Responsible nonsubscription can serve both employers and employees. However each
situation is unique so the decision to choose responsible nonsubscription must be based on making a well informed decision. If after careful evaluation a business
decides to operate as a Texas nonsubscriber, certain elements are
essential including an exemplary workplace safety program
and a quality comprehensive responsible nonsubscriber injury
Employers benefit from workplace safety programs for many reasons. First and foremost workplace safety programs help spare employees and their families the damaging consequences associated with the nearly 4 million injuries and more than 6,000 fatalities that occur in U.S. workplaces each year. Workplace safety programs also help to reduce the estimated $255 billion spent on work related injuries annually. According to the National Safety Council, employers spend an average, $34,000 for each disabling injury and $1.15 million for each workplace fatality. In addition to these reasons
Texas nonsubscribers are subject to damages in
negligence actions. So it is not hard to find a stronger incentive
for reinvesting a
generous portion of any savings recognized by the election
to operate as a Texas nonsubscriber into workplace injury prevention programs. A
comprehensive workplace safety program will not only help limit employee exposure to injuries and lower injured related costs, it
can also serve to mitigate exposure to liability. Thus, an effective
Texas nonsubscriber safety program does not merely consist of a
safety document or a few safety posters it is an ongoing,
ever-evolving program that necessitates active participation by both the employer and employees.
In fact, the Texas Labor Code and Texas case law provide that Texas employers shall provide a reasonably safe workplace and exercise ordinary care in protecting employees from injury. However, the goal of all nonsubscribers should be to exercise extraordinary care, be exceedingly devoted to protecting employees from injury and the provision of quality care if an injury occurs.
The benefit plan acts the hub of the Texas nonsubscriber program.
The plan is a written document that details the provision of workplace injury benefits, including what benefits
are available, what’s required of the employer, what’s
required of the employee, medical providers, claims procedures,
dispute provisions and more. Every employee must receive
a copy or detailed summary of the benefit plan called the Summary Plan Description (SPD) The SPD outlines how the plan operates and what it provides to participants. Federal law requires that the SPD must be be written in a manner calculated to be understood by the average plan participant, and must be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan. Many Texas nonsubscriber plans are
regulated by the federal Employee Income Retirement Security
Act or ERISA. ERISA requires any
associated benefits must be paid in accordance with the plan
and that the employer must not discriminate. ERISA also requires
fiduciaries to discharge their duties “solely
in the interest of the plan’s 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. Specific procedures
also require the plan’s provisions
are fairly implemented. These procedures include requirements
that participants are free from coercion or undue pressure
when making decisions. ERISA does not bar employees from
seeking a common law cause of action under state law, against Texas nonsubscribers as addressed in
Section 406.033 of the Texas Labor Code.
Section 406.052(b) of the Texas Labor Code states, “This section does not prohibit an employer who is not required to have workers' compensation insurance coverage and who has elected not to obtain workers' compensation insurance coverage from obtaining insurance coverage on the employer's employees if the insurance is not represented to any person as providing workers' compensation insurance coverage as authorized under this subtitle.” A responsible nonsubscriber must also secure a way
to fund injury benefits and a variety of nonsubscriber insurance coverage options exist. Generally, smaller businesses tend to purchase
coverage with a low deductible but with limited coverage while
larger businesses self-fund to a certain level and purchase
high deductible products to address losses that exceed
a set amount.
Dispute Prevention & Resolution
Although, businesses should establish methods for addressing employee disputes after they occur, the benefits associated with preventing disputes shouldn't be overlooked. Communication is key and nonsubscribers should therefore begin introducing employees to their nonsubscriber program at the time of hire. On the first day, provide them information about the company’s status as a nonsubscriber, the injury benefit plan and workplace injuries, including specific information on how, where and when to report workplace incidents, accidents and injuries. Employees should also receive a copy of the nonsubscriber program documents and discuss other specific terms like dispute resolution, training and work safe programs, etc. Employees should also be required to acknowledge receipt of the program documents and orientation training information. While it is important (and a legal requirement) to inform employees of your company’s nonsubscriber status at the time of hire, it is not likely that they will remember all the information that is disseminated during the orientation session if they become injured on the job. For this reason, it is important to utilize ongoing communication and provide periodic reminders about the nonsubscriber program. For example, incorporate reminders into workplace safety meetings, staff meetings or paycheck stuffers.
Effective post-injury communication is also important. Pre-designated (and trained) staff members should be in contact with an injured employee throughout the treatment and recovery period. Doing so will help keep employees informed of the plan provisions that relate to medical care, wage loss benefits, return to work programs, etc. and ensure they receive accurate and timely information to ease the transition from injury to return to work. Assigning and training certain staff members, management staff, claims professionals, etc. to handle injury claims will also help to ensure that accurate data is provided, plan provisions are met and employees receive benefits in a fair and expeditious manner. Employers should also ensure employees know who to contact when questions arise.
Employers should interface with the medical providers that are offering care to injured employees and in the event of a serious injury, it may also become necessary for company staff to meet with the family of an injured employee. Third party professionals can assist with these tasks if the burden becomes too great. For example, nurse case managers can act liaisons between employers, employees and medical providers while claims managers can assist with plan provisions, billing issues, reporting, etc. When meeting with employees it’s important to consider the employee’s frame of mind as an employee’s concern may extend beyond just merely his/her injury. Fear and trust oftentimes surface on issues like the general uncertainty of receiving medical care, provider relationships and lost wages.
Texas nonsubscribers should have a fair plan in place to address any disputes that may arise. Internal Dispute Resolution procedures are typically a good fist step. Third-party mediators are oftentimes used as
a second step and arbitration may be an option if the dispute is not resolved through mediation.
In cases of arbitration, both parties select the arbitrator
and all rules of arbitration must be well documented and
cannot favor either party. Arbitration is a legal process that only changes the forum in which the dispute is addressed. Arbitration does not impinge on legal rules that govern the employment relationship. In fact the United States Supreme Court has emphasized that “by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.” Therefore, the arbitration process cannot
disallow remedies that would otherwise exist if the claim
was litigated and arbitrators must also be allowed to grant
a full award, including costs and attorneys fees.
One of the advantages of operating as responsible nonsubscriber is the ability to implement a program to manage injury benefit claims. The rewards for adopting an effective program are primarily cost savings for the employer and quality benefits for the employees. The presence of tort liability is the main difference between a workers' compensation claim and a nonsubscriber claim and the reason a nonsubscriber claims should not be managed like a workers' compensation claim. Under workers' compensation, benefits are paid by the workers' compensation carrier generally without regard to fault. And since a subscribing employer is generally liable for only the payment of workers' compensation benefits, the fault or cause may not be important. In the case of a nonsubscriber claim however the fault or cause can be very important. Like workers' compensation claims, nonsubscriber claims may be provided without regard to fault but extra steps are oftentimes taken to determine the fault or cause of an injury. Determining the cause of an injury not only helps to limit reoccurrence, it also provides valuable information that could be useful in the event of a claim dispute. If a nonsubscriber utilizes the services of a Third Party Administrator it is important to ensure the TPA understands the differences too because outsourcing does not relieve an employer of the responsibilities associated with claims (or the overall nonsubscriber program). The employer should maintain effective communications with the TPA and receive regular reports that ensure claims are being handled appropriately and in accordance with the company's injury benefit plan.
One of the key ways an employer can succeed as a responsible nonsubscriber is to ensure employees receive quality medical care following a work-related injury. Direct employer involvement demonstrates the company’s commitment to employees while also helping to lower injury costs, reduce disputes, and expedite return to work, productivity and impact on litigation rates. Nonsubscribing employers and healthcare providers frequently work together to establish relationships regarding the treatment of injured employees. These agreements include how and when payments will be made, filing forms, if any, rates and more. Provider agreements should promote incentives based on quality care, employer and employee satisfaction and positive economic rather than price controls, regulation and legislation as the key method for reducing costs and improving care. Nonsubscribers typically pay medical providers quicker, allow higher rates and require much less paperwork but in return, they will expect quality care and good outcomes.
Texas nonsubscribers must comply with certain state and federal
laws. For example, Texas nonsubscribers must report certain injuries
and all occupational diseases and fatalities to the Texas
Department of Insurance, Division of Workers’ Compensation-DWC. Texas nonsubscribers
are also required to post certain notices in the workplace
and notify employees in writing of their
status as a nonsubscriber. Nonsubscribers should also comply with all federal laws and regulations such as those administered by the Occupational Health and Safety Administration (OSHA). Under OSHA, an employer is any "person engaged in a business affecting commerce that has employees, but does not include self employed persons or federal employers or any state or political subdivision of a state." So for the most part, OSHA applies to every type of business regardless of industry or number of employees. OSHA’s regulations generally require employers to adopt certain practices, means, and methods or processes reasonably necessary to protect employees from work-related injuries.
A nonsubscriber program does not exist separate and apart from other company programs but is a part of everything the company does. Departments like human resources, safety and risk management all play a role in the success of your nonsubscriber program. Periodic comprehensive reviews will help all divisions understand the program and the role their functions play in the company’s program. There is no firm rule as to the frequency of program reviews but if you evaluate and amend your program routinely, you may want to consider conducting a review every three to five years. Significant changes to the program should also prompt a review of the entire program. For example, acquiring new insurance or adopting a new benefit plan or safety program should prompt a comprehensive review. Additional information including a sample nonsubscriber program review checklist is available in the TXANS Knowledge Center.