Bad Faith and Texas Mutual Insurance: Plausible Deniability
Just how well the workers' comp system is working in Texas remains something of a mystery. While Amy Lee, director of the state's Workers' Compensation Research and Evaluation Group, can churn out report after report on initial denial rates — they have been increasing and were at 41 percent in 2004 among the top 25 carriers — she can't tell you how many of these denials were reversed.
"The data is not possible," she says. Since each case may have a number of contested parts and there are, for example, 20 possible different types of compensability issues, adding everything up in one neat package is something that, to date, the state has been disinclined or unable to do.
In the 2006 Biennial Report of the Texas Department of Insurance to the state legislature, the latest figures available were for 2004, when 26 percent of all medical claims were initially denied.
In a report Lee did for fiscal year 2007, workers' comp came in second among overall fraud referrals, with 28 cases. This was a 300 percent increase over 2006, attributed to its being "a new area of investigation for the fraud unit." Before 2006, it hadn't been tracked.
Sometimes injured workers' claims are denied because they don't meet deadlines for filing forms, Lee says. Most of the time, it has to do with whether the injury was work-related.
Brian White, deputy public counsel of the independent Office of Injured Employee Counsel, says he has found that "most cases are very legitimate."
There are other reasons for the increase in denials that have nothing to do with bad faith but are just trends, Lee says. "Texas has historically had higher medical costs per claim compared to other states for similar types of injuries." That was a factor in the reform legislation.
Since 2001, the majority of medical denials are because the insurance carriers say that the treatment being billed was not medically necessary, according to the biennial report.
In many parts of Texas, it's difficult to find and hire an attorney who will take on workers' comp cases, White says. Even if an injured worker wins at the administrative level, if the carrier appeals in civil court it starts a time clock running, and if the worker can't find someone to help him soon enough, he loses by default.
White's office is proposing that court-appointed attorneys be made available in such cases, with the funding for this coming out of the state's Subsequent Injury Fund.
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