Selling the New Workers’ Comp to Your Clients
By John Davenport

“We are cautiously optimistic about House Bill 7,” said Texas Mutual^® President Russ Oliver between sessions at the 2005 Independent Insurance Agents of Texas (IIAT) convention in Austin. “This new law will require a great deal of analysis over the next several months and into 2006 in order to implement its changes. While we appreciate the hard work the Legislature put into this law, the real challenge still lies ahead.”

Part of that challenge will fall upon you, the agent.

Already, House Bill 7 is changing the workers’ compensation landscape, and it will continue to evolve over the next few years. Anyone who was selling workers’ comp in 1991 when the last major reform occurred can tell you that changes this big have a ripple effect, touching all aspects of the system.

The summer issue of Comp News gives you the basic information you’ll need to answer some of your clients’ questions about the new law. Remember: Some changes occur on September 1, and others will wait on the development of new rules and processes. Click here for the latest news about the implementation of House Bill 7.

Promoting networks
The new law allows carriers to contract with or establish health care networks. You should encourage your workers’ comp clients to participate in the networks, once they become available.

Injured employees covered under a network plan must select their treating doctor from the network. Each network may designate which specialties it allows to serve as treating doctors.

Networks will use evidence-based treatment guidelines that should help shift the system’s focus to overall quality of care and return-to-work (RTW) outcomes. Improving RTW outcomes will reduce indemnity costs, and many studies suggest that returning injured employees to work, even at modified duty, ultimately saves on overall medical costs, too.

Marketing to nonsubscribers
Some of House Bill 7’s sweeping reforms may give you better tools for selling workers’ comp coverage to nonsubscribers (employers that choose not to carry workers’ comp insurance).

Since 1991, the law has protected employers with workers’ comp coverage from lawsuits resulting from workplace accidents, except in cases of gross negligence on the employer’s part resulting in a fatality. This “exclusive remedy” means injured employees are entitled to benefits under the workers’ comp system and may not pursue additional settlements from the employer. Nonsubscribers have no such legal protection.

In the past, some nonsubscribers used waivers to try to protect themselves from lawsuits by injured workers. In 2003, the Legislature prohibited the use of pre-employment waivers. Afterward, some nonsubscribers began using post-injury waivers. Although House Bill 7 does not prohibit the use of post-injury waivers, it adds new administrative requirements on the practice, which may make workers’ comp coverage more appealing.

With stronger legal protection for subscribers, many nonsubscribers may reconsider their decision and switch—or switch back—to workers’ compensation insurance.

Clarifying the law
Subscribers will also benefit from a change in the law specifying that the exclusive remedy applies to non-compensable workplace injuries, too. In other words, an injured employee cannot sue his or her employer for damages resulting from on-the-job injuries that are not work-related.

Although the old law implied this protection, the new law spells it out explicitly.

Another area of uncertainty in the old law involved intoxication on the job. In the past, some employees had successfully claimed testing positive for drugs or alcohol after an injury was not the same thing as proving that they were intoxicated when the injury occurred.

In one instance, an injured employee claimed he tested positive for marijuana because he had “smoked a joint to calm down” on his way to the emergency room immediately after an on-the-job injury. He claimed he “wasn’t stoned” at the time of the injury, and the employer couldn’t prove otherwise, so the Texas Workers’ Compensation Commission ruled that the injury was compensable.

House Bill 7 adds a “rebuttable presumption of intoxication” to the law. Effective September 1, the burden of proof will be on the employee if he or she tests positive for an intoxicating substance immediately following a workplace accident.

Reinforcing progress
The Legislature designed all of the changes in the law to help improve the processes and outcomes of the workers’ comp system. We won’t know the exact nature of some of the changes for some time to come, but we do know that the only way any of this will work is with the support of Texas employers.

As the direct link between insurance carriers and employers, you have a unique opportunity to help your clients focus on the big picture. The advent of health care networks may help direct care to the most appropriate specialty for the injury, but it won’t matter if your clients opt out of the health care networks. Shifting the system’s focus to returning injured employees to work will help reduce overall system costs, but only if employers are willing to provide viable RTW programs for injured employees who are able to return to work.

As always, Texas Mutual Insurance Company will work with the agent community to help Texas employers get the most out of their workers’ compensation coverage. With your help, we can promote the positive changes in the law and help build a better Texas.