TXANS Newsletter Provides the Latest News Regarding Texas Nonsubscription

Many nonsubscriber benefit plans operate under a federal law: The Employee Retirement Income Security Act (ERISA). The purpose of ERISA is to set minimum standards for most voluntarily plans and to protect persons that are entitled to receive benefits under such plans. ERISA generally requires that any person or entity with a role in making benefit-related decisions to abide by certain requirements. For example, ERISA requires that every plan must designate at least one person as a named fiduciary" and plan administrator. A plan must have at least one fiduciary (a person or entity) named in the written plan, or through a process described in the plan, as having control over the planÐs operation. The named fiduciary can be identified by office or by name and for some; it may be an administrative committee or a company's board of directors. ERISA also provides that any person who exercises the authority or responsibility described in the fiduciary definition will be a fiduciary, whether or not he/she knowingly accepts that responsibility. Thus, fiduciary status is based on the functions performed for the plan, not just a personÐs title.

ERISA provides that a fiduciary includes any person that:

• Exercises discretionary authority or control with respect to the management of a plan,
• Exercises any authority or control with respect to management or disposition of plan assets,
• Has discretionary authority or responsibility in the administration of the plan, or
• Provides investment advice for a direct or indirect fee with respect to the money or property of the plan.

Some plan-related decisions are not fiduciary actions but rather are business decisions made by the employer. For example, the decision to establish a plan, determine the benefit package, include certain features, make amendments or terminate a plan, are business decisions. When making these decisions, an employer is acting on behalf of the business not the plan and therefore is not a fiduciary. However, when an employer (or someone hired by the employer) takes steps to implement such decisions, that person is acting on behalf of the plan and in carrying out these actions, is a fiduciary.

What are some of the Duties of a Fiduciary?

ERISA provides that fiduciaries must discharge their duties solely in the interest of the plans participants and beneficiaries" and for the exclusive purpose" of providing benefits and defraying reasonable expenses of administration. Fiduciaries must also discharge their duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. However, a fiduciary must decline to follow the plan document if the direction contained in the document is inconsistent with ERISA. To ensure directions are proper and not contrary to ERISA, specific procedures must be followed to ensure that the plans provisions are fairly implemented. These procedures include requirements that participants must not be subject to coercion or undue pressure when making decisions.

ERISA also requires that a fiduciary discharge his or her duties in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with ERISA. Fiduciaries that do not follow the principles of conduct set forth in ERISA may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Regardless of whether an employer hires a third-party or uses internal administrative committees to manage the plan, there are still certain functions that can deem an employer a fiduciary.

The plan document serves as the foundation for plan operations and as such, employers will want to be familiar with their plan document, especially when it is drawn up by a third-party. Fiduciaries should review the plan document periodically to make sure it remains current. For example, some nonsubscriber insurance policies come with a "free" plan designed so that the plan and the policy work in conjunction with one another. In this instance when the employer changes insurance policies it also needs to ensure that the existing benefit plan is either adequately revised or a new plan is created and established.

Reporting

ERISA requires that participants receive written notice of certain facts regarding plans. Some of these facts must be provided to participants regularly and automatically or upon request. One of the most important documents participants are entitled to receive is a summary of the plan, the Summary Plan Description or SPD. The SPD is important because it outlines how the plan operates and what it provides to participants. If a plan is changed, participants must be informed, either through a revised SPD or a separate document, a Summary of Materials Modifications, which also must be given to participants free of charge.

A Form 5500 Annual Return/Report must be filed with the federal government in conjunction with certain benefit plans. The Form 5500 reports information about the plan and its operation to the U.S. Department of Labor, the Internal Revenue Service, the Pension Benefit Guaranty Corporation, plan participants and the public.

Additional Resources

For a copy of the U.S. Department of LaborÐs Brochure, Meeting Your Fiduciary Responsibilities, please click here. To view the Employee Retirement Income Security Act-ERISA law, please click here.

For more information on the Form 5500, associated instructions and filing requirements, see EFAST on the DOLwebsite. Visit the Resources" section and request a copy of the publication: Reporting and Disclosure Guide for Employee Benefit Plans."

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The state-required notices for both nonsubscribing and subscribing businesses have been revised to reflect the change in administration from the Texas Workers Compensation Commission (TWCC) to the new Division of Workers Compensation (DWC) at the Texas Department of Insurance.

The revised forms and notices for Texas nonsubscribers include:

• DWC Form 5 (formerly the TWCC 5) used to notify the DWC of a businessÐ nonsubscriber status both when the business becomes a nonsubscriber initially and annually thereafter.
• DWC Form 205 (formerly the TWCC 205), an addendum to the DWC 5 for nonsubscribing businesses with more than one location.
• DWC Notice 5 and DWC Notice 5s (formerly the TWCC Notice 5 and TWCC Notice 5s) which must be posted in certain areas of workplace to notify employees of the companyÐs nonsubscriber status.
• DWC Form 7 and DWC Form 7s (formerly the TWCC 7 and TWCC 7 Supplement) used to report lost time injuries, occupational diseases and fatalities.

The official deadline for utilizing of the revised DWC forms is May 1, 2006 but nonsubscribers may begin utilizing the forms immediately. The new forms are available on TXANS website, simply clickForms & Notices" under the Benefits and Services icon on the main page.

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More than four hundred nonsubscribing employers and nonsubscriber industry professionals participated recently in TXANS 16^th Annual Nonsubscriber Conference and Exhibition in Austin, Texas.

TXANS Annual Nonsubscriber Conference and Exhibition is the largest, most comprehensive program designed exclusively for businesses that provide injury benefits outside of traditional workersÐ compensation. TXANSÐ 2006 Nonsubscriber Conference & Exhibition featured an educational general session and more than twenty concurrent Learning Labs on a variety of topics from the nonsubscriber perspective. Topics that included insurance, medical care, legal considerations, regulatory issues, compliance, OSHA, the EEOC laws and more.

One Learning Lab focused on nonsubscriber workplace safety. A panel of nonsubscribing employers discussed how the option to operate as a nonsubscriber provides their company additional opportunities and incentives to involve employees in the safety process. One employer noted, Since becoming nonsubscribers we realize that employees and not managers are best positioned to see changes that need to be made to reduce workplace injuries." Another said, "When my company was in workersÐ compensation it averaged one injury a week. But after having the freedom to focus on workplace safety and not dealing with the complexities of the system, my company is only days away from going an entire year with no lost time injuries."

Another Learning Lab explored how nonsubscribers, medical providers and employees interface to improve care and maintain affordable medical costs. A panel of medical professionals revealed that responsible nonsubscriber programs keep employers involved, which helps ensure employees receive quality care. Providers and nonsubscribing employers work together to establish rates for medical care that are acceptable to both the employer and the health care provider.One panelist commented, "It has been our experience that most nonsubscribers understand that quality care from the beginning reduces overall costs as well as the time it takes for employees to recover."

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TXANS members reported the following findings in response to a recent TXANS Poll question: How did the decision to become a nonsubscriber affect your company's efforts with respect to workplace safety and injury prevention?

• 85.71% Improved. The company paid more attention to safety and injury prevention.
• 14.20% No Change. The company paid the same level of attention to safety & injury prevention.
• 0% Decreased. The company paid less attention to safety and injury prevention. 

 

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TXANS gratefully acknowledges Nick Bettinger, an attorney with the Fort Worth law firm of McDonald Sanders, for his assistance with a number of new nonsubscriber case summaries that are now available in TXANS Knowledge Center. The new case information not only offers a summary of the case at hand but also the applicable lesson for Texas nonsubscribers.

To follow is an example of one case summary - Mora v. Hemco Industries.

Julio Mora was a welder for Hemco Industries. On June 30, 1997, Mora was lifting a "jig" when he heard his spinal column make a noise. Mora reported the injury to his supervisor, but believing the injury was not serious, he continued working that day. Mora first saw a doctor nine days after lifting the jig and was later diagnosed with a herniated disc in his low back. Mora said he had never had a prior back injury. Mora eventually underwent back surgery which Hemco paid for under its injury benefit plan.

On appeal, the court decided that Mora had not presented any medical evidence which linked the lifting of the jig to having caused a herniated disc. As in Lewis, the employee testified that he injured his back lifting the jig and that was enough to establish the cause of the herniation. Unfortunately for Mora, no expert ever testified that the lifting incident caused MoraÐs herniated disc. Mora also argued that it didn't matter he didn't have evidence on this issue because some of the court documents Hemco filed allegedly admitted that the herniated disc happened when Mora picked up the jig and because Hemco paid Mora's medical bills. The court rejected this argument. Voluntarily paying an employeeÐs medical bills is not an admission that the medical condition that generated those bills was caused by the on-the-job injury. Moreover, the documentÐs references to an on-the-job injury were not unequivocal and deliberate judicial admissions. Finally, the appellate court said that the trial judge acted properly in not allowing Mora to re-open evidence on the issue of medical causation after he had rested his case.

Lesson: This case demonstrates that the courts require employees of nonsubscribers to strictly comply with the law and prove all of the elements of their case in order to obtain recovery. Paying medical bills under an injury benefit plan is not evidence of an admission of liability. Paying the medical bills and offering wage benefits often keeps employees from suing. Even if they do sue, you are still entitled to a credit on the judgment for those payments you have already made.

TXANS Knowledge Center offers a variety of information on responsible nonsubscription and is a member-only benefit for TXANS members and suppliers. If you are a TXANS member or supplier, click here to log in to TXANS Knowledge Center. If you would like to obtain a password, please contact TXANS at info@txans.org.

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Texas hospitals, including general or special hospitals, private mental hospitals, licensed a nursing homes and others are now required to adopt and implement policies to identify, assess, and develop strategies to control the risk of injury to patients and nurses associated with the lifting, transferring, repositioning or movement of patients.

The new law created by Senate Bill 1525 requires the establishment of a process that at a minimum includes:

• Analysis of the risk of injury to both patients and nurses posed by the patient handling needs of the patient populations served by the hospital or nursing home and the physical environment in which patient handling and movement occurs.
• Education of nurses in the identification, assessment and control of risks of injury to patients and nurses during patient handling.
• Evaluation of alternative ways to reduce risks associated with patient handling, including evaluation of equipment and the environment.
• Restriction, to the extent feasible, with existing equipment and aids of manual patient handling or movement of all or most of a patient's weight to emergency, life-threatening or otherwise exceptional circumstances.
• Collaboration with and an annual report to the nurse staffing committee.
• Procedures for nurses to refuse to perform or be involved in patient handling or movement that the nurse believes, in good faith, will expose a patient or nurse to an unacceptable risk of injury.
• Submission of an annual report to the governing body or the quality assurance committee on activities related to the identification, assessment, and development of strategies to control risk of injury to patients and nurses associated with the lifting, transferring, repositioning, or movement of a patient.

In developing architectural plans for constructing or remodeling a hospital, nursing home or a unit of a hospital or nursing home in which patient handling and movement occurs, the facility must consider the feasibility of incorporating patient handling equipment in the physical space and what construction design is needed to incorporate that equipment.

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TXANS' News© is a publication of the Texas Association of Responsible Nonsubscribers-TXANS™ and is distributed by TXANS for the exclusive use of specific registrants at TXANS’ member and supplier companies. Copyright TXANS all rights reserved.

TXANS' News© and TXANS™ are protected by the intellectual property laws of the United States and other jurisdictions. As such it is a violation of law to reproduce, rewrite, redistribute, re-disseminate, transmit, display, publish or broadcast, directly or indirectly any part of this document, in any medium whatsoever without prior written consent from TXANS. Copyright is not claimed for any part of an original work prepared by a U.S. or state government office as a part of that person's official duties.

The information provided herein should not be used as a substitute for consultation with a competent professional adviser. Before making a decision or taking any action, you should consult a nonsubscriber professional.

For more information or to contact us directly, please visit www.txans.org l ©2006, TXANS