The 2011 Texas Supreme Court ruling, Texas Mutual vs. Ruttiger, states that injured workers no longer can seek damages against insurance companies who deny claims “in bad faith.” Since this ruling, denials to workers comp claims have skyrocketed while claimants’ efforts in desputing denials has fallen to a success rate of less than 30%.
Attempts in the Texas State Legislature to amend this decision have died in committee. State Senator Leticia Van de Putte, D-San Antonio, proposed legislation that would have nullified the court decision because she feared that denials would become standard operating procedure, but to no avail.
Read the detailed report on how this affects Texas workers hurt on the job by Patricia Kilday Hart, Columnist for the Houston Chronicle.
Contents of that article are copied and pasted here to preserve availability:
TX court ruling benefits insurance companies in workers’ comp cases
In 2003, Continental flight attendant Sue Ann Stinson was giving her standard safety talk to a large chartered military flight on a Los Angeles runway when the pilot abruptly slammed the brakes and aborted takeoff. The sudden stop propelled Stinson down the aisle and flung her to the floor, knocking her unconscious and inflicting a painful neck injury.
Though hundreds of U.S. Marines had witnessed the accident, the airline’s workers’ compensation insurance company delayed her medical treatment over the next year by claiming her symptoms were “pre-existing and/or an ordinary disease of life.”
So, why does Stinson consider herself lucky? Her lawsuit against the insurance company was settled in November 2010, two months before the Texas Supreme Court ruled that injured workers no longer can seek damages against insurance companies who deny claims “in bad faith.”
“When I heard what the Supreme Court had done, I was completely blown away,” said Stinson, who lives in Spring. “The insurance company can spit in your face and they can no longer be held accountable.”
Since the 2011 Texas Mutual vs. Ruttiger ruling, the number of medical claims denied or contested by insurance carriers in the state’s workers’ compensation program has skyrocketed, according to an analysis by the State’s Office of Injured Employee Counsel.
Meanwhile, workers who protest rulings against them are losing in record numbers to insurance companies at “contested case” hearings held by the Texas Department of Insurance’s Workers’ Compensation Division. This year, injured workers are prevailing only 29 percent of the time.
Advocates for injured workers say the Ruttiger decision means the $2 billion in premiums paid each year by Texas employers for workers’ comp coverage goes largely to maintain an elaborate system of adjusters, investigators and lawyers that denies far too many legitimate claims of workers injured on the job.
The increase in claim denials is not “surprising to anyone who has seen what happens too often under the current playbook,” said Houston attorney Michael Patrick Doyle, who represented both Stinson and Galveston worker Timothy Ruttiger. “When the rules are changed to make insurer misconduct even more profitable, you can expect to see a whole lot more misconduct impacting legitimately injured workers just trying to get back to work.”
Attempted remedy dies
This spring, Sen. Leticia Van de Putte, D-San Antonio, proposed legislation that would have nullified the court decision because she feared that denials would become standard operating procedure. The bill died in committee.
According to the Office of Injured Employee Counsel, disputes over medical claims are on track to double in the last three years. The office handled 7,575 contested case hearings in 2011, and 11.959 in 2012. So far this year, the office has handled 7,963 cases, and projects it will reach nearly 16,000 cases by the end of the year.
Workers’ comp insurance was established to pay the medical bills and lost wages of employees injured on the job, while protecting employers from lawsuits. The Texas Legislature overhauled the system in 1989, and again in 2005, to reduce fraud and litigation costs, while attempting to set up an administrative process to guarantee workers’ medical bills are paid.
Both efforts appear to have worked, at least initially.
John Greeley, spokesman for the Texas Department of Insurance, said the figures from the Office of Injured Employee Counsel tell only half the story. Since the 2005 reforms, he said, on-the-job injuries in Texas have dropped 25 percent, reducing claims dramatically. Claim disputes have dropped correspondingly: in 2008, the department’s workers’ compensation division received 26,953 requests for a claim review, compared to 14,979 in 2012.
Despite the Supreme Court’s ruling, insurance carriers who treat injured workers unfairly are not off scot-free. Greeley said the Texas Department of Insurance has issued $2 million in fines against “system participants,” mostly carriers and medical providers, in the past two years for violating rules.
More claim disputes
Still, since the Ruttiger decision in early 2011, the Office of Injured Employee Counsel has seen a significant increase in claim disputes. According to the agency’s budget request to the Legislature, injured workers in some areas of the state have to wait 90 days before consulting with a state lawyer about their cases.
A national study by George Washington University School of Public Health may provide some insight into the dramatic decline in claims cited by the Texas Department of Insurance. Researchers concluded that some 40 percent of work-related injuries seen in U.S. emergency rooms were billed to private insurance, Medicaid or Medicare because workers were afraid of the hassle of the complex system, or possible retaliation by supervisors.
In Texas, most disputes pertain to the “extent of injury” suffered by a worker, according to Office of Injured Employee Council chief Norman Darwin. Insurers will acknowledge an accident produced a slight sprain, but not more extensive injuries connected to the event, Darwin wrote in an analysis provided this week to Insurance Commissioner Julia Rathgeber.
Darwin also wrote that workers are losing disputes over valid claims because state hearing examiners are requiring medical expert testimony that directly links injuries to job-related accidents, an impossibly high standard of proof.
“In virtually every case where the injury is serious and the medical treatment extensive, the denial is made that the expert did not explain how the event caused the injury,” Darwin wrote.
For example, Department of Insurance judges in January ruled against a school counselor who suffered a back injury when she was “attacked from behind by an 18-year-old student, and slammed into a desk and wall.” All the parties agreed that the injury occurred, and doctors testified that she sustained back injuries, including lumbar disc displacement and nerve root impingement. One doctor concluded “absent some strong evidence to the contrary, these injuries are the direct result” of the incident.
‘Time for the debate’
Another doctor disagreed, suggesting that “pre-existing degenerative conditions” could be causing the counselor’s back pain. The judges ruled against the counselor, saying “there was no expert medical evidence within a reasonable medical probability discussing how being thrown against a wall and/or desk” caused the injuries.
Darwin concluded in his analysis that “the system now in place is not working and it is time for the debate to begin.”
Rathgeber, appointed by Gov. Rick Perry on May 27 as insurance commissioner, said she had not had the time to study Darwin’s analysis, but planned to meet with him and Rod Bordelon, chief of the state Workers’ Compensation Commission, to assess the current system. “This is not an easy issue,” she said.