CHAPTER 415. ADMINISTRATIVE VIOLATIONS - Texas Statutes

LABOR CODE

TITLE 5. WORKERS' COMPENSATION

SUBTITLE A. TEXAS WORKERS' COMPENSATION ACT

CHAPTER 415. ADMINISTRATIVE VIOLATIONS

SUBCHAPTER A. PROHIBITED ACTS

Sec. 415.001. ADMINISTRATIVE VIOLATION BY REPRESENTATIVE OF

EMPLOYEE OR LEGAL BENEFICIARY. A representative of an employee

or legal beneficiary commits an administrative violation if the

person:

(1) fails without good cause to attend a dispute resolution

proceeding within the division;

(2) attends a dispute resolution proceeding within the division

without complete authority or fails to exercise authority to

effectuate an agreement or settlement;

(3) commits an act of barratry under Section 38.12, Penal Code;

(4) withholds from the employee's or legal beneficiary's weekly

benefits or from advances amounts not authorized to be withheld

by the division;

(5) enters into a settlement or agreement without the knowledge,

consent, and signature of the employee or legal beneficiary;

(6) takes a fee or withholds expenses in excess of the amounts

authorized by the division;

(7) refuses or fails to make prompt delivery to the employee or

legal beneficiary of funds belonging to the employee or legal

beneficiary as a result of a settlement, agreement, order, or

award;

(8) violates the Texas Disciplinary Rules of Professional

Conduct of the State Bar of Texas;

(9) misrepresents the provisions of this subtitle to an

employee, an employer, a health care provider, or a legal

beneficiary;

(10) violates a commissioner rule; or

(11) fails to comply with this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.265, eff. September 1, 2005.

Sec. 415.002. ADMINISTRATIVE VIOLATION BY INSURANCE CARRIER.

(a) An insurance carrier or its representative commits an

administrative violation if that person:

(1) misrepresents a provision of this subtitle to an employee,

an employer, a health care provider, or a legal beneficiary;

(2) terminates or reduces benefits without substantiating

evidence that the action is reasonable and authorized by law;

(3) instructs an employer not to file a document required to be

filed with the division;

(4) instructs or encourages an employer to violate a claimant's

right to medical benefits under this subtitle;

(5) fails to tender promptly full death benefits if a legitimate

dispute does not exist as to the liability of the insurance

carrier;

(6) allows an employer, other than a self-insured employer, to

dictate the methods by which and the terms on which a claim is

handled and settled;

(7) fails to confirm medical benefits coverage to a person or

facility providing medical treatment to a claimant if a

legitimate dispute does not exist as to the liability of the

insurance carrier;

(8) fails, without good cause, to attend a dispute resolution

proceeding within the division;

(9) attends a dispute resolution proceeding within the division

without complete authority or fails to exercise authority to

effectuate agreement or settlement;

(10) adjusts a workers' compensation claim in a manner contrary

to license requirements for an insurance adjuster, including the

requirements of Chapter 4101, Insurance Code, or the rules of the

commissioner of insurance;

(11) fails to process claims promptly in a reasonable and

prudent manner;

(12) fails to initiate or reinstate benefits when due if a

legitimate dispute does not exist as to the liability of the

insurance carrier;

(13) misrepresents the reason for not paying benefits or

terminating or reducing the payment of benefits;

(14) dates documents to misrepresent the actual date of the

initiation of benefits;

(15) makes a notation on a draft or other instrument indicating

that the draft or instrument represents a final settlement of a

claim if the claim is still open and pending before the division;

(16) fails or refuses to pay benefits from week to week as and

when due directly to the person entitled to the benefits;

(17) fails to pay an order awarding benefits;

(18) controverts a claim if the evidence clearly indicates

liability;

(19) unreasonably disputes the reasonableness and necessity of

health care;

(20) violates a commissioner rule;

(21) makes a statement denying all future medical care for a

compensable injury; or

(22) fails to comply with a provision of this subtitle.

(b) An insurance carrier or its representative does not commit

an administrative violation under Subsection (a)(6) by allowing

an employer to:

(1) freely discuss a claim;

(2) assist in the investigation and evaluation of a claim; or

(3) attend a proceeding of the division and participate at the

proceeding in accordance with this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 980, Sec. 1.45, eff. Sept.

1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.266, eff. September 1, 2005.

Sec. 415.003. ADMINISTRATIVE VIOLATION BY HEALTH CARE PROVIDER.

A health care provider commits an administrative violation if the

person:

(1) submits a charge for health care that was not furnished;

(2) administers improper, unreasonable, or medically unnecessary

treatment or services;

(3) makes an unnecessary referral;

(4) violates the division's fee and treatment guidelines;

(5) violates a commissioner rule; or

(6) fails to comply with a provision of this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 980, Sec. 1.45, eff. Sept.

1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.267, eff. September 1, 2005.

Sec. 415.0035. ADDITIONAL VIOLATIONS BY INSURANCE CARRIER OR

HEALTH CARE PROVIDER. (a) An insurance carrier or its

representative commits an administrative violation if that

person:

(1) fails to submit to the division a settlement or agreement of

the parties;

(2) fails to timely notify the division of the termination or

reduction of benefits and the reason for that action; or

(3) denies preauthorization in a manner that is not in

accordance with rules adopted by the commissioner under Section

413.014.

(b) A health care provider commits an administrative violation

if that person:

(1) fails or refuses to timely file required reports or records;

or

(2) fails to file with the division the annual disclosure

statement required by Section 413.041.

(c) A violation under Subsection (a) is a Class C administrative

violation.

(d) A violation under Subsection (b) is a Class D administrative

violation.

(e) An insurance carrier or health care provider commits an

administrative violation if that person violates this subtitle or

a rule, order, or decision of the commissioner.

(f) A subsequent administrative violation under this section,

after prior notice to the insurance carrier or health care

provider of noncompliance, is subject to penalties as provided by

Section 415.021. Prior notice under this subsection is not

required if the violation was of a decision or order of the

commissioner.

Added by Acts 1995, 74th Leg., ch. 980, Sec. 1.45, eff. Sept. 1,

1995. Amended by Acts 2001, 77th Leg., ch. 1456, Sec. 6.06, eff.

June 17, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.268, eff. September 1, 2005.

Sec. 415.0036. ADMINISTRATIVE VIOLATION BY PERSON PERFORMING

CERTAIN CLAIM SERVICES. (a) This section applies to an

insurance adjuster, case manager, or other person who has

authority under this title to request the performance of a

service affecting the delivery of benefits to an injured employee

or who actually performs such a service, including peer reviews,

performance of required medical examinations, or case management.

(b) A person described by Subsection (a) commits an

administrative violation if the person offers to pay, pays,

solicits, or receives an improper inducement relating to the

delivery of benefits to an injured employee or improperly

attempts to influence the delivery of benefits to an injured

employee, including through the making of improper threats. This

section applies to each person described by Subsection (a) who is

a participant in the workers' compensation system of this state

and to an agent of such a person.

(c) A violation under this section is a Class A administrative

violation.

Added by Acts 2007, 80th Leg., R.S., Ch.

198, Sec. 1, eff. September 1, 2007.

Sec. 415.004. PENALTY SPECIFIED IN OTHER LAW. If an act that is

an administrative violation under Section 415.001, 415.002, or

415.003 is expressly made an administrative violation of a

particular class or subject to a specified penalty in another

section of this subtitle, the administrative penalty assessed

under that section, and not under Section 415.001, 415.002, or

415.003, prevails.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 415.005. OVERCHARGING BY HEALTH CARE PROVIDERS PROHIBITED;

ADMINISTRATIVE VIOLATION. (a) A health care provider commits a

violation if the person charges an insurance carrier an amount

greater than that normally charged for similar treatment to a

payor outside the workers' compensation system, except for

mandated or negotiated charges.

(b) A violation under this section is an administrative

violation. A health care provider may be liable for an

administrative penalty regardless of whether a criminal action is

initiated under Section 413.043.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.269, eff. September 1, 2005.

Sec. 415.006. EMPLOYER CHARGEBACKS PROHIBITED; ADMINISTRATIVE

VIOLATION. (a) An employer may not collect from an employee,

directly or indirectly, a premium or other fee paid by the

employer to obtain workers' compensation insurance coverage,

except as provided by Sections 406.123 and 406.144.

(b) An employee or legal beneficiary of an employee has a right

of action to recover damages against an employer who violates

Subsection (a).

(c) A person commits an administrative violation if the person

violates Subsection (a).

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.270, eff. September 1, 2005.

Sec. 415.007. LOANS BY ATTORNEYS PROHIBITED. (a) An attorney

who represents a claimant before the division may not lend money

to the claimant during the pendency of the workers' compensation

claim.

(b) The attorney may assist the claimant in obtaining financial

assistance from another source if the attorney is not personally

liable for the credit extended to the claimant.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.271, eff. September 1, 2005.

Sec. 415.008. FRAUDULENTLY OBTAINING OR DENYING BENEFITS;

ADMINISTRATIVE VIOLATION. (a) A person commits a violation if

the person, to obtain or deny a payment of a workers'

compensation benefit or the provision of a benefit for the person

or another, knowingly or intentionally:

(1) makes a false or misleading statement;

(2) misrepresents or conceals a material fact;

(3) fabricates, alters, conceals, or destroys a document; or

(4) conspires to commit an act described by Subdivision (1),

(2), or (3).

(b) A violation under this section is a Class B administrative

violation.

(c) A person who has obtained an excess payment in violation of

this section is liable for full repayment plus interest computed

at the rate prescribed by Section 401.023. If the person is an

employee or person claiming death benefits, the repayment may be

redeemed from future income or death benefits to which the person

is otherwise entitled.

(d) An employer who has committed an act described by Subsection

(a) that results in denial of payments is liable for the past

benefit payments that would otherwise have been payable by the

insurance carrier during the period of denial, plus interest

computed at the rate prescribed by Section 401.023. The insurance

carrier is not liable for benefit payments during the period of

denial.

(e) If an administrative violation proceeding is pending under

this section against an employee or person claiming death

benefits, the division may not take final action on the person's

benefits.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.272, eff. September 1, 2005.

Sec. 415.009. FRIVOLOUS ACTIONS; ADMINISTRATIVE VIOLATION. (a)

A person commits a violation if the person brings, prosecutes, or

defends an action for benefits under this subtitle or requests

initiation of an administrative violation proceeding that does

not have a basis in fact or is not warranted by existing law or a

good faith argument for the extension, modification, or reversal

of existing law.

(b) A violation under Subsection (a) is a Class B administrative

violation.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.273, eff. September 1, 2005.

Sec. 415.010. BREACH OF AGREEMENT; ADMINISTRATIVE VIOLATION.

(a) A party to an agreement approved by the division commits a

violation if the person breaches a provision of the agreement.

(b) A violation under Subsection (a) is a Class C administrative

violation.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.274, eff. September 1, 2005.

SUBCHAPTER B. PENALTIES

Sec. 415.021. ASSESSMENT OF ADMINISTRATIVE PENALTIES. (a) In

addition to any other provisions in this subtitle relating to

violations, a person commits an administrative violation if the

person violates, fails to comply with, or refuses to comply with

this subtitle or a rule, order, or decision of the commissioner.

In addition to any sanctions, administrative penalty, or other

remedy authorized by this subtitle, the commissioner may assess

an administrative penalty against a person who commits an

administrative violation. The administrative penalty shall not

exceed $25,000 per day per occurrence. Each day of noncompliance

constitutes a separate violation. The commissioner's authority

under this chapter is in addition to any other authority to

enforce a sanction, penalty, fine, forfeiture, denial,

suspension, or revocation otherwise authorized by law.

(b) The commissioner may enter a cease and desist order against

a person who:

(1) commits repeated administrative violations;

(2) allows, as a business practice, the commission of repeated

administrative violations; or

(3) violates an order or decision of the commissioner.

(c) In assessing an administrative penalty:

(1) the commissioner shall consider:

(A) the seriousness of the violation, including the nature,

circumstances, consequences, extent, and gravity of the

prohibited act;

(B) the history and extent of previous administrative

violations;

(C) the demonstrated good faith of the violator, including

actions taken to rectify the consequences of the prohibited act;

(D) the penalty necessary to deter future violations; and

(E) other matters that justice may require; and

(2) the commissioner shall, to the extent reasonable, consider

the economic benefit resulting from the prohibited act.

(d) A penalty may be assessed only after the person charged with

an administrative violation has been given an opportunity for a

hearing under Subchapter C.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 2001, 77th Leg., ch. 1456, Sec. 6.07, eff. June

17, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.275, eff. September 1, 2005.

Sec. 415.022. CLASSIFICATION OF ADMINISTRATIVE VIOLATIONS;

PENALTIES. Administrative violations are classified as follows:

(1) a Class A administrative violation, punishable by an

administrative penalty not to exceed $10,000;

(2) a Class B administrative violation, punishable by an

administrative penalty not to exceed $5,000;

(3) a Class C administrative violation, punishable by an

administrative penalty not to exceed $1,000; and

(4) a Class D administrative violation, punishable by an

administrative penalty not to exceed $500.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 415.023. COMMISSION OF WRONGFUL ACT AS MATTER OF PRACTICE;

ADMINISTRATIVE VIOLATION. (a) A person who commits an

administrative violation under Section 415.001, 415.002, 415.003,

or 415.0035 as a matter of practice is subject to an applicable

rule adopted under Subsection (b) in addition to the penalty

assessed for the violation.

(b) The commissioner may adopt rules providing for:

(1) a reduction or denial of fees;

(2) public or private reprimand by the commissioner;

(3) suspension from practice before the division;

(4) restriction, suspension, or revocation of the right to

receive reimbursement under this subtitle; or

(5) referral and petition to the appropriate licensing authority

for appropriate disciplinary action, including the restriction,

suspension, or revocation of the person's license.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 2001, 77th Leg., ch. 1456, Sec. 6.08, eff. June

17, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.276, eff. September 1, 2005.

Sec. 415.024. BREACH OF SETTLEMENT AGREEMENT; ADMINISTRATIVE

VIOLATION. A material and substantial breach of a settlement

agreement that establishes a compliance plan is an administrative

violation. In determining the amount of the penalty, the

commissioner shall consider the total volume of claims handled by

the insurance carrier.

Added by Acts 1997, 75th Leg., ch. 1443, Sec. 9, eff. Sept. 1,

1997.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.277, eff. September 1, 2005.

Sec. 415.025. REFERENCES TO A CLASS OF VIOLATION OR PENALTY. A

reference in this code or other law, or in rules of the former

Texas Workers' Compensation Commission or the commissioner, to a

particular class of violation, administrative violation, or

penalty shall be construed as a reference to an administrative

penalty. Except as otherwise provided by this subtitle, an

administrative penalty may not exceed $25,000 per day per

occurrence. Each day of noncompliance constitutes a separate

violation.

Added by Acts 2005, 79th Leg., Ch.

265, Sec. 3.278, eff. September 1, 2005.

SUBCHAPTER C. PROCEDURES

Sec. 415.031. INITIATION OF ADMINISTRATIVE VIOLATION

PROCEEDINGS. Any person may request the initiation of

administrative violation proceedings by filing a written

allegation with the division.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.279, eff. September 1, 2005.

Sec. 415.032. NOTICE OF POSSIBLE ADMINISTRATIVE VIOLATION;

RESPONSE. (a) If investigation by the division indicates that

an administrative violation has occurred, the division shall

notify the person alleged to have committed the violation in

writing of:

(1) the charge;

(2) the proposed penalty;

(3) the right to consent to the charge and the penalty; and

(4) the right to request a hearing.

(b) Not later than the 20th day after the date on which notice

is received, the charged party shall:

(1) remit the amount of the penalty to the division; or

(2) submit to the division a written request for a hearing.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.280, eff. September 1, 2005.

Sec. 415.033. FAILURE TO RESPOND. If, without good cause, a

charged party fails to respond as required under Section 415.032,

the penalty is due and the division shall initiate enforcement

proceedings.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.281, eff. September 1, 2005.

Sec. 415.034. HEARING PROCEDURES. (a) On the request of the

charged party or the commissioner, the State Office of

Administrative Hearings shall set a hearing. The hearing shall

be conducted in the manner provided for a contested case under

Chapter 2001, Government Code (the administrative procedure law).

(b) At the close of the hearing, the hearing officer conducting

the hearing shall make findings of fact and conclusions of law

and shall issue a written decision. If the hearing officer

determines that an administrative violation has occurred, the

hearing officer shall include in the decision the amount of the

administrative penalty assessed and shall order payment of the

penalty.

(c) The findings of fact, the decision, and the order shall be

sent immediately to the charged party.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49), eff.

Sept. 1, 1995; Acts 1995, 74th Leg., ch. 980, Sec. 1.46, eff.

Sept. 1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.282, eff. September 1, 2005.

Sec. 415.035. JUDICIAL REVIEW. (a) A decision under Section

415.034 is subject to judicial review in the manner provided for

judicial review under Chapter 2001, Government Code.

(b) If an administrative penalty is assessed, the person charged

shall:

(1) forward the amount of the penalty to the division for

deposit in an escrow account; or

(2) post with the division a bond for the amount of the penalty,

effective until all judicial review of the determination is

final.

(c) Failure to comply with Subsection (b) results in a waiver of

all legal rights to contest the violation or the amount of the

penalty.

(d) If the court determines that the penalty should not have

been assessed or reduces the amount of the penalty, the division

shall:

(1) remit the appropriate amount, plus accrued interest, if the

administrative penalty was paid; or

(2) release the bond.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49), eff.

Sept. 1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.283, eff. September 1, 2005.