §12.202(g)(1) – (8) list the required elements of the certification of independence and qualifications of the reviewer. New §12.202(h) provides that the information required in §12.202 must be available for examination and review by TDI and TDI-DWC personnel on request. New §12.202(i) requires IROs to require providers conducting independent reviews to notify the IROs of any changes in the information in §12.202(d). New §12.202(a)(1), §12.202(a)(2), §12.202(c)(1) – (3), §12.202(d)(1) – (4), and §12.202(g)-(i) and amendments to §12.202(b)(1) and §12.202(c) are necessary to implement Insurance Code §4202.007 and Insurance Code §4202.002(b). Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI has determined the enhanced personnel and credentialing requirements of amended §12.202 are necessary to ensure the qualifications and independence of each reviewer and the fairness of the procedures used by an IRO in making review determinations, standards for which the commissioner must adopt rules under Insurance Code §4202.002(b). TDI also adopts nonsubstantive amendments to §12.202 to conform to current agency writing style. Section §12.203. Conflicts of Interest Prohibited. Amendments to §12.203 delete “is a subsidiary of, or in any way owned or controlled by” and add “has any 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 33 of 139 Chapter 12 – Independent Review Organizations ownership interest in or control over the person, or if the person has any ownership interest in or control over a payor” for clarity and to conform to current agency writing style. Section §12.204. Prohibitions of Certain Activities and Relationships of Independent Review Organizations and Individuals or Entities Associated with Independent Review Organizations. New §12.204(d) prohibits an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent contractor of another IRO. This amendment is necessary to implement Insurance Code §4202.002(c)(1)(E). Insurance Code §4202.002(c) requires the commissioner to adopt standards and rules that prohibit an individual who serves as an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent contractor of another IRO. TDI deletes §12.204(h) because the “December 26, 2010,” applicability dates are no longer relevant. Existing §12.204(g) is redesignated as §12.204(h). TDI also adopts nonsubstantive amendments to §12.204 to conform to current agency writing style. Section §12.205. Independent Review Organization Contact with and Receipt of Information from Health Care Providers and Patients. Amendments to §12.205(a) delete “preclude” and add “as the initial contract prevent” to clarify an existing requirement. Amendments to §12.205(e) delete “such expense shall be reimbursed by the” and “as expense of independent review” and add “The” and “must 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 34 of 139 Chapter 12 – Independent Review Organizations pay these unreimbursed costs to the health care provider” to clarify an existing requirement. TDI also adopts nonsubstantive changes to conform to current agency writing style. Section §12.206. Notice of Determinations Made by Independent Review Organizations. Amendments to §12.206(c)(1) and new §12.206(c)(2) and (3) require IROs to make a determination on a life-threatening condition within three days after receiving the information necessary to make a determination or, with respect to workers’ compensation medical benefits, within eight days after receiving the request to make a determination. These amendments are necessary to implement Insurance Code §4202.003(1), which provides that the standards adopted under §4202.002 require each IRO to make the IRO’s determination for a life-threatening condition as defined by §4201.002 no later than the earlier of the third day, rather than the fifth day, after the date the IRO receives the information necessary to make the determination. With respect to a review of a health care service provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination for a lifethreatening condition by the eighth day after the date the IRO receives the request for determination. With respect to a review of a health care service other than services provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination by the third day after the date the IRO receives the request that a determination be made. An amendment to §12.206(e) updates the web address for TDI’s forms. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 35 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.206 to conform to current agency writing style. Section §12.207. Independent Review Organization Telephone Access. Amendments to §12.207(a) change “both time zones in Texas” to “both Central and Mountain time zones” for clarity. Amendments to §12.207(b) require an IRO’s phone system to be “dedicated.” TDI clarifies that a dedicated telephone system is a phone system intended primarily for use in the IRO business. These amendments are necessary to implement Insurance Code §4202.002(a) and (b). They are also necessary for TDI staff to be able to contact the IRO as part of its ongoing oversight of IROs under Insurance Code §4202.007. Moreover, the amendments ensure the IRO is preserving the confidentiality patient records. TDI also adopts nonsubstantive amendments to §12.207 to conform to current agency writing style. Section §12.208. Confidentiality. New §12.208(b) prohibits IROs from disclosing patient information protected by HIPPA to implement Insurance Code §4202.002(c)(1)(F). New §12.208(c) adds a reference to HIPAA to implement Insurance Code §4202.002(c)(1)(F). Amendments to redesignated §12.208(h) require IROs to transmit and store records in compliance with HIPAA to implement Insurance Code §4202.002(c)(1)(F). Insurance Code §4202.002(c), in part, requires the commissioner to adopt standards and rules that prohibit publicly disclosing patient information protected by HIPAA or transmitting the information to a subcontractor 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 36 of 139 Chapter 12 – Independent Review Organizations involved in the independent review process that has not signed an agreement similar to the business associate agreement required by regulations adopted under the HIPAA. TDI also adopts nonsubstantive amendments to §12.208 to conform to current agency writing style. Section §12.301. Complaints, Oversight, and Information. TDI adopts nonsubstantive amendments to §12.301 to conform to current agency writing style. Section §12.302. Administrative Violations. TDI adopts nonsubstantive amendments to §12.302 to conform to current agency writing style. Section §12.303. Surrender of Certificate of Registration. Amendments to §12.303(a) clarify when an IRO must surrender its certificate of registration. Amendments to §12.303(a) delete “while the organization is under investigation or as part of an agreed order” to implement Insurance Code §4202.002(c)(2)(B) as amended by HB 2645. Amendments to existing §12.303(b) delete the definition of “investigation” to conform to changes to §4202.002(c)(2)(B), as amended by HB 2645, which deleted the term. Amendments to existing §12.303(c) delete “a certificate of registration that is surrendered under this section is temporarily suspended while the investigation is pending” also to conform to changes to §4202.002(c)(2)(B). Amendments to §12.303 delete existing §12.303(f), which states that §12.4 only applies to IROs licensed on or after December 26, 2010, or IROs with certificates of registration renewed in Texas on or after December 26, 2010, as the applicability of this chapter is addressed in amended §12.4. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 37 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.303 to conform to current agency writing style. Section §12.401. Fees. TDI adopts nonsubstantive amendments to §12.401 to conform to agency writing style. Section §12.402. Classification of Specialty. TDI adopts nonsubstantive amendments to §12.402 to conform to agency writing style. Section §12.403 Fee Amounts. TDI adopts nonsubstantive amendments to §12.403 to conform to agency writing style. Section §12.404. Payment of Fees. Amendments to §12.404(c) change the number of days within which URAs or payors must pay IROs from 30 to 15. These amendments implement Insurance Code §4202.002(a) and are necessary because TDI has determined 15 days is a sufficient amount of time for URAs or payors to pay IROs. TDI also adopts nonsubstantive amendments to §12.404 to conform to current agency writing style. Section §12.405. Failure To Pay Invoice. TDI adopts nonsubstantive amendments to §12.405 to conform to agency writing style. Section §12.406. Application and Renewal of Certificate of Registration Fees. Amendments to §12.406 change the fee for an original certificate of registration as an IRO from $800 to $1000, and the fee for renewal of a certificate of registration from $200 to $400. The increase in the fee for an original certificate of registration is necessary because the new fee better reflects the cost to TDI of regulating IROs. The amendment to the fee for the renewal of a certificate of registration is necessary 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 38 of 139 Chapter 12 – Independent Review Organizations because the renewal is now every two years instead of every year. TDI clarifies that the net cost of renewal for an IRO will remain the same. TDI clarifies that there is no fee for reporting a material change to a certification as an IRO. These amendments are adopted under TDI’s rulemaking authority in Insurance Code §4202.002(a)(1). TDI also adopts nonsubstantive amendments to §12.406 to conform to current agency writing style. Section §12.501. Requests for Independent Review. Amendments to §12.501 include inserting “Chapter 4201,” a reference to “Subchapter U,” and a reference to “Chapter 134 of this title.” These amendments are necessary under Insurance Code §4202.002(a) to properly cite the sections of the Insurance Code about utilization review. TDI also adopts nonsubstantive amendments to §12.501 to conform to current agency writing style. Section §12.502. Random Assignment. TDI adopts nonsubstantive amendments to §12.502(b) to conform to agency writing style. 3. SUMMARY OF COMMENTS AND AGENCY RESPONSE. General Comment: Commenters express their support for the proposed amendments. Agency Response: TDI appreciates the supportive comments. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 39 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter requests that all agency responses in the adopted rules implementing HB 4519 from the December 17, 2010, issue of the Texas Register (35 TexReg 11281) be reviewed and that the precedents set in the rulemaking phase of HB 4519 be used in rulemaking for HB 2645. A commenter states that the proposed rules have an “overly broad” interpretation of HB 2645 and that substantial portions of the proposed sections have no legislative authorization in HB 2645. Agency Response: TDI declines to make the suggested change. TDI emphasizes that the amendments and new section are necessary to implement HB 2645, 83rd Legislature, Regular Session (2013), which amends Insurance Code Chapter 4202, relating to the certification and operation of IROs in Texas. In addition, TDI has determined that other amendments are necessary to enforce Insurance Code Chapter 4202. TDI clarifies that in the December 17, 2010, issue of the Texas Register, adopted rules implementing HB 4519 were published (35 TexReg 11281), and reconsideration and application of HB 4519 agency responses would be redundant. Comment: A commenter requests the commissioner change the deadline for the submission of written comments on the proposed rules and delay the rule proposal public hearing for 30 days. The commenter states that IROs do not have full-time regulatory and advisory attorneys to prepare comments on new rules to determine constitutional issues such as legislative authority. The only option for IROs would be to retain law firms. Small IROs have had no surplus earnings to retain an attorney 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 40 of 139 Chapter 12 – Independent Review Organizations because average caseload was down to four per month in 2014. The commenter states that executives of the IROs prepare the comments and need more time. The commenter states that legislators who managed the passing of HB2645 should have additional time to review the proposed new rules to determine whether the rules faithfully implement the legislation that passed by overwhelming majorities in both houses and that was approved by the office of the governor. The commenter further explains that TDI has allowed IROs to comment on two draft proposals before publication of the proposed rules, but that the comments many submitted have not led to dialogue or discussion, and the same rules that were proposed will now be adopted. Agency Response: TDI declines to provide additional time for submission of comments because TDI provided a reasonable opportunity for all interested persons to submit data, views, or arguments, orally and in writing as required under Government Code §2001.029(a). TDI provided many opportunities for public comment, including a public stakeholder hearing, two advisory group forums, a public hearing on the rule proposal with oral testimony, and both a concept draft and proposed rule comment period. Comment: A commenter expresses concern that a currently filed bill will jeopardize confidentiality of the IRO panels of reviewers. The commenter states that IROs will no longer be independent if the reviewers’ identities are known. Agency Response: TDI asserts that proposed legislation is outside the scope of the proposed IRO rules. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 41 of 139 Chapter 12 – Independent Review Organizations Section 12.4 Applicability Comment: A commenter recommends changing the applicability date in one of two ways: (i) at the time of the renewal application in the first renewal period after the publication of the adoption, or (ii) 120 days after the publication of the adoption. The commenter states that at least 120 days may be required to comply with the provisions of the new rules that require IROs to develop software to manage IRO processes, including a system for credentialing verification. The commenter states that while some IROs have software, others do not, and software experts tell the commenter that it may take as long as 180 days to develop and test the new software. The commenter states that it may take IROs a considerable amount of time to contract with medical directors, and with reviewers whose contracts must be changed to disclose that another physician without the same specialization of the reviewer will be auditing their work product. Agency Response: TDI agrees to change the effective date of the rule, but disagrees with the commenter’s suggested change. As explained in the reasoned justification, TDI has determined that the effective date of the adopted rules, which gives stakeholders until July 7, 2015, is sufficient. Based on this effective date, TDI also clarifies that existing IROs have an obligation to update their applications, but their submission of updated information does not change their existing renewal date. TDI asserts that IROs that have been granted a renewal of a certificate of registration before the effective date of this rule must report any material change, which will include new 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 42 of 139 Chapter 12 – Independent Review Organizations requirements of §12.103, no later than the 30th day after the date on which the change takes effect under Insurance Code §4202.005(c). TDI deleted the phrase “applications for a certificate of registration as an IRO, and for a renewal of a certificate of registration as an IRO” in adopted §12.4 to clarify that IROs must comply with the adopted amendments on the effective date of the rule. However, all independent reviews filed with TDI before the effective date of the rule are subject to the rules in effect at the time the independent review was filed with TDI. TDI clarifies that amended §12.103(4)(A) and (B) does not require IROs to develop software to manage IRO processes. But amended §12.103(4)(A)and (B) does require an IRO to include in its original application the procedures used by the IRO applicant to verify physician and provider credentials and the computer processes, electronic databases, and records used to make the verification, if any, and the credentialing software used by the applicant for managing the processes, databases, and records. An extension of the effective date is not necessary for an IRO to develop and test the new software, because an IRO is not required to purchase new software under the proposed rules. TDI clarifies that the new and amended rules neither require the IRO to change its contracts with reviewers nor require an IRO to disclose to reviewers that the medical director will perform quality assurance audits. Section 12.5. Definitions 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 43 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter states the definition of “adverse determination” should be amended to highlight that a determination that a health care service is experimental or investigational is not an adverse determination for purposes of health care provided under workers’ compensation insurance. Section 12.5(1) should be amended to be consistent with the definition of adverse determination for utilization review in §19.2003(b)(1) and state specifically that a determination that a health care service is experimental or investigational is not an adverse determination for purposes of health care provided under workers’ compensation insurance. The commenter recommends that the definition of “adverse determination” include the sentence, “For purposes of workers’ compensation, a determination that health care services are experimental or investigational does not constitute an adverse determination.” The commenter states that the definition of “independent review” in amended §12.5(19) should be modified by removing the language after adverse determination. The commenter states this would permit the same definition of the phrase for both workers’ compensation and group health, without continuing the misstatement that a determination that proposed health care is experimental or investigational is a basis for denial in workers’ compensation. The commenter states the changes to both §12.5(1) and §12.5(19) provide precision and clarity as to the meaning of the rules. Agency Response: TDI declines to make the suggested change. TDI did not propose amendments to the existing definition of “adverse determination” because existing §12.6(b), in part, provides that IROs and personnel conducting independent reviews must comply with Labor Code Title 5 and applicable TDI-DWC rules. For workers’ 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 44 of 139 Chapter 12 – Independent Review Organizations compensation, in the event of a conflict between 28 TAC Chapter 12 and the Labor Code, the Labor Code controls. It is TDI’s and TDI-DWC’s position that, based on Labor Code §408.021, an injured employee under both network and nonnetwork coverage is entitled to all medically necessary health care services, including experimental and investigational health care services. Labor Code §408.021 entitles an injured employee, under both network and nonnetwork coverage, to health care reasonably required by the nature of the injury as and when needed. Additionally, under §12.206(d)(15), the IRO’s review outcome in the notice of determination must clearly state whether medical necessity or appropriateness exists for each of the health care services in dispute and whether the health care services in dispute are experimental or investigational, as applicable. Comment: A commenter welcomes the replacement of the term “stored” with “maintained and accessible” in proposed §12.5(32) because most micro businesses, and businesses in general in the current technological environment, store their records in secure remote servers, accessible from their office computers. These records are “maintained and accessible” and managed by the computer in the office of the business. This contrasts with the past technological environment where business records were stored in file cabinets in physical offices. Commenters also state that a short inspection of the computer system at the office of an IRO would allow TDI to verify both that an IRO has a physical office in the state and that the required records are “maintained and accessible” from the IRO’s 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 45 of 139 Chapter 12 – Independent Review Organizations computer. A commenter states that the same records could be accessed by IRO staff at a computer at the TDI offices, which would allow TDI to hold examinations in a government office rather than in the home offices of small, micro businesses. Agency Response: TDI appreciates the supportive comment but does not agree that TDI can access the IRO’s computer from the TDI offices. Remotely accessing the IRO’s records would require TDI to expend additional resources obtaining a system capable of such access and potentially jeopardize both the IRO’s and TDI’s security as well as patients’ and reviewers’ confidentiality. In addition, TDI does not agree with the commenter’s recommendation that TDI could hold examinations in TDI’s offices. Existing §12.106(c) requires that documents that support the application for certificate of registration or renewal must be available for inspection at the primary office of the IRO. In addition to examining records, TDI staff must go on-site to determine continuing compliance with Insurance Code Chapter 4202. Under amended §12.106(c), TDI specifies that documents must be available for review during an examination at the IRO’s primary office located in Texas, including information required in the original application for a certificate of registration. TDI will conduct an on-site examination at the applicant’s primary office to ensure compliance with TDI’s rules, including amended §12.106, §12.208, and §12.103(13), existing §12.204(c), and in the case of an office located in a residence, verifying that the office is located in a room set aside for IRO business. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 46 of 139 Chapter 12 – Independent Review Organizations Section 12.103. Information Required in Original Application for Certificate of Registration. Comment: A commenter recommends clarifying in §12.103(1)(B) that the summary of review criteria and review procedures that will be used to determine the experimental and investigational nature of health care will have no application for IROs performing review of health care provided in workers’ compensation. The commenter suggests adding “provided outside of workers’ compensation” to the end of existing §12.103(1)(B). Agency Response: TDI declines to make the suggested change. TDI clarifies that existing §12.6(b), in part, provides that IROs and personnel conducting independent reviews for workers’ compensation must comply with Labor Code Title 5 and applicable TDI-DWC rules. In the event of a conflict between 28 TAC Chapter 12 and the Labor Code, the Labor Code controls. It is TDI’s and TDI-DWC’s position that based on Labor Code §408.021, an injured employee under both network and nonnetwork coverage is entitled to all medically necessary health care services, including experimental and investigational health care services. Labor Code §408.021 entitles an injured employee, under both network and nonnetwork coverage, to health care reasonably required by the nature of the injury as and when needed. Under §12.206(d)(15), the IRO’s review outcome in the notice of determination must clearly state whether medical necessity or appropriateness exists for each of the health care services in dispute and whether the health care services in dispute are experimental or investigational, as applicable. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 47 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter that is an accreditation board asks TDI to state whether its accreditation standards for IROs are substantially similar to TDI’s requirements. Agency Response: TDI will consider an organization’s accreditation standards at the time an IRO applicant submits an application for or renewal of a certificate of registration. Comment: A commenter requests that new §12.103(8)(A) state “the applicant shall submit written evidence in the form of a copy of the Certificate of Formation issued by the Texas Secretary of State, and nothing in this rule shall be taken to mean that the applicant must submit any additional ‘letter’ or other documentation from the secretary of state.” Agency Response: TDI agrees to amend §12.103, but disagrees with the suggested language. TDI deleted the phrase “a letter from the Texas Secretary of State” and added the phrase “a copy of the Certificate of Formation from the Texas Secretary of State” in §12.103(8) to reflect the formation and existence requirements of Business Organizations Code §3.001. Comment: A commenter disagrees with TDI’s proposed deletion of existing §12.103(8)(A), requiring an IRO to submit documentary evidence including the applicant’s bylaws, rules, and regulations in the IRO application. The commenter requests that §12.103(8)(A) require an IRO to provide: 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 48 of 139 Chapter 12 – Independent Review Organizations (A) Written evidence that the applicant is doing business in this state in accordance with the Business Organizations Code, which may include: (i) a letter from the Secretary of State indicating the entity has filed the appropriate information to conduct business in this state; and (ii) the bylaws, rules, and regulations, or any similar document regulating the conduct of the internal affairs of the applicant with a notarized certification bearing the original signature of an officer or authorized representative of the applicant that they are true, accurate, and complete copies of the originals. Agency Response: TDI declines to make the suggested change. New §12.103(12) requires the IRO applicant to submit to TDI documentation from the comptroller demonstrating the applicant’s good standing and the right to transact business in Texas. Insurance Code §4202.002(c)(2)(A)(ii) requires an IRO to be incorporated in this state. TDI deleted the phrase “a letter from the Texas Secretary of State” and added the phrase “a copy of the Certificate of Formation from the Texas Secretary of State” in new §12.103(8)(A) to reflect the formation and existence requirements of Business Organizations Code §3.001. TDI deleted language requiring the applicant to submit documents relating to its internal affairs, such as bylaws, because TDI has included more specific requirements about the information necessary for the commissioner to determine whether an applicant is qualified to obtain a certificate of registration as an IRO in amended §12.103. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 49 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter states that new §12.103(8)(E) has no legislative authorization, is not in HB 2645, and is not in Insurance Code §4200.002(a) or any other section of the Insurance Code. Insurance Code §4200.002(a) requires IROs to submit a list of any contractors, and a list follows of the types of businesses, all of which are in the health care industry. The commenter suggests TDI make it clear that IROs must submit a list of contractors in the medical industry where there might be a conflict of interest, but this is not a demand for lists of contracts for any and all contractors, especially if not in the medical industry or if the contractor is not involved in processing cases and does not have access to medical records. A commenter requests that TDI continue the same practice that has been in place for over a decade, requiring IROs to submit lists of contractors in the health insurance industry. If the contractor has access to medical records, the contractor must sign a business associate agreement, as per HB 2645. A commenter states that until 2014, IROs were not required to submit either copies of contracts or lists. Agency Response: TDI declines to make the suggested change. TDI clarifies that Insurance Code Chapter 4202 does not contain a requirement that IROs submit to TDI only a list of health care industry contracts. Insurance Code Chapter 4202 gives the commissioner the authority to adopt standards and rules for the certification, selection, and operation of IROs. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance. TDI’s oversight of IROs includes oversight of contracts and subcontracts with third parties who perform any IRO functions on behalf of the IRO. TDI staff must determine compliance with all 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 50 of 139 Chapter 12 – Independent Review Organizations requirements of Insurance Code Chapter 4202, including processing the independent review requests that TDI assigns to the IRO, maintaining confidentiality, and credentialing of reviewers. To do so, TDI staff must be aware of all parties performing IRO functions. TDI clarifies that new §12.103(8)(E) is necessary to implement Insurance Code §4202.002(a) and Insurance Code §4202.007, to ensure that IROs retain responsibility for compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Section 12.104. Review of Original Application. Comment: A commenter states that the existing 30-day time frame for an applicant to correct omissions or deficiencies in the application should be retained unless TDI publishes and makes available to applicants a guide to application for a certificate of registration as an IRO, in which case the proposed 15-day requirement would be sufficient. At one time before HB 4519, TDI published such a guide, but no such guide has been available since 2009. The commenter states that a guide would streamline the application and renewal process, and any audit or examination process. The commenter states that a guide would make TDI’s understanding of the IRO process clear, and how to be successful and avoid lengthy disputes with IROs that have been certified as IROs. Agency Response: TDI declines to make the suggested change. TDI clarifies that the requirement in new §12.104(2)(B) that an applicant correct omissions or deficiencies in the application within 15 days of the date of TDI’s latest notice of omissions or 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 51 of 139 Chapter 12 – Independent Review Organizations deficiencies only applies to original applications for certificates of registration, and does not apply to renewals, audits, or examinations. TDI determined that 15 days is a sufficient amount of time for applicants to respond to TDI’s notice of omissions and deficiencies. Additionally, new §12.104(2)(B) provides that an applicant may request additional time, not to exceed 30 days, in writing to correct omissions or deficiencies. TDI is not aware of any guide that TDI published for use by IRO applicants. The current and past application forms (LHL006) include and have included instructions for applicants. TDI has also prepared a Frequently Asked Questions page for IROs, available on TDI’s website at www.tdi.texas.gov/hmo/irofaqs.html. Section 12.106. Examinations. Comment: A commenter commends TDI for establishing that the commissioner or the commissioner’s designee will conduct an on-site examination of the IRO applicant’s primary office. The commenter agrees that an on-site examination is the most effective mechanism for ensuring compliance with the requirements to be certified as an IRO. Agency Response: TDI appreciates the supportive comment. Comment: A commenter states that HB 2645 does not directly address examinations, either before or after certification, but it does address computer systems required at the office of the IRO, and the required use of electronic records by IRO. A commenter recommended that HB 2645 include a provision that IROs move to computer systems 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 52 of 139 Chapter 12 – Independent Review Organizations and electronic systems in the hope that TDI would see how these provisions would streamline the examination and certification process by making a form of eRegulation possible. The commenter states that in TDI’s adopted rules in November 2010, implementing HB 4519, TDI declares that on-site examinations of IROs are necessary in order to examine the books and records of the IRO, which at that time were usually in file cabinets at the IROs primary office in Texas. The commenter states that HB 2645 requires IROs to maintain electronic records that are accessible from the computer systems in the IRO’s offices. A commenter states that proposed amended §12.106 was not required by HB 2645 and is not addressed in the Insurance Code. The commenter requests that TDI amend §12.106 to state: “Prior to Certification: Prior to issuing a Certification, TDI will conduct an onsite ‘Inspection’ of the executive office of the IRO to verify that the IRO has a physical office, and that it is equipped with a computer system where records are maintained and accessible. Continued:  https://www.tdi.state.tx.us/rules/2015/documents/order3927.pdf

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

As a prerequisite for writing workers’ compensation insurance in Texas, an insurance company must maintain or provide accident prevention facilities that are adequate to provide accident prevention services required by the nature of their policyholder operations. These include surveys, recommendations, training programs, consultations, analysis of accident causes, industrial hygiene, and industrial health services. Applicable statute and rules include the Texas Labor Code (TLC), Chapter 411, Subchapter E and 28 Texas Administrative Code (TAC), Chapter 166. For more information about the accident prevention services requirements, contact the TDI-DWC at 512-804-4626 or aps@tdi.texas.gov.

• Annual Reporting Requirements
• Accident Prevention Services Inspections
• Recently Adopted/Repealed Accident Prevention Services Rules 28 TAC, Chapter 166

Annual Reporting Requirements

• Companies Writing Worker’s Compensation Policies Before October 1, 2013Insurance companies that had active workers’ compensation policies at any time from January 1, 2013 through October 1, 2013 must submit an initial DWC Form-109, Accident Prevention Services Annual Report, to the TDI-DWC by April 1, 2014. Subsequent annual reports must be filed by April 1 of each year thereafter if active policies were in effect for the preceding calendar year.
• Companies that Start Writing Worker’s Compensation Policies On or After October 1, 2013 

  An insurance company that writes its first workers’ compensation policy on or after October 1, 2013 shall file with the TDI-DWC an initial DWC Form-109, Accident Prevention Services Annual Report,not later than the effective date of its first workers’ compensation insurance policy. Thereafter, they must file a subsequent annual report by April 1 of each year if active policies were in effect for the preceding calendar year.The DWC Form-109 may be submitted to the TDI-DWC via e-mail to aps@tdi.texas.gov.

Accident Prevention Services Inspections

The TDI-DWC determines the adequacy of insurance company accident prevention facilities and services that are required by state law through review of information submitted on the DWC Form-109, Accident Prevention Services Annual Report, and through inspections of an insurance company’s accident prevention services.

As part of the inspection process, the TDI-DWC conducts policyholder visits to help determine the adequacy of the accident prevention services provided by insurance companies. Items reviewed during policyholder visits typically include: the types and confirmation of accident prevention services provided by the insurance company; a review of policyholder written safety programs and work-related injuries and illnesses; and an assessment of safety or health hazards at the worksite.

As determined to be appropriate, the TDI-DWC can remotely inspect an insurance company’s accident prevention services via electronic means. Insurance companies that desire an electronic inspection should notify the TDI-DWC of the request as soon as possible after receipt of the notification of inspection letter and no later than the date the policyholder list is due. Insurance company representatives or their designees must be available by telephone on the day of the inspection. Any information presented electronically by insurance companies will be provided in a manner that does not impede or alter the inspection process and will be in accordance with 28 TAC Chapter 166.

Each insurance company writing workers’ compensation policies will receive an initial inspection. Subsequent inspections will be conducted as often as the TDI-DWC considers necessary to determine compliance with the statute and rules.

Recently Adopted/Repealed Accident Prevention Services Rules

On March 11, 2013, Commissioner of Workers’ Compensation Rod Bordelon adopted new 28 TAC §166.2, amended §§166.1, 166.3, and 166.5, and repealed §§166.2, 166.4, and 166.6 – 166.9 regarding Texas Workers’ Compensation Accident Prevention Services. The purpose of these changes is to update various notice, service, and reporting requirements imposed upon insurance companies regarding accident prevention services associated with TLC provisions in Chapter 411, Subchapter E, Accident Prevention Services.

The adopted rules were effective October 1, 2013. The newly adopted rules and associated forms are available on the TDI website.

• Adopted/Repealed Rules (28 TAC Chapter 166)
• DWC Form-105, Accident Prevention Services Worksheet
• DWC Form-109, Accident Prevention Services Annual Report
• Accident Prevention Services Rule Implementation Training Materials (PDF)

For more information contact: APS@tdi.texas.gov

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.