Developments Impacting the Texas Workers’ Compensation System February 21, 2012
Bordelon Adopts Year End Rules in 2011; Other Rules to Be Proposed
During the final days of 2011, Commissioner of Workers’
Compensation, Rod Bordelon adopted several rules that
implement provisions of House Bill (HB) 2605 and other
legislation passed in 2011. HB 2605, the Division of Workers’
Compensation sunset legislation, was passed during the regular
session of the 82nd Texas Legislature in 2011.
The rules adopted by Commissioner Bordelon include Rules
141.2 and 141.3 that define "good cause" for rescheduling a
Benefit Review Conference (BRC) and establish deadlines for
requesting that a BRC be rescheduled. These rules implement
legislative changes made by House Bill 2605. The rules were
adopted October 31, 2011 with an effective date of November
Commissioner Rod Bordelon Commissioner Bordelon also adopted Rule 143.2 to implement
legislative changes made by HB 2605 that authorizes the
Appeals Panel to issue a written decision affirming the decision of a hearings officer if the case is a
case of first impression, involves a recent change in law or involves errors at the contested case
hearing that require correction, but do not affect the outcome of the hearing. Rule 143.2 was adopted
on October 31, 2011 with an effective date of November 20, 2011.
Rules that establish procedures for the resolution of underpayments and overpayments of income
benefits – Rules 126.15 and 126.16 – were adopted by Commissioner Bordelon on December 12,
2011 with an effective date of January 1, 2012. The rules establish a procedure by which an
insurance carrier may recoup an overpayment of income benefits from future income benefit
payments, and pay an underpayment of income benefits, including interest on accrued by unpaid
Rules 126.15 and 126.16 were proposed and adopted after the Division of Workers’ Compensation
(DWC) held two informal work group meetings on September 1, 2011 and September 12, 2011 for
the purpose of formulating rule language for the rules required by HB 2089. HB 2089, passed by the
Texas Legislature during its regular session in 2011, mandated the adoption of the rules.
Other Rules in the Works
DWC has published and is currently accepting comment on informal draft Rules 133.307, 133.308,
144.1–144.7, and 144.9–144.16. The informal draft rules relate to appeals in medical fee and
medical necessity dispute cases and have been drafted to implement provisions of HB 2605. HB
2605 amended the appellate process parties must follow when appealing medical fee dispute cases
Continued on Page 7.
Copyrighted Publication of the Insurance Council of Texas
The Insurance Council of Texas (ICT) has been following several significant developments that
impact the Texas workers’ compensation system.
The following developments are reported on in this edition of the Texas Workers’ Compensation
Articles Page Number
Bordelon Adopts Year End Rules in 2011; Other Rules to Be Proposed 1
Honoring One of the Insurance Industry’s Members of the Greatest Generation 9
Workers’ Compensation Commissioner Adopts Amended and New Enforcement Rules 13
Senate Committees Release Interim Charges; Insurance Issues to Be Studied 15
DWC’s Bryan Field Office Changes Service to Injured Employees 16
Joe Johnson to Chair ICT Board 17
Prescription Drug Abuse Panel Discussion Featured at TAB Annual Conference 19
CDC Article Discusses Prescription Drug Abuse and Offers Prevention Strategies 23
DWC Finalizes Utilization Review Agent Audit Plan 29
Prescription Drug Abuse: A Growing National Problem 29
DWC Form-066, Statement of Pharmacy Services, Revised 38
Head of TDI’s Fraud Unit Retires; Will Continue Fight Against Insurance Fraud 41
Commissioner Bordelon Adopts Rules Regarding Procedures for the Resolution of Under- 43
payments and Overpayments of Income Benefits
DWC Seeks Input on Designated Doctor’s Qualification Criteria 44
Honoring One of the Insurance Industry’s Members of the Greatest Generation Page 9
Senate Committees Release Interim Charges; Insurance Issues to Be Studied Page 15
Prescription Drug Abuse Panel Discussion Featured at TAB Annual Conference Page 19
CDC Article Discusses Prescription Drug Abuse and Offers Prevention Strategies Page 23
Prescription Drug Abuse: A Growing National Problem Page 29
The Opiod Epidemic in Workers’ Compensation Page 45
Drug Repacking for Physician Dispensing: The $700 Million Problem Page 49
Opiod Treatment Best Practices: Addressing Prescription Drug Abuse Page 53
Architect of House Bill 7 Workers’ Comp Reforms Not Seeking Re-Election Page 78
Texas Loses a Workers’ Comp Pioneer: Former Chief Appeals Panel Judge Passes Away Page 92
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 2
Articles Page Number
DWC’s Bryan Office Changes Service to Injured Employees 44
The Opiod Epidemic in Workers’ Compensation 45
Drug Repacking for Physician Dispensing: The $700 Million Problem 49
Opiod Treatment Best Practices: Addressing Prescription Drug Abuse 53
Prescription Drugs Crime Related Stories from Around Texas 57
ICT Sponsors Bastrop Fire Victims 59
Significant Texas Case Law Update from WorkCompCentral 62
Fifth Court Conditionally Granted Writs of Prohibition and Mandamus for Carrier 64
Did You Know? 65
Stakeholder Group Wants to Improve Return-to-Work Outcomes 66
Return-to-Work Is Not a One-Way Street 69
TDI Accepts NCCI’s 2012 Lost Cost Filiing for Workers’ Compensation 71
Insurance Fraud News 73
DWC Approves 13 Companies to Self-Insure for Workers’ Compensation Claims 75
Architect of House Bill 7 Workers’ Comp Reforms Not Seeking Re-Election 78
Has the Era of E-Claims Portals Arrived? 81
Workers’ Compensation News Briefs 85
Two Indicted in Travis County on Workers’ Comp Fraud Charges 89
Bryan Man Sentenced on Workers’ Comp Fraud Charges 89
Job Losses Cause Workers' Compensation Coverage and Costs to Fall 91
Texas Loses a Workers’ Comp Pioneer: Former Chief Appeals Panel Judge Passes Away 92
Workers’ Compensation Calendar 94
Navigating ICT’s Newsletter Is Easy
Did you know that you can navigate ICT’s workers’ compensation newsletter by clicking
on the page number located in the articles table of contents in the newsletter?
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 3
TEXAS WORKERS’ COMPENSATION UPDATE
A Copyrighted Publication of the Insurance Council of Texas
Rick Gentry, Executive Director
Steve Nichols, Manager, Workers’ Compensation Services and Newsletter Editor
Cynthia Haywood, Assistant Newsletter Editor
The Texas Workers’ Compensation Update, published by ICT Services, Inc., is Texas’ premier source
for news on developments in the Texas workers’ compensation system. The newsletter includes articles
written by Insurance Council of Texas staff and contributing authors who have extensive experience
with the Texas workers’ compensation system. The views expressed in articles that have been
contributed to the newsletter do not necessarily reflect the views, opinions, or position of the Insurance
Council of Texas or its member companies.
Subscription Price: Comments and Inquiries:
$125 per year for electronic Please send all comments or inquiries to Steve Nichols at the
subscription following address, telephone number, or above referenced E-
No Cost for ICT Members
and Associate Members ICT Services, Inc.
P.O. Box 15
Austin, Texas 78767-0015
Phone 512/ 444-9611 - Fax 512/ 444-0734
Available as an electronic publication only.
Navigating ICT’s Newsletter Is Easy
Did you know that you can navigate ICT’s workers’ compensation newsletter by clicking
on the page number located in the articles table of contents at the beginning of the newsletter?
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 4
Advertiser Page Number
Thompson, Coe, Cousins and Irons, L.L.P. 8
ICT’s 2012 Workers’ Compensation Seminar 12
Burns Anderson Jury & Brenner, L.L.P. 18
Flahive Ogden & Latson, P.C. 22
Stone Loughlin & Swanson, L.L.P. 28
JI Companies 40
Jopari Solutions, Inc. 42
GENEX – A Sponsor of ICT’s 2012 Spring Seminars 48
Professional Associates 52
Arnold & Placek, P.C. 60
Work Loss Data Institute’s ODG Treatment in Workers’ Comp Guideline 61
GENEX Certified Texas Health Care Network 63
Forté Texas Workers’ Compensation Network Solution 68
UniMed Direct 72
Workers’ Compensation Insurance Fraud is a Problem! 74
Express Scripts 76
Coventry Workers’ Comp Services 77
Smith & Carr, P.C. 79
Injury Management Organization 80
Downs Stanford, P.C. 84
Thornton Biechlin Segrato Reynolds & Guerra, L.C. 86
Mitchell – Smart Advisor Solutions 87
Property Casualty Insurers Association of America 88
Become an Associate Member of the Insurance Council of Texas 90
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 5
Happy New Year from the Insurance Council of Texas
"Happy New Year!" †
That greeting will be said and heard for at least the first couple of
weeks as a new year gets under way. But the day celebrated as
New Year's Day in modern America was not always January 1.
The celebration of the new year is the oldest of all holidays. It was
first observed in ancient Babylon about 4000 years ago. In the
years around 2000 BC, the Babylonian New Year began with the
first New Moon (actually the first visible cresent) after the Vernal
Equinox (first day of spring).
The beginning of spring is a logical time to start a new year. After
all, it is the season of rebirth, of planting new crops, and of
blossoming. January 1, on the other hand, has no astronomical nor
agricultural significance. It is purely arbitrary.
The Romans continued to observe the New Year in late March,
but their calendar was continually tampered with by various
emperors so that the calendar soon became out of synchronization
with the sun. In order to set the calendar right, the Roman senate,
in 153 BC, declared January 1 to be the beginning of the New
The early Catholic Church condemned the New Year festivities as
paganism. But as Christianity became more widespread, the early
church began having its own religious observances concurrently
with many of the pagan celebrations, and New Year's Day was no
different. January 1st has been celebrated as a holiday by Western
nations for only about the past 400 years.
Traditions of the season include the making of New Year's resolu-
tions. The tradition of using a baby to signify the New Year was
begun in Greece around 600 BC. Early Egyptians also used a
baby as a symbol of rebirth. The use of an image of a baby with
a New Years banner as a symbolic representation of the New Year
was brought to early America by the Germans. They had used the
effigy since the fourteenth century.
One of the most venerable New Years traditions is the champaign
toast at midnight to ring in the new year. Toasting can be traced
back to the ancient Romans and Greeks who would pour wine, to
be shared among those attending a religious function, from a
The song, "Auld Lang Syne," playing in the background, is sung
at the stroke of midnight in almost every English-speaking
country in the world to bring in the new year. At least partially
written by Robert Burns in the 1700's, it was first published in
† From http://wilstar.com/holidays/newyear.htm. 1796 after Burns' death. Early variations of the song were sung
prior to 1700 and inspired Burns to produce the modern rendition.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 6
Continued from Page 1: Bordelon Reports Texas Workers’ Comp System Performing Very Well
adjudicated by the DWC and medical necessity decisions issued by independent review organiza-
tions (IROs). The rules incorporate the new appellate processes enacted by HB 2605 into existing
DWC rules governing medical dispute resolution and arbitration. This includes provisions providing
for accelerated review for first responders.
On January 24, 2011, Commissioner Bordelon adopted amendments to the DWC’s Chapter 180
enforcement rules and new rules that implement legislative changes made by HB 2605. The rules
amendments and new rules .– amended Rules 180.1, 180.3, 180.5, and 180.27 and proposed new
Rules 180.4, 180.9, and 180.10 – are primarily intended to implement recent statutory amendments
included in HB 2605. The statutory changes include monitoring and enforcement activities
conducted by the DWC, specifically compliance audits, on-site visits, proposals for decision,
informal dispositions by default, and ex parte emergency cease and desist orders.
The DWC currently has other rules that are currently being prepared for proposal and/or adoption.
The rules include:
● Designated Doctor Rules addressing designated doctor eligibility, testing and
● Non-Subscriber Reporting Rules that provide clarity to parties about reporting
non-subscription, proof of coverage, employer notices to employees and employer
reporting of injury;
● Accident Prevention Services Rules that clarify current DWC accident prevention
services related processes; and
● Companion Utilization Review Rules that proposed amendments to Rules 133.2, 133.240,
133.250, 133.305 and 134.600. DWC withdraw previously proposed amendments to 133.2,
133.240, 133.250, 133.305 and 134.600 following TDI's withdrawal of the Chapter 19,
Subchapters R and U amendments.
The DWC has prepared a rules project chart that is available on the DWC’s website. The rules
project chart was updated on January 17, 2012. DWC staff anticipates updating the rules project
chart in the near future.
Pledge Your Support to ICT’s Scholarship Program Today
Together We can Make a Difference
Information about the Insurance Council of Texas Education
Foundation and how you can become a contributor is available on our website.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 7
Austin Dallas Houston Saint Paul
Celebrating 60 Years of Service
Since 1951, Thompson, Coe, Cousins & Irons, L.L.P. has dedicated itself to providing clients
with responsive and quality legal services. It has grown from a firm of two experienced
practitioners in property and casualty insurance law to a firm of over 120 attorneys with offices
in Austin, Dallas, Houston and Saint Paul.
Thompson Coe is nationally recognized by the insurance industry for its expertise in insurance
law and for its litigation skills. In recent years, the firm has expanded its capabilities in workers’
compensation law. The firm’s clients are varied. The firm has represented clients in trial and
appellate courts in both the state and federal system and before state agencies include the Texas
Department of Insurance, the Division of Workers’ Compensation and the Texas Legislature.
The firm maintains a legislative practice, representing principally insurance industry clients,
including the Association of Fire and Casualty Companies in Texas (AFACT). The firm is
counsel to several insurance industry trade associations, including the Insurance Council of
Texas (ICT), who work with the Texas Department of Insurance concerning rules, rates and
forms with respect to all lines of property and casualty insurance.
Thompson Coe also represents insurers in workers’ compensation claims dispute matters before
the Texas courts.
The firm’s litigation practice include contract disputes, coverage questions under property and
liability policies, defense against fraud and bad faith claims, business litigation, subrogation and
intervention actions and workers’ compensation.
THOMPSON, COE, COUSINS & IRONS, LLP
Insurance Regulatory and Transactions Section
ALBERT BETTS JR. RODNEY D. BUCKER JACK M. CLEAVELAND JR.
email@example.com firstname.lastname@example.org email@example.com
(512) 703-5039 (214) 871-8255 (214) 871-8280
WILL D. DAVIS RICHARD S. GEIGER MICHAEL W. JONES
firstname.lastname@example.org email@example.com firstname.lastname@example.org
(512) 703-5070 (214) 871-8281 (512) 703-5055
DAVID D. KNOLL JAY A. THOMPSON EMORY L. WHITE JR.
email@example.com firstname.lastname@example.org email@example.com
(512) 703-5090 (512) 703-5060 (214) 871-8282
Visit Thompson Coe Online at www.thompsoncoe.com.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 8
Honoring One of the Insurance Industry’s Members of the Greatest Generation
By Ron Cobb, Attorney of Counsel to the American Insurance Association
At a legislative interim hearing regarding the Texas Windstorm
Insurance Association, just before Veterans Day, Senator
Leticia Van de Putte asked for all Veterans to come forward.
She took a moment to thank them for their service and
presented each with a commemorative Veterans Day Medal.
One of those standing before Senator Van De Putte was
insurance veteran Verle Petri. After the meeting she was
astounded to learn that Petri was a veteran of World War II and
Korea. Astounded describes the feeling many people have
when learning that he is actually 84 years old and a veteran of
not one but two wars! Frankly he just does not look his age – a
problem many of us wish we had.
Upon learning that Petri and some of his war buddies would be
attending the Nimitz Museum Pearl Harbor tribute on
December 7th in Fredericksburg, Texas, Petri and I sat down
for coffee and had a conversation about his remembrances of the war years and his subsequent career
in the insurance business. What he told me is a story worth telling, for Petri deserves to be honored
for his service in World War II, the Korean War and insurance industry.
It is important to note that on December 7th, millions of Americans around the nation and world
observed the 70th anniversary of the Japanese attack on Pearl Harbor and our nation’s entry into the
carnage and fire of World War II. World War II forever changed our nation and millions of men and
women who became known as our nation’s Greatest Generation.
In the summer of 1944, just past his 17th birthday, Petri and three friends enlisted at the Navy
Recruiting Office in Des Moines, Iowa. Although Midwest recruits were sent to Farragut, Idaho for
training, a disease quickly broke out – likely diphtheria – and the base was quarantined. This
development resulted in the Midwest recruits – Petri included – going to boot camp at Naval Station
Great Lakes, Illinois.
Following Petri’s stateside duty in June 1945, he was assigned to the Pacific Fleet, commanded by
fellow Texan and Fredericksburg resident Admiral Chester Nimitz. Upon reporting to the Pacific
Fleet, he was assigned to the USS Fond du Lac (APA 166), an Assault Personnel Attack transport
ship named after a city in Wisconsin. Ships of this type were used for amphibious island invasions
throughout the Pacific that began with Guadalcanal in the Solomon Islands and continued with the
Marianas, Guam, the Philippines and ultimately Okinawa. Attack transports also participated in
Operations Torch (invasion of North Africa), Overlord (D-Day invasion of Europe) and Dragoon
(invasion of Southern France in August of 1944) and landings in the Pacific Theater of Operations.
After Petri reported for duty aboard the U.S.S. Fond du Lac, the attack transport proceeded to pick
up 2,000 Marines in the Philippines. It was planned for those Marines to participate in Operation
Downfall – the invasion of Japan. Had Operation Downfall proceeded, those Marines would have
been in the midst of a campaign that was projected to cost the lives of hundreds of thousands of U.S.
Marines and U.S. Army troops. Luckily, the atomic weapon made Operation Downfall unnecessary.
The Marines were on board the U.S.S. Fond du Lac when the Japanese peace treaty was signed on
September 2, 1945 on the battleship U.S.S. Missouri (BB-63). The Fond du Lac was among the
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 9
many ships deployed offshore from Tokyo Harbor not too far from the Missouri when the Japanese
surrended. Petri was thus a witness to a momentous time in history – the end of World War II.
The Marines aboard the U.S.S. Fond du Lac were in the first wave of ships going into Sasebo, Japan
with occupation troops under Gen. MacArthur. Thereafter, the ship was assigned to Operation Magic
Carpet which was created to bring U.S. military personnel back to the United States for discharge or
further assignment. The U.S.S. Fond du Lac’s first Magic Carpet mission took her to Guam where
she picked up 2,000 personnel eligible for discharge in San Francisco, California. After encountering
a typhoon while island hopping they were ordered to Norfolk, Virginia to decommission the ship.
Petri was then assigned to a cargo ship for another five months on journeys to Hawaii, Guam,
Okinawa and South Korea and finally being separated from the Navy with an honorable discharge in
Upon being discharged from the Navy and returning to Iowa, Petri used the GI Bill to earn a degree
at the University of Iowa. His first job landed him in the insurance business. His career in the
insurance industry began April 1950 with Allied Mutual in Des Moines as an underwriter.
Unexpectedly, Petri’s insurance career was put on hold just a few months later. He was a member of
the U.S. Navy Reserves post-World War II. On June 25, 1950, the North Koreans invaded South
Korea starting a three-year struggle between Communism and Freedom – the Korean War. Petri was
notified of possible recall to active duty in July of 1950 and advised that he was on Ready Alert and
subject to reporting for active-duty within 72 hours.
The Navy eventually called Petri to active duty to serve during the Korean War. He left Allied
Mutual and reported to the Des Moines Naval Reserve Training Facility and learned that he was in
line for an amphibious warfare assignment such as being assigned to a Landing Ship Dock (LSD),
Landing Ship Tank (LST), Landing Ship Medium (LSM) or one several types of landing craft. The
LSD, LST, LSM, and other amphibious warships and craft then in the fleet had all served as the
workhorses of U.S. amphibious operations in the European Theater of Operations and Pacific
Theater of Operations during World War II. Petri was fortunate as in early 1951 his status was eased
from Ready Alert to Standby which allowed him to resume his insurance career.
In May of1955, he headed to Texas and accepted a marketing position with Pacific Employers due
largely to the influence of Houston insurance executive Willoughby Williams. In 1963 he was
named Marketing Manager at Pacific Indemnity where he worked for four years.
In 1967, Chubb and Son, Inc. acquired Pacific Indemnity. Petri stayed on and remained with Chubb
until his retirement in 2003. At Chubb, he held positions of ever increasing responsibility that
included Marketing Representative, Marketing Manager, Assistant Vice President/ Personal Lines
Manager and Vice President/ Branch Manager, Marketing Representative, Marketing Manager
and Personal Lines Manager. His retirement did not end his involvement in the insurance industry.
Since his retirement in 2003, Petri continues to serve as an independent consultant to Chubb and can
frequently be seen at TDI meetings, industry meetings, and legislative hearings.
Petri has also had a ring side seat to Texas political history. His onetime Houston Manager at Pacific
Employers was Richard G. Waters. Waters was appointed to the State Board of Insurance in late
1935 when there were Commissioners for Life, Casualty and Fire. During Water’s tenure, Raymond
Mauk was the Fire Commissioner. Raymond Mauk is considered to have shaped the Texas
insurance industry. Waters had served as the campaign manager for Jimmy Allred when he was
elected Governor of Texas in 1935. Allred would subsequently serve as Lyndon Johnson's campaign
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 10
Manager in 1937 – the year Johnson was elected to Congress. Johnson was later elected to the U.S.
Senate. During the late 1950’s Senator Johnson came to Houston frequently when he was Senate
Majority Leader. Johnson always hosted a function at Lamar Hotel in the famous Suite 8F where
Houston business leaders would be present. Petri recalls attending several of these meetings with
Waters. His role was to sit quietly in the corner as it was somewhat intimidating to be with the
Senate Majority Leader and Texas business and political leaders when they were discussing issues
that went far beyond the insurance world.
Verle Petri, a country boy from Iowa, has served both his country and the insurance industry over a
lifetime and in doing so has been an eyewitness to history. He prefers to be thought of as one of
millions of young American men who answered the call of duty and served our nation. However, he
is a member of the Greatest Generation and his life epitomizes the way most members of the
generation lived – working hard and giving their all without ever complaining or asking for anything
Countless other men and women have served our great nation in uniform over the years and found
their way into one of the most stable and enduring industries in the history of our nation – the
insurance industry. However, I do not know of any other insurance professional who has served our
nation and insurance industry for as long as Verle Petri. As such, I ask that each reader of this article
take the time out of their day and remember Petri and the many other insurance professionals who
have honored our nation with their service in uniform and went on to help build the great nation and
vibrant insurance industry we have today.
Editor’s Note: Ron Cobb, the author of this article, is a Government Affairs Consultant and Legal
Regulatory Affairs attorney who represents the American Insurance Association (AIA) before the
Texas Legislature, Texas Department of Insurance (TDI) and TDI’s Division of Workers’
Compensation. Prior to 2005, Cobb spent 40 years in the insurance industry at positions ranging
from underwriting to corporate law. He was employed by AIA for 29 years – 1976 until 2005 –
where he served as Regional Vice-President. Cobb served as a Vice President and Assistant General
Counsel at and as the Executive Assistant to the President of American General Insurance Company
from 1964 to 1976. He holds both a Bachelor of Arts and Law Degree. He earned his law degree
from South Texas College of Law.
For those of you interested in learning more about World War II, Life magazine has posted a series
of photo collections from the war. The photo galleries can be found on Life magazine’s website. You
can also find information about Texans who served in World War II and stories about military
installations in Texas during war on the website of Texas Escapes.
ICT is Looking for Insurance Professionals to Honor for their Service to Our Country
Many insurance professionals have served our country in uniform. ICT would like to
recognize these individuals in our newsletter.
Do you know anyone who is a veteran of World War II, Korea, Vietnam, more recent military
operation or is a veteran of the War on Terrorism who you believe should have their story
If so, please prepare and send an article for publication in this newsletter to Steve Nichols at
firstname.lastname@example.org. As an alternative, you may nominate an individual and send
their contact information to Steve Nichols to have an article written by ICT staff.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 11
ICT ANNOUNCES ITS 2012 WORKERS’ COMPENSATION SEMINAR
Workers' Compensation Case Law Update
Albert Betts, Thompson Coe and ICT’s General
Recent Significant Appeals Panel Decisions
Stuart Colburn, Downs Stanford, P.C.
Developments Impacting the Designated Doctor
Process Brandi Prejean, Thornton Law Firm
Understanding the Benefit Review Conference
Process Joe Anderson, Burns Anderson Jury &
A Dialogue on Combating Fraud in the Texas
Workers' Compensation System
The Insurance Council of Texas announces its latest workers’
compensation seminar. Be sure to attend the seminar and learn Jane Stone, Stone Loughlin & Swanson; Dennis
about developments impacting the Texas workers’ compensation Pompa, Former Associate Commissioner, Fraud
system. Unit, Texas Department of Insurance; Tim Riley,
Vice President Special Investigations Dept., Texas
DATES AND LOCATIONS Mutual Insurance Company
Understanding Pain in Workers' Compensation
March 17, 2012 Claims Don Abrams, P.A., President and CEO,
Crowne Plaza Dallas - Near The Galleria Medical Equation, Inc.
14315 Midway Road
Addison, Texas A Conversation: Prescription Drug Abuse in
Phone: (972) 980-8877 ● Seminar Agenda Texas Workers' Compensation: Myth or
April 10, 2012
Double Tree by Hilton Hotel Austin Julie Shank, BSN, Owner, J Shank Consulting
and William Nemeth, M.D., FAAOS, DACPE
6505 Interstate Highway 35 North
Austin, Texas Overcoming Return-to-Work Barriers – Doug
Phone: (512) 454-3737 ● Seminar Agenda Smith, M.D., Medical Director, RTW, Inc.
(Addison) or Dawn Bergerson, OTR, CCM, Injury
REGISTRATION FEE Management Organization (Austin)
$250.00 SPONSORSHIP OPPORTUNIES AVAILABLE
Register Online at ICT’s Website today. Interested in sponsoring the seminar?
This course has been approved for 8 continuing education hours Contact Steve Nichols via e-mail to inquire about
(class room hours) by the Texas Department of Insurance (Course sponsorship opportunities.
# 85864). Attend-ance during the entire seminar is required in
order to be awarded the CE credit hours. Insurance Council of Contact Cynthia Haywood at (512) 444-9611 for
Texas TDI CE Provider #: 32832. additional information about the seminar.
This course has been approved for Minimum Continuing Legal This program has been pre-approved by the Com-
Education credit by the State Bar of Texas Committee on MCLE mission for Case Manager Certification to provide
in the amount of 7.0 hours, of which 0 hours will apply to legal continuing education credit to CCMs. This
ethics/professional responsibility credit. educational activity has been for 7.0 clock hours.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 12
Workers’ Compensation Commissioner Adopts Amended and New Enforcement Rules
On January 24, 2012, Commissioner of Workers’
Compensation Rod Bordelon adopted amendments to the
Division of Workers’ Compensation’s enforcement rules
– Rules 180.1, 180.3, 180.5, 180.8 and 180.27. The
Commissioner also adopted new rules – Rules 180.4,
180.9 and 180.10.
The rules were adopted with an effective date of
February 14, 2012.
The DWC announced that the purpose of the adopted rule
amendments and new rules is to implement recent
legislation in House Bill (HB) 2605, enacted by the 82nd
Texas Legislature during its regular session in 2011. The
provisions of HB 2605 were effective September 1,
HB 2605 legislation expanded the Commissioner of Workers’ Compensation’s authority to enter the
final decision in all DWC enforcement actions heard at the State Office of Administrative Hearings
(SOAH), authorized the Commissioner to issue ex parte emergency cease and desist orders in
certain cases, and to conduct announced and unannounced on-site visits when reviewing the
operations of a person regulated by the DWC.
The adopted rules amendments and new rules amend the DWC’s Chapter 180 enforcement rules to
reflect the Commissioner of Workers’ Compensation’s expanded authority in enforcement cases
heard at SOAH and enact procedures by rule that will apply to emergency cease and desist orders
and on-site visits conducted by the DWC. The adopted rules also contain changes that clarify and
updates existing Chapter 180 rule provisions and provide the DWC with greater flexibility when
performing certain system monitoring and enforcement activities.
Overview of the Rules
Rule 180.1 sets forth the definitions for terms used in the Chapter 180 rules. The DWC said in its
rule adoption preamble that the adopted amendments are necessary in order to provide clarity to
defined terms. The adopted amendments clarify the definition of terms such as “compliance audit”
and “conviction” and delete defined terms that are no longer used in the DWC’s monitoring and
Rule 180.3 sets out the DWC’s process for compliance audits. The DWC said in its rule adoption
preamble that the adopted amendments to the rule are necessary in order to make clarifying changes
in terminology used in this section, and to provide the DWC with flexibility when deciding whether
to publish a final audit report on the DWC’s website.
Rule 180.4 sets out the DWC’s process for on-site visits. The DWC said the new adopted rule is
necessary to implement legislative changes in HB 2605 that authorize the DWC to conduct on-site
visits when reviewing the operations of a person or entity regulated by the DWC. The adopted rule
prescribes the procedures to be used for both announced and unannounced on-site visits and
specifies the types of records subject to inspection.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 13
Rule 180.5 sets forth requirements for the DWC’s access to workers’ compensation related records
and information. The DWC said the adopted amendments to the rule are necessary to clarify
terminology used in the rule and provide the DWC with flexibility in determining the manner and
format in which requested information must be provided to the DWC.
Rule 180.8 establishes the DWC’s procedures for issuing notices of violation, notices of hearing and
processing default judgments. The DWC said the adopted amendments to the rule are necessary to
clarify terminology used in the rule.
The DWC noted in its rule adoption preamble that the adopted amendments to Rule 180.8 clarify
that the Commissioner issues the final order in DWC enforcement cases heard at SOAH. The DWC
also said the rule amendments clarify the process a charged party must follow when filing a motion
to set aside a default order and reopen the record.
Rule 180.9 sets out the process for the final adjudication by the DWC of proposals for decision from
SOAH. The new rule conforms to legislative changes in HB 2605 that expand the Commissioner’s
authority to issue the final order in all DWC enforcement cases heard at SOAH. The adopted rule also
makes amendments designed to clarify the DWC’s processes when issuing an order following a
proposal for decision.
Rule 180.10 sets out the DWC’s process for ex parte emergency cease and desist orders. The rule
prescribes the contents of an emergency cease and desist order, sets out the procedures for appealing
an emergency cease and desist order and sets out how a party may request a stay of an emergency
cease and desist order.
Rule 180.27 sets out the DWC’s process for restoration of doctor practice privileges removed under
Sec. 408.0231 of the Texas Labor Code. The DWC said the amendments to the rule are necessary to
delete provisions in the rule that relate to proposals for decision in DWC enforcement cases heard at
SOAH. These deleted provisions have been recodified and amended in newly adopted Rule 180.9.
Register for ICT’s Spring Workers’ Compensation Seminar Today
Do your company’s or firm’s claims professionals or attorneys need continuing education hours?
ICT can meet your employees’ continuing education needs.
Send your claims professionals or attorneys to a high quality educational event that will provide
your professional staff with enhanced knowledge that will assist them as they navigate the
challenging Texas workers’ compensation system.
March 17, 2012 April 10, 2012
Crowne Plaza Dallas - Near The Galleria Double Tree by Hilton Hotel Austin
14315 Midway Road 6505 Interstate Highway 35 North
Addison, Texas Austin, Texas
Register Online at ICT’s Website today.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 14
Senate Committees Release Interim Charges; Insurance Issues to Be Studied
Two Texas Senate committees have released their
respective interim charges that require each commit-
tee to study aspects of the Texas insurance industry.
The Senate Business & Commerce Committee
released its interim charges on February 6, 2012.
The State Affairs Committee released their interim
charges on January 24, 2012.
The interim charges for the State Affairs Committee
includes examining the Texas workers’ compen-
sation system and make recommendations for
changes to meet the needs of Texas employers and
employees. Specific-ally, the State Affairs
Committee is charged with reviewing the following:
● The dispute resolution process and benefits available from employers that do not subscribe
to workers’ compensation;
● The adequacy of income benefits in the workers’ compensation system, specifically on
high-wage earners receiving the maximum compensation rate;
● Identify and report on fatalities in the workers’ compensation system, including the
amount of death and burial benefits paid to beneficiaries and the Subsequent Injury Fund
● The return-to-work numbers and results for injured employees in the workers’ compensa-
tion system that are referred to the Department of Assistive and Rehabilitative Services.
The Senate State Affairs Committee has not yet to schedule hearings on these issue but are expected
to do so in the not to distant future.
Some of the Senate Business & Commerce Committee’s interim charges directly relate to insurance
and while other charges involve issues that may include the property and casualty insurance
industry. The Business & Commerce Committee charges include:
● Study the state's approach to licensing and regulation of occupations to ensure protection
of public welfare, trust, health, and safety and eliminate unnecessary, overly restrictive, or
anti-competitive regulation. Review guidelines and other states' approaches for
determining when regulation is necessary and make recommendations for improving
Texas' regulatory system;
● Monitor the implementation of legislation addressed by the Senate Committee on Business
& Commerce, 82nd Legislature, Regular and Called Sessions, and make recommendations
for any legislation needed to improve, enhance, and/or complete implementation. Specific-
ally, review the implementation of HB 2592 and 2594 relating to payday lending, and
make recommendations relating to consistency and coordination with local ordinances and
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 15
● Conduct a broad review of the Texas home owners insurance market and make recommen-
dations to improve transparency and consumer education, ensure fair practices, and lower
rates. Specifically, consider the following:
○ Compare Texas' homeowners insurance premiums with those of other states and
identify the factors underlying Texas' premium levels and recommend steps that the
Legislature may take to reduce homeowners' rates, if appropriate;
○ Study strategies that increase awareness of state insurance resources to help
consumers compare rates and coverage among various insurance providers;
○ Study the relationship between insurance premiums and construction costs,
especially as associated with recovery from natural disasters, to ensure that
consumers are treated fairly;
○ Review the use by insurers, in rating and underwriting decisions, of customer
inquiries regarding the general terms or conditions of, or coverage offered under, an
The Senate Business & Commerce Committee met in January and heard testimony from Insurance
Commissioner Eleanor Kitzman on rates and other regulatory issues.
DWC’s Bryan Field Office Changes Service to Injured Employees
On February1, 2012, the Bryan Field Office of the Division of Workers’ Compensation (DWC)
started providing customer service to injured employees by appointment only. The DWC will no
longer provide injured employees with walk-in services to assist them with issues related to their
claims. Benefit Review Conferences and Contested Case Hearings will continue to be held at the
Bryan Field Office location as scheduled.
Injured employees with workers’ compensation claims managed by the Bryan Field Office must now
call 1-800-252-7031 for assistance with their claim and to make an appointment for assistance with
their workers’ compensation claims. This policy also applies to inquiries about where to send all
correspondence and faxes, including official actions and forms.
Appointments with the Office of Injured Employee Counsel (OIEC) ombudsman will also continue
to be held at the Bryan Field Office location as scheduled. Injured employees may also call 1-866-
393-6432 to obtain assistance from OIEC ombudsman and staff.
This latest change in how the DWC provides services to injured employees is part of an on-going
review of services being provided at field offices. The review of services by senior DWC staff has
resulted in the closure of several field offices and realignment of others.
Does Your Company Provide Vendor and Other Services to Insurance Companies?
If your answer is YES, contact Mark Hanna, ICT’s Manager of Public Affairs and Membership,
at email@example.com and inquire about how you can become an associate member
of the Insurance Council of Texas.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 16
Joe Johnson to Chair ICT Board
By Mark Hanna, Manager of Public Affairs and Membership, Insurance Council of Texas
The Insurance Council of Texas (ICT) has elected Joe Johnson chairman
of the board of directors beginning January 1, 2012. Johnson is Vice
President and Regional Manager of the United Fire Group. Johnson has
served 35 years in the insurance industry in various positions with
companies in Texas and Arkansas. He is a graduate of the University of
Johnson said he is proud to take over the helm at ICT.
“Having served on ICT’s Board for the past six years, I am honored to
now serve as its chairman,” Johnson said. Chairing the largest state
Joe Johnson insurance trade organization in the country brings with it a lot of respon-
sebility in speaking for the industry. I assure you ICT will continue
its lead role in addressing the industry’s concerns and future.”
Robert Gilbert, Assistant Vice President of Government Industry Relations with USAA, was elected
vice chairman. Robert Zeman, Corporate Counsel for Allstate, was elected treasurer. Lyndell
Haigood, Regional Vice President of State Auto Insurance, was elected secretary.
Craig Sparks, president of Union Standard Insurance, will serve as immediate past chair president.
The other members of the ICT board of directors and their representatives are:
Chubb Group of Insurance Companies: Tom Fitzpatrick
Farmers Insurance Group: Frank Galitski
Liberty Mutual Insurance Company: Lee Ann Alexander
The Republic Group: Richard Mayer
Kemper Insurance: Dorothy Langley
Texas Farm Bureau Insurance Companies: Mike Gerik
Travelers: David Lavergne
State Farm: John Stuckemeyer
The Insurance Council of Texas (ICT) is the largest state insurance trade association in the country
consisting of more than 500 property and casualty insurers writing business in Texas.
Additional information about ICT can be found online here.
Register for ICT’s Workers’ Compensation Seminar Today
The Insurance Council of Texas will be presenting our 2012 Spring Workers' Compensation
Seminar in the Dallas – Fort Worth area on March 27, 2012 and Austin on April 10, 2012.
Sign up today and come earn CE and/or CLE credits and enjoy a whole lunch.
Register Online Today!
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 17
Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 18
Prescription Drug Abuse Panel Discussion Featured at TAB Annual Conference
Texas Association of Business Coalition to Target Drug Abuse in Workers’ Compensation
By Albert Betts, J.D., ICT General Counsel and Partner at Thompson Coe
Over the last several months, various workers
compensation stakeholders have had ongoing
discussions with the Division of Workers’
Compensation about growing concerns over
overutilization and misuse of prescription drugs.
As recent news reports and studies have shown, this
issue is not limited only to workers’ compensation.
Last year, the Texas Association of Business (TAB)
organized a coalition of workers’ compensation
insurer representatives, medical professionals,
pharmacy representatives, health care representa-
tives, and other interested stakeholders to discuss
and find solutions to the growing problem of
prescription drug abuse in group health and
workers’ compensation. The group is known as the
Texas Alliance for Responsible Prescription Drug
Use and Insurance Council of Texas (ICT) is a
The prescription drug abuse discussion took center
stage during a panel discussion on Thursday,
February 2, 2012 at the TAB Annual Conference.
The panel was moderated by Cathy DeWitt, TAB’s
vice president for governmental affairs, and the topic was the need to curb prescription drug abuse in
the Texas workers’ compensation system.
Panelists included Sen. Tommy Williams (R-Woodlands), author of legislation that cracks down on
pill mills and doctor shopping; Dr. C.M. Schade, former president of the Texas Pain Society; Johnny
Hatcher, general manager of regulatory compliance and security for QVL Pharmacy in Dallas; and
Stuart Colburn, an attorney and shareholder with Downs Stanford law firm.
Prescription Drug Abuse is an Epidemic in Texas
According to the Austin-American Stateman, Sen. Williams is reported to have said that prescription
drug abuse is an epidemic in Texas and the nation. The Austin-American Statesman reported that
Sen. Williams said during the course of the TAB panel discussion that there were 188 overdose
deaths attributed to prescription drugs in Harris County alone.
The Austin-American Statesman also reported that Dr. C.M. Schade, a pain medicine physician and
anesthesiologist in Garland, Texas, said the problem of prescription drug abuse is widespread. Dr.
Schade also said 7 million Americans over age 12 abused prescription drugs for non-medical
purposes in 2009 and that Americans used 99 percent of the Hydrocodone and 80 percent of the
Oxycodone consumed in the world.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 19
Various studies and recent reports support Sen. Williams’ and Dr. Schade’s concerns. Overutili-
zation of drugs and inappropriate pharmaceutical services can lead to very serious adverse health
events for injured workers. According to the US Food and Drug Administration, the most serious
adverse health outcomes arising out of the overutilization of narcotics are respiratory depression,
central nervous system depression, addiction and death.
Data from the Centers for Disease Control and Prevention (CDC) included in the publication 20
Leading Causes of Death 2007 indicate that accidental drug overdose is the number one injury-
related cause of death among adults aged 35-54 and is number two for young adults aged 15-34. In
Texas, the number of accidental overdose deaths has increased 250% from 1999 to 2007 with 790
accidental drug deaths in 1999 and 1,987 accidental drug deaths in 2007. In Houston, 50 percent of
all accidental overdose deaths from 2005 to 2009 were associated with prescription opioid drugs
such as Oxycodone and Hydrocodone. According to Workers’ Compensation Research Insitute,
Hydrocodone is the most commonly prescribed drug for injured workers nation-wide.
The Drug Enforcement Administration’s publication Prescription Drug Abuse- A DEA Focus
(November 2008) reports that nearly 7 million Americans abuse prescription medication, a number
greater than those abusing cocaine, heroin, hallucinogens, Ecstacy and inhalants combined.
Prescription Drug Abuse Has Fueled Criminal Acts Such as Robberies of Pharmacies
Dr. Schade said that persons addicted to pain medications are resorting to robbing pharmacies due to
the relative ease in which they can rob pharmacies. Texas has seen its share of pharmacy robberies
across the state.
U.S. Pharmacist reported that on May 29, 2009, a 49-year-old man entered a San Antonio, Texas,
pharmacy with a gun pulled and cocked. He handed the clerk a note demanding cash and OxyContin.
He then pointed the gun at the pharmacist owner of the store. The pharmacist pulled out a gun he
kept in the pharmacy for protection. When the robber saw the pharmacist’s weapon, he reportedly
uttered his last words, “Let’s get it on.”
The pharmacist shot the robber in the chest at point-blank range. The San Antonio Police Chief ruled
the shooting as a justifiable homicide. That pharmacy had been robbed at knifepoint 3 years earlier.
On February 2, 2011, Houston television station KHOU reported that the Houston Police
Department announced that three men in a van rammed through a wall into the Fiesta store on
Studewood in Houston’s Heights neighborhood to access the store’s pharmacy. The men stole drugs
KHOU also reported that other criminals have recently targeted two other Texas pharmacies,
including a CVS store in Fort Bend County. Surveillance cameras caught a man giving employees a
list of drugs he unsuccessfully tried stealing. Three other suspects were caught on tape in another
recent case in Sugar Land. Police there said it was Sugarland’s first pharmacy robbery in 10 years.
A Houston FOX network affiliate, FOX 26, recently reported that on January 15, 2012, a Sugarland
Walgreens pharmacy was robbed by a young man who entered the store and walked to the pharmacy
and passed a note to a clerk which said he wanted prescription medication, though he never showed
a gun. The pharmacist complied with the robbery suspect who left the store with prescription
medications valued at approximately $3,000.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 20
According to RxPatrol, an information clearinghouse developed and funded by Purdue Pharma L.P.
to collect data related to pharmacy robberies, burglaries and theft that involve the loss of controlled
substances, there have been 2,216 robberies of pharmacies nationwide as of February 3, 2012. An
employee of RxPatrol told ICT that many of those robberies involve the theft of narcotic drugs, e.g.
Oxycodone, Oxycontin, Hydrocodone and other pain medications.
TAB’s Alliance to Consider Multiple Initiatives to Combat Prescription Drug Abuse
WorkCompCentral reported that DeWitt said TAB is building an alliance of medical professional,
insurance and business groups to participate in the Texas Alliance for Responsible Prescription Drug
Use and assist in the effort to curb prescription drug abuse.
WorkCompCentral also reported that Cathy DeWitt said the effort, organized by TAB, is targeting
problems with prescription drug abuse in the Texas workers’ compensation system because it affects
employers, employee and workers’ compensation system costs. DeWitt also said that TAB wants to
attack the problem because of its effects on communities and families, as well as individuals.
The Texas Alliance for Responsible Prescription Drug Use is expected to consider a wide range of
initiatives to address prescription drug abuse in the Texas workers’ compensation system. Those
initiatives could include educational, regulatory, and/or legislative action.
The American Insurance Association, Association of Fire and Casualty Companies in Texas,
Insurance Council of Texas and the Property and Casualty Insurers Association of America are
members of the Alliance. Also participating in the Alliance are several state agencies that include the
Texas Department of Insurance’s Division of Workers’ Compensation and the Office of Injured
Employee Counsel. The Texas Pain Society, individual physicians and several insurance defense law
firms who are interested in combating prescription drug abuse are also members of the Alliance.
Editor’s Note: The author of this article is Albert Betts. Betts is a
partner with the law firm of Thompson, Coe, Cousins & Irons and ICT’s
General Counsel. He served as the first full-time workers’ compensation
commissioner from September 1, 2005 through August 31, 2008.
Betts has extensive experience as a lawyer and public policy adminis-
trator including representing the Texas Department of Insurance in
litigation and the state’s workers' compensation carrier – the State Office
of Risk Management – in administrative proceedings.
Betts has advised the state risk management board, the commissioner of
insurance, and political leadership on insurance and workers’
Albert Betts compensation matters.
Mark Your Calendars For the 2012 Mid-Year Property & Casualty Insurance Symposium
Thursday, July 12, 2012 ♦ Austin, Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 21
For the last sixty years, Flahive, Ogden & Latson has
defended workers' compensation claims before three
state agencies and state courts at every level. Our
practice is limited to workers' compensation defense
throughout the State of Texas. Twenty-one lawyers in the
firm have been designated as board certified specialists
in workers' compensation law by the Texas Board of
Our insurance carrier clients include six of the largest
workers’ compensation insurance groups in Texas: The
American International Group, The Hartford Insurance
504 Lavaca Suite 1000 P.O. Box Drawer, 13367 Companies, The Liberty Mutual Insurance Companies,
Capitol Station Austin, Texas 78711 The Travelers Insurance Companies, Texas Mutual
Tel 512.477.4405 | Fax 512.867.1700 Insurance Company and The Zurich Insurance
Email firstname.lastname@example.org Companies. We also represent a large number of mid-
size as well as small carriers, many third party
____________________________________ administrators, three self-insured groups, thirty-four
certified self insurers, and approximately 2,500 cities,
Flahive Ogden & Latson Texas Workers’ school districts, and other governmental self-insureds.
Among the lawyers in the firm, one is a former Justice on
the Court of Appeals and one is a former Contested Case
Hearing Officer for the Texas Workers' Compensation
Commission. Four of the firm's lawyers were honors
graduates, three were editors of their respective law
school Law Reviews, four were selected by the Texas
Court of Appeals to prestigious judicial clerkships, and
one served as a clerk to a Justice on the Texas Supreme
Court. Three of the firm's attorneys were members of
their respective law school national competition teams
(mock trial, moot court, or negotiation), and five are
certified specialists in fields other than workers’
compensation (personal injury law, appellate law, and
Visit FOL online at www.fol.com.
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 22
CDC Article Discusses Prescription Drug Abuse and Offers Prevention Strategies
On January 13, 2012, the Centers for Disease
Control and Prevention (CDC) published an
article that discusses prescription drug abuse as
an epidemic in the United States and offers
possible abuse prevention strategies. The article
also discussed the national response to the
national prescription drug abuse epidemic.
The CDC reported that in 2007, approximately
27,000 unintentional drug overdose deaths
occurred in the United States, one death every
19 minutes. The CDC noted that prescription
drug abuse is the fastest growing drug problem
in the United States.
The CDC also reported the following:
The increase in unintentional drug overdose death rates in recent years (Figure 1) has been
driven by increased use of a class of prescription drugs called opioid analgesics. Since 2003,
more overdose deaths have involved opioid analgesics than heroin and cocaine combined
(Figure 2). In addition, for every unintentional overdose death related to an opioid analgesic,
nine persons are admitted for substance abuse treatment, 35 visit emergency departments, 161
report drug abuse or dependence, and 461 report nonmedical uses of opioid analgesics.
Implementing strategies that target those persons at greatest risk will require strong coordination
and collaboration at the federal, state, local, and tribal levels, as well as engagement of parents,
youth influencers, health-care professionals, and policy-makers.
The CDC noted that the two main populations in the United States at risk for prescription drug
overdose are the approximately 9 million persons who report long-term medical use of opioids, and
the roughly 5 million persons who report non-medical use (i.e., use without a prescription or medical
need), in the past month. The CDC said in an attempt to treat patient pain better, practitioners have
greatly increased their rate of opioid prescribing over the past decade.
The article reported that drug distribution through the pharmaceutical supply chain was the
equivalent of 96 mg of morphine per person in 1997 and approximately 700 mg per person in 2007,
an increase of greater than 600%. That 700 mg of morphine per person is enough for everyone in the
United States to take a typical 5 mg dose of Vicodin (hydrocodone and acetaminophen) every 4
hours for 3 weeks.
In a previous article, the CDC reported that nearly three out of four prescription drug overdoses are
caused by prescription painkillers—also called opioid pain relievers. The unprecedented rise in
overdose deaths in the US parallels a 300% increase since 1999 in the sale of these strong pain-
killers. CDC also reported that the misuse and abuse of prescription painkillers was responsible for
more than 475,000 emergency department visits in 2009, a number that nearly doubled in just five
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 23
Prevention Strategies Discussed
The CDC reported that some promising strategies exist for addressing
these two high-risk groups. The following is an overview of the
prevention strategies discussed in the CDC article.
The first prevention strategy is use of prescription data combined
with insurance restrictions to prevent "doctor shopping" and reduce
inappropriate use of opioids. Users of multiple providers for the same
drug, routinely obtaining early refills, and persons engaged in other
inappropriate behaviors can be tracked with state prescription drug
monitoring programs or insurance claim information. Public and
private insurers can limit the reimbursement of claims for opioid prescriptions to a designated doctor
and a designated pharmacy. This action is especially important for public insurers because Medicaid
recipients and other low-income populations are at high risk for prescription drug overdose. Insurers
also can identify inappropriate use of certain opioids for certain diagnoses (e.g., the use of extended-
release or long-acting opioids like transdermal fentanyl or methadone for short-term pain).
A second strategy is improving legislation and enforcement of existing laws. Most states now have
laws against doctor shopping, but they are not enforced uniformly. In contrast, only a few states have
laws regulating for-profit clinics that distribute controlled prescription drugs with minimal medical
evaluation. Laws against such "pill mills" as well as laws that require physical examinations before
prescribing might help reduce the diversion of these drugs for nonmedical use. In addition, a variety
of other state controls on prescription fraud are being employed. For example, according to the
National Alliance for Model State Drug Laws, 15 states required or permitted pharmacists to request
identification from persons obtaining controlled substances as of March 2009.
A third strategy is to improve medical practice in prescribing opioids. Care for patients with complex
chronic pain problems is challenging, and many prescribers receive little education on this topic. As
a result, prescribers too often start patients on opioids and expect unreasonable benefits from the
treatment. In a prospective, population-based study of injured workers with compensable
low back pain, 38% of the workers received an opioid early in their care, most at the first doctor
visit. Among the 6% who went on to receive opioids for chronic pain for 1 year, most did not report
clinically meaningful improvement in pain and function, even though their opioid dose rose
significantly over the year.
The CDC noted that evidence-based guidelines can educate prescribers regarding the under-
appreciated risks and frequently exaggerated benefits of high-dose opioid therapy. “Such guidelines
especially are needed for emergency departments because persons at greater risk for overdose
frequently visit emergency departments seeking drugs,” said the CDC. “Guidelines will be more
effective if health system or payer reviews hold prescribers accountable for their behaviors.”
The National Response to Prescription Drug Abuse
At the national level, the White House Office of National Drug Control Policy establishes policies,
priorities, and objectives for the nation's drug control program to reduce illicit drug use, manufac-
turing, and trafficking; drug-related crime and violence; and drug-related health consequences. In
May 2010, President Obama released the National Drug Control Strategy, which outlined the
Administration's science-based public health approach to drug policy. In 2011, the strategy was
expanded to place special focus on certain populations, such as service members and their families,
college students, women and children, and persons in the criminal justice system.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 24
The CDC said that when developing a national approach to address prescription drug overdose, any
policy must balance the desire to minimize abuse with the need to ensure legitimate access to these
medications, and its implementation must bring together a variety of federal, state, local, and tribal
groups. The Administration's plan for addressing prescription drug abuse, Epidemic: Responding to
America's Prescription Drug Abuse Crisis, which was released in April 2011, includes four
components: education, tracking and monitoring, proper medication disposal, and enforcement.
The majority of health-care providers receives little or no education regarding addiction and may be
at risk for prescribing an addictive medication without fully appreciating the potential risks.
Therefore, the first component of the plan calls for mandatory prescriber education. This would
require prescribers to be trained on appropriate prescribing of opioids before obtaining their
controlled substance registration from the Drug Enforcement Administration (DEA). Parents and
patients also must be educated about the dangers and prevalence of prescription drug abuse and how
to use prescription drugs safely. To achieve this, the plan calls for a public/private partnership to
develop an educational campaign directed at parents and patients.
The second component of the plan calls for prescription drug monitoring programs to be operational
in all states and mechanisms to be in place for data sharing. As of May 2011, 35 states had
operational monitoring programs, and 13 additional states had passed enacting legislation. Texas has
a prescription drug monitoring program and is in the midst of developing an online prescription drug
data base that will allow for more effective tracking of prescriptions by doctors and pharmacies.
CDC said the third component, proper medication disposal, is essential because the public lacks a
safe, convenient, and environmentally responsible way to dispose of medications that are no longer
needed. DEA is drafting rules to provide easier access to drug disposal. In support of medication
disposal efforts, DEA held National Prescription Drug Take-Back Events in 2010 and 2011. During
the first two such events, approximately 309 tons of drugs were collected at over 5,000 sites across
The fourth component calls on law enforcement agencies to help decrease prescription drug
diversion and abuse. The majority of prescribers are responsible, but unscrupulous persons continue
to operate outside of legitimate medical practice. The CDC said these persons must be held
accountable, and noted that the national the plan outlines specific actions the federal government can
take to help law enforcement agencies effectively address pill mills and doctor shopping.
A Texas Specific Solution is Needed
Initial steps have been taken by Texas law makers and public policy makers to address prescription
drug abuse. Sen. Tommy Williams (R-The Woodlands) authored legislation – Senate Bill (SB) 911 –
during the 2009 legislative session that requires pain management clinics to register with the Texas
Medical Board in order to control pill mill operations. The implementation of SB 911 has resulted in
several pill mills be shut down and arrests associated with the operation of pill mills.
During the 2011 legislative session, Sen. Williams authored SB 158 that makes it a criminal offense
to obtain or attempt to obtain from a practitioner a controlled substance or a prescription for a
controlled substance by misrepresentation, fraud, forgery, deception, subterfuge, or concealment of
a material fact. SB 158 created criminal penalties for patients who visit multiple practitioners and
do not disclose that they are already receiving controlled substances. The legislation also provided
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 25
that defendants in pill mill cases could be charged under the Texas Penal Code’s criminal organization
statutes. Senate Bill 158 amended the Texas Penal Code to expand the conditions that constitute the
offense of engaging in organized criminal activity to include causing the unlawful delivery, dispensation,
or distribution of a controlled substance or dangerous drug in violation of the Medical Practice Act.
The Texas Alliance for Responsible Prescription Drug Use (Alliance) has come together to combat
prescription drug abuse. The members of the Alliance believe that a Texas specific solution to
prescription drug abuse is needed. As such, the Alliance is expected to explore educational,
regulatory, and legislative initiatives to combat prescription drug abuse in Texas. In the interim, some
insurance groups are discussing the need for rule-making by the Division of Workers’ Compensation
that would provide workers’ compensation physicians and insurance carriers with an effective tool to
address prescription drug abuse and misuse in the Texas workers’ compensation system.
The Insurance Council of Texas (ICT) has previously urged the Commissioner of Workers’
Compensation to adopt a rule that provides physicians and insurance carriers with a tool that allows
the injured employee’s treating doctor or prescribing doctor and insurance carrier to address the
claims that are “at risk” due to excessive, inappropriate utilization of prescription drugs. To date, the
Division of Workers’ Compensation has not proposed such a rule.
Steve Nichols, manager of workers’ compensation services at ICT, said that there is currently no
effective tool to combat prescription drug abuse in the Texas workers’ compensation system. “The
lack of a rule that provides physicians and insurers with an effective tool to address prescription drug
abuse and inappropriate pharmaceutical care for injured workers, including claims in which the
injured employee is addicted to prescription drugs, is very concerning.” He noted that the
commissioner of workers’ compensation has the authority to adopt such a rule.
Prescription Drug Facts You Need to Know
For every 1 overdose death from prescription
painkillers there are…
• 10 treatment admissions for abuse
• 32 emergency department visits for
misuse or abuse
• 130 people who abuse or are dependent
• 825 people who take prescription
painkillers for nonmedical use
Source: Centers for Disease Control and Prevention
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 26
Facts About Prescription Painkillers Use and Overdose Deaths in the United States
Amount of prescription painkillers sold by state per 10,000 people (2010)…
Source: Automation of Reports and Consolidated Orders System (ARCOS) of the Drug Enforcement Administration
Drug overdose death rates by state per 100,000 people (2008)…
Source: National Vital Statistics System, 2008
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 27
Innovation. At Stone Loughlin & Swanson, LLP our passion is administrative law and we have distinguished ourselves
as a "go to" law firm in the areas of health and workers' compensation insurance regulation. Our innovative challenges to
agency action have saved our clients millions of dollars and changed the regulatory landscape for all system participants.
Expertise. We are eight attorneys, a registered nurse, and a dedicated support staff all focused on the same area of
practice, day in and day out. The firm is rated AV by Martindale Hubbell, the nation's leading rating group for lawyers. In
addition, we are the only law firm in Texas chosen to be a member of the National Workers' Compensation Defense
Presence. We live and work in Austin, home of state regulatory agencies, the State Office of Administrative Hearings
(SOAH), and the Travis County courts (venue for substantial evidence judicial reviews). Our presence in the state capital
allows us to closely monitor agency actions and deliver cost-effective representation in administrative proceedings. In
particular, our proximity to the Texas Department of Insurance, Division of Workers' Compensation makes us perfectly
positioned to assist system participants in the development, certification, and regulation of workers' compensation health
care networks and to assist insurance carriers and self-insured employers with workers' compensation medical necessity
and fee disputes.
P: (512) 343-1300 Visit Us Online at: http://www.slsaustin.com/index.html
F: (512) 3431385
3508 Far West Blvd., Suite 200
Austin, Texas 78731
Member National Workers’ Compensation Defense Network – A Nationwide Network of Law Firms Practicing in Workers’ Compensation
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 28
DWC Finalizes Utilization Review Agent Audit Plan
On December 12, 2011 the Division of Workers’ Compensation (DWC)
solicited and received input from workers’ compensation system
participants on a draft Utilization Review Agent Plan-Based Audit. The
audit plan was adopted by Workers’ Compensation Commissioner Rod
Bordelon without changes on December 27, 2011.
The DWC reported that all comments were carefully considered and
discussed. DWC noted that it will consider some of the comments as part
of a future utilization review agent plan-based audit.
All medical quality reviews initiated on or after January 1, 2011 are performed in accordance with
the medical quality review procedure approved by Commissioner Bordelon on December 30, 2010.
The approved Utilization Review Agent Plan-Based Audit plan is posted on the TDI website.
The Medical Quality Review Panel will review select cases from the approved 2011 Independent
Review Organization (IRO) plan-based audit where the IRO overturned an utilization review agent’s
(URA) decision. URA’s previously reviewed in Fiscal year 2011, currently under review in Fiscal
2012 or undergoing a quality of care compliant investigation will be excluded from the audit.
The audit will review select cases of overturned URA decisions from January 1, 2010 through
December 25, 2010.
Prescription Drug Abuse: A Growing National Problem
By Stuart D. Colburn, Attorney and Shareholder, Downs Stanford, P.C.
We are killing our children. And we are killing their parents.
When we are not successful killing our citizens, we destroy
their lives and the lives of their families. The weapon is legal:
Hyperbole aside, no one intends such damage on our citizens.
America’s prescription drug abuse (PDA) problem is not
nearly as well known as our War on Drugs. No war has been
declared and yet American lives are being lost.
American citizens make up 4% of the world’s population.
Yet, we consume 66% of the world’s legal drugs. Americans
• 99% of hydrocodone
• 80% of opiates
• 71% of oxycodone
An estimated 7 million Americans abuse prescription drugs: more than the number of Americans
abusing cocaine, heroin, hallucinogens, ecstasy, and inhalants combined.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 29
The Center for Disease Control estimated 11,500 people die a year from opiates, twice as many as
cocaine and five times as many as heroin. Deaths have quadrupled over the last decade. We are
fighting the wrong war.
In 1991, doctors wrote 40 million prescriptions for opioids. In 2007, the number of prescriptions
rose to 180 million. Hospital admissions increased a staggering 400% from 1998 to 2008 with a
200% increase in the number of deaths. Two Americans die every hour from prescription drug
Source: Centers for Disease Control and Prevention
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 30
Prescription drug abuse is also regional. The federal government identified three primary hubs:
southern California, southern Florida, and Harris County (Houston area), Texas. In fact, one out of
six Houston-area deaths is attributed to prescription drugs. In 2010, 734 million hydrocodone pills
were prescribed in Houston – enough for every man, woman, and child to consume 30 doses.
Nationally, the number of deaths from prescription drug abuse surpassed the number of deaths
caused by alcohol and firearms. Recently, prescription drug abuse deaths exceeded the number of
deaths caused by motor vehicle accidents in such states as Ohio. In Michigan, prescription drug
overdose is the second leading cause of unintentional deaths. Perhaps more troubling is that 25% of
those seeking medical care were younger than age 25.
Prescription drug abuse also strikes our military forces. In 2009, our fighting forces were prescribed
four times the number of pain medications they were prescribed 2001. In fact, 25% of soldiers
admitted abusing prescription drugs in the last twelve months.
Although the federal government has not declared war on prescription drugs, the White House did
announce a policy on April 21, 2011, calling the prescription drug epidemic “our Nation’s fastest
drug problem.” The White House plan includes expanding prescription drug monitoring programs,
educating doctors and patients, and expanding prosecution of pill mills.
Why Prescription Drug Abuse Problem is Different than Illicit Drugs
Prescription drugs are qualitatively and quantitatively different than illegal drugs. First, abusers of
prescription drugs have more access to scheduled narcotics than illegal drugs. Prescription drugs are
more plentiful than their illegal counterparts. Prescription drugs are not prohibited, although they
are controlled and regulated by the federal government. Manufacturers can legally make - and
citizens can legally take - drugs prescribed by a doctor. There is less social stigma attached to the
abuse of prescription drugs. In comparison, illegal drugs are in limited supply.
Second, abusers have greater access to not only drugs but also higher quality drugs. Large
companies manufacture prescription drugs in a clean and safe facility with consistent dose and
strength monitored by governmental agencies. Prescription drugs are taken orally with no risk of
HIV and hepatitis B or C. The quality of illegal drugs such as cocaine or heroin is circumspect with
no enforcement or regulatory safeguards. Illegal drug makers can dilute their product to expand
profits without threat of regulatory sanctions or lawsuits. Deaths occur due to impurities.
Many drugs can be abused. The current favorite drugs that are abused are:
The public’s appetite for prescription drugs leads to a lucrative secondary market. The typical
prescription drug abuser personally uses the drugs for nonmedical purposes. Drug diversion occurs
when the prescription holder gives or sells drugs to others. For example, oxycontin has been known
to sell for $40 a pill. MScontin fetched as much as $70 per pill. A fetanyl patch was good for $50.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 31
Even vicodin was worth $1-$4 per pill. One study revealed 85% of respondents received drugs from
someone who had a prescription.
Young adults are generally the buyers and sellers in the secondary market. Kids steal from their
parents’ medicine cabinets to feed their own habit or sell to others. The easy access to prescription
drugs provides an adequate supply chain keeping the purchase price relatively low for other kids to
enter the market. Peer pressure and addiction creates the demand. PDA moves from outcasts to the
“in” kids. Soon, it is accepted and “cool” to get high with prescription drugs. Kids throw “pharm
parties” where partygoers swallow handfuls of pills often not knowing what they are taking and
ignorant of drug interactions. Alcohol is often the chaser. These actions can result in dangerous
self-destructive behavior, injury, and death.
Who Are The Stakeholders?
If prescription drug abuse is to be tackled, the various stakeholders need to work together to address
this issue. Who are the stakeholders in this on-going effort to battle prescription drug abuse?
Unlike illegal drug manufacturers, the pharmaceutical industry includes Fortune 500 companies who
are well-respected in their communities. Drug makers spend billions in research, development, and
testing. They truly make miracle drugs that save lives. Numerous pain management medications
have also improved the quality of life for millions of Americans. Pharmaceutical companies must
make a profit and create value for their shareholders. Like any good capitalist, they must create
products people want. To reach their target audience and “hit their number,” they market drugs to
their potential customers first using attractive drug reps visiting doctor’s offices and later directly to
consumers. Profit motive leads to better drugs but can also lead to some perversions.
Physicians are held in high regard and command significant salaries. Like others, doctors can often
be influenced by relationships and business opportunities. For example, one study of physicians
found the following:
94% had a relationship with pharmaceutical companies;
83% receive food or drinks in the workplace from pharmaceutical companies;
78% receive drug samples;
35% receive reimbursement to attend meetings including continuing medical education,
usually at plush resorts; and
28% receive payment for consulting, speaking, or enrolling patients in clinical trials.
Physicians are both healers and entrepreneurs. Many in the profession view themselves as more than
a provider of medical services to their patients but rather as business professionals. Prescription
drugs are one profit center.
And like any good capitalists, many doctors continually look to expand their profit centers. One
company marketed on LinkedIn how doctor’s offices could expand their profit margin by dispen-
sing drugs. Physician dispensing is a hot topic across the nation. Studies show that physician
dispensing increases the number of prescriptions and the cost of those prescriptions in the states that
allow it. For example, payers reimburse doctors 148% more for ibuprofen in Florida and 464%
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 32
more for Soma. Louisiana doctors were reimbursed 81% more than a retail pharmacy for ibuprofen
and “only” 268% for soma.
State Ibuprofen Soma
Florida 148% 464%
Illinois 142% 384%
Louisiana 181% 268%
Maryland 163% 318%
Closely associated with physician dispensing is repackaging. Repackagers deliver bulk medi-cations
to physician offices. The packages are then divided into smaller amounts for dispensing to patients.
Drugs are reimbursed at higher amounts per pill. An April 2011 study by California Workers’
Compensation Institute noted that 80% of the drugs and costs in the California workers’
compensation system are prescribed by 20% of the doctors. The study focused on a breakdown of
the top 10% of doctors who prescribe opiod drugs to injured workers. For example, the top 10% of
physicians prescribed 79% of all Schedule II opioid prescriptions and 87% of opioid morphine
equivalents. Worse, the top 1% of California physicians are responsible for a whopping 33% of all
Schedule II opiod prescriptions and 41% of all Schedule II opiod morphine equivalents.
Source: California Workers’ Compensation Institute, 2011
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 33
The business of some medical providers is supply-
ing pain medications. Some of these providers and
businesses have come to be known as “pill mills.”
States are choosing to regulate the business of pre-
scribing drugs. For example, Texas recently began
regulating pain management facilities.
The Texas legislature heard horror stories of pill
mills popping up in strip centers around town with
long lines and accepting little or no insurance. The
“Houston Cocktail” was a prescription for three
drugs that should never be prescribed together:
hydrocodone, valium, and xanex. From January
2009 to March 2010, one Houston doctor wrote more than 43,000 prescriptions for the Houston
Cocktail. In 2009, 70% of the 144,000 prescriptions of the Houston Cocktail were in fact from
After Esther Scarborough’s son died of an overdose after his first visit to a Houston-area pain clinic,
she said, “These doctors are using our loved ones as cash cows or ATM machines. They make a lot
of money off these drugs.” The pill mill bill requires facilities and their owners to register if they
derive 50% or more of its business from writing pain prescriptions. All facilities must be owned by
a doctor who spends at least 33% of his time treating patients at the facility. After the pill mill bill
became law, there was a 45% drop in scheduled narcotics prescribed in Houston compared with the
same time the year before.
Dr. Gerald Ratinov was the largest prescriber of hydrocodone in the State of Texas. Prosecutors and
law enforcement successfully used the pill mill bill to crack down against doctors improperly
prescribing or diverting scheduled narcotics. Dr. Ratinov is now in jail.
The pill mill bill author, Senator Williams (R-The Woodlands), successfully passed a new law (SB
158) in 2011 that makes it a crime for individuals, including patients and people in the industry, to
divert drugs. A patient may no longer conceal a material fact when seeking or filling a prescription.
Concealment of a material fact is defined as follows: “For purposes of this subsection, a material fact
includes whether the person has an existing prescription for a controlled substance issued for the
same period of time by another practitioner.” The addict or diverter who attempts to fill a
prescription for a drug, while already receiving that drug for the same period from a different source,
commits a crime.
Few doctors receive education and training about drug addiction and drug diversion. This is
especially true for more mature doctors.
Continued on Next Page…
Be Part of the Solution. Help Stop Prescription Drug
Abuse in the Texas Workers’ Compensation System
Report Prescription Drug Abuse and Illegal Prescriptions
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 34
Pharmacies make money dispensing pharmaceu-
ticals. But pharmacies have also become victims.
More pharmacies report robberies. In fact, there
has been an 81% increase in robberies since 2006
resulting in 1.3 million pills stolen. Some
robberies have turned lethal.
In Long Island, NY, a robber shot the pharmacist,
teenage store clerk, and two customers in her
pursuit of hydrocodone. An Idaho man dressed in
a suit and tie threatened “to light this place up” if
not provided oxycontin.
Robbers are taking some extreme measures
including squeezing into air-conditioning shafts, using an electric saw to cut off a door knob, and in
one instance, a woman attempted to break in a Walgreens drive thru window with a crowbar. Some
pharmacies are posting signs saying they do not carry oxycontin or oxycodone.
Insurers pay 80% of the nation’s $230 billion drug bill and are therefore the main financiers and
enablers of drug diversion. The Coalition Against Insurance Fraud has reported that prescription
drug abuse costs $72.5 billion per year. In 2006, almost one half of Aetna’s member fraud
investigations involved prescription drug benefits.
Prescription drug costs are rising faster than inflation and the medical CPI (medical inflation).
Payers are implementing strategies to combat the high cost and higher utilization of scheduled
narcotics. A cottage industry of prescription benefit managers (PBM) has developed to combat
utilization and costs of prescription drugs. Each payer is developing internal procedures to identify
potential drug abuse or diversion. But each state has different laws and attitudes towards
prescription drug abuse complicating their efforts.
The Patient (Injured Worker in Workers’ Compensation Claims)
Patients are being prescribed and are taking more pain medications. More frequent prescriptions and
more pills inevitably lead to more addicts. Addicts rob, steal, and lie. Their addiction affects those
they love, destroying families.
One judge recently explained the cycle: “The addict soon breaks the law and either steals or diverts
the drugs to fund the drug habit. Eventually, the addict is arrested for violation of a state or federal
law leaving his family to pick up the pieces.
Patients do not choose the addiction but the statistics of the lives affected do not lie.” Some patients
trust the physician. Others may have ulterior motives. Detoxication programs are not a failsafe cure
and often administered after so many lives are destroyed. They are costly when compared to
strategies to stop the addiction from ever taking hold of the patient.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 35
Prescription drug abuse and diversion is a problem requiring close interaction between the public
and private sectors. Stakeholders must work together using tools at their disposal in a coordi-nated
effort to fight “supply and demand”. The most successful action the government can take in
partnership with other stakeholders is establishing an effective, real-time or near real-time
prescription drug monitoring program (PDMP). Some states have created their own programs with
varying degrees of success. A model program includes:
• Scheduled and other highly abusive substances;
• Real time data transmission between stakeholders;
• A requirement for doctors to check the PDMP database before writing a prescription;
• A requirement for pharmacies to check the PDMP database before dispensing
• Integration with neighboring states.
A PDMP must be mandatory for use by doctors and pharmacies. In order to be effective, a PDMP
must be in real time or near real-time (very little delay in prescription data being added to the
tracking system). No comprehensive strategy will be successful without it. The front line suppliers
– doctors who prescribe and the pharmacies who fill – will instantly know if the patient is taking
prescription drugs from another source reducing supply. The PDMP protects the front line suppliers
from charges of creating an addict. Regulators can monitor the prescribing habits of outlier doctors
for more education or oversight.
Provide for Early Intervention Opportunities in Health Care
Public policy makers, legislators and regulatory agencies, should provide for, by law or rule,
a program that allows physicians and payers to interface through a pharmaceutical case manage-
ment process that is aimed at address prescription drug abuse, addiction and the diversion of narcotic
Require Continuing Education of Physicians on the Prescription of Narcotic Drugs
The White House Office of National Drug Control Policy has stated that a crucial first step in
tackling the problem of prescription drug abuse is to educate parents, youth, and patients about the
dangers of abusing prescription drugs, while requiring prescribers to receive education on the
appropriate and safe use, and proper storage and disposal of prescription drugs. There is also a need
to require all physicians to complete continuing education courses in prescribing narcotics and
controlled drugs as a condition of licensure renewal. Several states are actually considering
legislation to enhance physician training that focuses on the prescribing of narcotic drugs and
controlled substances. Such effort should be undertaken in all states.
Physicians Mandatory Use of PDMP Database
The public has an unreasonable view of the knowledge base of healthcare providers. Although every
doctor graduated from medical school, knowledge itself comes from specialized training. Scheduled
narcotics should only be prescribed by doctors with the requisite training and experience. Those
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 36
doctors granted the additional license to prescribe scheduled narcotics would be subject to additional
Physicians should be required to check with the PDMP database before writing a prescription for
dangerous drugs. A doctor who fails to comply risks prescription license forfeiture and possible
lawsuits. A physician who does verify using the database should enjoy immunity from lawsuits.
Prescribers of narcotics should enter into drug contracts with their patients. Routine and random
monitoring of the patient’s urine will confirm the drugs are being taken (to avoid drug diversion) and
at the right levels (to avoid abuse). Violations of the drug contract should be reported to the PDMP
Drug dispensing by physicians does have some benefits. 1 Critics argue physician dispensing can
result in abuse by the inevitable bad actors statistically present in every large group. Indeed, the cost
to human life and dollars are staggering even if only 1% of all providers were problem dispensers. If
physician dispensing is allowed, the reimbursement rate should be no higher than the retail
pharmacy removing the profit motive to dispense more drugs or stronger, more addicting (and
expensive) drugs. The physician dispenser should be allowed to bill extra for drug contracts and
Pharmacies Mandatory Use of PDMP Database
Pharmacies should be required to participate in a prescription drug monitoring program for
scheduled narcotics before dispensing scheduled narcotics.
Pharmaceutical companies should design drugs to deter abuse. Drug companies employ manu-
facturing techniques making it more difficult or impossible for drugs to be ground up into a powder.
Pharmaceutical companies should not be allowed to market scheduled narcotics for off-label use.
For example, Fetanyl, an end-stage cancer pain drug, marketed for low back pain. The off-label use
of Fetanyl has resulted in the abuse of that drug with tragic consequences to the abusers.
Public education about prescription drug abuse should be paramount on billboards and in our school
systems. Every day, 7,000 young people abuse prescription narcotics for the first time. Patients who
receive a prescription or scheduled narcotics should also undergo approved education and
Payers should implement strategies designed to identify addicts, diversion of drugs and outlier
prescribing physicians. Payers should also urge policy makers to establish and adopt an effective
PDMP and common sense laws giving regulators the information and power necessary to fight
prescription drug abuse. Payers have ever more increasing sophisticated software able to perform
advanced predictive modeling and performance analytics that can identify outlier doctors and
possible addicts. Payers should undertake communication with other stakeholders early in the
process both as preventive education and as proactive identification of prescription drug abuse
The dispensing of drugs by physicians in Texas is allowed on a very limited basis. The author and ICT are not
advocating for the expansion of physician dispensing of drugs in Texas.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 37
sooner rather than later. It is important to note that the use of pharmacy benefit managers and drug
formularies are currently available for implementation.
Many people believe America is losing (or has lost) the War on Drugs. Winning the War on Drugs
is important. It is important to note that prescription drug abuse kills more people and causes more
family destruction than all illegal drugs. All stakeholders should be collectively engaged in the
search for solutions to prescription drug abuse and when necessary demand action. Doing nothing
creates addicts and destroys families. Doing nothing makes us part of the problem.
Editor’s Note: Stuart D. Colburn, an Attorney and Shareholder with Downs Stanford, P.C., is the
author of the article. Mr. Colburn manages the Austin, Texas office of Downs Stanford, P.C., where
the firm maintains a Texas Workers' Compensation Commission Austin Board Service. He is board
certified in Workers' Compensation Law by the Texas Board of Legal Specialization. Mr. Colburn is
the firm's representative at Workers' Compensation Commission meetings and for any legislative
endeavors. Specializing in Workers' Compensation, Mr. Colburn has extensive experience in all
phases of dispute resolution before the Texas Workers' Compensation Commission and in district
courts across the state. He is extremely active in the education of both adjusters and employers, and
is certified by the Texas Department of Insurance as a continuing education provider. A sought-after
speaker, Mr. Colburn has delivered more than a hundred speeches regarding Workers'
Compensation and related issues. He is also a member of the Texas Association of Business’
Coalition for the Responsible Prescribing and Use of Prescription Drugs in Workers’
DWC Form-066, Statement of Pharmacy Services, Revised
On December 22, 2011, the Division of Workers’ Compensation announced that the DWC Form-
066, Statement of Pharmacy Services, had recently revised to conform with amendments to DWC
rules, 28 Texas Administrative Code §§133.10, 133.500, 133.501 and new §133.502 regarding
medical bill processing. The rules were adopted by the Commissioner of Workers’ Compensation
Rod Bordelon on August 1, 2011 and may be viewed on the TDI website.
The DWC Form-066 issued in February 2011 has been withdrawn and replaced with a new version.
The only change to the form is deletion of the TDI-DWC address in the letterhead. The DWC noted
that the Division’s address is unnecessary since the form is submitted to the insurance carrier and
payment should be remitted to the pharmacy. The DWC also noted that the addition of the DWC
address to the form resulted in some insurance carriers sending payments to the DWC instead of the
The revised DWC Form-066 is available for download from the TDI website.
Workers’ compensation insurance fraud steals money from the workers’
compensation system and employers.
The Texas Department of Insurance (TDI), Texas Committee on Insurance
Fraud and insurers work hard to stamp it out, but we need your help.
Report workers’ compensation insurance fraud to TDI at 1-888-327-8818
or online at http://www.tdi.state.tx.us/fraud/frsiufrrpt.html.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 38
There simply is NO other daily news outlet that provides you with the timely coverage
of developments impacting the Texas workers’ compensation system.
Bringing you news about develops impacting the Texas workers’ compensation with the speed
Legislative news reports on the Texas Legislature and its continuing
efforts to reform and improve the Texas workers’ compensation.
There is nothing like knowing about legislative developments that could
impact the workers’ compensation line of insurance as it is happening.
WorkCompCentral keeps you on top of legislative news.
Legal updates on important workers’ compensation litigation and case law.
Staying on top of legal developments impacting the Texas workers’
compensation system has never been easier. WorkCompCentral brings you
the latest on important case law.
Find out about the latest workers’ compensation court decisions as they
happen from WorkCompCentral.
Do you find it hard to keep up with the ever changing rules in the Texas
workers’ compensation system?
Read about rules as they are being contemplated, debated, and adopted.
Learn what system stakeholders have to say about new rules.
You do not get news on rule adoptions in as a timely fashion form any
other news outlet. WorkCompCentral brings it to you with the speed of
WorkCompCentral brings you ––– Texas news, Texas Case Law, Texas Law & Rules, and
Soon Texas Education
We have easy subscription plans or get your news a la carte.
Visit us online at www.workcompcentral.com
1320 Flynn Rd., #403
Camarillo, CA 93012
Contact us at 805.484.0333 for information on subscribing to workcompencentral.com.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 39
Recognized Expertise in providing High Quality Risk A Full Suite of Integrated Services
Management and Claims Services to Texas Public
When you work with JI Companies, you can be sure all of
your Workers’ Compensation, Liability and Property
We provide workers’ compensation and property/liability insurance needs are being met. Our integrated services
administration to over 440 Texas Cities, Counties, School include:
Districts, Water Districts, Health Systems, MHMR
● Workers’ Compensation Claims Administration
Centers, and other public entities. With over a quarter
● Medical Bill Review
of experience, we understand that unique issues they
● Return to Work Development Programs
face every day. Our reputation is built on an unwavering
● Utilization Management
commitment to customer service, working with each
● Field and Telephonic Case Management
client in partnership, to develop customer programs that fit
● Integrated Systems
● Transitional Duty Plans
● Loss Control/Safety Services and Training
Easy Online 24/7 Access
● Liability Claims Administration
● Property Claims Administration
We know that access to your claims information is ● Non-Subscriber Services
important, and we provide you with JI Risk Online® -
secure, web-based access to your complete claims files Count on Us as Your Partner
and all reports 24 hours a day, seven days a week.
As a JI Companies client, you are never alone in navigating
Whether you’re at your office computer, working from
the complex world of workers’ compensation, liability and
home, or traveling, you can view files, create reports, and
property coverage. As your partner, we always provide a
even file claims online 24/7 anywhere you have access to
client-focused Active Account Manager who consults with
the web. Communication is paramount. In addition to
you regarding your needs and circumstances and provides
on-going reporting, we also provide a detailed Stewardship
thorough project management and detailed implementation
Report, a regular report card that accesses the performance
planning . Our team also includes dedicated adjusters who
of your plan and helps chart future directions.
devote full time to processing your claims promptly and
Contact us today. Let us take the worry out of your Workers’ Compensation, Liability and
Property Insurance programs with the same top-flight professional service currently
being enjoyed by dozens of public entities and associations throughout Texas.
JI Companies | 10535 Boyer Boulevard | Suite 100 | Austin, TX 78758
Phone (512) 427-2300 | http://www.jicompanies.com/
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 40
Head of TDI’s Fraud Unit Retires; Will Continue the Fight Against Insurance Fraud
Dennis Pompa, the Associate Commissioner and Director of the
Texas Department of Insurance’s Fraud Unit retired at the end of
2011. Pompa had served as the head of the Fraud Unit for the
past nine years.
Prior to coming to the Texas Department of Insurance (TDI),
Dennis was employed as a district attorney financial crimes and
insurance fraud investigator, police officer and bank executive.
His career in insurance fraud investigations spans more than two
Prior to assuming his current position, Pompa served as the
Deputy Commissioner and Chief Investigator for the TDI Fraud
Unit. He holds a Bachelor of Science degree in Criminal Justice
Criminal Justice Administration and is a Certified Fraud
Dennis Pompa Examiner (CFE).
Pompa earned the respect of many within the insurance industry for his fight against insurance fraud.
“Dennis Pompa proved it doesn’t take an iron fist or loud voice to be successful in fighting crime.
Pompa steered his team of investigators through the murky waters of criminal fraud for 16 years.
During his tenure Pompa doubled the size of his staff and increased the number of peace officers in
the Fraud Unit which resulted in a huge increase in the number of arrests, convictions, fines and
prison sentences for those involved in insurance fraud,” said Mark Hanna, Manager of Public Affairs
and Membership at the Insurance Council of Texas. “Putting in place special insurance fraud
prosecutors in Dallas and now Harris County were monumental achievements.”
Hanna said Pompa’s agreement to join the insurance industry in creating the Texas Committee on
Insurance Fraud brought about needed legislation assisting both TDI and the marketplace in
reporting the crime and strengthening insurance fraud penalties. “Pompa’s annual Fraud conference
in Austin has been the meeting for special investigators in Texas,” said Hanna. “All those who have
worked with him in law enforcement will miss his guidance.”
Albert Betts, ICT’s General Counsel and former Commissioner of Workers’ Compensation, said
Pompa’s dedication to preventing and fighting insurance fraud will be missed by insurers and
insurance consumers alike.
“I had the pleasure of working with Dennis Pompa while I was Human Resources Director, Chief of
Staff, and then Commissioner of Workers' Compensation at the Department,” said Betts. “During
that time, he was dedicated to fighting against fraud and when he assumed the role as head of the
Fraud Unit, he was able to bring a more productive and calmer working environment to the Fraud
Unit.” Betts said professionalism and dedication will be missed by the insurance industry as he was
always willing to listen and offer assistance.
Pompa has recently formed SIU Anti-Fraud Solutions for the purpose of assisting the insurance
industry with a wide-range of anti-fraud services. He will be featured on an insurance fraud panel at
ICT’s 2012 Spring workers’ compensation seminars.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 41
• The e-Billing
A Jopari Solutions
• CA eBill Regulations
• Jopari eBill
Jopari is changing the way insurance payers manage bill and payment processing needs. Now payers
can greatly reduce costs and boost operational efficiency while meeting today’s intense regulatory
compliance laws including e-Bill, e-Pay and HIPAA.
Payers of all industries use Jopari Pay™ to significantly reduce both operational costs and the drain
on valuable human resources, while realizing a return on investment almost immediately.
Implementing Jopari Pay™ is easy and noninvasive. There’s no software to install and never
periodic maintenance. And, as a transaction-based service, we never charge a monthly retainer.
Contact Jopari now and learn how we can implement a strategy that will increase your bottom line
and provider satisfaction.
• Automated Payment Processing
• Web Portal Services
• Automated Payment Status & Appeal Processing
• 1099 Services
• Electronic Bill & Attachment Delivery
• ANSI 837 / 835 Transaction Services
• Paperless Workflow Solutions / Support
• Medical Bill EDI State Reporting
Jopari is a privately-held California C corporation operating in the state of California since
November 2003. Jopari supplies world-class solutions in the area of enterprise payment and
Services & Solutions
Jopari Pay™ enables your existing claim
Jopari Solutions, Inc. information system to make electronic
1855 Gateway Boulevard Suite 500 disbursements. Implementation is speedy; its
Concord, CA 94520 use is uncomplicated. And we apply your
Phone: (925) 459-5200 business rules; no infrastructure changes are
Fax: (925) 459-5222 necessary. Simply plug us in and the savings
start on day one!
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 42
Commissioner Bordelon Adopts Rules Regarding Procedures for the
Resolution of Underpayments and Overpayments of Income Benefits
On December 12, 2011, Commissioner of Workers'
Compensation Rod Bordelon, adopted new rules that establish
procedures for the resolution of underpayments and over-
payments of income benefits – new Rules 126.15 and §126.16,
regarding – and amend Rule 128.1, regarding the calculation
of average weekly wages. The new rules and rule amendments,
which were effective on January 1, 2012, implement House
Bill (HB) 2089 that was passed by the 82nd Texas Legislature
during its regular session in 2011.
HB 2089 enacted Texas Labor Code §408.0815 which requires
the Commissioner of Workers’ Compensation to adopt rules to
establish a procedure by which an insurance carrier may recoup
an overpayment of income benefits from future income benefit
payments, and shall pay an under-payment of income benefits,
including interest on accrued by unpaid benefits. The adopted
rules apply to income benefits only and do not affect the
Division of Workers' Compensation's (DWC) authority to identify and take action on underpayments
and overpayments on its own motion.
The DWC has created a sample notice, Notice of Underpayment of Income Benefits, injured
employees may use under adopted new Rule 126.15 when providing the insurance carrier with
written notice of an underpayment. Injured employees may begin using the form on or after January
The rules were proposed and adopted after the Division of Workers’ Compensation (DWC) held two
informal work group meetings on September 1, 2011 and September 12, 2011 for the purpose of
formulating rule language for these rules required by HB 2089. The meetings were open to the
public, and workers' compensation system participants at these meetings assisted the DWC in
developing the rule language.
Did You Know?
The Insurance Council of Texas (ICT) publishes an Appeals Panel Decisions Digest that
includes summaries of significant decisions. The electronic manual, prepared in conjunction with
the Austin-based law firm of Burns, Anderson Jury Brenner, L.L.P., is available to ICT’s
membership as a members only benefit.
If you are employed by a member company of ICT, contact Steve Nichols to obtain access to the
manual at email@example.com.
Not a member, inquire about joining ICT by contacting Mark Hanna at 512.444.0911 or via e-mail
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 43
DWC Seeks Input on Designated Doctor’s Qualification Criteria
On December 19, 2011, the Division of Workers’
Compensation (DWC) announced that a new informal
draft subsection (b) for Rule 127.130 designated
doctor’s qualification criteria for examinations perform-
ed on or after January 1, 2013 had been posted for
informal comments. The new draft subsection was
posted for comments due to the DWC having made
changes to the subsection in response to public
comments received on the informal draft proposal of
§127.130(b) that was published on October 14, 2011.
The DWC announced that it is only seeking comments
on §127.130(b) and clarified that system participants
will have the opportunity to comment on other portions
of Chapter 127 when the Division formally proposed its
amendments to that chapter in early 2012.
The informal draft subsection establishes the doctor specialties that may examine specific injuries
and diagnoses related to body areas. The proposed language represents a major change from the
current criteria and is the result of legislative changes made by the 82nd Texas Legislature during its
regular session in 2011.
The comment period on the informal draft rule subsection closed January 11, 2012 at 5:00 p.m. CST.
DWC’s Bryan Office Changes Service to Injured Employees
On January 2, 2012, the Division of Workers’ Compensation announced that effective February1,
2012, the Bryan Office of the Division of Workers’ Compensation (DWC) will provide walk-in
customer service to injured employees by appointment only. DWC Benefit Review Conferences and
Contested Case Hearings will continue to be held at the Bryan Field Office location as scheduled.
Injured employees with workers’ compensation claims managed by the Bryan Field Office should
call 1-800-252-7031 for assistance with their claim, to make an appointment and for information on
where to send all correspondence and faxes, including official actions and forms.
Appointments with the Office of Injured Employee Counsel (OIEC) ombudsman will also continue
to be held at the Bryan Field Office location as scheduled. To schedule an appointment with OIEC,
injured employees should call 1-866-EZE-OIEC (1-866-393-6432).
Be Part of the Solution. Help Stop Prescription Drug
Abuse in the Texas Workers’ Compensation System
Report Prescription Drug Abuse and Illegal Prescriptions
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 44
The Opiod Epidemic In Workers’ Compensation
By Joseph Paduda; Principal of Health Strategy Associates
Opioid use in work comp is gaining visibility and most
work comp executives have moved opioid abuse and
overuse to the top of their priority list. Those who
haven’t, should: Employers and insurers will spend
$1.4 billion on narcotics this year with the vast
majority of those dollars paying for opioids such as
OxyContin® Percoset®, Actiq®, and Fentanyl, drugs
that are not indicated for most workers comp injuries.
This is a critical problem, one that although societal in
nature, directly and dramatically affects claimants,
employers and policyholders. Regulators and
legislators are also keenly interested. The big insurance
trade groups are addressing opioid use, driven by
members looking for so-far elusive solutions to a
problem adding to claimants’ misery while costing
policyholders billions in added, unnecessary cost.
There’s actually very little credible evidence that long-term opioid use is appropriate treatment for
work comp injuries. These are drugs that were primarily developed - and approved by the FDA for -
treating end-stage cancer pain. There's ample evidence that long-term opioid use leads to longer
claim duration, long-term disability, higher costs, and higher medical expense. And, that's on top of
the damage it does to relationships, families and society.
Along with the questions around the benefits of opioids for work-related injuries, the research
indicates that few prescribing physicians – about one in twenty - are complying with best practices,
namely assessing the patient’s initial and subsequent functionality and pain level and risk of
depression, requiring patients complete and sign an Opioid Agreement, and ordering random urine
drug tests to assess compliance and potential use of street and other drugs.
How did we get here?
Opioids are synthetic versions of opium-derived drugs originally developed for treating patients with
end-stage cancer. Remarkably effective at reducing pain in many instances, many were meant to
only last a few hours to deal with “break-through” pain. In the long term, they can provide relief
from chronic pain when used appropriately within guidelines.
In the late 1990s, at least 20 states passed new laws, regulations or policies moving from the near
prohibition of opioids to using them without dosing guidance. The laws were based on weak science,
which in turn, was based on experience with cancer pain.
Now, those same drugs are widely prescribed for musculoskeletal injuries, where their usefulness is
highly questionable. A 2009 study (Franklin et al, Clin. J Pain, Dec. 2009) stated that only a
minority of patients taking opioids for low back pain improved by at least 30 percent in pain
function; even fewer (16 percent) saw improvement in functionality. If that’s not bad enough, the
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 45
longer the injured worker is on narcotics, the longer they are off work and the greater the likelihood
of addiction rehabilitation (“Narcotics in Workers’ Compensation,” NCCI Research Brief, Dec.
Research also showed the average claim costs of workers receiving seven or more opioid
prescriptions for back problems without spinal cord involvement were three times more expensive
than those of workers who received zero or one opioid prescription. These workers were 2.7 times
more likely to be off work and had 4.7 times as many days off work. These findings suggest that
greater use of opioid pain medication is associated with adverse outcomes – in addition to the high
cost of the medication itself (Swedlow et al CWCI Special Report 2008).
Which states have the most narcotic usage and what’s working?
Some states are waking up after a long slumber and others remain in dangerous denial as their
percent of work comp dollars spent on opioids explodes. Based on WCRI and other research,
California, Pennsylvania, Louisiana, and New York have shown narcotic utilization significantly
higher than the other states, with New York occupying the top spot in WCRI’s analysis.
Massachusetts had by far the largest percentage of Schedule II drugs (those deemed most susceptible
to abuse) used as pain medications. Again New York and Louisiana had high percentages of
claimants using narcotics for an extended time.
While the use of narcotics in Texas is not as prevalent or costly as it is in those top four states,
WCRI data indicates the Lone Star State is well above the median in almost all utilization categories:
volume of narcotics prescribed; number of narcotic scripts per claim; number of pills per script;
percentage of claimants prescribed narcotics. Those data points have to be balanced against the
potency of drugs prescribed by Texas’ physicians. Relatively few scripts were written for the most
potent narcotics: Schedule II drugs.
In fact, according to WCRI, “only 4 percent of the nonsurgical cases who had narcotics received
Schedule II narcotics, compared with 24 percent in the median state. Prescriptions for Schedule II
narcotics only accounted for about 2 percent of the prescriptions for pain medications.” (“Interstate
Variations in the Use of Narcotics” by Dongchun Wang, Kathryn Mueller, Dean Hashimoto, WCRI
July 2011). Unfortunately, despite the lower potency of narcotics prescribed in Texas, the greater
volume of claimants prescribed these drugs, longer duration of care, higher volume of scripts and
pills per scripts combined to give Texas claimants more morphine equivalents than the median
One of the more promising initiatives is the expanded use of Prescription Drug Monitoring Programs
(PDMP). While PDMPs exist in many states today, there is wide variation and often little
compliance. In New York, State Attorney General Eric Schneiderman has proposed a bill that
would require physicians and pharmacists to consult a statewide prescription drug monitoring
database, called I-STOP, before writing or filling a prescription for narcotics. Under the state's
current system, pharmacies are required to submit information each time they fill a narcotic
prescription to a database run by the New York Department of Health's Bureau of Narcotic
Enforcement. However, pharmacists are unable to access the system prior to filling a prescription,
and the database has a one-month lag. Schneiderman's proposal calls for the creation of a new, real-
time database that would allow doctors and pharmacists to review patients' prescription drug history
prior to prescribing or dispensing a controlled substance in an effort to prevent prescription drug
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 46
The inherent, but often-ignored consequence of overuse of opioids is a dramatic increase in risk of
addiction and dependency. Sadly, many insurers don’t want to screen for addiction because they
don’t want to “own” that addiction. The harsh reality of addiction liability is that a very high
proportion of claimants who have been on opioids for more than 90 days are at high risk for
addiction. Moreover, the payer already owns the addiction, they are just choosing to treat that
addiction with the drug of choice rather than employ an intelligent, evidence-based approach to
resolving the problem. The price tag for ongoing opioids usage runs $1,000 to $12,000 per month,
plus associated drug costs for treating side effects, extended disability duration and settlement
expense. So the question is not “do you want to own the addiction,” but rather: “how long do you
want to own the addiction?”
Discouraging overprescribing is one step, providing guidance for primary care providers on the safe
and effective use of opioids for chronic non-cancer pain must be the priority going forward. Payers
must take a strong stance, advocating for treatment agreements where patients are screened,
randomly drug tested and offered addiction/dependency treatment when the daily dose reaches 120
MED (morphine equivalent dose) and pain and function have not substantially improved. While
there are no silver bullets, treating addiction with outpatient medically assisted detox and cognitive
behavioral therapy should be a priority.
Legislative and regulatory changes have started to address opioid prescriptions in comp claims.
Colorado is currently paying physicians for managing chronic pain based on a code-based
reimbursement for review of drug screens and the implementation and monitoring of opioid
agreements. Washington State has passed legislation requiring prescribing physicians comply with
best practices including drug testing and completion of opioid agreements.
Of course, Texas now requires physicians to seek pre-authorization before prescribing “N” drugs to
claimants. (“N” drugs is the designation the Work Loss Institute’s Official Disability Guidelines
gives for such narcotics as SOMA, Oxycontin, Lidoderm, and Fentanyl.) Anecdotal reports indicate
the prescriptions for “N” drugs have fallen off considerably since this closed formulary went into
effect in September 2011. It will be interesting to see results after a year or so. While the adoption
of ODG is welcome indeed, payers and employers still have to address the population of claimants
currently addicted to narcotics.
The American Insurance Association has developed a comprehensive approach that includes these
practices and implementation of prescription drug monitoring programs that communicate across
state lines. Some pharmacy benefit managers have developed data mining tools that identify at-risk
claimants and the physicians who appear to be over-prescribing opioids.
These initiatives are very, very welcome. To quote Gary Franklin, MD, Medical Director of
Washington State’s workers’ compensation program and the primary driving force behind the State’s
opioid legislation, “This is a ‘hair on fire’ issue.” If your hair is not yet on fire, you’re either bald or
not paying attention.
Editor’s Note: Joseph Paduda, the author of the article, is the principal of Health Strategy
Associates. Paduda is a nationally recognized expert in workers’ compensation with deep experi-
ence in medical and pharmacy services. In addition to consulting with managed care organi-
zations, employers, health care providers, and insurers, Health Strategy Associates conducts regular
surveys on managing work comp pharmacy costs. Author of ManagedCareMatters.com blog,
Paduda can be reached at firstname.lastname@example.org
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 47
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 48
Drug Repackaging for Physician Dispensing: The $700 Million Problem
By Joseph Paduda; Principal, Health Strategy Associates
So far, Texas has avoided one of the biggest problems in
workers’ comp – physician dispensing of drugs to injured
workers. So far. That could change; a bill introduced
earlier this year would have allowed physicians to dispense
drugs and force employers and insurers to pay massively
inflated charges. While the bill died this year, rest assured
it will be re-introduced in 2013. There’s just too much
money in this business, too much profit for purveyors, too
many millions at stake. And here’s how this works.
Nationally, about $1.7 billion is spent on physician-
dispensed drugs. That’s at least $700 million more than
necessary. It is a problem that is gaining visibility.
Using research by NCCI as a baseline, physician-dispensed
drugs account for over a third of all workers comp
pharmacy expenses, and that percentage is growing
dramatically every year. The problem is simple; the cost
for drugs dispensed in physician offices is typically three times the retail pharmacy price – for the
same drug. This equates to 2 percent of total workers’ comp medical expense or about 1 percent of
work comp premiums.
I’d be remiss if I didn’t note that advocates for this issue cite a couple of advantages for patients:
convenience and compliance. It is undoubtedly a bit easier for the patient to pick up their drugs on
the way out of the doctor’s office than to make another stop at the pharmacy, even though there are
seemingly pharmacies located on every street corner.
Physician dispensing advocates claim this increases “compliance,” the chance that the patient will
actually take the medication. However, there’s just no research to back up those claims, no evidence
that physician dispensing does anything but drive up employers’ costs.
How it works
Drugs dispensed by physicians are almost always provided by drug repackagers, a niche industry
that buys pills in bulk and “repackages” those pills into their own bottles. A quirk in the FDA’s
regulations enables companies that repackage pills to be classified as “manufacturers,” and that
allows them to determine their own price for those pills. Repackagers assign an NDC, or National
Drug Code, to their repackaged drugs. In turn, they determine the Average Wholesale Price (AWP)
for each NDC.
As almost all state workers comp pharmacy fee schedules are based on AWP, so this allows
repackagers to set their own prices, and requires employers and insurers to base their payments to
the physicians who dispense drugs on that (usually hugely inflated) AWP.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 49
Today, Texas, along with Massachusetts and New York, essentially bans physician dispensing by
greatly limiting physicians’ ability to dispense drugs. Other states allow physician dispensing but
require repackagers to base their price on the “underlying NDC” that is, the price set by the original
drug’s manufacturer. Georgia, Mississippi, and California are three states that have dramatically
lowered costs with this solution.
But it’s not just price that’s a problem. Since many work comp claimants receive care for their
occupational injury from physicians they don’t normally see, there’s a greatly increased risk of
dangerous drug-to-drug interaction. Patients usually can’t recall with complete accuracy the drugs
they are taking or the dosages of those drugs so the physician can’t be sure what they are prescribing
is entirely safe. When the injured worker fills a script at a pharmacy, the pharmacist can access its
comprehensive, electronic database of medications and dosages the patient has previously filled,
providing an additional level of safety. This doesn’t happen when the prescriber is also the
dispenser. Pharmacies also have tools to avoid patient safety issues, including contraindications and
What do the repackagers/dispensers say?
Not surprisingly, companies in the physician dispensing and repackaging business claim the practice
increases compliance and therefore improves patient outcomes. However, they only dispense drugs
to work comp/auto patients where reimbursement is much higher; group health and
Medicare/Medicaid plans won’t pay the inflated costs for physician dispensed repackaged drugs.
Moreover, these companies have failed to show empirical data to support the compliance assertion.
They also say claimants go without drugs because they can’t get scripts filled - a claim that is highly
doubtful. Pharmacy chains value work comp because it is more profitable than other payers.
If the pharmacy can’t identify the insurer, they sell the work comp scripts to factoring companies
and still make a solid margin. Again there is no empirical data to support the assertion that patients
go without needed drugs.
While there can be rare instances of patients not getting the drugs they need, most fills flow
smoothly through a well-coordinated system that has proven checks and balances. Safety is rarely
compromised in a pharmacy-dispensed setting.
What’s the impact?
In addition to the public safety concerns, work comp systems through the U.S. are buckling under
the strain of increased costs. A report by the Workers’ Compensation Research Institute (WCRI)
found that the average payment per claim for prescription drugs in the Massachusetts work comp
system was $289 or 30 percent lower than the median of the study states. The main reasons for the
lower prescription costs in Massachusetts include lower prices paid to pharmacies due to a lower
pharmacy fee schedule, more frequent use of less expensive generic drugs, and a ban on physicians
dispensing medications directly to their patients.
In contrast, WCRI also found the average payment per work comp claim for prescription drugs in
Florida was $565 or 38 percent higher than the median of the 16 states in the study. The main reason
for Florida’s higher than average prescription costs was that some physicians wrote prescriptions
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 50
and dispensed them directly to the patients at their offices. In Florida, over half of all work comp
prescription dollars are spent on repackaged drugs with prices typically 3 times the costs of the same
drug in a retail pharmacy.
Florida’s work comp rates just increased nine percent, with 2.5 points due solely to increased costs
from physician dispensed repackaged drugs. Much to the displeasure of Florida’s employers and
insurers, the Sunshine State can now claim the highest rate of physician dispensing in the country.
To date, Texas has avoided the problems of high cost and compromised patient safety inherent in
physician dispensing of repackaged drugs. However, the enormous profits enjoyed by companies
that are repackaging and servicing this industry give them millions to spend on lobbying. One firm,
Automated Healthcare Solutions (AHCS) of Miramar Florida, has begun a concerted effort to enable
physician dispensing of repackaged drugs in Texas. This is the same AHCS that has spent over a
million dollars on lobbying efforts and political contributions in its home state.
The practice must be limited and costs of repackaged and compounded drugs controlled through
state pharmacy fee schedules and/or limits on the practice such as those currently in place in Texas.
At a minimum, reimbursement should be restricted to fee schedule rate, regardless of the location of
dispensing. Further, reimbursement for repackaged drugs should be tied to the cost (AWP and
NDC) of the original manufacturer of the drug.
Looking to reverse this alarming trend for the future, industry groups (and groups like the TIC) must
continue to build coalitions with employers, government agencies and taxpayer associations with a
focus on patient safety. Proponents of physician dispensing are extremely well-funded (using
employers’ dollars) and very active. There’s so much profit in this business that Texas’ employers,
claimants, taxpayers, and insurers can expect the battle to be long and contentious. However, the
facts, good policy, and fiscal prudence are on the side of those stakeholders, and educating all about
the costs of and problems with physician dispensing will go a long way to winning the war.
Joseph Paduda, the author of the article, is the principal of
Health Strategy Associates. Paduda is a nationally recognized
expert in workers’ compensation with deep experience in
medical and pharmacy services.
In addition to consulting with managed care organizations,
employers, health care providers, and insurers, Health Strategy
Associates conducts regular surveys on managing work comp
Author of ManagedCareMatters.com blog.
Paduda can be reached at email@example.com
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 51
To provide outstanding, complete, and thorough products
that will contribute to lowering the soaring costs of
workers’ compensation claims, and always provide
optimum customer service satisfaction.
Why Professional Associates?
Professional Associates was established
in 1998 and quickly grew to become a
leader in the peer review industry.
Adjusters and medical agencies became
acutely aware of a growing need for a
high quality, customer service oriented
peer review company. That company
needed to have an unparalleled turn
around time coupled with a thorough
review that exceeded client expectations.
Professional Associates provided that solution. For over a decade, has
Our Products partnered with our clients in solving problems associated with claims and
Peer Review risk management.
Telephonic Review Professional Associates demonstrates our
commitment to our client from the beginning of a
RME/DDE Coordination product to its completion. Our devoted staff
provides unmatched customer service while also
Nurse Case File Review sharing with our clients our extensive knowledge
and guidance through each phase of the product.
Impairment Review Our dedicated staff has over 19 years of
experience in the industry and Professional
X-Ray Film Review Associates continues to be a leader in the field of
Life Care Plans
Future Medical Cost Analysis
Contact us at firstname.lastname@example.org for more information about our
Submit Product Requests to services.
Please visit us online at
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 52
Opioid Treatment Best Practices: Addressing Prescription Drug Abuse
By Mark Pew, Senior Vice President of Business Development, PRIUM
Not a day goes by without some mention of over-utilization
of prescription drugs. It could be a report from the Centers
for Drug Control (CDC) on the U.S. public health crisis (the
CDC calls it an “epidemic”) associated with prescription
drugs, or new statutes being proposed for a workers’ com-
pensation jurisdiction, or an informed opinion rendered in
articles, blogs or conferences about the issue. At this junc-
ture, there can be no denying that the U.S. has a problem
with prescription drugs (some statistics show the U.S.
consumes 80% of all opioids and 99% of all hydrocodone in
the world). There is no shortage of statistics that define the
problem in detail (SAMHSA reports that pain reliever abuse
went from 6.8% in 1998 to 26.5% in 2008, the CDC reports
that opioids were involved in 73.8% (14,800) of prescription
drug overdoses in 2009, NCCI’s 2011 report shows
OxyContin is the #1 prescribed drug while Hydrocodone/
Acetamninophen is #3 in workers’ compensation).
Many Americans have real pain (SAMHSA estimates more than 50M suffer from chronic pain). But
there almost seems to be an American cultural expectation that pain should be minimized, if not
eradicated, by any means necessary.
A variety of reputable sources have documented of clinical best practices documented by a variety of
reputable sources for how to properly prescribe and manage prescription drugs for chronic pain. The
Federal government has been very outspoken on this issue, for example:
The Food and Drug Administration Amendments Act of 2007 gave FDA the authority to
require a Risk Evaluation and Mitigation Strategy (REMS) from manufacturers to
ensure that the benefits of a drug or biological product outweigh its risks.
A component of REMS is the FDA’s “Blueprint for Prescribing Continuing Education
Program,” whose first draft was published on 10/25/11. The intended audience is
physicians who prescribe extended-release and long-acting opioids, and its content
expounds upon what the FDA considers to be “best practices.” While the FDA has not
announced its timeframe for the comment period, it is obvious that the evolving REMS
strategy is a priority. The draft can be found on the FDA’s website.
In 2011 President Obama launched a national drug control strategy that includes a
specific “Epidemic: Responding to America’s Prescription Drug Abuse Crisis.” The four
cornerstones are education, tracking and monitoring, proper medication disposal, and
enforcement. One key tactic is to build Prescription Drug Monitoring Program (PDMP)
interoperability across state lines. The full report can be found on the White House’s
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 53
While not new, the U.S. Department of Health and Human Services manages a National
Guideline Clearinghouse (http://www.guideline.gov/) that consolidates evidence-based
clinical practice guidelines.
In the workers’ compensation industry, there are a variety of clinical guidelines that address the
medical appropriateness of all types of treatments. There are generally three sources:
Official Disability Guidelines treatment guidelines (ODG);
American College of Occupational and Environmental Medicine (ACOEM); and
Guidelines authored specifically by a jurisdiction.
Jurisdictions that have created their own include Arkansas, Colorado, Connecticut, Maine,
Massachusetts, Minnesota, New York, Rhode Island, Washington and Wyoming. Texas selected the
ODG treat guidelines as the standard of care for treatment provided on/after May 1, 2007.
As you read through the various guidelines regarding the use of prescription drugs for managing
chronic pain, one thing becomes extremely clear: opioids are not recommended for long-term use
unless there is objective evidence of functional improvement and pain control. In fact, the concept
of a “trial” use only for opioids is mentioned prominently, and if that well-managed trial is
unsuccessful in producing improvement then opioids should be discontinued.
There are methods to use before the trial begins, including assess risks to abuse/addiction, try
alternative treatments like functional restoration or multi-disciplinary chronic pain management
programs, use of non-opioid analgesics, and create a customized treatment plan with specific goals.
Guidelines recommend strategies while opioid trial is underway, including to establish an opioid
treatment agreement, continuously evaluate subjective/objective pain and function levels, use drug
screening to ensure compliance, monitor side effects, adjust drugs and dosages to maximize
Treatment guidelines suggest ways to determine the trial’s effectiveness (are patients getting better).
To quote ODG: “Relief of pain with the use of medications is generally temporary, and measures of
the lasting benefit from this modality should include evaluating the effect of pain relief in
relationship to improvements in function and increased activity.”
Interestingly, ODG has 10 points for when opioids should be discontinued but only two points for
when they should be continued – the patient is back to work / has improved function and has better
control of pain. Using Albert Einstein’s definition of insanity, doing the same thing over and over
again and expecting different results, it is fair to say that continuing to prescribe drugs but yet having
low function and high pain is insane.
So, with all of the attention and established clinical best practices and near universal opinion that
opioids should not be used long-term, why is there an epidemic that only seems to grow every day?
And what can realistically be done to turn the tide?
Check Out PRIUM’s Evidence Based Blog
Michael Gavin and Mark Pew of PRIUM have launched a blog that focuses on emphasis on the over-
utilization of prescription drugs in the treatment of injured workers. Be sure to check the Blog out.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 54
While the answer to the first question is very complex, it could be distilled down to the primary
1. Treating physician: In some cases, there may be a lack of education or true
understanding as to the negative repercussions from chronic over-utilization of
prescription drugs, or a financial incentive to continue prescribing;
2. Patients: The expectation of no pain feeds the desire for sedation, and sometimes results
in directing their own care through the treating physician (for those with more devious
intentions, OxyContin street price is reputed to be up to $1 per milligram);
3. Pharmaceutical Manufacturers: They are capitalists and not motivated to reduce sales
of the drugs they spent millions of dollars to create;
4. Payers: Sometimes “No” is the most difficult word to say
Physician education and engagement and accountability would be a great start to turning the tide.
For patients who suffer chronic pain and whose drug regimen has not provided benefit (or, in some
cases, has created hyperalgesia [pain out of proportion to physical findings] or polypharmacy [more
drugs are prescribed than is clinically warranted]), the goal must be to find another treatment plan.
Often, the treating physician is unaware of the short and long term damage the drugs are causing, or
possibly just not aware of other options, or may have a patient that is demanding and the status quo
is the easiest approach. Some treating physicians are motivated by incentives other than the patient’s
health (for example, dispensing drugs from their office at an inflated price creates a perverse
incentive to continue prescribing), but the vast majority may just not know the answer. Therefore,
engaging with the treating physician to educate them on why the current drug regimen may be
inappropriate and options they can consider, soliciting an agreement to change, and then holding
them accountable to make the changes is the most effective method to actually remove patients from
clinically inappropriate drugs. “Best practices” for this process could be considered as:
1. Identification of patients with a potentially inappropriate drug regimen;
2. Discussion between the treating physician and a peer physician, using evidence based
medicine (EBM) guidelines as a baseline comparison to the current treatment plan and
identify areas where different treatment could yield better outcomes – for drugs, that
might be non-opioid drugs or a multi-disciplinary chronic pain management program for
3. Consensus on appropriate changes should be documented in writing;
4. Compelling arguments should be given to the patient for why there is a need for change;
5. Enforcement of changes at the pharmacy through Prior Authorizations or Exclusions
within the Pharmacy Benefit Manager (PBM), regular drug screening and an opioid
6. Oversight with the treating physician to provide accountability and an advisory through
the discontinuance process; and
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 55
7. Recalibration of the patient’s circumstances to implement lifestyle changes that will
provide a better environment for living without drugs.
This process works. There are many case studies that show patients transitioning from an
egregiously inappropriate drug regimen to one that has a lucid clinical rationale, and even to no
drugs at all with a better way to cope with the pain while being more cognitively aware and satisfied.
However, for this process to work, all stakeholders need to understand the risks associated with
maintaining the status quo and have a desire and will to change. Educating treating physicians by
far-reaching plans like the FDA’s “Blueprint for Prescribing Continuing Education Program” should
remain a priority (and optimally mandated as part of their Continuing Medical Education [CME]
requirements), but that will take time to rollout. The faster, and more direct, approach is to educate
one treating physician at a time through intervention on one patient at a time. And the process
cannot stop at just education but must continue through accountability to ensure changes are enacted
and the patient’s health improves. In healthcare, as in business, the focus needs to be on the
outcome, and if patients are not at their maximum medical improvement (MMI) the healthcare is not
working. A “stable” regimen is not one that hasn’t changed in awhile, but instead one that has
given the patient the highest quality of life.
Texas has created a set of mandates that should help injured workers and their treating physicians
enact changes that have been overlooked. Known as the Texas Closed Formulary (TCF), the Texas
DWC (Department of Workers’ Compensation) has mandated the use of ODG to assess every
injured worker’s drug regimen, and when ”N” status drugs are involved, to either verify their
appropriateness or discontinue them. The TCF rules addressed new injuries first by requiring
preauthorization of all ”N” drugs for a date of injury (DOI) on/after September 1, 2011. The second
phase addresses “legacy claims” (those with a DOI before September 1, 2011) by giving the payers
and treating physicians two years to adjust the drug regimens. The DWC has documented, in rules, a
process similar to the “best practices” outlined above. While support for this kind of interaction has
been in the statutes since 2005, there continued to be massive over-utilization of prescription drugs.
Obviously, Texas is putting a stake in the ground to force the issue, and they have my admiration.
Will the Texas mandate of a cleanup process of these “legacy claims” actually make a difference,
turning inaction into action and rehabilitating patients into more productive family members and
citizens? That will be determined over the next two years, but I believe the TCF will work because
there are punitive actions for those that do not comply and that when successful it will ultimately be
emulated by other jurisdictions. In a broader sense, will we react to this epidemic with a sense of
urgency and change our outlook on the impact these drugs have on our country? Do we have the
will, and courage, to enact change? Only time will tell, but my hope is that we will all look back on
2012 as the year we began to back away from the cliff’s edge.
Editor’s Note: Mark Pew, the author of the article, is the Senior Vice President of Business
Development of PRIUM. He brings 30 years of expertise in the property and casualty and healthcare
industries, strategic planning and technology to PRIUM and their clients. Pew has worked with
PRIUM in a variety of roles since 1989, including IT and operations and product and service
development and executive management. He led the development of PRIUM’s eCase application in
2001 that remains the foundation for internal operations and customer interaction and is
responsible for creating the PPR (Physician Pharmaceutical Review) product in 2003 and
incorporating PPR into the QMI (Qualified Medical Intervention) Program in 2009. Pew’s current
responsibilities at PRIUM include sales, marketing, account management, strategic alliance
development, and new product/service development.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 56
Pew has authored white papers on the Texas Closed Drug Formulary. His white papers are
available at http://www.prium.net/resources/white-papers/. He can be contacted at
PRIUM is a URAC-accredited utilization review and medical cost management company that serves
the workers’ compensation and general liability insurance industries. Services include prospective,
concurrent and retrospective reviews that facilitate the management of clinical resources. Reviews
are typically subject to strict statutory processes and timelines determined by the jurisdiction where
the work injury occurred and/or care is delivered. PRIUM provides objective, unbiased and
defensible reviews of medical necessity and causality. Medical records, discussions with treating
providers, evidence-based medicine and our physician reviewers’ personal education and practice
experience determine the recommendations. Reviews cover health care and pharmaceutical
services. PRIUM stands behind its clinical opinions and is willing to speak on behalf of its clients in
front of any industry or statutory mediator.
Prescription Drugs Crime Related Stories from Around Texas
December 28, 2011, Abilene Reporter News – A registered pharmacy technician at Barnes &
Williams Drug Center was filling a prescription for a woman, but something about her voice was a
bit too familiar. Then it hit pharmacy technician, it was the voice of the nurse who had called in the
prescription just a few minutes ago. The pharmacy technician reported the incident to police. The
nurse, who was driving around town with her children in the car, had tried to fill prescriptions at
nearly all of Abilene's other pharmacies. The nurse was apprehended by Abilene police. Delivery of
illegally acquired prescription drugs is a felony, while possession also can graduate from misde-
meanor to felony depending on the amount and type of drug. Accidental overdoses from
prescription drugs continue to be one of the leading causes of injury-related deaths in Texas.
January 5, 2012, Seguin Gazette –A 30-year-old San Marcos woman was sentenced to a 10-year
term in state prison after pleading guilty to illegal possession of a prescription drug. The woman
was indicted in August 2009 on a charge of possession of a controlled substance, 28 grams or more,
less than 200 grams, of a substance containing hydrocodone, and the indictment was enhanced by
two prior felonies, a conviction for fraud in June 2003 in Guadalupe County and a conviction for
tampering or fabricating evidence with intent to impair prosecution in July 2007 in Williamson
County. She accepted a plea agreement and was ordered to serve a 10-year term in the Institutional
Division of the Texas Department of Criminal Justice.
December 28, 2011, Abilene Reporter News – A Stephens County physician arrested in
Breckenridge in December for allegedly prescribing narcotics without examining patients had
previously been arrested and indicted on a similar charge in 2009. The physician was sanctioned by
the Texas Medical Board in October 2004 for reportedly prescribing Demerol, OxyContin,
hydrocodone and other pain medications to patients without any diagnostic testing to determine if
the medications were required. While operating under the board's orders, the physician allegedly
prescribed narcotics without an examination in June 2008. According to court documents, he
allegedly did so again in April 2011. Both criminal cases are still pending.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 57
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 58
ICT Sponsors Bastrop Fire Victims
The holidays are supposed to be about happy
memories, families and friends gathering to
celebrate the season, exchanging gifts and
preparing and eating the feast. Many of us are
blessed with these good memories.
Unfortunately this year, many families lost
everything they owned when the wildfi res
ravaged Bastrop County over the Labor Day
Weekend. Even some ICT employees were
evacuated from their homes during the wildfire,
but fortunately no one lost their home.
Feeling extremely close to the Bastrop
community and the fire victims, the Insurance
Council of Texas (ICT) charitable committee
held a fundraiser in the weeks following the disaster. ICT employees donated clothes, baby items,
household items, personal care items and collected $500 which was donated to the families.
The ICT Charitable committee organizes fundraisers throughout the year. Because of the generosity
of the ICT employees, the fundraising has become very successful. Every month, the committee
arranges raffles, and sells snacks, sausage wraps and breakfast tacos. In November, the committee
held an annual auction where employees donated new and gently used items and home-baked goods.
It’s not only fun, but the single most profitable fundraiser of the year.
In past years during the Christmas season, ICT sponsored numerous charities in the Central Texas
area such as SafePlace, A World for Children, and Ronald McDonald House.
This year, ICT adopted a family in Bastrop County who lost everything. Several generations
of family members lived on the property and a total of three homes were burned to the ground.
Through the employee’s generosity, the committee was able to buy the children toys and
clothes and provide the adults with gift cards, clothes and household goods.
“Many families we have sponsored in the past had little money to spend on food much less gifts for
the children, but at least they had a home to live in”, said Jan Moden, Chair of the ICT Charitable
Committee. “The families we helped this year had nothing left except the clothes they were wearing.
They have to start all over. These families are now living with other family members until they can
start rebuilding their lives.”
Moden said, “The families were so grateful for all the items and gifts that were donated. It is so
rewarding to know we were able to make a difference in the life of others that lost everything.”
“When the temperature soared over 100 degrees this summer, ICT also donated $100 to the “Fan
Drive” that Family Eldercare sponsors,” said Moden. “This organization provides help to meet the
needs of the elderly.”
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 59
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 60
An Associate Member of the Insurance Council
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 61
Significant Texas Case Law Update From WorkCompCentral
In re Texas Mutual Insurance Co., 05-11-01505-CV (1/31/2012): A Texas appellate court rebuked a
trial court judge for defying its order and exceeding the bounds of the limited authority granted on
remand to apportion an award of attorney fees. See case summary and decision here.
Davis v. American Casualty Co. of Reading, PA, 07-11-00256-CV (1/27/2012): A Texas worker
who objected to a reduction in the amount of his temporary insurance benefits failed to properly
invoke the trial court's jurisdiction by filing his complaint prematurely, and then making a second
attempt too late, an appellate court ruled. See case summary and decision here.
Castleberry v. New Hampshire Insurance Co., 06-11-00094-CV (1/13/2012): A trial court
erroneously dismissed a claimant's entire appeal and should have considered a question about his
erectile dysfunction medication. See case summary and decision here.
Barnes v. UPS, 01-09-00648-CV (1/12/2012): The issues decided by the Department of Workers'
Compensation are not identical to those presented in this action for gross negligence. See case
summary and decision here.
SORM v. Joiner, 06-11-00076-CV (1/12/2012): A physician's rating that stated the wrong date of
maximum medical improvement could still serve as the basis for a 34% impairment rating. See case
summary and decision here.
Liberty Insurance Corp. v. Camero, 05-10-00740-CV (12/12/2011): An injured worker's civil suit
against an insurer was barred because she failed to exhaust her administrative remedies before filing
her bad faith suit. See case summary and decision here.
WorkCompCentral Offers Workers’ Comp Research Library for Texas and Much More
If you have a full access paid subscription to WorkCompCentral, as opposed to a news only
subscription, you can access the WorkCompCentral Research Library - TX. In order to access this
resource, you must first log in, then click on Law in the upper horizontal menu of the site header.
WorkCompCentral was founded by David J. DePaolo in 1999. DePaolo became a member of the
California State Bar in 1984 and practiced workers' compensation law in California in private
practice with Miller & Folse, Adelson Testan Brundo & Popalardo, and as a sole practitioner prior
to starting WorkCompCentral. DePaolo holds a J.D. from Pepperdine University School of Law
(1984), a Masters in Business Administration from California Lutheran University (1997) and a
Bachelor of Arts, English, from San Diego State University (1981). He is a featured speaker at the
Insurance Council of Texas’ annual workers’ compensation conference.
WorkCompCentral reports on developments impacting workers’ compensation systems in all 50
states and the District of Columbia and offers online continuing education courses in several states.
WorkCompCentral also hosts a Jobs Bank on its website.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 62
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 63
Fifth Court Conditionally Granted Writs of Prohibition and Mandamus for Carrier
Trial Court Failed to Apportion Attorney Fees
By Randy McNeel, Thornton, Biechlin, Segrato, Reynolds & Gurerra, L.C.
The Fifth District Court of Appeals conditionally granted a
writ of prohibition and a writ of mandamus in favor of the
carrier in the matter of In Re Texas Mutual Insurance
Company (TMIC). The court’s decision, written by Justice
Jim Moseley, can be found online.
In this case, TMIC sued Ralf G. Boetsch (Boetsch) to
appeal an administrative decision that he was disabled by a
workplace injury. After an adverse ruling in the trial court,
TMIC appealed to the Fifth Court.
In its Order on Motion to Strike, which was entered after
the appellate court remanded the case, the trial court
misinterpreted the Fifth Court’s opinion and mandate as
allowing Boetsch to recover his attorney fees for pursuing
the case on remand, and on further appeal, if there was any
further appeal in which he was successful.
The Fifth Court stated that its opinion clearly instructed the
trial court to “apportion and award fees to the claimant’s
attorney only for the issues on which the claimant prevails”. Likewise, the mandate only remanded
“the issue of attorney fees…for apportionment in accordance with this opinion.”
The mandate did not instruct the trial court to award Boetsch any fees incurred pursuing the case on
remand or on any further appeal, nor was that an issue in the court’s prior opinion.
The Fifth Court found the trial court lacked the authority and jurisdiction to interpret the mandate and
improperly ordered Boetsch attorney’s fees for pursuing the case on remand. The court also
determined that the trial court abused its discretion when it ordered TMIC to respond to Boetsch’s
requests for production and admissions.
The court conditionally granted TMIC’s petition for writ of prohibition and writ of mandamus.
The writ of prohibition will issue only in the event the trial court fails to vacate that portion of its
Order on Motion to Strike stating that the “Defendant will, however, be able to claim his attorney’s
fees for pursuing the case on remand, and on further appeal, if there is any further appeal in which
the Defendant is successful”.
Editor’s Note: Randy McNeel, the author of the article, is the Director of Marketing at Thornton,
Biechlin, Segrato, Reynolds & Gurerra, L.C. and has held numerous claims management positions
including assistant vice president of strategic planning for a large property-casualty insurance
company. He has Bachelor of Business Administration in Economics from Sam Houston State
University and attended Southern Methodist University and The University of Texas at Austin.
McNeel has been involved with the Insurance Institute of America and holds the AIC, ARM and AIM
designations, in addition to completion of various segments of his CPCU.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 64
McNeel is a registered lobbyist who is actively involved in Texas
workers’ compensation regulatory matters and the legislative
process. He works closely with the members of the Texas House
and Senate on workers’ compensation legislation and is
frequently used as a resource by individual legislators. McNeel
attends committee public hearings during each session and often
provides testimony on pending workers compensation bills.
Randy McNeel can be contacted at (512) 329-666 or via e-mail
The article is intended for general information only. It is not to
Randy McNeel be considered legal advice or a legal opinion.
Contact the Thornton Law Firm if you have any questions about the court’s decision or a similar
Did You Know?
Workers’ Compensation Insurers paid $4,998,025,528 for health care services between 2006
Service Type Billed Amount Paid
Professional Services Bills $2,765,732,702
Institutional Bills $1,510,047,014
Dental Bills $ 13,105,965
Pharmacy Bills $ 709,139,847
Source: Texas Department of Insurance, Division of Workers’ Compensation, System Data Report
Note: Workers' Compensation medical billing data updated through May 2011.
The Number of Designated Doctor appoints has declined since 2007:
Measure 2006 2007 2008 2009 2010
Number of Designated 1,016 1,039 1,166 1,225 1,272
Number of DD 51,073 58,672 53,342 47,303 45,348
Source: Texas Department of Insurance, Division of Workers’ Compensation, System Data Report
Note: A single scheduled designated doctor appointment may include multiple exam reasons.
The Division of Workers’ Compensation has additional system data available on the agency website
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 65
Stakeholder Group Wants to Improve Return-to-Work Outcomes
By Bill Kidd, Central Bureau Chief, WorkCompCentral.Com
A new work group looking for ways to improve return-to-work outcomes in the Texas workers'
compensation system plans to meet on February 1, 2012 to discuss strategies and goals. The work
group has been formed by system stakeholders and is not a Division of Workers’ Compensation
The Stakeholder Return-to-Work Group is an offshoot of the DWC's Performance-Based Oversight
Work Group, which has been advising the DWC on criteria for legislatively mandated "report cards"
that evaluate carrier performance in meeting key goals in the workers' compensation system, such as
providing quality care to injured workers and prompt payment of claims.
The DWC is required to issue the report cards for health care providers and carriers at least every
two years. Doctors were evaluated in 2011, and carriers will be evaluated this year.
No time was been announced for the Stakeholder Return-to-Work Group meeting. The group met
prior to the DWC’s Performance-Based Oversight Work Group meeting which was held at the
DWC’s central office located in Austin, Texas.
The Return-to-Work Group includes representatives of carriers, health care providers and employers.
DWC staff is also participating in the work group. The group began organizing late last year and is
in the early stages of developing a mission statement and goals.
Sarita Shipe, regulatory compliance coordinator for the Texas Association of School Boards, and Dr.
David Gude, chief operating officer of Texas MedClinic in San Antonio, were selected by
stakeholders to lead the working group.
Shipe said she would like the group to focus on the role of employers in return-to-work efforts.
Shipe said she has seen school districts that have implemented effective return-to-work programs
reduce their workers' compensation costs as much as 60% to 90%. Gude was not available for
comment on the activities of the work group.
The new work group likely will look for ways to ensure sustained employment by injured workers,
as well as getting employees back to work as soon as they’re able, Insurance Council of Texas
workers’ compensation manager Steve Nichols said. "This really is a joint effort by the division and
stakeholders," he said.
“The stakeholder group has 14 members but could add more. The group plans to invite interested
parties, including employers with successful return-to-work programs,” Nichols said.
“Nichols said the group, of which he is a member, wants to “identify barriers to return-to-work and
to improve return-to-work outcomes.”
A report issued last year by the Texas Department of Insurance Workers’ Compensation Research
and Evaluation Group shows that the percentage of injured employees in the Texas system who
initially returned to work within six months after being injured rose from 75% for 2005 and 2006 to
76% in 2007, 78% in 2008 and 81% in 2009.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 66
“A rate of 81% is good,” Nichols said. “However, we need to get the other 19% of injured
employees back to work sooner rather than later, if medically appropriate.” But Nichols also noted
the Research and Evaluation Group’s report reveals that figures for sustained return-to-work for
injured employees from 2005 to 2009 are not as encouraging.
Sustained employment within six months of injury rose steadily from 68% in 2006 to 76% in 2009.
However, sustained employment within one year after injury rose from 76% in 2005 to 77% for
2006 and 2007, and hit 79% in 2008, before slipping to 78% in 2009. In addition, the report shows,
sustained employment within six months with earnings equal to or higher than pre-injury wages
continued to decline each year in the study period, dropping from 47% in 2005 to 40% in 2009. “The
percentage of injured employees reaching sustained employment continues to decline for the other
milestones as well,” the report says.
Jo Betsy Norton, vice president of public affairs for Texas Mutual Insurance Co., said the carrier
isn't involved in the work group, but is monitoring the effort. "Return-to-work is a hard nut to crack,"
Norton said, because there are multiple parties and "many variables."
“Ideally, return-to-work is a three-way partnership with employers, health care providers and
insurers combining their efforts to help injured workers, but that doesn't always occur,” Norton said.
“Texas Mutual has found that “communication between injured worker, network provider and
employer is key to a successful return-to-work program,” Norton said. “Texas Mutual uses claim and
nurse case management staff to help facilitate return-to-work discussions involving providers,
employers and injured workers, which has improved return-to-work outcomes for network claims.”
Trey Gillespie, senior workers’ compensation director for the Property Casualty Insurers Association
of America (PCI) and a member of the Return-to-Work Group, said most large and medium-sized
employers understand the importance of early and safe return to work and have learned how to
facilitate a return to modified duty until the worker can return to full-duty work.
“It is much more problematic for small employers, especially in a sluggish economy,” Gillespie said.
But Gillespie said PCI is glad to work with other system participants on efforts to improve return-to-
work outcomes in Texas.
The Texas Department of Insurance’s (TDI) Workers’ Compensation Research and Evaluation
Group report, “Return-to-Work Outcomes for Texas Injured Employees,” can be found on TDI’s
Editor’s Note: This article was authored by Bill Kidd of WorkCompCentral and was originally
published by WorkCompCentral on February 11, 2011. The article has been republished in this
edition of ICT’s workers’ compensation newsletter with the permission of WorkCompCentral. The
article was edited for the purpose of being included in this newsletter.
There simply is NO other Daily News
Outlet that provides you with timely
coverage of developments impacting the
Texas workers’ compensation system.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 67
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 68
Return-to-Work Is Not a One-Way Street
By Kelly Sartain, Senior Agency Reprenstative, Texas Mutual Insurance Company
Employers work hard to prevent workplace accidents.
But what happens when an employee does get injured?
In a perfect world, the employee, employer, doctor and
insurance carrier work together as part of a return-to-
work team. The team’s goal is to help the employee get
well and back on the job.
Return-to-work is an easy sell for employers. It can
help reduce your workers’ compensation costs. It also
promotes productivity by getting experienced workers
back on the team as soon as medically reasonable.
For a return-to-work program to work, however, your employees must do their part. Get their buy-in
by explaining what’s in it for them.
The longer employees are off work with injuries, the less likely they are to get back on the job. By
the 12th month of disability, their chances of ever returning to work drop 50 percent. That is bad
news for injured workers who live on tight budgets, because workers’ compensation benefits replace
only 70 to 75 percent of lost wages.
While the bottom line is the best way to get most people’s attention, it is just as important to remind
your injured workers there are also physical benefits to returning to work. Studies show that injured
workers who get back on the job actually recover faster. In short, work can be therapeutic.
Return-to-work programs help control the human and monetary costs associated with workplace
injuries. The process starts when your insurance carrier finds out about the injury.
Encourage your employees to tell you as soon as possible if they are hurt on the job. Prompt
reporting allows your adjuster the opportunity to open a claim when necessary and start working to
get the employee well and back to work.
The doctor might determine that the injured worker needs time to heal before resuming normal job
duties. He or she might still be able to contribute to productivity, however, by performing modified
Ask your employees to help you brainstorm tasks injured workers can do while they recover.
Explain that you are not looking for “busy work.” Modified duty should be meaningful work that
contributes to quality or productivity.
In some cases, injured workers may not be able to immediately return to work in any capacity. In the
meantime, keep in touch with them, and encourage them to check in with you at least once a week.
Stress that their first obligation is to get well. Find out how they’re doing, and ask whether they need
help with their recovery.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 69
Employers have access to free tools that can help them launch a return-to-work program or improve
an existing program. Employers and their employees can get more free return-to-work resources
through the Texas Department of Insurance, Division of Workers’ Compensation (DWC) and their
Editor’s Note: The author of this article, Kelly Sartain, is a
senior representative at Texas Mutual Insurance Company
(Texas Mutual). Sartain has over 21 years of experience
working within the Texas workers’ compensation insurance
market as an underwriting and in marketing.
She has been on the marketing side of the insurance
profession for over 8 years with a strong focus on customer
service along with training insurance agents and
developing new agents for her company.
Prior to assuming her current position at Texas Mutual,
Sartain served as an underwriter for Texas Mutual,
Kelly Sartain AmComp and Travelers Insurance Company.
The article has been edited and included in this edition of ICT’s newsletter with the permission of
Texas Mutual Insurance Company.
Improving Return-to-Work Outcomes in Texas
Educating System Stakeholders is Key to Improving RTW Outcomes
Preventing injuries in the work place is an effective risk management tool for employers and
workers’ compensation insurers.
Getting injured workers’ back to work when they are medically able to return-to-work is just
as important as preventing injuries.
Injured workers’, employers, treating doctors and insurers often come up against barriers to
return-to-work that need to be overcome if the Texas workers’ compensation is to see any
measurable about of improvement in return-to-work outcomes.
Education of all stakeholders in the Texas workers’ compensation system about the benefits of
return-to-work is key to improving return-to-work outcomes in the Texas system.
Communication is of paramount importance in all return-to-work programs.
Learn More About Return-to-Work Programs Here
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 70
TDI Accepts NCCI’s 2012 Loss Cost Filing for Workers’ Compensation
On January 30, 2012, the Texas Department of Insurance
(TDI) published Commissioner’s Bulletin #B-0004-12 and
announced that TDI had accepted the National Council on
Compensation Insurance (NCCI) advisory loss cost filing
with an effective date of June 1, 2012. The commissioner’s
bulletin is available on TDI’s website.
The bulletin noted that insurers may use NCCI’s advisory
loss costs as an alternative to the classification relativities.
Insurers planning to adopt the June 1, 2012, advisory loss
costs must comply with the requirements in the Summary
of Actions Required by Insurers document.
The bulletin also announced that TDI will not amend the
the June 1, 2011, workers' compensation classification relativities and experience rating values in
the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compen-
sation and Employers' Liability Insurance.
The bulletin noted that for all workers’ compensation policies written with an effective date on or
after June 1, 2012, each workers’ compensation insurer must continue to use the June 1, 2011,
classification relativities, unless the insurer files to use its own independent insurer-specific
classification relativities or files to use the June 1, 2012, NCCI loss costs.
The bulletin also noted that insurers may not base their rates on the June 1, 2011, NCCI loss costs
for policies with an effective date on or after June 1, 2012.
TDI also announced that insurers must continue to use the expected loss rates and discount ratios
adopted by Commissioner’s Order No. 11-0125 to calculate experience modifiers with an effective
date on or after June 1, 2011.
The bulletin noted that Section 2053.003 of the Insurance Code requires each insurer to file with
TDI all rates, supplementary rating information, and reasonable and pertinent supporting information
for risks written in Texas. Insurers must submit the required documents as outlined in the Summary
of Actions Required by Insurers no later than May 1, 2012.
Insurers that elect to maintain their existing TDI classification relativities and deviations may do so
without submitting a filing at this time. An insurer that is not currently writing workers'
compensation insurance must complete and submit a filing and the attached Notice of Carrier Intent
and Certification to the Department before the effective date of its first policy.
Insurers that fail to comply with filing requirements may be subject to regulatory action.
Filing requirements are specified in the Property and Casualty Filings Made Easy Guide at:
Insurers may provide the required information using the transmittal form and filing exhibits in the
Filings Made Easy Guide, or in their own forms and formats. Rate filings must include a transmittal
form, supplementary rating information, and pertinent supporting information for proposed changes
in an insurer’s deviation, loss cost multiplier, or other rating factors.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 71
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 72
Insurance Fraud News
Midland Business Pleads Guilty to Hiding Payroll from Texas Mutual
On January 27, 2012, Texas Mutual Insurance Company reported that AB Abatement, Inc. of
Midland, Texas, pled to workers’ compensation fraud-related charges. A Travis County district court
ordered AB Abatement, Inc. to pay $70,000 in restitution to Texas Mutual and a $1,000 fine.
Vanco Insulation, Inc., owned by Robert Crow of Midland, obtained workers’ compensation
coverage through Texas Mutual from April 2003 to October 2006. During that time, related
company, AB Abatement, Inc., misrepresented numbers of employees and payroll associated with
the Vanco Insulation, Inc. policies to Texas Mutual.
Austin-based Texas Mutual Insurance Company is the state’s leading provider of workers’
compensation insurance, with approximately 33 percent of the market. Texas Mutual is an industry
leader in the fight against workers’ compensation fraud. The company maintains three teams of in-
house fraud investigators. In 2010, they saved, identified or recovered $5.5 million through their
claimant, health care provider and employer fraud investigations.
Houston Man Pleads Guilty to Hiding Payroll from Texas Mutual
On January 17, 2011, Texas Mutual Insurance Company reported that Marvin Solano of Houston
pled guilty to workers’ compensation fraud-related charges. A Travis County district court ordered
Solano to pay $140,038 to Texas Mutual, pay a fine of $1,000, serve 10 years of deferred
adjudication and perform 300 hours of community service.
Solano owned Elamar, Ltd., doing business as Mastercare Gardens. He obtained workers’
compensation coverage through Texas Mutual from February 2006 to May 2008. During that time,
he concealed payroll through various family operated companies he controlled.
Because workers’ compensation premium is based, in part, on payroll, this type of scheme results in
an employer being charged a lower premium than it actually owes. By hiding payroll, an employer
can gain an unfair advantage over competitors.
Workers’ Comp Fraud Scheme Costs Texas Business $149K
On January 12, 2012, Texas Mutual Insurance Company reported today that Granbury Contracting
& Utilities, Inc., of Granbury, Texas, pled guilty to workers’ compensation fraud-related charges. A
Travis County district court ordered the company to pay $149,000 in restitution to Texas Mutual.
Granbury Contracting & Utilities, Inc., owned by Wayne Wienecke, obtained workers’ compen-
sation coverage through Texas Mutual from November 2003 to April 2008. During that time,
Granbury Contracting & Utilities, Inc. misrepresented numbers of employees and payroll to Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 73
Workers’ Compensation Insurance Fraud Is A Problem!
What is Insurance Fraud?
Insurance fraud is an intentional deception committed by applicants,
policyholders, claimants, providers, agents and company employees. It may
occur during the process of buying, using, selling or underwriting insurance
and is usually motivated by greed.
Insurance Fraud is a crime in Texas!
Workers’ Compensation insurance fraud is a problem.
The National Insurance Crime Bureau (NICB) has reported that
studies indicate up to 10 percent--perhaps more--of all property/
casualty insurance claims are fraudulent. The NICB has also
estimated that workers' comp fraud costs the insurance industry as
much as $5 billion annually.
Workers’ compensation fraud includes the padding of bills by health care
providers, injured employees claiming injuries that do not occur, employers
falsely classifying employees in different occupations to obtain lower
premiums, and injured employees receiving income replacement benefits
“Disabled” Injured Worker Playing We Need Your Help!
The Texas Committee on Insurance Fraud needs your help in fighting
workers’ compensation fraud.
You can help us fight workers’ compensation insurance fraud by reporting
it to the Texas Department of Insurance at 1-888-372-8818.
Online Reporting of Fraud Availabe
Online reporting of insurance fraud is available at:
“Disabled” Injured Worker
Changing a Flat Tire Take a bite out of crime by reporting workers’ compensation insurance
Get Involved with the Texas Committee on Insurance Fraud
Contact Mark Hanna at (512) 444-9611 or at the following e-mail address
email@example.com to become involved in the Texas Committee
on Insurance Fraud.
Help Us Fight Workers’ Compensation Insurance Fraud
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 74
DWC Approves 13 Companies to Self-Insure for Workers’ Compensation Claims
The Division of Workers’ Compensation (DWC) approved
thirteen renewals of the Certificates of Authority for companies
to self-insure their workers’ compensation claims for a one-year
period under the TDI-DWC Self-Insurance Program. These
companies collectively employ approximately 26,500
employees in Texas.
Under Texas law, certain large, private companies can self-
insure for workers’ compensation claims, while retaining the
protection of the Texas Workers’ Compensation Act for the
company and for its employees. To qualify, a company must
have a minimum workers’ compensation insurance unmodified
manual premium of $500,000 and meet other requirements
subject to annual review.
The following companies received self-insurance certificates:
• Associated Wholesale Grocers, Inc., Kansas City, KS
• Bradford Holding Company, Inc., Corpus Christi
• E. I. du Pont de Nemours and Company, Irving
• Emerson Electric Co., St. Louis, MO
• FedEx Freight, Inc., Harrison, AR
• Guardian Industries Corp., Auburn Hills, MI
• International Paper Company, Memphis, TN
• James Construction Group, LLC, Baton Rouge, LA
• Louisiana-Pacific Corporation, Portland, OR
• The Procter & Gamble Company, Cincinnati, OH
• The Sherwin-Williams Company, Cleveland, OH
• Textron, Inc., Providence, RI
• Weyerhaeuser Company, Federal Way, WA
For more information on applying to the Self-Insurance Regulation program, visit the DWC website
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 75
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 76
3200 Highland Avenue
Downers Grove, IL 60515
Coventry WC Network Services, a business segment of Coventry Health Care Workers' Comp Services, Inc.
("Coventry Workers' Comp Services"), is the comprehensive outsourcing solution for containing health care
and disability costs. Serving the occupational health care market, Coventry Workers’ Comp Services
provides employers, insurers and claims payors with a variety of integrated health care services. These
services include in-network and out-of-network medical claims review and re-pricing, access to specialized
Preferred Provider Organizations ("PPOs"), early intervention and case management-driven Return-To-
Work ("RTW") services and other cost management and related services.
Recently formed from the combination of First Health and Concentra’s Workers’ Compensation Cost
Management businesses, Coventry Workers’ Comp Services delivers increased medical, indemnity and
administrative (“total cost”) savings by offering our customers a fully integrated suite of services.
Coventry WC Networks have focused our workers’ compensation expertise, technology and work process
re-engineering resources to deliver the following value to our customers:
• Increased cost savings (medical and total costs)
• Improved communications and quality of decision-making
• Service innovation, consistency and reliability
• Increased information accuracy and usefulness; and
• Increased frequency of superior claims outcomes.
With more than three decades of experience and as one of the industry leaders in our field, Coventry WC
Network Services provides services that successful reduce the high cost of workers’ compensation medical
and total costs while delivering improved claims outcomes for injured workers, employers, third-party
administrators and insurers.
Coventry WC Network Services reviews, re-prices, and reduces medical bills received by claims payors
(third-party-administrators and insurers) and also achieves customer savings through fee negotiation and
access to PPO networks. Document management solutions and Adjuster Desktop informational interfaces
contribute proven capabilities that facilitate adjuster effectiveness and improve the timeliness and flow of
meaningful information to support both better decision-making and lower operating costs.
Visit us online at http://www.coventrywcnetworks.com/.
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 77
Architect of House Bill 7 Workers’ Comp Reforms Not Seeking Re-Election
By Steve Nichols, Manager, Workers’ Compensation Services, Insurance Council of Texas
The architect of the House Bill (HB) 7 reforms
that represented a significant change in the
Texas workers’ compensation landscape will not
seek re-election to the Texas House of
Representatives. Rep. Burt Solomons (R-
Carrollton) announced his decision to not seek
re-election on December 17, 2011.
“After much reflection, I have decided not to
seek re-election in the 2012 Republican primary,
but rather to leave office when my current ninth
term expires in January 2013,” said Rep.
Solomons. “After what will be eighteen years of
public service in the Texas House, both my wife
and I feel it’s time for me to see what new
adventures, opportunities, and challenges life
Rep. Burt Solomons (R-Carrollton) may have in store.”
Solomons’ exit from the political stage has left many Texas workers’ compensation system
stakeholders wondering who will step up to safeguard the HB 7 reforms.
Solomons authored HB 7 – the omnibus workers’ compensation reform legislation passed during the
2005 session of the Texas Legislature – which made major changes in the Texas workers'
compensation system. HB 7 abolished the Texas Workers' Compensation Commission and replaced
the agency with the Division of Workers' Compensation (DWC). The DWC is an independent
division of the Texas Department of Insurance with its own commissioner who is appointed by the
Governor of Texas. HB 7 also provides insurance carriers with the authority to contract with
certified health care networks for the delivery of health care benefits.
Since the passage and implementation of HB 7, Solomons has served as the “guardian” of reforms
that have been credited with significantly improving the performance of the Texas workers’
compensation system. The nine-term legislator has also passed other legislation to address issues
associated with the Texas workers’ compensation system.
During the most recent regular session of the Texas Legislature – Solomons introduced and passed
legislation that allowed insurance carriers to continue to use pharmacy discount agreements. He also
passed legislation requiring the release of workers' compensation data by staff leasing companies.
Rep. Solomons has also passed legislation that addressed a wide range of important public policy
issues during his tenure in the Texas House of Representatives.
In a message to his colleagues, Solomons expressed his thanks to his wife, his constituents and
fellow legislators in the House and Senate, and to his long-time chief of staff, Bonnie Bruce, and
acknowledged their intelligence and hard work over the years that helped him pass many pieces of
positive legislation addressing many different, important issues.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 78
Collective Years of Legal Experience
SMITH & CARR, P.C.
ATTORNEYS AT LAW
SMITH & CARR, P.C. is a litigation boutique founded by Stephen T. Smith
More Information About the Firm and Charles M. Carr, III. Their collective years of legal experience
(Right Click on Information Topics) provide a background for the handling of claims in both judicial and
administrative forums, as well as the alternative dispute resolution
Smith & Carr, P.C. Attorneys process.
Representative List of Clients Smith & Carr, P.C. is dedicated to providing efficient economical and aggressive
representation of its clients in both litigation and administrative matters. The firm's
Seminars Offered by Smith & Carr, P.C. strength lies in its collective years of legal experience together with a solid work ethic
based upon the belief that providing cost effective legal representation is paramount. The
Onsite Continuing Education firm's attorneys concentrate on trials and appeals in state and federal court, as well as
before administrative tribunals.
SMITH & CARR, P.C. Primarily handles personal injury defense (insurance defense),
insurance coverage, employment and commercial issues. Areas of practice include:
Employment: Defense of employers in litigation involving
Americans With Disabilities Act, Fair Labor
Standards Act, Family Medical Leave Act,
Hour/Wage and Unemployment claims, Retaliatory
Discharge and Wrongful Termination.
Insurance: Defense of insurance carriers in Bad Faith and
Deceptive Trade Practices/Consumer Protection
litigation, Coverage Opinions, Declaratory Judgment
Actions, and Insurance Subrogation.
Personal Injury: Defense of insured's in litigation involving
Automobile, Construction Liability, Employer's
Liability, Jones Act/Maritime, Longshore and Harbor
Workers' Compensation Act, Defense Base Act,
Premises Liability, Products Liability, Trucking and
Professional Injury: Accounting, Insurance Agent and Insurance Claims Malpractice.
The attorneys of SMITH & CARR, P.C. are licensed to practice law in the courts of the
Not Certified by the Texas
States of Texas, Louisiana and Oklahoma. They are also licensed in federal courts in
Board of Legal Specialization
Texas and Louisiana.
Smith & Carr, P.C.
4900 Woodway, Suite #1200
Houston, Texas 77056
Email : firstname.lastname@example.org
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 79
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 80
Has the Era of E-Claims Portals Arrived?
How Texas Could Benefit From an E-Claims Portal
By Joe Lawless, President, E-Health Data Systems
What would it mean to the state of Texas to have an E-
claims portal utilized within their Workers’ Compen-
sation System? What is involved in developing such a
system and what benefits can be gained from moving
to an E-Claims portal system?
These questions, and many others relating to this topic,
proved to be quite thought provoking, as I listened to a
recent pre-conference symposium at the National
Workers Compensation and Disability Conference.
I concluded that a well-designed software suite
utilizing an E-Claims web portal application could
create huge savings, and simultaneously provide
substantial gains in efficiencies. Within the current
system, a substantial amount of time is spent working
in a cumbersome manual process. This is preventing
involved parties from working cohesively without.
duplicating efforts. This current system causes missed timeframes resulting in delayed management
Texas is a leader in how it manages its’ Workers Compensation system. It now seems appro-priate to
capitalize on available technology and truly enhance the service deliveries within the Texas
Workers’ Compensation system.
Supporting my thoughts, were comments from a recent Workers Compensation IT survey indicating
that there is a strong interest in the industry for new technology. The survey further documented how
important an efficient claims IT system is within the Workers’ Compensation System. Systems
directly affect such things as productivity, compliance, medical costs, litigation rates, expenses and
outcomes, just to name a few. Additional costs affected include administrative expenses, claims
costs, employee retention and satisfaction, and ultimately growth, revenues, and profitability.
Price Waterhouse Coopers Health Research Institute (2008) estimated that 88 billion of the 1.2
trillion wasted health dollars can be attributed to ineffective use of technology.
The E-Claims portal allows insurers and other system stakeholders to take advantage of technologies
that are already being utilized throughout the various states and group health environments; e.g. EDI,
Document Management, Data Mining, and incorporation of state forms and etc. Additionally,
Electronic Medical Records could be integrated and readily available to all authorized parties.
Workflows could be redesigned, allowing all stakeholders to capitalize on both workforce savings as
well as enhanced efficiencies. Transparency within the system would allow for accountability as
well as real time communication.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 81
In the traditional model, the Clearing House is responsible for the processing of electronic claims
from providers and meeting the X12 ANSI 837 reporting guidelines as specified by the DWC and
TDI. The Clearing House is responsible for capturing the data from the CMS 1500s and UB 04s in a
prescribed format and sends the data and the supporting documentation to the medical bill
The E-Claims portal is a clearinghouse, data repository, and EDI bridge all in one. It utilizes
industry standard data storage and server functionality, layering the additional tools of the next
generation: Cloud computing collaboration. This Cloud will make accessible all aspects of the data,
handle tracking, document management, and analytics intuitively available for all aspects of a claim
and o participants resulting in a more effective process flow. These technologies are utilized to
convert a paper driven manual process to a comprehensive electronic system.
By using EDI, information can be securely transmitted and shared by the approved stakeholders. A
claim could be initiated by filing the first report of injury via an E-Claims portal. This would ensure
that proper notice is received by the insurer and regulatory agency. Providers can submit E-bills
through the web portal and know instantly that an 837 clean bill has been submitted. Supporting
documentation can also be uploaded to the system. The web portal allows E-filing and tracking of
all DWC forms, which can be automated. The portal enables carriers to upload claims data and
enables stakeholders the ability to send and receive information from other sources.
As a data repository for claims, the software application can manage E-bill attachments and, create
an electronic medical record that can be sorted by document type, date of service, and provider. This
creates an accurate summary of the injured worker’s medical history and allows the reviewer the
ability to view the medical record in different view sets. The E-Claims portal securely accesses the
repository, exposing all medical records, reports, bills and other pertinent data related to an
individual’s claim. This information is available to all authorized stakeholders who meet security
The software application allows the stakeholders to file and track all DWC forms. The forms are
time and date stamped to insure data integrity. Time sensitive information can be managed
efficiently through this historical tracking system. Upon form submission, distribution to all
authorized stakeholders is automated. Document management of state forms is an opportunity to
improve communication among all of the stakeholders. An example would be preparation and
submission of the DWC 69 (impairment rating report) and DWC 73 (work status report). Filing of
forms such as these through the portal would ensure that all stakeholders are informed in a timely
manner. The software application has the ability to data mine the DWC 73, DWC 69, and other
DWC forms. This enables users to extract valid data for scorecards and reporting.
Through improved workflows, accountability tracking, and status updates, many benefits can be
achieved. The status updates on time sensitive DWC issues could be viewed by the approved
parties, thus creating accountability and transparencies for all of the stakeholders. Some examples
would be the ability to track the status of income benefit payments and disputes, allowing disputing
parties to file a request for a Benefit Review Conference through the portal and request the
assignment of a Designated Doctor. Additionally, status updates on contested case hearings and
appeals of CCH decisions could be provided. Plain language notices could also be filed and tracked.
Some other examples of how the E-Claims portal and associated system could improve the flow of
information and data is the filing and exchange of bona fide offers of employment and the exchange
of documents prior to a Benefit Review Conference and Contested Case Hearing.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 82
The E-Claims portal could have an immediate positive impact on the Designated Doctor process.
Because the software application automates many manual processes and creates better efficiencies,
information can be shared among approved stakeholders. Some examples would be the ability to
request a DWC 32 online and track its progress through the approval process. Stakeholders would
then have the ability to view the DWC 32 and EES 14 ensuring the validity of the request. The
carrier and treating physician could upload the medical records, which could then be retrieved and
reviewed by the designated doctor. The Letter of Clarification process would also benefit from this
For insurance carriers, integration with an E-Claims Portal needs to be optional and incremental. The
E- Claims Portal has a variety of levels of integration as befits the level of functionality granted by
each insurance carrier. An insurance carrier that does not interconnect with the portal would still be
able to view its claims being processed, albeit the stages of work would move more slowly due to
following paper protocols. An insurance carrier that is fully bridged to the portal with EDI would
see fewer delays as data would not be stalled in paper transformations.
The implementation of a E-Claims Portal for Texas workers’ compensation claims would also
improve system communications. Keep in mind that the largest group of complaints filed in the
Texas workers’ compensation system involves communication complaints. In addition to improving
communications among system stakeholders, the E-Claims Portal would provide the Division of
Workers’ Compensation with an enhanced ability to perform its system oversight duties.
I leave you with this one question:
With all that you know, is it time to move towards an E-Claim Portal system in Texas?
Editor’s Note: The author of this article is Joe Lawless Jr. Lawless has extensive experience with
developing and managing claims management systems for payors. Together with Anthony Jucha and
Joe Lawless Sr., Lawless founded E-Health Data Systems for the purpose of providing the insurance
industry with solutions to automate workers’ compensation business processes.
E-Health Data Systems has decades of workers’ compensation and technology experience that has
streamlined the business processes of many clients. Microsoft technology is at the core of their
platform. Their expertise lies in their ability to create and integrate new and existing infrastruc-
tures, to facilitate solving the business problems of disparate agencies. E-Health Data System’s
portfolio includes web portals, EDI, data repositories, data warehousing, reporting, dashboards,
metrics, key performance indicators, production of state forms, medical document sorting, electronic
medical records, practice management, accounting, business workflow automation, fax and
scanning automation, call center operations, task management and accountability.
Mr. Lawless can be contacted at (713) 400-0226.
Does Your Company Provide Vendor and Other Services to Insurance Companies?
If your answer is YES, contact Mark Hanna, ICT’s Manager of Public Affairs and Membership,
at email@example.com and inquiry about how you can become an associate member
of the Insurance Council of Texas.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 83
2001 Bryan Street, Suite 4000
Dallas, Texas 75201
(214) 748. 7900
(214) 748. 4530 Fax
Since 1989, Downs • Stanford, P.C. has been engaged in the
practice of civil litigation throughout Texas, and, occasionally, in
other states. We excel in defending civil litigation cases, including
personal injury, workers' compensation, labor/employment law,
and prosecuting or defending business litigation. We also have
accomplished attorneys who concentrate in family law, probate and
estate planning, and civil appellate law.
The Firm is recognized with the prestigious AV rating by the
national legal directory Martindale-Hubbell and is promoted by
Providing insurers with quality legal Best's Directory of Recommended Insurance Attorneys and
representation in workers’ compensation Adjusters. In addition the firm is recognized by the International
claims and proceedings. Society of Primerus law firms.
With Offices in Dallas and Austin, our docket http://www.downsstanford.com/
covers all venues throughout Texas.
* Unless indicated in the individual attorney biographies, not
certified by the Texas Board of Legal Specialization
Downs • Stanford maintains a strong presence before the Texas Workers' Compensation
Commission. Our attorneys are highly trained in the requirements of the Texas Labor
Code and the Rules of the Texas Workers' Compensation Commission. This expertise
covers both the "Old Law" and the "New Law". We are prepared to handle all aspects of
workers' compensation claims ranging from legal consultation on a specific claim issue,
medical dispute resolution, defending administrative violations, and the prosecution and
defense of judicial review matters and matters before the State Office of Administrative
We actively represent numerous insurance carriers, third-party administrators, employers
and certified self-insurers for all types of hearings before the Texas Workers' Compen-
sation Commission, including Benefit Review Conferences, Contested Case Hearings and
appeals to the Appeals Panel of the Texas Workers' Compensation Commission. We
maintain an active trial docket of workers' compensation cases that have been appealed
beyond the Texas Workers' Compensation Commission into judicial review.
Downs • Stanford maintains a high success rate on workers' compensation trials. We have
also successfully defended our client’s interests before the Court of Appeals.
Downs • Stanford also provides a full service Board Representative Service to further
service all aspects of an insurer and self-insured company before the Texas Workers
Our expertise covers all types of workers' compensation claims ranging from back strains
to complex multi-chemical sensitivity claims.
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 84
WORKERS’ COMPENSATION NEWS BRIEFS
Austin, Texas, Feb. 15, 2012 – The Texas Department of Insurance’s Division of Workers’
Compensation (DWC) announced that it will host the 16th Annual Workplace Safety
Conference, the Texas Safety Summit, on April 10-12, 2012 in Austin, Texas.
San Diego, California, Feb. 8, 2012 – The Claims Journal reported that Accident Fund Holdings,
Inc., headquartered in Lansing, Michigan, recently created a comprehensive narcotics program to
help reduce the health risks associated with narcotics and provide a mechanism for injured workers
to return to work sooner. Accident Fund Holdings has been monitoring the use of opioids to manage
chronic pain for years and the results of a recent study completed in 2011 with the Division of
Environmental and Occupational Medicine at Johns Hopkins School of Medicine has validated the
scope of this problem.
Boca Rotan, Florida, Feb. 7, 2012 – NCCI posted a discussion paper on Volunteer Firefighters on
its website that provides a history of the classification codes and rules for volunteer firefighters,
identifies questions and issues that have arisen, and includes research on state workers compensation
laws and recent legislation impacting volunteer firefighters. The paper also outlines several exposure
base alternatives for public policymakers to consider.
Boca Rotan, Florida, Feb. 7, 2012 – NCCI posted an analysis of frequency and severity is based on
data valued as of 12/31/2010 received under the Calendar-Accident Year Call. In addition to results
for all NCCI states combined, detailed results by state are provided. (Password Required to View
Camarillo, California, Feb. 2, 2012 – WorkCompCentral reported that Division of Workers'
Compensation staff, doctors, attorneys and insurer representatives met recently to begin developing
criteria for the 2013 "report cards" for health care providers under the DWC's performance-based
oversight process. Much of the discussion focused on whether to expand a pilot program that looked
at providers' use of magnetic resonance imaging (MRI) for patients with low back pain during their
first three weeks of treatment. (Subscription Required)
Cambridge, Massachussetts, Jan. 10, 2012 – The Workers’ Compensation Research Institute
(WCRI) released a new study titled Hospital Outpatient Cost Index for Workers’ Compensation that
provides a tool to indentify and better understand hospital costs. WCRI’s study measures hospital
outpatient/ASC costs actually paid over a seven year period from 2003 to 2009. It focuses on
services that are associated with the most common surgeries performed in workers’ compensation
cases since surgery-related costs make up approximately 60 to 70 percent of all outpatient costs.
Austin, Texas, Jan. 2, 2012 – The Texas Department of Insurance’s Division of Workers’
Compensation (DWC) posted a report on Calendar Year 2011 complaints submitted to the DWC by
system stakeholders. The reported includes insurance industry performance rates for four key
performance measures. Insurers can request their company’s individual performance report for
Calendar Year 2012 from the DWC at PBO@tdi.state.tx.us.
Cambridge, Massachussetts, Dec. 20, 2011 – The Workers’ Compensation Research Institute
(WCRI) announced the publication of the 12th Edition of its Monitoring the Impact of Reforms and
Recession in Texas: CompScope™ Benchmarks publication. WCRI noted that the average cost of a
workers’ compensation claim in Texas grew five percent in 2009, reflecting the impact of recent
medical fee schedule increases and possibly some effect of the recession. The study can be
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 85
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 86
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 87
The Property Casualty Insurers Association of America (PCI) provides a
responsible and effective voice on public policy questions affecting
insurance products and services in an effort to foster a competitive
insurance marketplace for the benefit of insurers and consumers. The
proverbial adage “strength in numbers” rings true at our association, for
no insurance company can solely create the type of influence, wealth of
information and networking opportunities that PCI provides. Our
greatest value to members is the ability to save companies time and
money by creating individual and collective victories through a healthier
legislative and regulatory environment. Members benefit from the
advocacy, knowledge, networking and value that PCI offers.
Advocacy: The unmatched skills of PCI staff and local lobbyists, a
group that includes former state legislators and commissioners,
enables the association to inform and influence state and federal
public policy makers. Retained lobbyists are used in each state to
advocate PCI positions on issues. Expert staff exists at PCI
headquarters in Des Plaines, our federal government affairs office in
Washington, D.C., and regional offices in Albany, Atlanta, Austin,
Boston, Denver, Harrisburg, Tallahassee, Trenton, Seattle and
Sacramento to better manage industry activity.
Knowledge: The information members receive is specifically targeted
to their interests. Our more than 80 publications — including bulletins,
committee communications, reference and research documents and
statistical analysis — enlighten members with understanding that is
necessary to stay on top of new industry activities.
In particular, the Legislative Database tracks thousands of bills and
regulations each year, reporting on their introduction, enactment, and
court challenges. This service analyzes and interprets effects of bills and
regulations on insurers — saving members the cost of noncompliance.
Besides the written word, the sharing of information takes place through
seminars, where industry experts editorialize and clarify issues, and
committee meetings that facilitate information sharing among members.
Networking: Gleaning competitive tips from peer-to-peer contact leads
to peak performance. PCI provides a multitude of opportunities to meet
with colleagues and establish new business associates each year through
its 8 seminars and numerous committee meetings. PCI has at least one
member headquartered in each of the 50 states, bringing more contacts,
knowledge and expertise to the association — and creating partnerships
across the nation.
Enhance your business, your bottom line, your industry environment. E-mail firstname.lastname@example.org or
call her at 847-553-3634.
An Associate Member of the Insurance Council of Texas
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 88
Two Indicted in Travis County on Workers’ Comp Fraud Charges
On February 9, 2012, Texas Mutual Insurance
Company reported that Travis County grand juries
indicted, in separate cases, Curtis L. Blankenship,
Sr. of San Antonio and Melody Tendayi of Austin
on workers’ compensation fraud-related charges.
Blankenship, a Texas Mutual policyholder,
reported a company fatality involving his son as a
work-related accident. As a result, Texas Mutual
began paying death benefits to him. Meanwhile, a
Texas Mutual investigation uncovered evidence
that Blankenship knew the fatality was not work-
The indictment alleges that Blankenship obtained
$39,000 in workers’ compensation benefits he was
not entitled to.
In an unrelated case, Tendayi reported a job-related injury while working as a youth care worker for
Youth and Family Alliance in Austin. She claimed she was unable to work as a result of the injury,
and Texas Mutual began paying income benefits to her.
Meanwhile, Texas Mutual uncovered evidence that Tendayi worked for another company while
receiving income benefits.
The indictment alleges that Tendayi obtained $5,762 in workers’ compensation benefits she was not
Editor’s Note: A grand jury indictment is a formal accusation - not a conviction - of criminal
Bryan Man Sentenced on Workers’ Comp Fraud Charges
On December 20, 2011, Texas Mutual Insurance Company reported that a Travis County district
court sentenced Richard Merriman of Bryan, Texas on workers’ compensation fraud-related charges.
The court sentenced Merriman to two years’ deferred adjudication and ordered him to pay $3,197 in
restitution to Texas Mutual.
Merriman reported a job-related injury while working as a security guard for HVP Private Security,
Inc. in San Antonio. He claimed he was unable to work as a result of the injury, and Texas Mutual
began paying income benefits to him.
A Texas Mutual investigation subsequently determined that Merriman had lied on benefits applica-
tion forms regarding his employment status, causing Texas Mutual to pay him supplemental income
benefits he was not entitled to.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 89
INSURANCE COUNCIL OF TEXAS
Become An Associate Member Today
The Insurance Council of Texas (ICT) is a multi-purpose, non-profit
trade association of property and casualty insurers writing business in
Texas. ICT's purpose is to provide a mechanism through which our
members and associate members can collectively represent their interests
in the regulatory process and stay abreast of those events that affect the
business of insurance in Texas.
Our experienced and knowledgeable staff provides a variety of services
and products that give our member companies the information and
resources they need to be successful in the Texas insurance marketplace.
Our Accomplishments ICT does not lobby, but follows the legislative process and reports to the
● ICT is an opinion leader in the Texas membership on important legislative initiatives and changes in insurance
workers’ compensation system. law. We are regular participants in regulatory matters and employ an
active committee system to guide our involvement.
● ICT has commented on every new rule
proposed by the state’s workers’ ICT’s Workers’ Compensation Services program provides our members
compensation regulatory agency and and associate members with representation before the Texas Department
shaped the rules that have been adopted. of Insurance (TDI) and the TDI Division of Workers’ Compensation on
● ICT provides our membership with regulatory matters, timely reports on developments impacting the Texas
timely analysis of new laws and rules workers’ compensation system and information not available from any
not available from any other source. other source.
More information about our workers’ Associate Membership Benefits
compensation program is available on ICT’s
website. ■ Your company/firm would join the collective voice of ICT's 500
plus member insurance companies and a growing number of
■ Access to ICT's "members only" website;
■ Access for an unlimited number of company/firm staff members
to our workers' compensation newsletter, association newsletter,
workers' compensation bulletins and other insurance lines
bulletins, and our members-only confidential legislative report;
■ ICT’s Workers’ Compensation Committee provides our members
with a forum to discuss workers’ compensation policy issues;
■ Free access to ICT's on-line, electronic workers' compensation
manuals, e.g. Texas Workers' Compensation Law and Rules
manual and Appeals Panel Digest; and
■ New associate members and associate members who renew their
Contact Mark Hanna, ICT’s membership are entitled to have a full-page, multi-color advertise-
Manager of Public Affairs, at (512) ment in each edition of the Texas Workers' Compensation
444-9611 to obtain additional Update newsletter.
information about joining ICT.
Visit Us Online at http://www.insurancecouncil.org/.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 90
Job Losses Cause Workers' Compensation Coverage and Costs to Fall
The number of workers covered by workers'
compensation dropped by 4.4 percent in 2009,
the biggest decrease in two decades, according
to a report released by the National Academy of
Social Insurance. Employer costs for benefits
fell by 7.6 percent to $73.9 billion in 2009 (the
most recent year with complete data), reflecting
the overall decline in employment.
“As one might expect, when the Great Recession
hit, employers paid less in workers’ compensa-
tion costs because there were fewer workers to
cover,” said John F. Burton, Jr., chair of the panel
that oversees the report. “Although the drop in
employer costs represents the biggest decrease in
the last two decades, benefits increased slightly
by 0.4 percent to $58.3 billion, reflecting in part
benefits provided in 2009 to workers injured in
“As one might expect, when the Great Recession hit, employers paid less in workers’ compensation
costs because there were fewer workers to cover,” said John F. Burton, Jr., chair of the panel that
oversees the report. “Although the drop in employer costs represents the biggest decrease in the last
two decades, benefits increased slightly by 0.4 percent to $58.3 billion, reflecting in part benefits
provided in 2009 to workers injured in prior years.”
Workers’ Compensation Benefits, Coverage, and Costs 2009
Aggregate Amounts 2009 in Percent
Covered Workers (in thousands) 124,856 -4.4
Covered Wages (in billions) $5,675 -4.7
Workers’ Compensation Benefits Paid (in billions)
Medical Benefits (in billions) $28.9 -1.1
Income Benefits (in billions) $29.4 1.9
Share of Medical Benefits in Total 50% -1.5
Employer costs $73.9 -7.6
Amount per $100 of Covered Wages in Amount
Benefits Paid $1.03 $0.05
Medical Payments 0.51 0.02
Income Benefits to Workers 0.52 0.04
Employer Costs 1.30 -0.04
Source: The National Academy of Social Insurance; Note: These figures are nation-wide.
The total benefits paid to injured workers in 2009 increased in 23 states and the District of Columbia
while declining in the remaining 27 states, compared to the previous year. Payments for medical care
declined for the first time in a decade by 1.1 percent to $28.9 billion, although they continue to make
up roughly half of total workers' compensation benefits. Employers paid a total of $73.9 billion
nationwide for workers' compensation with a cost of $1.30 per $100 of payroll, the lowest in the last
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 91
Texas Loses a Workers’ Comp Pioneer: Former Chief Appeals Panel Judge Passes Away
Stark Orben Sanders, Jr., attorney, judge, career military officer
and long-time resident of San Antonio and Garden Ridge, Texas,
passed away at the age of 77 on February 4, 2012 in San Antonio,
Texas. Sanders was a pioneer in the post Senate Bill 1 workers’
Sanders received a Juris Doctor Degree in June 1960 from
Indiana University prior to embarking upon a distinguished career
in the United States Air Force Judge Advocate General's Corps.
Among Sanders’ many achievements in the Air Force was his
service as an Appellate Military Judge on the Air Force Court of
Military Review from July 1974 to July 1979. He retired from the
Air Force as a Colonel.
Stark Sanders Following his distinguished military career, Sanders served for
ten years as the Chief Appeals Judge at the Texas Workers’
Compensation Commission (TWCC) in Austin, Texas. He shaped the Texas workers’ compensation
system with his leadership and mentoring of TWCC’s Appeals Panel judges.
Sanders is survived by his wife, Carolyn Brown Sanders of Garden Ridge, Texas, two daughters and
Tributes Pour in From Former Colleagues and Attorneys Who Practiced Before TWCC
Todd K. Brown, the former Executive Director of TWCC, said Sanders believed that public service
was an honorable service and brought the highest honor to public service. Brown said Stark Sanders
was truly one of the most professional public servants he ever had the opportunity to be associated
“After an honorable career in uniform serving our country, Stark Sanders stepped up and became a
pioneer in the Texas workers' compensation system,” said Brown. “He established the most efficient
and balanced workers compensation dispute resolution system in the country.”
Sue Kelley, former General Counsel of the Texas Workers’ Compensation Commission (TWCC)
and Appeals Panel Judge, said she was shocked when she heard the news of Sanders’ passing.
“Stark Sanders was a great judge, a top notch mentor, and a thoroughly enjoyable colleague and
human being,” said Kelley. “My best thoughts go out to his family.”
Steve Nichols, manager of workers’ compensation services at the Insurance Council of Texas and
former member of the TWCC’s Medical Review Division, recalled Sanders as a trail blazer in the
early days of the TWCC. Nichols said Sanders leaves behind a great legacy that shall endure for
many years to come.
“Stark Sanders was charged with building an appeals tribunal that was the last stop for workers’
compensation disputes prior to the court house,” said Nichols. “He used his experience as a former
Air Force military judge, great intellect and common sense to build an Appeals Panel that had a
significant impact on the Texas workers’ compensation system in the 1990s and beyond.”
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 92
Joe Anderson, an Austin attorney and founding partner of Burns Anderson Jury & Brenner, L.L.P.,
praised Sanders’ honesty and said he left a mark on the Texas workers’ compensation system.
“Stark Sanders was one of the Appeals Panel judges dedicated to strictly interpreting the law with
fierce intellectual honesty,” said Anderson. “He had a challenging job interpreting the then “new”
workers’ compensation law when it was truly “new.”
Anderson said, “Stark Sander resisted political pressure to bend decisions to whichever ever way the
winds happened to be blowing during those early tumultuous years. He left a mark in those early
decisions that served as a guide for all of us as the body of law at the Appeals Panel level developed
in those days.”
Kevin McGillicuddy, Director of Workers' Compensation at Parker & Associates, credited Sanders
with implementation of a very important provision of Senate Bill 1 which was passed during a
special session of the Texas Legislature in 1989.
“Stark Sanders did marvelous work in implementing the provisions of the "New Law" relating to the
work of the appeals panels of the Texas Workers' Compensation Commission,” said McGillicuddy.
“He and his fellow appeals judges wrote very thoughtful and thorough decisions that helped
immensely in setting out the TWCC's interpretation of the "New Law" and consequently helped all
parties to a then new system arrive at better and more consistent claims decisions than would
otherwise have been the case.”
Bobby Stokes, a shareholder at Flahive Ogden & Latson, P.C., said Texas workers’ compensation
stakeholders owe Sanders a great debt of gratitude for the great work he did in establishing an
effective appeals tribunal.
“At the time that Judge Stark Sanders became associated with the Texas workers compensation
system, the former dispute resolution process had been radically replaced by the system that we have
today,” said Stokes. “It seems hard to imagine now, but no one -- not even the legislators who
designed the system --knew how it would perform in practice. There were no benefit review officers,
no contested case hearing officers, and no appeals panel judges. There was just a six-member
commission, an executive director, a 300-page statute and Judge Sanders.”
Sokes said, “Through the application of his extraordinary organizational skills, a broad association
of legal colleagues, and untold hours of hard work, Judge Sanders built the foundation of the Texas
workers' compensation system that endures today. This is a legacy that all too few system stake-
holders realize today. However, it is a legacy that every system stakeholder should remember. We all
owe Judge Sanders a great debt of gratitude.”
Do Not Miss An Opportunity to Earn Workers’ Comp Continuing Education Hours
Do you need CE or CLE hours and a wholesome lunch?
The Insurance Council of Texas will be presenting their 2012 Spring Workers' Compensation
Seminar in the Dallas – Fort Worth area on March 27, 2012 and Austin on April 10, 2012.
Register online today and come learn about new developments and hot button issues facing
Texas workers’ compensation stakeholders.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 93
Workers’ Compensation Events Calendar
Texas Department of Insurance
Public Meetings and Hearings
The Texas Department of Insurance (TDI) does not currently have any public meetings or hearings
The Texas Department of Insurance has no stakeholder meetings scheduled at this time.
Division of Workers’ Compensation
Public Meetings and Hearings
The Division of Workers’ Compensation (DWC) does not currently have any public meetings or
The Division of Workers’ Compensation (DWC) does not currently have any stakeholder meetings
The DWC continues to hold a series of educational seminars for doctors and other stakeholders
throughout Texas. The event dates and locations are available on the Agency Calendar on the TDI
Insurance Council of Texas
2012 Mid-Year Property & Casualty Insurance Symposium
ICT and AFACT will host the 2012 Mid-Year Property & Casualty Insurance Symposium in Austin,
Texas on July 12, 2012. Registration for this event will be available on ICT’s website.
2012 Workers’ Compensation Conference
ICT will host its 2012 Workers’ Compensation Conference in September of 2012 on a date to be
2012 Workers’ Compensation Seminars
ICT will host its 2012 Spring Workers’ Compensation Seminars in Addison, Texas on March 27,
2012 and in Austin, Texas on April 10, 2012. Information about the seminars and registration is
available on ICT’s website.
Copyrighted Publication of the Insurance Council of Texas –February 21, 2012 Page 94