HBA-DMD H.B. 2511 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 2511 By: Giddings Business & Industry 7/30/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, the amount of paperwork that must have been processed within the Workers' Compensation system lengthened the time required to process workers' compensation claims and disputes. The Texas Workers' Compensation Commission (commission) staff sometimes had difficulty in obtaining or verifying workers' compensation coverage and claims information from employers, certified self-insurers, and political subdivisions. The commission utilized more than 100 full-time employees to enter data into a database. The volume of information processed in this manner was too large to allow for effective quality control, and thus errors were made during data entry, which made later analysis difficult. Additionally, in some cases employers sent reports of injury to the commission instead of the insurance carrier which caused delays in the delivery of medical care to injured workers. H.B. 2511 permits the commission, by rule, to allow or require electronic transmission of information to be used in lieu of transmitting information via paper form. This bill authorizes the commission to consult a data collection agent to fulfill the data collection requirements and adopt rules necessary to implement the data collection requirements. This bill also requires the executive director of the commission to develop a plan and appoint a task force to incorporate electronic reporting, information, and financial exchanges between parties in the workers' compensation system. The commission is authorized to adopt rules to establish the coverage and claim administration contact information. H.B. 2511 requires a certified self-insurer and political subdivision to file notice of the coverage and claim administration contact information with the commission. This bill also prohibits the employer from transferring the obligation to report injuries to the insurance carrier. It also provides a penalty for an employer or insurance carrier if an employer or insurance carrier fails to identify or confirm an employer's coverage status and claim administration contact information. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Workers' Compensation Commission in SECTION 1 (Section 401.024, Labor Code), SECTION 2 (Section 406.006, Labor Code), and SECTION 3 (Section 406.009, Labor Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter C, Chapter 401, Labor Code, by adding Section 401.024, as follows: Sec. 401.024. TRANSMISSION OF INFORMATION. (a) Defines "electronic transmission" in this section. (b) Authorizes the Texas Workers' Compensation Commission (commission), by rule, to permit or require electronic transmission to be used instead of the specified form, manner or procedure, notwithstanding other provisions in this subtitle that specify the form, manner, or procedure for the transmission of specified information. Provides that if electronic transmission of specific information is not authorized or permitted by commission rule, transmission of that information is governed by any applicable statute or rule that prescribes the form, manner, or procedure for the transmission, including standards adopted by the Department of Information Resources. (c) Authorizes the commission to designate and contract with a data collection agent in order to fulfill the data collection requirements of this subtitle. (d) Authorizes the executive director of the commission (executive director) to prescribe the form, manner, and procedure for transmission of any authorized or required electronic transmissions, including requirements related to security, confidentiality, accuracy, and accountability. SECTION 2. Amends Section 406.006, Labor Code, as follows: Sec. 406.006. New Title: INSURANCE COVERAGE AND CLAIM ADMINISTRATION REPORTING REQUIREMENTS; ADMINISTRATIVE VIOLATION. (a) Requires an insurance company from which an employer has obtained workers' compensation insurance coverage, a certified self-insurer, and a political subdivision to file notice of the coverage and claim administration contact information with the commission no later than 10 days after the coverage or claim administration agreement takes effect, unless the commission adopts a rule establishing a later date for filing. Provides that coverage takes effect on the date on which a binder is issued, a later date and time which is agreed to by the parties, on the date provided by the certificate of self-insurance, or on the date provided in an interlocal agreement that provides for self-insurance. Authorizes the commission to adopt rules in order to establish the coverage and claim administration contact information required under this subsection. Makes conforming changes. (b) Makes no change. (c) Sets forth that an insurance company, certified self-insurer, or political subdivision commits a violation if the person, rather than company, fails to file notice with the commission as provided by this section. (d) Defines "political subdivision" in this section. SECTION 3. Amends Section 406.009, Labor Code, by adding Subsections (c), (d), and (e), as follows: (c) Authorizes the commission to designate a data collection agent, implement an electronic reporting and public information access program, and adopt rules necessary to implement the data collection requirements of this subchapter. Authorizes the executive director to establish the form, manner, and procedure for the transmission of information to the commission as provided by Section 402.042(b)(11) (General Powers and Duties of Executive Director). (d) Authorizes the commission to require an employer or insurance carrier subject to this subtitle to identify or confirm an employer's coverage status and claim administration contact information as necessary to achieve the purposes of this subtitle. (e) Sets forth that an employer or insurance carrier commits a Class C administrative violation if that person fails to comply with Subsection (d). SECTION 4. Amends Section 406.051(c), Labor Code, to prohibit the employer from transferring the obligation to report injuries to the insurance carrier, rather than commission, under Section 409.005 (Report of Injury; Administrative Violation). SECTION 5. Amends Section 408.003(e), Labor Code, to make a conforming change. SECTION 6. Amends Section 504.002(a), Labor Code, to provide that Sections 406.006 (Insurance Company Notice; Administrative Violation), 406.007 (Termination of Coverage by Employer; Notice), 406.008 (Cancellation or Nonrenewal of Coverage by Insurance Company; Notice), and 406.009 (Collecting and Maintaining Information; Monitoring and Enforcing Compliance), rather than Chapter 405 (Repealed), apply to and are included in this chapter except to the extent that they are inconsistent with this chapter. SECTION 7.(a) Effective date: September 1, 1999, except as provided by Subsection (c) of this section. (b) Requires executive director of the commission to develop and publish a plan to incorporate electronic reporting of information and financial exchanges between the parties in the workers' compensation system within a certain time period. Specifies provisions for the plan. Requires the executive director to appoint a task force and hold public hearings. Requires the plan to be designed to achieve a 30 percent reduction in paper communication requirements within a certain time period. (c) Sets forth that the change in law made by this Act to Section 406.006, Labor Code, with regard to a certified self-insurer and political subdivision not required to file notice of coverage before the effective date of this Act, takes effect January 1, 2000. SECTION 8.Emergency clause.