CHAPTER 415. ADMINISTRATIVE VIOLATIONS
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.