Texas Occupational Accident Insurance

Frequently Asked Questions

Do I have to have workers' compensation insurance?

Employers in Texas have always had the choice of "opting out" of workers comp. In fact, an employer can reject workers' compensation completely and "go bare," paying no benefits whatsoever to injured employees. However, we do not recommend this path, and believe that non-subscription should be a responsible alternative, in which employers are encouraged to manage their costs and provide a safer workplace.

What are the advantages of opting out?

In general, employers in Texas who "opt out" of workers compensation are better able to direct the care of injured employees, are given a financial incentive to provide a safer workplace, and can avoid the frustration of dealing with uncaring or unresponsive state agencies or health care providers. Non-subscriber employers can participate in the decision to send an employee to a certain doctor, whether to pay a claim, whether an employee is eligible for benefits, whether light duty work is available, and even whether a claim is valid at all. Non-subscriber employers can also receive a direct return on their effort to increase workplace safety, both in reduced premiums and a reduction in claims. Employee morale may also improve when hard working employees see that "malingerers" are not permitted to take advantage of the system and collect on suspicious injuries.

How can I tell when a claim is suspicious?

There are several "tell tale" signs that an injury may not be what it seems. Usually an employee injury claim is questionable when it includes three or more of the following indicators:

•        The injury concerns soft tissue & cannot be objectively verified

•        The employee refuses diagnostic procedures to confirm the injury

•        The employee refuses to cooperate with rehabilitation personnel

•        The employee refuses to return to work despite a doctor's O. K. to return

•        The employee has history of reporting subjective injuries

•        The injury "occurred" on a Friday and is reported on a Monday

•        The claim occurs after the employee has been terminated

•        The claim occurs shortly after the employee was hired

•        The type of injury is unusual in the employee's line of work

•        The claim occurs after the injured worker took unexplained or excessive time off

•        The employee does not promptly report injury to supervisor

•        The injury was not witnessed by anyone

•        The reported accident occurred in an area where the employee does not work

•        The details of the accident are vague or contradictory

•        An independent medical exam (IME) reveals conflicting medical evidence

•        The employee says he can't work but does other things that require full mobility

Using our program, an employer has a much better chance of rooting out "bogus claims" and denying benefits, and managing claims that are worthwhile and need attention.

What are the disadvantages of opting out?

With Workers Compensation, the benefits are the employees "exclusive remedy" in most cases. In the case of Non-Subscription coverage, an employee could choose to sue an employer for his injuries. However, mediation/binding arbitration is available to Non-Subscriber if they are subject to a negligence lawsuit. These alternative dispute resolution methods will reduce the cost of litigation.

How can I avoid a lawsuit?

The good news is that most people are not interested in hiring a lawyer and suing their employer, and historically the number of cases compared to the number of actual injury claims is extremely low. The reality is that anyone can file a lawsuit. Usually, if that happens it either involves a serious accident that results in permanent disabilities, or it occurs when an employee's benefit claims go unpaid and he has no other choice. Under our program, we encourage employers to adopt a safety program, which can help reduce the potential for a major injury. In addition, we will handle every injury claim quickly and efficiently to make sure that bill collectors do not force injured workers into contacting an attorney. Finally, with ADR in place, lawsuits will go to mediation/arbitration, where the majority of disputes are resolved quickly and with a minimum of disruption at work.

Is opting out for everyone?

No - There are Texas companies that are required to have a Workers Comp Certificate in order to conduct business with certain companies. There are some high-risk companies that may want to remain in the workers comp system.

What does it take to opt out of workers' compensation?

To opt out, the employer must:

•        File DWC form 5 with the Texas Department of Insurance (formerly the Texas Workers' Compensation Commission),

•        Notify its employees, current and new, that the employer is a Non-Subscriber

•        Post notices, in both Spanish and English, in a common area.

We recommend that the company also obtain sufficient insurance coverage, with the proper ERISA documentation, to pay for employee injury and put in place a sufficient, management involved safety program.

Do I have to adopt an ERISA Plan if I opt out of workers' compensation?

Yes - Once you become a non-subscriber you fall under ERISA law. Having a written ERISA plan is therefore not only legally required, it simply makes good business sense.

What documents do I need to comply with ERISA?

Employers must have two fundamental documents that describe the plan -- a written plan document and a summary plan description -- each of which must meet the requirements of ERISA. An ERISA Plan is provided as one of our services to policyholders.

How does ADR work?

ADR means "Alternative Dispute Resolution." In practice, this means that a company can adopt a plan to send nearly all workplace disputes to mediation or, if that does not succeed, to final binding arbitration. ADR may not apply to all claims (such as pre-existing disputes or certain administrative matters), and it may not apply to all employers (such as those with collective bargaining agreements). However, in the vast majority of cases, ADR is available and an extremely useful tool.

Why would I want ADR?

There are several reasons for choosing to adopt an ADR program, including:

1.     Speed and reduced litigation costs

2.     Privacy

3.     The absence of a jury (and their sometimes emotionally-driven verdicts)

4.     The "expert" status of most mediators or arbitrators, which allows them to bring their own experience to the resolution of a dispute

5.     The increased potential for settlement that results from most mediators' or arbitrators' direct involvement in the process

6.     Greater informality, which allows parties to get to the heart of an issue.

Particularly in mediation, the parties and the mediator have the ability to fashion remedies or results that could not be achieved through litigation or arbitration.

What is mediation?

Mediation is often the most straightforward and cost-effective method of examining and resolving disputes. It is a meeting in which a neutral third party, called a mediator, helps the parties come to an agreement based on everyone's needs and interests. Mediation helps primarily by opening up communication and by coming up with options. It is a non-binding process. That means the mediator can make suggestions, but the employee and the employer are responsible for mutually resolving the dispute.

What is arbitration?

Arbitration is a process in which a dispute is presented to a neutral third party, the arbitrator, for a final and binding decision. The arbitrator makes this decision after both sides present their arguments at the arbitration hearing. There is no jury. The arbitration service provider runs the proceedings, which are held privately. Though arbitration is much less formal than a court trial, it is an orderly proceeding, governed by rules of procedure and legal standards of conduct.

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