Proposed Rules Title 28

TITLE 28. INSURANCE

PART 1. TEXAS DEPARTMENT OF INSURANCE

The Texas Department of Insurance (TDI) proposes amendments to 28 TAC §9.1 and §9.401, concerning the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) and the Texas Title Insurance Statistical Plan (Statistical Plan). On September 1, 2023, the Texas Title Land Association (TLTA) submitted to TDI proposed new and amended Basic Manual rules and items. The commissioner of insurance considered the proposed items submitted by the title industry and TDI staff on November 15, 2023, at the Texas Title Insurance Public Hearing, Docket No. 2841. The commissioner called the hearing under Insurance Code §2703.202 and §2703.206.

On December 21, 2023, the commissioner issued Commissioner's Order No. 2023-8429, approving the proposed new and amended items submitted by TLTA and TDI, with changes and corrections to some of the items, as noted in the order. The order and all the proposed items, with their explanations and detailed justifications, can be viewed on www.tdi.texas.gov/rules/2023/exrules/html.

EXPLANATION. The proposed new and amended rule items are identified by the item numbers used for the November 15, 2023, hearing submissions, except for "2023" preceding all the item numbers. This was added by TDI after the hearing for the exhibits referenced in this proposal. This proposal is necessary to:

- adopt new rules, forms, and rates;

- modify or replace existing rules and forms;

- facilitate the administration and regulation of title insurance; and

- update, correct, clarify, or harmonize title insurance rules and forms.

Details for the proposed new and amended items are provided in this proposal. In some of these items, TDI made substantive and nonsubstantive changes to the original submissions. The description of each item includes a brief explanation of any substantive changes.

At the hearing on November 15, 2023, the petitioners withdrew Items 2023-15, 2023-17, and 2023-20 from consideration. The petitioners also withdrew Items 2023-8, 2023-10, 2023-12, 2023-14, and 2023-19 and replaced them with amended versions of those submissions, labeling them as 2023-A, 2023-B, 2023-C, 2023-D, and 2023-E, respectively.

The proposed amendments to §9.1 and §9.401 and the proposed new and amended rule items in the Basic Manual and Statistical Plan are described in the following paragraphs.

Section 9.1. Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas. Amendments to §9.1 propose to adopt by reference the version of the Basic Manual effective on November 1, 2024. The section is also amended to remove text providing for the Basic Manual to be available via mail and email because it is accessible on TDI's website.

Section 9.401. Texas Title Insurance Statistical Plan. Amendments to §9.401 propose to adopt by reference the version of the Statistical Plan effective January 1, 2025. The section is also amended to update the mailing address from which the Statistical Plan is available.

Item 2023-1. TDI proposes to amend Rate Rule R-11.c, affecting the following Basic Manual items:

1. Form T-3 (Assignment of Mortgage Endorsement) - TDI proposes to increase the premium to the minimum Basic Premium Rate plus $100 for each additional full or partial 12-month period after the first anniversary of the initial policy date. Currently the premium is the minimum Basic Premium Rate.

2. Form T-38 (Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release from Personal Liability Endorsement) - TDI proposes to increase the premium to the minimum Basic Premium Rate plus $25 per year between the issuance of the endorsement and the policy. Currently, the premium is $100 plus $10 per year between the issuance of the endorsement and the policy.

3. Form T-3 (Down Date Endorsement) - TDI proposes to increase the premium from $50 to $100 for nonresidential construction projects. The premium remains $50 for residential construction projects.

TDI also makes nonsubstantive edits that change the lettering convention on the subsections from lowercase to uppercase and plain language edits.

Item 2023-2. TDI proposes to amend Rate Rule R-15.b to increase the premium for the Form T-3 "down date endorsement" for Owner's Policies from $50 to $100 for nonresidential construction projects. The premium remains $50 for residential construction projects.

Item 2023-3. TDI proposes to amend Rate Rule R-30 to increase the premium for Access Endorsements (Form T-23) from $100 for all Access Endorsements issued under a policy to $100 for each Access Endorsement issued under a policy. TDI also makes nonsubstantive plain language edits.

Item 2023-4. TDI proposes to amend Form T-1R, Residential Owner's Policy of Title Insurance One-to-Four Family Residences, to remove the parenthetical "(Applies to Owner's Policy only)" in Schedule B, Item 3 of the form.

Item 2023-5. TDI proposes to amend Form T-16, Loan Policy Aggregation Endorsement, to make changes to conform more closely to the American Land Title Association (ALTA) form used in other states. TDI also makes nonsubstantive plain language edits, renumbers the subsections, and restructures the form text for greater clarity and easier reading.

Item 2023-6. TDI proposes to amend Forms T-19, T-19.1, T-19.2, and T-19.3, which are a series of endorsements that include coverage for damage to improvements because of mineral extraction or development. The proposed amendments make coverage across the forms more consistent and update Forms T-19.2 and T-19.3 to conform with their model form equivalents from ALTA.

Item 2023-7. TDI proposes to amend Forms T-1 and T-2 to clarify provisions related to survey coverage.

Item 2023-9. TDI proposes to amend subsection C of Procedural Rule P-20 to allow title insurers to specify for which year the policy insures that taxes are not yet due and payable.

Item 2023-11. TDI proposes to amend Procedural Rule P-57 to allow for more legal entities used in estate planning to be an additional insured on the Additional Insured Endorsement (Form T-26) and to allow the endorsement to be added up to 90 days after title is conveyed to the additional insured.

Item 2023-13. TDI proposes to amend Procedural Rule P-2 and create a new Form T-47.1 to allow for an unsworn declaration to be used to affirm that a property is essentially unchanged since a previous survey was issued. New Form T-47.1 can be used instead of the Form T-47, Survey Affidavit. Form T-47 will still be available. TDI proposes to amend Form T-47 to allow for a single declarant and makes nonsubstantive plain language updates.

Item 2023-16. TDI proposes to amend Procedural Rule P-9.b.8, Rate Rule R-11.f, and Form T-35 to clarify that the endorsement covers only revolving credit arrangements for construction projects, not other kinds of future advances.

Item 2023-18. TDI proposes a new endorsement, Energy Project - Minerals and Surface Damage Endorsement (Form T-19.4), for surface damage coverage for severable improvements that would not be insured under the other forms that cover surface damage related to mineral extraction (Forms T-19, T-19.1, T-19.2, and T-19.3). TDI also proposes new Procedural Rule P-50.2 to govern use of the new endorsement, and new Rate Rule R-29.2 to set a premium of 5% of the Basic Premium Rate. The endorsement will only be used if it is issued simultaneously with an energy project endorsement, as described in Item 2023-B.

Item 2023-21. TDI proposes to amend Internal Control No. 5 to explicitly allow for electronic signatures on escrow checks.

Item 2023-22. TDI proposes to update Form PC-150 to align with the Texas State Board of Public Accountancy standards.

Item 2023-23. TDI proposes to amend Form T-11 to correct a clerical error on the form where the last item on a numbered list did not have its corresponding number.

Item 2023-24. TDI proposes to amend Form PC-417 to update TDI's mailing address on the form.

Item 2023-25. TDI proposes to amend Licensing Forms FINT 08, FINT 09, FINT 10, FINT 129, and FINT 143 to remove the notarization requirement and replace it with an unsworn declaration.

Item 2023-26. TDI proposes to amend the Statistical Plan to update codes related to Rate Rule R-8 so that the plan matches the transaction descriptions that changed when Rate Rule R-8 was amended in 2019. TDI proposes to further amend the Statistical Plan to add codes that match the rate changes and new endorsements in Items 2023-1, 2023-18, 2023-B, and 2023-C. TDI also proposes to amend descriptions, where appropriate, for clarification and consistency of presentation. TDI proposes several nonsubstantive style and formatting changes to reflect current TDI style preferences. These include changing the font to Segoe UI, increasing the type size to 12 point, and improving text alignment and table formats. Item 2023-26 combines Items 26 and 27 from Commissioner's Order No. 2023-8429 for more efficiency since both items addressed changes to the Statistical Plan.

Item 2023-27. TDI proposes to update TDI's mailing address, email address, and physical address where they are listed in the Basic Manual to reflect TDI's move from its previous location in the William P. Hobby Building at 333 Guadalupe Street, Austin, Texas 78701, to the Barbara Jordan State Office Building at 1601 Congress Avenue, Austin, Texas 78701, and also added TDI's Title Examinations email address as another way to communicate with TDI. These changes to the Basic Manual were not proposed at the hearing but are nonsubstantive and necessary to include in the proposal. This item changes TDI's address in the following places in the Basic Manual:

- Section V, Exhibit & Forms, Report forms for Audit of Trust Funds (TDI Title Forms PC 150)

- Section VI, Administration Rules, Rule D-1: Requirements for Ceasing Operations by Agents and Direct Operations, Section I, A

- Section VI, Administration Rules, Rule S1: Minimum Capitalization Standards for Title Agents Pursuant to §2651.012 and Certification and Procedure to Determine Value of Assets Pursuant to §2651.158, Section III, C, D, and E

- Section VI, Administration Rules, Rule S.4: Title Company Requirements, Procedures, and Forms for Providing Privileged Title Agent Financial Solvency Information to the Department Pursuant to §2651.011, # A - 2 and 3, # B - 1 and 2

- Section VI, Administration Rules, Rule S.5: Filing of Title Agent's Quarterly Withholding Tax Report, Section III and Section IV

- Section VI, Administration Rules, Rule S.7: Surety Bond for Title Agents to Comply with Minimum Capitalization Standards, Section I, # E

Item 2023-A. TDI proposes to amend Form T-50, the Insured Closing Service Letter, to conform more closely to recent changes in ALTA's model Closing Protection Letter, including the addition of language that excludes computer-related fraud. TDI makes nonsubstantive changes to update the formatting to TDI style, including the use of 12-point Segoe UI font, plainer language for the letter's contents, consistently numbered and lettered paragraphs, and clearer organization of the information.

Item 2023-B. TDI proposes to add six new endorsements that are specifically tailored for different scenarios involving coverage of severable improvements in connection with electrical energy projects: Forms T-55, T-55.1, T-55.2, T-55.3, T-55.4, and T-55.5. TDI also proposes amendments to Procedural Rule P-72 to govern use of the new endorsements and a new rate rule that will charge 5% of the Basic Premium Rate for each endorsement (Rate Rule R-37). Amended Procedural Rule P-72 will also govern the use of an existing severable improvements endorsement form (Form T-54), and new Rate Rule R-37 will establish a charge of 5% of the Basic Premium Rate for the endorsement. TDI makes nonsubstantive changes to update the formatting to TDI style, including changing the font to 12-point Segoe UI, plainer language for the form contents where possible, consistently numbered and lettered paragraphs, and a clearer organization of the information.

Item 2023-C. TDI proposes to amend Procedural Rule P-1.u. to broaden the description of residential real property. The amendments will allow immediately contemplated improvements to be considered residential properties on currently unimproved land. The amendments will also loosen the acreage restrictions, including removing the agricultural production requirement for large residential properties between 10 and 200 acres. TDI also proposes to amend Rate Rule R-16 by allowing a 5% survey coverage rate to be applied to residential property when an Owner's Policy (Form T-1) is issued, not just when a Residential Owner Policy (Form T-1R) is issued. TDI makes nonsubstantive changes to update the formatting to TDI style, including to the use of 12-point Segoe UI font, plainer language for the form contents where possible, consistently numbered and lettered paragraphs, and a clearer organization of the information.

Item 2023-D. TDI proposes to amend subparagraph 2.b of the Equity Loan Mortgage Endorsement (Form T-42) by deleting the existing language and inserting a statement that the subparagraph is intentionally deleted because of an amendment to the Texas Constitution. The Texas Constitution amendment made the subparagraph obsolete.

Item 2023-E. TDI proposes to amend subsections B, C, D, and F of Rate Rule R-5 (Simultaneous Issue of Owner's Policy and Loan Policy). The amendments to subsections B, C, and D clarify that the simultaneous issue discount is available in combination with other applicable rate discounts. The amendments to subsection F lower the Owner's Policy amount threshold for that subsection from $5 million to $1 million. They also restrict the subsection to nonresidential property transactions and qualify that the subsequent Loan Policy must be issued by the same company that issued the Owner's Policy. Finally, the proposed amendments include nonsubstantive editorial and formatting changes to conform the Basic Manual items to the TDI style and to improve clarity. These changes update the formatting to TDI style, including the use of 12-point Segoe UI font, plainer language for the form contents where possible, consistently numbered and lettered paragraphs, and a clearer organization of the information.

TDI received comments at the public hearing on November 15, 2023, and received comments on TLTA's formal petition, which was posted on TDI's website on September 15, 2023. The comments included TLTA proposing revisions to the exhibits in its formal petition, and supportive comments from other stakeholders. TDI considered these comments when drafting this proposal.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. David Muckerheide, assistant director of the Property and Casualty Division, has determined that during each year of the first five years the proposed amendments are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the amendments, other than those imposed by the statute. Mr. Muckerheide made this determination because the proposed amendments do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.

Mr. Muckerheide does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.

PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed amendments are in effect, Mr. Muckerheide expects that administering them will have the public benefit of ensuring that TDI's rules conform to and support the purposes of the Title Insurance Act by adopting by reference updated versions of the Basic Manual and Statistical Plan, which will better protect consumers and purchasers of title insurance policies and provide for adequate and reasonable rates of return for title insurance companies and agents. Some of the revisions to the Basic Manual will also have public benefits of (1) making insuring forms easier to understand and reducing uncertainty, (2) making new title insurance coverage available, (3) supporting the availability and flexibility of existing title insurance coverage, and (4) reducing the administrative burden of some underwriting and regulatory processes.

Mr. Muckerheide expects that the proposed adoption by reference of the revised Basic Manual will not impose costs of compliance for title agents and underwriters. The primary costs attributable to this proposal are the costs of updating the amended forms and adding new forms for consistency with the revised Basic Manual. In Texas, title forms are promulgated, which means all title agents and underwriters must use the same forms. Title agents and underwriters typically have subscriptions with software vendors whose services include providing Basic Manual forms; these vendors make any necessary form updates and additions as well as associated data capture for Statistical Plan reporting. Vendors typically do not charge extra for these updates and additions. The services are included in the fee that title agents and underwriters pay to vendors.

The other aspect of this proposal includes adoption by reference of new or amended rate rules and procedural rules. Again, software vendors will absorb some or all of the costs associated with these changes as part of the services ordinarily included in their subscriptions at no extra charge. Any changes in underwriting labor that may be incidental to the new or amended rate rules and procedural rules will be offset, at least to some extent, by the proposed rate rule items that increase rates in some cases or introduce charges for new endorsements. Other changes include removing notarization requirements on licensing forms, removing notarization requirements for survey coverage by allowing use of an unsworn declaration rather than an affidavit, and allowing escrow checks to be signed electronically. These changes should reduce time and cost expenditures for licensees.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the proposed adoption by reference of the revised Basic Manual and Statistical Plan will not have an adverse economic effect on small or micro businesses, or on rural communities. As described in the preceding Public Benefit and Cost Note section, the changes are unlikely to impose an actual cost on title agents or underwriters, and this includes any that are small or micro businesses. Further, they do not create requirements applicable to rural communities. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.

EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal is unlikely to impose a cost on regulated persons. Even if the proposal were to impose such a cost, no additional rule amendments are required under Government Code §2001.0045 because the sections as proposed and the changes to the Basic Manual and Statistical Plan are necessary to implement legislation. The proposed rule implements Insurance Code Chapters 2551, 2651, 2652, and 2703. Under the Title Insurance Act, the commissioner is responsible for and required to promulgate title insurance rates and forms, as well as adopt necessary rules governing their use. If any changes impose additional costs, such as implementation costs, it is reasonable for TDI to apply the implementation exception in Government Code §2001.045 to the ongoing concern of promulgating rates and forms and regulating the business of title insurance, as required by the Legislature.

GOVERNMENT GROWTH IMPACT STATEMENT. TDI has determined that for each year of the first five years that the proposed amendments and the Basic Manual's new and amended rules are in effect, the proposed rule:

- will not create or eliminate a government program;

- will not require the creation of new employee positions or the elimination of existing employee positions;

- will not require an increase or decrease in future legislative appropriations to the agency;

- will not require an increase or decrease in fees paid to the agency;

- will not create a new regulation;

- will expand, limit, or repeal an existing regulation;

- will not increase or decrease the number of individuals subject to the rule's applicability; and

- will not positively or adversely affect the Texas economy.

TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on July 1, 2024. The full text of the adoption-by-reference materials for 28 TAC §9.1 and §9.401 can be viewed at www.tdi.texas.gov/rules/2023/exrules.html and is available for review in the Office of the Chief Clerk. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.

To request a public hearing on the proposal, submit a request before the end of the comment period to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030. The request for public hearing must be separate from any comments and received by TDI no later than 5:00 p.m., central time, on July 1, 2024. If a public hearing is held, TDI will consider written and oral comments presented at the hearing.

SUBCHAPTER A. BASIC MANUAL OF RULES, RATES AND FORMS FOR THE WRITING OF TITLE INSURANCE IN THE STATE OF TEXAS

28 TAC §9.1

STATUTORY AUTHORITY. TDI proposes amendments to §9.1 under Insurance Code §§2551.003, 2651.002, 2651.007, 2652.051, 2703.054, 2703.101, 2703.151, 2703.208, and 36.001.

Insurance Code §2551.003 authorizes the commissioner to adopt and enforce rules that prescribe underwriting standards and practices, that define risks, and that the commissioner determines are necessary to accomplish the purposes of the Title Insurance Act.

Insurance Code §2651.002 requires that a title agent must file an application for an agent's license on forms provided by TDI.

Insurance Code §2651.007 requires that TDI prescribe title agent licensing renewal forms.

Insurance Code §2652.051 requires that an escrow officer file an application for an escrow officer's license on forms provided by TDI.

Insurance Code §2703.054 authorizes the commissioner to amend owner title insurance policy language and endorsements to implement Insurance Code Chapter 2703, Subchapter A.

Insurance Code §2703.101 requires the commissioner to prescribe an owner title policy form to be used in connection with a transaction involving residential real property in this state.

Insurance Code §2703.151 requires the commissioner to fix and promulgate premiums rates charged by title insurance companies and agents.

Insurance Code §2703.208 provides that any addition or amendment to the Basic Manual may be proposed and adopted by reference by publishing notice in the Texas Register.

Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.

CROSS-REFERENCE TO STATUTE. Section 9.1 implements Insurance Code §§2551.003, 2703.054, 2703.101, and 2703.151.

§9.1.Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas.

The Texas Department of Insurance adopts by reference the Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) as amended, effective November 1, 2024 [~~February 1, 2021~~]. The Basic Manual is available [~~from the Texas Department of Insurance, Mail Code 104-PC, P.O. Box 149104, Austin, TX 78711-2040. The Basic Manual is also available~~] on the TDI website at www.tdi.texas.gov [~~, and by email from ChiefClerk@tdi.texas.gov~~].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 14, 2024.

TRD-202402170

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: June 30, 2024

For further information, please call: (512) 676-6555

SUBCHAPTER C. TEXAS TITLE INSURANCE STATISTICAL PLAN

28 TAC §9.401

STATUTORY AUTHORITY. TDI proposes amendments to §9.401 under Insurance Code §§2551.003, 2703.151, 2703.153, 2703.208, and 36.001.

Insurance Code §2703.151 requires the commissioner to fix and promulgate premiums rates charged by title insurance companies and agents.

Insurance Code §2703.153 requires the commissioner to develop and maintain a statistical report for the use of fixing and promulgating premium rates. The commissioner is required to evaluate the statistical report not less than every five years to see whether changes are required and amend it as necessary.

Insurance Code §2703.208 provides that any addition or amendment to the Basic Manual may be proposed and adopted by reference by publishing notice in the Texas Register.

Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.

CROSS-REFERENCE TO STATUTE. Section 9.401 implements Insurance Code §2703.153.

§9.401.Texas Title Insurance Statistical Plan.

The Texas Department of Insurance adopts by reference the rules in the Texas Title Insurance Statistical Plan [~~Texas Title Insurance Statistical Plan~~] as amended effective January 1, 2025 [~~April 1, 2020~~]. This document is published by and is available from the Texas Department of Insurance, MC: PC-ACT, [~~Mail Code 105-5D,~~] P.O. Box 12030, [~~149014,~~] Austin, Texas 78711-2030 [~~78714-9104~~]. This document is also available on the TDI website at www.tdi.texas.gov.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 14, 2024.

TRD-202402171

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: June 30, 2024

For further information, please call: (512) 676-6555

PART 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

CHAPTER 127. DESIGNATED DOCTOR PROCEDURES AND REQUIREMENTS

SUBCHAPTER A. DESIGNATED DOCTOR SCHEDULING AND EXAMINATIONS

28 TAC §127.1, §127.25

INTRODUCTION. The Texas Department of Insurance, Division of Workers' Compensation (DWC) proposes to amend 28 TAC Chapter 127, concerning designated doctor (DD) procedures and requirements. DWC proposes amending §127.1, concerning DD examination requests and §127.25, concerning failure to attend a DD examination. Section 127.1 and §127.25 implement House Bill 2468, 88th Legislature, Regular Session (2023), which amended Labor Code §408.0041 and added Labor Code §408.1615.

EXPLANATION. The amendments to 28 TAC §127.1 and §127.25 are necessary to implement HB 2468. HB 2468 amended Labor Code §408.0041 to include individuals receiving lifetime income benefits under new Labor Code §408.1615. Section 408.1615 allows insurance carriers to suspend benefits if the first responder does not submit to a DD examination as required by Labor Code §§408.0041(a), 408.0041(f), or 408.1615(h). DWC proposes to amend 28 TAC §127.1 and §127.5 to reflect these statutory changes.

In addition, the proposed amendments include nonsubstantive editorial and formatting changes to conform the sections to the agency's current style and to improve the rule's clarity.

Section 127.1 concerns requesting DD examinations. The injured employee or an insurance carrier may ask DWC to order, or DWC on its own motion may order, an examination by a DD to resolve questions about the employee's injury. Section 127.1(d)(2) states that DWC will deny a request for a DD examination under §127.1 if the request would require a DD examination that violates certain statutes. The proposed amendment includes a reference to new Labor Code §408.1615 as one of these statutes because HB 2468 amended §408.0041 to include individuals receiving lifetime income benefits under §408.1615.

Section 127.25 concerns the suspension, reinitiation, and reinstatement of benefits when an injured employee fails to attend a DD examination. Amending §127.25 is necessary to implement HB 2468. HB 2468 amended Labor Code §408.0041 to include individuals receiving lifetime income benefits under new Labor Code §408.1615. The amendments to §127.25 allow for the suspension of lifetime benefits received under §408.1615 and for the reinstatement of those benefits after completing a missed DD examination.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Deputy Commissioner for Health & Safety Mary Landrum has determined that during each year of the first five years the proposed amendments are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the sections, other than that imposed by the statute. This determination was made because the proposed amendments do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.

Deputy Commissioner Landrum does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.

PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed amendments are in effect, Deputy Commissioner Landrum expects that enforcing and administering the proposed amendments will have the public benefit of ensuring that DWC's rules conform to Labor Code §§408.0041 and 408.1615.

Deputy Commissioner Landrum expects that the proposed amendments will not increase the cost to comply with Labor Code §§408.0041 and 408.1615 because they do not impose requirements beyond those in the statutes. Labor Code §408.0041 requires an injured employee, under certain circumstances, to attend a DD examination to resolve questions about the injury. Labor Code §408.1615 requires the commissioner to adopt rules establishing procedures for the suspension and reinstatement of lifetime income benefits under §408.1615. As a result, the cost associated with including in the rule those individuals receiving lifetime income benefits under §408.1615 does not result from the enforcement or administration of the proposed amendments.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. DWC has determined that the proposed amendments will not have an adverse economic effect or a disproportionate economic impact on small or micro businesses, or on rural communities. The amendments implement HB 2468 by including individuals receiving lifetime income benefits under Labor Code §408.1615 into existing rules. As a result, and in accordance with Government Code §2006.002(c), DWC is not required to prepare a regulatory flexibility analysis.

EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. DWC has determined that this proposal does not impose a possible cost on regulated persons. Also, no additional rule amendments are required under Government Code §2001.0045 because the proposed amendments are necessary to implement legislation. The proposed rule implements Labor Code §§408.0041 and 408.1615.

GOVERNMENT GROWTH IMPACT STATEMENT. DWC has determined that for each year of the first five years that the proposed amendments are in effect, the proposed rule:

- will not create or eliminate a government program;

- will not require the creation of new employee positions or the elimination of existing employee positions;

- will not require an increase or decrease in future legislative appropriations to the agency;

- will not require an increase or decrease in fees paid to the agency;

- will not create a new regulation;

- will expand, limit, or repeal an existing regulation;

- will increase or decrease the number of individuals subject to the rule's applicability; and

- will not positively or adversely affect the Texas economy.

DWC made these determinations because the proposed amendments expand the existing regulation in Chapter 127 to apply to individuals receiving lifetime income benefits and increase the number of individuals subject to the rule. These amendments are required to implement the changes to Labor Code §§408.0041 and 408.1615 by HB 2468.

TAKINGS IMPACT ASSESSMENT. DWC has determined that no private real property interests are affected by this proposal, and this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

REQUEST FOR PUBLIC COMMENT. DWC will consider any written comments on the proposal that DWC receives no later than 5:00 p.m., Central time, on July 1, 2024. Send your comments to RuleComments@tdi.texas.gov; or to Texas Department of Insurance, Division of Workers' Compensation, Legal Services, MC-LS, P.O. Box 12050, Austin, Texas 78711-2050.

DWC will also consider written and oral comments on the proposal at a public hearing at 10:00 a.m., Central time, on June 25, 2024. The hearing will take place remotely. DWC will publish details of how to view and participate in the hearing on the agency website at www.tdi.texas.gov//alert/event/index.html.

STATUTORY AUTHORITY. DWC proposes amendments to §127.1 and §127.25 under Labor Code §§408.0041, 408.1615, 402.00111, 402.00116, and 402.061.

Labor Code §408.0041 provides that the commissioner may order a DD examination to resolve questions about an individual's injuries. It also provides that an insurance carrier may suspend benefits for a period in which the individual does not attend the required DD examination, and provides for when the insurance carrier must reinstate benefits.

Labor Code §408.1615 provides lifetime income benefits for certain first responders who sustain a serious bodily injury, other than an injury described by §408.161, in the course and scope of the employee's employment or volunteer service as a first responder that renders the employee permanently unemployable.

Labor Code §402.00111 provides that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority under Title 5 of the Labor Code.

Labor Code §402.00116 provides that the commissioner of workers' compensation shall administer and enforce this title, other workers' compensation laws of this state, and other laws granting jurisdiction to or applicable to DWC or the commissioner.

Labor Code §402.061 provides that the commissioner of workers' compensation shall adopt rules as necessary to implement and enforce the Texas Workers' Compensation Act.

CROSS-REFERENCE TO STATUTE. Section 127.1 and §127.25 implement Labor Code §§408.0041 and 408.1615. Labor Code §408.0041 was enacted by HB 2600, 77th Legislature, Regular Session (2001) and amended by HB 7, 79th Legislature, Regular Session (2005); SB 1169, 80th Legislature, Regular Session (2007); HB 2004, 80th Legislature, Regular Session (2007); HB 2605, 82nd Legislature, Regular Session (2011); and HB 2468, 88th Legislature, Regular Session (2023). Labor Code §408.1615 was enacted by HB 2468, 88th Legislature, Regular Session (2023).

§127.1.Requesting Designated Doctor Examinations.

(a) - (c) (No change.)

(d) Denial of a request. The division will determine whether good cause exists on a case-by-case basis. The division will deny a request for a designated doctor examination and provide a written explanation for the denial to the requester if:

(1) the request does not comply with any of the requirements of subsection (b) or (c) of this section;

(2) the request would require the division to schedule an examination that violates Labor Code §§408.0041, 408.123, [or] 408.151, or 408.1615;

(3) there is an unresolved dispute about compensability reported under §124.2 of this title (relating to Insurance Carrier [~~Reporting and~~] Notification Requirements); or

(4) the request lacks any legal or factual basis that would reasonably merit approval.

(e) - (f) (No change.)

§127.25.Failure to Attend a Designated Doctor Examination.

(a) Suspension of benefits. An insurance carrier may suspend temporary income benefits (TIBs), or lifetime income benefits under §408.1615, if an injured employee fails, without good cause, to attend a designated doctor examination or a referral examination under §127.10(c) of this title.

(b) - (d) (No change.)

(e) Reinitiation of TIBs [~~benefits~~]. The insurance carrier must reinitiate [~~reinstate~~] TIBs effective on the date the injured employee submitted to the rescheduled examination under subsection (c) of this section or the date the examination was scheduled at the injured employee's request under subsection (d) of this section, unless the designated doctor's report indicates that the injured employee has reached MMI or is otherwise not eligible for income benefits. The reinitiation of TIBs must occur no later than the seventh day following:

(1) the date the insurance carrier was notified that the injured employee submitted to the examination; or

(2) the date the insurance carrier was notified that the division found the injured employee had good cause for not attending the examination.

(f) Reinstatement of lifetime income benefits. The insurance carrier must reinstate lifetime income benefits under §408.1615 effective on the date the injured employee submitted to the rescheduled examination under subsection (c) of this section, or the date the examination was scheduled at the injured employee's request under subsection (d) of this section, unless the designated doctor's report indicates that the injured employee is no longer eligible for lifetime income benefits. The reinstatement of lifetime income benefits must occur no later than the seventh day following:

(1) the date the insurance carrier was notified that the injured employee submitted to the examination; or

(2) the date the insurance carrier was notified that the division found the injured employee had good cause for not attending the examination.

(g) [~~(f)~~] Benefits during suspension. An injured employee is not entitled to TIBs or lifetime income benefits under §408.1615 during the period when the insurance carrier suspended benefits under this section unless the injured employee later submits to the examination, and:

(1) the division finds that the injured employee had good cause for not attending the examination; or

(2) the insurance carrier determines that the injured employee had good cause for not attending the examination.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 17, 2024.

TRD-202402236

Kara Mace

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: June 30, 2024

For further information, please call: (512) 804-4703

CHAPTER 131. BENEFITS--LIFETIME INCOME BENEFITS

INTRODUCTION. The Texas Department of Insurance, Division of Workers' Compensation (DWC) proposes to amend 28 TAC Chapter 131, concerning lifetime income benefits. DWC proposes amending §131.1, concerning the initiation of lifetime income benefits, and adding new §§131.10, 131.11, 131.12, 131.13, and 131.14, concerning lifetime income benefits for first responders under Texas Labor Code §408.1615. The proposed amendments and new sections will restructure Chapter 131 into two subchapters. New Subchapter A will include the existing sections of Chapter 131, which are §§131.1, 131.2, 131.3, and 131.4. New Subchapter B will include the new sections of Chapter 131, which are §§131.10, 131.11, 131.12, 131.13, and 131.14. Subchapter B will apply to first responders receiving benefits under §408.1615. The amendments and new sections implement House Bill (HB) 2468, 88th Legislature, Regular Session (2023), which amended Labor Code §408.0041 and enacted Labor Code §408.1615. Section 131.1 implements Labor Code §§408.0041, 408.161 and 408.1615. Sections 131.10, 131.11, 131.12, 131.13, and 131.14 implement Labor Code §408.1615.

EXPLANATION. The amendments to §131.1 and new §§131.10, 131.11, 131.12, 131.13, and 131.14 are necessary to implement HB 2468. HB 2468 enacted Labor Code §408.1615, which allows certain first responders to receive lifetime income benefits.

The proposed amendments and new sections add definitions and create procedures for a first responder's annual certification to the insurance carrier, for the suspension and reinstatement of lifetime income benefits, and for the dispute of a first responder's continuing entitlement to lifetime income benefits.

The proposed amendments and new sections also include nonsubstantive editorial and formatting changes to conform the sections to the agency's current style and to improve the rule's clarity.

Section 131.1 concerns the initiation of lifetime income benefits by the insurance carrier or at the request of the employee, and provides for the approval or denial of those benefits. Amending §131.1 is necessary to implement Labor Code §408.1615, which makes certain first responders eligible for lifetime income benefits. The amendments add a reference to Labor Code §408.1615 under §131.1 to include individuals who are eligible to receive lifetime income benefits under §408.1615.

Section 131.10 concerns definitions in new Labor Code §408.1615. New §131.10 is necessary to add these definitions for the rule's clarity.

Section 131.11 concerns applicability for new Subchapter B. New §131.11 is necessary to implement Labor Code §408.1615, which created lifetime income benefits for certain first responders. Section 131.11 lists who may be entitled to these benefits under §408.1615.

Section 131.12 concerns a first responder's annual certification to the insurance carrier as required by Labor Code §408.1615. New §131.12 is necessary to implement §408.1615 by listing the content, method, and timing of the certification. To help first responders comply with the certification submission required under §408.1615, new §131.12 requires insurance carriers to provide notice to those receiving benefits under §408.1615 by sending a certification to complete 30 days before the certification is due, which includes the anniversary date benefits began to accrue.

Section 131.13 concerns the suspension and reinstatement of lifetime income benefits for first responders under Labor Code §408.1615. New §131.13 is necessary to implement Labor Code §408.1615, which states when an insurance carrier can suspend a first responder's lifetime income benefits under that section and when an insurance carrier must reinstate those benefits. Section 408.1615(i) requires the commissioner, by rule, to ensure that an employee receives reasonable notice of the insurance carrier's basis for the suspension and is provided a reasonable opportunity to complete the annual certification or otherwise respond to the notice. DWC interprets a reasonable opportunity as being 20 days. As a result, new §131.13 requires the insurance carrier to give the first responder a plain-language notice of the basis for the suspension, and requires the first responder to respond to the notice within 20 days of receiving it. In addition, new §131.13 states that if the suspension is due to a missing annual certification, the insurance carrier must reinstate benefits within seven days of receiving the certification. It also states that if the suspension is due to failure to attend a designated doctor examination, the insurance carrier must follow §127.25 of this title for suspension and reinstatement of the first responder's benefits. If the first responder believes that the insurance carrier's assertion that the first responder was employed is not correct, then the first responder would request dispute resolution under Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution). If the suspension is due to employment in any capacity, new §131.13 requires the first responder to submit a new request for lifetime income benefits under §131.1. Finally, new §131.13 clarifies that if the insurance carrier suspends or reinstates benefits under §131.13, the insurance carrier must comply with the electronic notification requirements to DWC in §124.2 and Chapter 124, Subchapter B (relating to Insurance Carrier Claim Electronic Data Interchange Reporting to the Division).

Section 131.14 provides for the dispute of a first responder's continuing entitlement to lifetime income benefits. New §131.14 is necessary to implement Labor Code §408.1615, which allows an insurance carrier to review a first responder's continuing entitlement to the lifetime income benefits more than once in a five-year period if the insurance carrier provides evidence to DWC that the first responder's annual certification is not accurate, and the commissioner finds that the evidence is sufficient. If the evidence is sufficient, the insurance carrier must request a designated doctor (DD) exam to determine whether the first responder remains eligible to receive lifetime income benefits under §408.1615. New §131.14 provides procedures for this process. Once DWC receives the evidence from an insurance carrier, DWC will issue an order stating whether the insurance carrier is entitled to require the first responder to submit to a DD examination under §408.1615(h). If a DD exam is completed, the parties may dispute the DD's opinion on the first responder's continuing entitlement to lifetime income benefits through DWC's dispute resolution process.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Deputy Commissioner for Hearings Allen Craddock has determined that during each year of the first five years the proposed amendments and new sections are in effect, there will be minimal fiscal impact on state and local governments as a result of enforcing or administering the sections, other than that imposed by the statute. This determination was made because the proposed amendments do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.

Deputy Commissioner Craddock does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.

PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed amendments and new sections are in effect, Deputy Commissioner Craddock expects that enforcing and administering the proposed amendments and sections will have the public benefit of ensuring that DWC's rules conform to Labor Code §§408.0041, 408.161 and 408.1615.

Deputy Commissioner Craddock also expects that the proposed amendments and new sections will impose an economic cost on persons required to comply with the rule. Section 131.12 requires insurance carriers to provide notice to first responders receiving lifetime income benefits under Labor Code §408.1615 by sending the first responder the annual certification to complete 30 days before the certification is due and including the anniversary date the first responder's benefits began to accrue. Labor Code §408.1615 requires first responders receiving lifetime income benefits under the section to annually submit to the insurance carrier a certification stating they have not worked in any capacity during the preceding year.

Based on dispute data from years 2017 - 2023, DWC anticipates that, each year, there will be about 10 first responders who will be entitled to lifetime income benefits under §408.1615. DWC estimates that the cost for insurance carriers to send one certification to a first responder to be $0.68 for postage and about $0.50 for the cost to print the certification and pay for the envelope. As a result, the total cost to comply with this requirement would be $1.18 for each certification sent. With DWC's estimated number of first responders receiving lifetime income benefits under §408.1615 to be 10 individuals, the annual total cost to comply with the rule would be $11.80 for all insurance carriers combined.

First responders receiving lifetime income benefits under §408.1615 have been severely injured, and requiring insurance carriers to send the annual certification to complete to the first responder along with their accrual date will make it easier for the first responder to comply with the statutory requirement to submit the certification. DWC finds that the benefit of helping severely injured first responders submit the annual certification to complete required under §408.1615 outweighs the minimal cost to insurance carriers to provide notice and the certification to these first responders.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. DWC has determined that the proposed amendments and new sections may have an adverse economic effect or a disproportionate economic impact on small or micro businesses, or on rural communities. The cost analysis in the Public Benefit and Cost Note section of this proposal also applies to these small and micro businesses and rural communities. Most of the potential cost from these rules impacts insurance carriers. DWC identified 145 insurance carriers that had more than $0 but less than $6 million total direct written premium nationally for workers' compensation insurance. These insurance carriers writing workers' compensation insurance in Texas meet the definition of a small business under Government Code §2006.001(2)(C). As a result, DWC estimates that the changes may affect 145 small or micro businesses.

In addition, most rural political subdivisions self-insure their workers' compensation responsibilities individually or as part of a pool, so their impacts and benefits will be similar to the insurance carriers. The data readily available from the Texas Demographic Center and the United States Census Bureau divides the Texas population into "places" and counties. For census purposes, "place" includes census designated places, consolidated cities, and incorporated places. There are often multiple places in a county, and some places span multiple counties, so the reports DWC collects from political subdivisions that self-insure their workers' compensation liabilities may include places that span different counties. As a result, to get the best estimate of affected rural communities, DWC looked at the Texas Demographic Center's January 2023 estimated county populations. Government Code Chapter 487 defines "rural county" at various population levels, ranging from a maximum population of 125,000 to 150,000. But Government Code Chapter 490G defines "rural county" in part as a county with a population of less than 60,000. Insurance Code Chapter 845 defines "rural area" as a county with a population of 50,000 or less. Using the most inclusive definition, of the 254 Texas counties, 222 have a population of less than 150,000, and all of those contain one or more self-insuring political subdivisions. As a result, DWC estimates that the changes may affect 222 rural counties on some level.

The primary objectives of this proposal are to implement new Labor Code §408.1615, which provides lifetime income benefits to certain severely injured first responders, and to make the process easier for these first responders. Requiring insurance carriers to send the annual certification to complete helps reduce the burden from first responders to remember to submit their certification and reminds them of their accrual date. DWC considered the following alternatives to minimize any adverse impact on small and micro businesses and rural communities while accomplishing the proposal's objectives:

(1) Not proposing the requirement. DWC considered not proposing the changes but rejected that option. As stated in the cost note, the individuals receiving lifetime income benefits under Labor Code §408.1615 have been severely injured, and requiring insurance carriers to send the annual certification to complete to the first responder along with their accrual date will help first responders comply with §408.1615. Requiring insurance carriers to notify and send the first responder their annual certification to complete makes the process less difficult for these severely injured first responders to retain the benefits they are entitled to. For this reason, not proposing the changes is not a viable option.

(2) Proposing a different requirement for small and micro businesses or rural communities. The proposed rule requires insurance carriers to send notice and the annual certification to complete to the first responder 30 days before the certification is due. The only alternatives are to not require insurance carriers to send notice and the certification to the first responder, or to adjust the timeframe. Given the number of insurance carriers writing workers' compensation policies in Texas that qualify as small businesses based on their premium volume, proposing a different requirement for small and micro businesses or rural communities would mean the different requirement would likely affect a large percentage of first responders. If DWC were to not require small or micro businesses or rural communities to send a first responder the annual certification to complete, the first responders affected by that would not have the same assistance as those in other areas. If DWC were to adopt a different timeframe for small and micro businesses or rural communities, it would not substantially lower the cost of compliance, and receiving the form too early or too late for an annual certification might make it more difficult for injured first responders to comply with the requirement. As stated in option one, requiring insurance carriers to notify and send the first responder their annual certification to complete makes the process less difficult for these severely injured first responders to retain the benefits they are entitled to. For this reason, proposing a different requirement is not a viable option.

(3) Exempting small or micro businesses or rural communities from the proposed requirement. DWC considered exempting small or micro businesses or rural communities from all or part of the rules but rejected that option. Like the second option, exempting small and micro businesses or rural communities from the proposed rule would likely affect a large percentage of first responders. If DWC were to not require small or micro businesses or rural communities to send a first responder the annual certification to complete, the first responders affected by that would not have the same assistance as those in other areas. As stated in options one and two, requiring insurance carriers to notify and send the first responder their annual certification to complete makes the process less difficult for these severely injured first responders to retain the benefits they are entitled to. For this reason, exempting small and micro businesses or rural communities from the proposed requirement is not a viable option.

EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. DWC has determined that this proposal does impose a possible cost on regulated persons. However, the cost for insurance carriers to send a certification to complete each year to first responders receiving lifetime income benefits under Labor Code §408.1615 is minimal, and necessary to implement Labor Code §§408.0041 and 408.1615, as amended and added by HB 2468. As a result, no additional rule amendments are required under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT. DWC has determined that for each year of the first five years that the proposed amendments and new sections are in effect, the proposed rule:

- will not create or eliminate a government program;

- will not require the creation of new employee positions or the elimination of existing employee positions;

- will not require an increase or decrease in future legislative appropriations to the agency;

- will not require an increase or decrease in fees paid to the agency;

- will create a new regulation;

- will expand, limit, or repeal an existing regulation;

- will increase or decrease the number of individuals subject to the rule's applicability; or

- will not positively or adversely affect the Texas economy.

DWC made these determinations because the proposal adds new sections, amends existing sections, and changes the people the sections affect. However, these changes are necessary to implement Labor Code §§408.0041 and 408.1615, as amended by HB 2468. HB 2468 expanded the types of injured employees that qualify for lifetime income benefits and created a special category and specific requirements for first responders with specific types of injuries.

SUBCHAPTER A. GENERAL PROVISIONS

28 TAC §131.1

STATUTORY AUTHORITY. DWC proposes creating Subchapter A, Chapter 131; amendments to §131.1; and locating §§131.1, 131.2, 131.3, and 131.4 in new Subchapter A under Labor Code §§408.0041, 408.161, 408.1615, 402.00111, 402.00116, and 402.061.

Labor Code §408.0041 provides that the commissioner may order a DD exam to resolve questions about an individual's injuries. It also provides that an insurance carrier may suspend benefits for a period in which the individual does not attend the required DD exam, and provides for when the insurance carrier must reinstate benefits.

Labor Code §408.161 provides lifetime income benefits for certain injuries.

Labor Code §402.00111 provides that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority under Title 5 of the Labor Code.

Labor Code §402.061 provides that the commissioner of workers' compensation shall adopt rules as necessary to implement and enforce the Texas Workers' Compensation Act.

CROSS-REFERENCE TO STATUTE. Section 131.1 implements Labor Code §§408.0041, 408.161, and 408.1615. Labor Code §408.0041 was enacted by HB 2600, 77th Legislature, Regular Session (2001) and amended by HB 7, 79th Legislature, Regular Session (2005); Senate Bill (SB) 1169, 80th Legislature, Regular Session (2007); HB 2004, 80th Legislature, Regular Session (2007); HB 2605, 82nd Legislature, Regular Session (2011); and HB 2468, 88th Legislature, Regular Session (2023). Labor Code §408.161 was enacted by HB 752, 73rd Legislature, Regular Session (1993) and amended by HB 3196, 75th Legislature, Regular Session (1997); HB 2510, 76th Legislature, Regular Session (1999); HB 2600, 77th Legislature, Regular Session (2001); HB 7, 79th Legislature, Regular Session (2005); and HB 2468, 88th Legislature, Regular Session (2023). Labor Code §408.1615 was enacted by HB 2468, 88th Legislature, Regular Session (2023).

§131.1.Initiation of Lifetime Income Benefits; Notice of Denial.

(a) The insurance carrier must [~~shall~~] initiate the payment of lifetime income benefits without a final decision, order, or other action of the commissioner if an injured employee meets the eligibility criteria for lifetime income benefits listed under Labor Code §408.161 or §408.1615 as a result of the compensable injury.

(b) An injured employee may submit a written request for lifetime income benefits to the insurance carrier. The insurance carrier must [~~shall~~] either initiate lifetime income benefits or deny the injured employee's eligibility for lifetime income benefits considering all of the eligibility criteria listed under Labor Code §408.161 or §408.1615 within 60 days of receiving [~~from the receipt of~~] the injured employee's written request. An insurance carrier's failure to respond to the request for lifetime income benefits within the timeframes described in this subsection does not constitute a waiver of the insurance carrier's right to dispute the injured employee's eligibility for lifetime income benefits.

(c) The insurance carrier must [~~shall~~] make the first payment of lifetime income benefits on or before the 15th day after the date the insurance carrier reasonably believes that the injured employee is eligible for lifetime income benefits as a result of the compensable injury. The initiation of lifetime income benefits without a final decision, order, or other action of the commissioner does not waive the insurance carrier's right to contest the compensability of the injury under [~~in accordance with~~] Labor Code §409.021(c).

(d) If the injured employee submits a written request for lifetime income benefits, and the insurance carrier denies that the injured employee is eligible for lifetime income benefits, the insurance carrier must [~~shall~~] deny eligibility by sending a plain-language [~~plain language~~] notice of denial of eligibility to the division, the injured employee, and the injured employee's representative, if any, in the form and manner prescribed by the division up to the 60th day after it receives [~~receipt of~~] the written request. The notice of denial of eligibility must [~~shall~~] include:

(1) a full and complete statement describing the insurance carrier's reasons for denial. The statement must contain sufficient claim-specific substantive information to enable the injured employee to understand the insurance carrier's position or action taken under the claim. A generic statement that simply states the insurance carrier's position with phrases such as "not part of compensable injury," "not meeting criteria," "liability is in question," "under investigation," "eligibility questioned," or other similar phrases with no further description of the factual basis for the denial does not satisfy the requirements of paragraph (1) of this subsection;

(2) contact information, including the adjuster's name, toll-free telephone and fax numbers, and email address; and

(3) a statement informing the injured employee of his or her right to request a benefit review conference to resolve the dispute.

(e) An injured employee may contest the insurance carrier's denial of eligibility for lifetime income benefits or failure to respond to the written request for lifetime income benefits by requesting dispute resolution [~~a benefit review conference~~] as provided by Chapters 141 - 144 and 147 [~~Chapter 141~~] of this title (relating to Dispute Resolution) [~~(relating to Dispute Resolution--Benefit Review Conference)~~].

(f) Nothing in this section is intended to limit an [~~any~~] insurance carrier's duty to initiate payment of lifetime income benefits before the time limit established in subsection (c) of this section.

~~[(g) Effective date. This section is effective on June 1, 2015].~~

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 17, 2024.

TRD-202402237

Kara Mace

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: June 30, 2024

For further information, please call: (512) 804-4703

SUBCHAPTER B. LIFETIME INCOME BENEFITS--CERTAIN FIRST RESPONDERS.

28 TAC §§131.10 - 131.14

STATUTORY AUTHORITY. DWC proposes new §§131.10 131.11, 131.12, 131.13, and 131.14 under Labor Code §§408.0041, 408.1615, 402.00111, 402.00116, and 402.061.

Labor Code §402.00111 provides that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority under Title 5 of the Labor Code.

Labor Code §402.061 provides that the commissioner of workers' compensation shall adopt rules as necessary to implement and enforce the Texas Workers' Compensation Act.

CROSS-REFERENCE TO STATUTE. Section 131.1 implements Labor Code §§408.0041 and 408.1615. Labor Code §408.0041 was enacted by HB 2600, 77th Legislature, Regular Session (2001) and amended by HB 7, 79th Legislature, Regular Session (2005); SB 1169, 80th Legislature, Regular Session (2007); HB 2004, 80th Legislature, Regular Session (2007); HB 2605, 82nd Legislature, Regular Session (2011); and HB 2468, 88th Legislature, Regular Session (2023). Labor Code §408.1615 was enacted by HB 2468, 88th Legislature, Regular Session (2023).

§131.10.Definitions.

In Subchapter B of this chapter:

(1) "First responders" means "first responders" as defined in Labor Code §408.1615.

(2) "Serious bodily injury" means "serious bodily injury" as defined in Penal Code §1.07.

§131.11.Applicability.

This subchapter applies to a first responder who sustains a serious bodily injury:

(1) that is an injury described under Labor Code §408.1615;

(2) in the course and scope of the first responder's employment or volunteer service as a first responder; and

(3) that renders the first responder permanently unemployable.

§131.12.First Responder's Annual Certification to Insurance Carrier.

(a) Requirement. A first responder receiving lifetime income benefits under §408.1615 must file a certification with the insurance carrier annually.

(b) Content. The certification must state that the first responder was not employed in any capacity during the preceding year.

(c) Method and Timing. The first responder must submit the certification to the insurance carrier in the form and manner prescribed by the division:

(1) by first class mail, by personal delivery, or electronically; and

(2) no later than 30 days after the anniversary of the date the first responder's lifetime income benefits began to accrue.

(d) Notice. Every year, 30 days before the first responder's annual certification is due, an insurance carrier must send the annual certification to complete to the first responder and include the anniversary date the first responder's lifetime income benefits began to accrue.

§131.13.Suspension and Reinstatement of Lifetime Income Benefits.

(a) An insurance carrier may suspend the payment of lifetime income benefits to a first responder during and for a period in which:

(1) The first responder fails to complete the annual certification as required by §408.1615(e).

(2) The first responder, without good cause, fails to attend a designated doctor examination as required by §408.0041(j).

(3) The first responder is employed in any capacity.

(4) A designated doctor's report indicates that the first responder is no longer entitled to lifetime income benefits as provided in §408.0041(k-1).

(b) Before an insurance carrier may suspend lifetime income benefits under this section, the insurance carrier must send a plain-language notice to the first responder that explains the basis for the suspension.

(1) Within 20 days of receiving this notice, the first responder must respond to the insurance carrier's notice by:

(A) submitting the annual certification to the insurance carrier;

(B) notifying the insurance carrier of an examination under §127.25 of this title (relating to Failure to Attend a Designated Doctor Examination); or

(2) If the first responder does not respond within 20 days of receiving this notice, the insurance carrier may suspend the first responder's benefits.

(c) If an insurance carrier suspends benefits under subsection (a)(1) of this section, the insurance carrier must reinstate benefits effective on the date the insurance carrier receives the first responder's annual certification. The reinstatement of benefits must occur no later than the seventh day following the date the insurance carrier receives the annual certification.

(d) If an insurance carrier suspends benefits under subsection (a)(2) of this section (failure to attend a designated doctor examination), the insurance carrier must follow §127.25 of this title for suspension and reinstatement of the first responder's benefits.

(e) If an insurance carrier suspends benefits under subsection (a)(3) of this section (employment in any capacity), the first responder must submit a new request for lifetime income benefits under §131.1 of this chapter (relating to Initiation of Lifetime Income Benefits; Notice of Denial).

(f) If the insurance carrier suspends or reinstates benefits under this section, the insurance carrier must also comply with the electronic notification requirements to DWC in §124.2 and Chapter 124, Subchapter B (relating to Insurance Carrier Claim Electronic Data Interchange Reporting to the Division).

§131.14.Dispute of Continuing Entitlement of Lifetime Income Benefits.

(a) If the insurance carrier disputes the accuracy of the first responder's annual certification under Labor Code §408.1615(g), the insurance carrier must provide a copy of the annual certification along with supporting evidence to the division and to the first responder.

(b) Upon receipt of the information in subsection (a) of this section, the division will issue an order stating whether the insurance carrier is entitled to an examination under Labor Code §408.1615(h).

(c) The parties may dispute the determination of the division through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution).

(d) After receiving the designated doctor's report under Labor Code §408.1615(h), a party may dispute the designated doctor's opinion on continuing entitlement to lifetime income benefits through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 17, 2024.

TRD-202402238

Kara Mace

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: June 30, 2024

For further information, please call: (512) 804-4703