LABOR CODE
CHAPTER 415. ADMINISTRATIVE VIOLATIONS
SUBCHAPTER A. PROHIBITED ACTS
§ 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 wilfully or intentionally:
(1) fails without good cause to attend a dispute
resolution proceeding within the commission;
(2) attends a dispute resolution proceeding within the
commission 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 commission;
(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 commission;
(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 commission rule; or
(11) fails to comply with this subtitle.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 415.002. ADMINISTRATIVE VIOLATION BY AN INSURANCE
CARRIER. (a) An insurance carrier or its representative commits
an administrative violation if that person wilfully or
intentionally:
(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 commission;
(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 commission;
(9) attends a dispute resolution proceeding within the
commission 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 407, Acts of the 63rd
Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
Texas Insurance Code), or the rules of the State Board 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 commission;
(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 commission rule; or
(21) 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 commission and
participate at the proceeding in accordance with this subtitle.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 980, § 1.45, eff. Sept. 1, 1995.
§ 415.003. ADMINISTRATIVE VIOLATION BY HEALTH CARE
PROVIDER. A health care provider commits an administrative
violation if the person wilfully or intentionally:
(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 commission's fee and treatment
guidelines;
(5) violates a commission rule; or
(6) fails to comply with a provision of this subtitle.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 980, § 1.45, eff. Sept. 1, 1995.
§ 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 commission a settlement or
agreement of the parties;
(2) fails to timely notify the commission 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 commission 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 commission 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 commission.
(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 committed wilfully or intentionally,
or if the violation was of a decision or order of the commission.
Added by Acts 1995, 74th Leg., ch. 980, § 1.45, eff. Sept. 1,
1995. Amended by Acts 2001, 77th Leg., ch. 1456, § 6.06, eff.
June 17, 2001.
§ 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, § 1, eff. Sept. 1, 1993.
§ 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 a Class B
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, § 1, eff. Sept. 1, 1993.
§ 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 a violation if the person violates
Subsection (a). A violation under this subsection is a Class C
administrative violation.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 415.007. LOANS BY ATTORNEYS PROHIBITED. (a) An
attorney who represents a claimant before the commission 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, § 1, eff. Sept. 1, 1993.
§ 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 commission may not take final action on the person's
benefits.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 415.009. FRIVOLOUS ACTIONS; ADMINISTRATIVE
VIOLATION. (a) A person commits a violation if the person
knowingly 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, § 1, eff. Sept. 1, 1993.
§ 415.010. BREACH OF AGREEMENT; ADMINISTRATIVE
VIOLATION. (a) A party to an agreement approved by the commission
commits a violation if the person knowingly breaches a provision of
the agreement.
(b) A violation under Subsection (a) is a Class C
administrative violation.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
SUBCHAPTER B. PENALTIES
§ 415.021. ASSESSMENT OF ADMINISTRATIVE
PENALTIES. (a) The commission may assess an administrative
penalty against a person who commits an administrative violation.
Notwithstanding Subsection (c), the commission by rule shall adopt
a schedule of specific monetary administrative penalties for
specific violations under this subtitle.
(b) The commission may assess an administrative penalty not
to exceed $10,000 and 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 commission.
(c) In assessing an administrative penalty, the commission
shall consider:
(1) the seriousness of the violation, including the
nature, circumstances, consequences, extent, and gravity of the
prohibited act;
(2) the history and extent of previous administrative
violations;
(3) the demonstrated good faith of the violator,
including actions taken to rectify the consequences of the
prohibited act;
(4) the economic benefit resulting from the prohibited
act;
(5) the penalty necessary to deter future violations;
and
(6) other matters that justice may require.
(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, § 1, eff. Sept. 1, 1993. Amended
by Acts 2001, 77th Leg., ch. 1456, § 6.07, eff. June 17, 2001.
§ 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, § 1, eff. Sept. 1, 1993.
§ 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 commission may adopt rules providing for:
(1) a reduction or denial of fees;
(2) public or private reprimand by the commission;
(3) suspension from practice before the commission;
(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, § 1, eff. Sept. 1, 1993. Amended
by Acts 2001, 77th Leg., ch. 1456, § 6.08, eff. June 17, 2001.
§ 415.024. BREACH OF SETTLEMENT AGREEMENT;
ADMINISTRATIVE VIOLATION. A material and substantial breach of a
settlement agreement that establishes a compliance plan is a Class
A administrative violation. In determining the amount of the
penalty, the commission shall consider the total volume of claims
handled by the insurance carrier.
Added by Acts 1997, 75th Leg., ch. 1443, § 9, eff. Sept. 1, 1997.
SUBCHAPTER C. PROCEDURES
§ 415.031. INITIATION OF ADMINISTRATIVE VIOLATION
PROCEEDINGS. Any person may request the initiation of
administrative violation proceedings by filing a written
allegation with the director of the division of compliance and
practices.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 415.032. NOTICE OF POSSIBLE ADMINISTRATIVE VIOLATION;
RESPONSE. (a) If investigation by the division of compliance and
practices 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 commission;
or
(2) submit to the commission a written request for a
hearing.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 commission shall initiate enforcement
proceedings.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 415.034. HEARING PROCEDURES. (a) On the request of
the charged party or the executive director, 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, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 76, § 5.95(49), eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 980, § 1.46, eff. Sept. 1, 1995.
§ 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 executive
director for deposit in an escrow account; or
(2) post with the executive director 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 executive
director 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, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 76, § 5.95(49), eff. Sept. 1, 1995.
