Unique workers’ compensation laws in Texas allow employers to choose whether they will subscribe to traditional workers’ comp programs. As such, approximately 20% of Texas employers have opted to develop their own injury benefit programs. In this Workers’ Comp Matters, Alan Pierce talks with Bill Minick about why Texas laws differ from the rest of the country and why the newly developed QCARE designation is an important marker of responsibility amongst non-subscribing employers.
Bill Minick is chairman of PartnerSource.
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Workers Comp Matters
QCARE Designation: What it Means for Texas Injury Benefit Programs
Intro: This is Workers Comp Matters, hosted by attorney Alan S. Pierce, the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert, and author Alan S. Pierce is a leader committed to making a difference when Workers Comp Matters.
Alan Pierce: Welcome everybody to today’s edition of Workers Comp Matters here on the Legal Talk Network. I am your host Alan Pierce of the Salem, Massachusetts law firm of Pierce, Pierce & Napolitano, where we concentrate our practice in the representation of injured workers and their families in workers’ comp and related matters.
Today’s guest is Bill Minick of Texas. He will discuss a product called QCARE for non-subscribing employers in the State of Texas.
But before we begin I would like to thank our sponsor PInow. If you need a qualified private investigator anywhere in the United States contact www.pinow.com to learn more.
Well, my guest today as I mentioned is Bill Minick, the Founder and Chairman of PartnerSource, the largest consulting firm for Texas Injury Benefit Programs. Bill is a board member of the Association for Responsible Alternatives to Workers’ Compensation. He has served on the advisory board and as a judge for the Annual Comp Laude Awards. He is a founding member of Kids’ Chance of Texas, a very wonderful charitable program for children primarily of injured workers either killed or seriously injured in the course of their employment. And he is an innovator and looks at traditional workers’ comp from a unique perspective.
Now, as I mentioned before, I represent injured workers, have always done so for the majority of my practice, but I have known Bill for several years now. Our professional relationship, sometimes a bit rocky, began after the adoption of the so-called Opt-Out Law in Oklahoma which sparked shall we say a significant amount of controversy and resulted in a variety of constitutional and other challenges to the concept of allowing employers to opt-out of mandatory workers’ comp insurance coverage and devise their own plans.
We have done several shows in the past on Opt-Out and while Bill and I still have widely divergent views on how to best improve the delivery of wage replacement and medical benefits to injured workers, we do agree that in many ways compensation to injured workers needs to be improved. And for the record while I do not endorse the concept of alternatives to workers’ comp, I do recognize and admire Bill’s advocacy for a better system for both employees and employers. So from that standpoint we are in definite agreement and I am delighted to have him on our show today to share the concept of QCARE with our audience.
So Bill, welcome to Workers Comp Matters.
Bill Minick: Thank you Alan. Pleasure to be here.
Alan Pierce: I don’t want to get too much into Opt-Out, but I think what I would like to do to frame our discussion is to describe the State of Texas, because QCARE, which I will have you describe in a moment, applies to the unique area of workers’ comp in Texas. So tell us why is Texas different than the other 49 states insofar as workers’ compensation is concerned.
Bill Minick: Well, thank you again Alan for the opportunity to be with you today and appreciate that introduction. We have far more in common than we do differences. We are definitely both focused on trying to find the best outcomes for injured workers as well as for employers and the reason Texas has remained an elective state, as most states used to be, is because we have had a very active and competitive environment developed, particularly over the past 30 years, where best practices have really pointed toward five key things that a responsible employer needs to do and now we have roughly 95% of all Texas workers covered by either workers’ compensation or an Injury Benefit Plan; that can only happen in a very competitive insurance environment.
And the ARAWC website I think does a great job of laying out those five key components of employee advocacy, active engagement by the parties, both the injured employee and the employer, and the medical providers involved in pursuing the best claim outcome, and when we get better medical outcomes and we do in several ways and demonstrated by decades of research, we are able to pay better benefits.
So the Texas system is a main directive because of the recognition that competition has made the Texas system much more efficient and higher performing; it’s now — the workers’ comp system in Texas is one of the most widely recognized, high performing states in the country, but also because on the non-subscriber side we are able to pay significantly better wage replacement and drive lower cost.
Alan Pierce: Okay. So let’s maybe for some of our listeners, let’s maybe expand on that. You mentioned the word Texas is elective and you mentioned the term non-subscriber. Where I practice and pretty much the rest of the country workers’ compensation laws are mandatory. In other words, every employer with certain exceptions, there are certain types of employment such as longshore and harbor workers, railroad workers, federal workers, but most private employers and municipal and state and county employers are required to have workers’ comp insurance; that is the only plan for compensating an employee who suffers a job-related injury.
Texas is a bit of anomaly and you correctly mentioned that when workers’ comp started over 100 years ago the programs pretty much were elective, employers could elect to purchase workers’ comp or they could suffer the consequences of not having any workers’ comp coverage and be sued in tort.
Texas has remained a state which allows the employer to decide to purchase workers’ comp or be self-insured or be what you described as a non-subscriber, and it is within those employers that are non-subscribers that there are, can I safely say two categories of non-subscribers. A company that does not purchase a workers’ comp plan can have nothing and be subject to a lawsuit or that an employer could purchase another type of product and that’s what I think you were alluding to, some type of benefit plan.
So have I summarized that sufficiently or confused it?
Bill Minick: No. I think that’s a good summary. Certainly in historic terms and going forward we really think over the past couple of years have developed I think a more direct and responsible way to present these three options as either the employer carries workers’ comp insurance or it has a QCARE program which really defines what a responsible Texas Injury Benefit Program is and we will talk about that I guess a little further and then opt-out.
Now, the opt-out terminology clearly suggests that something important is not being done. So we think about employers who opt-out as those who may not be meeting industry standards for the QCARE designation or provide any injury benefits. We are trying to emphasize a much greater measure of transparency and responsibility and improvement in these programs over the past five years and encourage employers to really step up their game and where needed improve their programs so that they can obtain the QCARE designation.
Alan Pierce: Okay. So let’s take a look at the State of Texas because that is where QCARE, which is your product, it’s a designation, which I will have you give us more detail about in a minute, but let’s say of the entire pool of employers in the State of Texas, can you give us an idea of perhaps what percentage of employers or percentage of the workforce, whichever is more easy or relevant, are covered under traditional workers’ compensation or self-insurance workers’ compensation plans?
Bill Minick: About 80% of all Texas workers are covered by workers’ compensation insurance and about 20 are in the non-subscriber environment. So that’s about 1.2 million Texas employees are covered by Injury Benefit Programs.
Alan Pierce: Okay. Now, how many employees are not covered by anything, neither workers’ comp or an Injury Benefit Program, do you have a handle or a number on that?
Bill Minick: Yeah, approximately 5% of Texas workers are not covered by either. And when you look at the exceptions to coverage available in virtually every state as well as its non-compliance in every state that 5% figure is comparable to what we see across the country.
Alan Pierce: And non-compliance I guess would be in other states where an employer is violating the law by not providing workers’ comp, we all know that is a problem.
Bill Minick: That’s correct.
Alan Pierce: Employers either purposely not buying workers’ comp insurance or having their insurance canceled or perhaps impermissibly classifying their workers as independent contractors as opposed to employees. So I do agree with you, there is and always has been a problem of so-called noncompliance.
In Texas noncompliance is perfectly legal, but the non-complying employer is of course subject to civil liability and civil damages, much differently than an employers.
Okay, so we have got — in the State of Texas we have got 20% of the workforce not covered under workers’ comp and 95% of them or a significant amount of them are covered by another type, you called — like an Injury Benefit Plan. So tell us how an Injury Benefit Plan is different than traditional workers’ comp?
Bill Minick: An Injury Benefit Plan is designed very similar to a group health or other group disability program. I started out as a tax and employee benefits attorney and for nine years focused on all types of union and non-union employee benefit programs and group health, disability and retirement. And we had the opportunity to develop the first ERISA-based Injury Benefit Plan in 1989 when I was working for a very large law firm in Dallas and in a very tough workers’ compensation market.
At that time there was no alternative insurance market, but one sprang up in the late ‘80s and we just started out trying to figure how do we address the employer’s desire to pay medical benefits for an injured worker and to pay lost wages, but do it outside of the workers’ comp system.
Now we have got 30 years of developing these programs, which essentially deliver the same type of benefits. We pay 100% of reasonable and necessary medical care and we pay wage replacement, typically beginning from the first day. It is a taxable benefit outside of workers’ compensation, so we increase the percentage of pay to at least 85%; PartnerSource programs on average pay 92% wage replacement starting first day and typically with no weekly maximum.
So it’s the same type of benefit, but it’s delivered in the same manner and subject to the same disclosure and fiduciary requirements that you see on other employer-sponsored medical programs.
Alan Pierce: And again where you and I may disagree may have to do with the fact that employers, first of all, by making this an ERISA plan, and of course the ERISA statute is a federal statute that protects both employees and defines obligations of employers, that takes any disputed case out of the traditional dispute resolution process that might begin at the workers’ comp commission or agency and then go into perhaps if necessary the state appellate courts.
Those of us who practice long-term disability law and we realize when there is a dispute with an Ltd carrier, the manner of resolving that dispute is much different. We have to file suit in federal court, it’s much more cumbersome and complicated.
So I don’t want to go into all of the areas where while the benefits may be similar or the same or perhaps even better, the access may be different. But when an employer has an Injury Benefit Plan that is not a workers’ comp plan, is that employer subject to being sued if the injury occurred as a result of the employer’s negligence, so do they enjoy the protection and immunity from the exclusive remedy that is under traditional workers’ comp?
Bill Minick: So they do have employer liability exposure, yes, on every claim. So every time an employee is injured there are two claims at issue. One is the employee benefit plan claim and then the other is a state law negligence liability claim.
So on the employee benefits, as you mentioned, it is generally subject to federal court jurisdiction which was a decision made by Congress over 45 years ago, where they looked at different dispute resolution systems and decided that instead of driving all of these benefit claims in the same type of judicial state-based or even federally-based system that at that point was known for its administrative complexity, they decided let’s put a fiduciary obligation on the employer to make benefit determinations in the best interest of the employee as opposed to what we still see in workers’ comp particularly the focus on cost containment and minimum legal compliance as opposed to fiduciary standard.
So that drives a measure of behavior and benefit delivery that further reduces the liability exposure, but where there is any type of injury claim, even the simplest of claim, there is a simple negligence exposure for the employer and that is a powerful force for good.
I think the difference between state and federal court is really a matter of familiarity and volume of claims. Certainly the negligence liability side is an area that personal injury and workers’ comp attorneys are much more familiar and comfortable with. The basic concepts of duty breach and proximate cause apply and those claims and that unlimited liability exposure motivates significant investments in safety and training and the delivery of care.
Alan Pierce: I do agree with you that one of the purposes behind an employer being held responsible for negligence in causing a work injury is, in addition to providing compensation to the person injured, it is an incentive for a safe workplace. I don’t think anybody can disagree with that.
Some of the problems are that there are some employers who simply don’t care, but that’s not unique to Texas, Oklahoma or Massachusetts or anywhere else. There are outliers from the employer side of things and there are of course outliers on the employee side and our goal is to make a system that is fair and equitable for everyone.
And that gets us into a discussion of your product QCARE and at this point before we get into the weeds on QCARE, I would like to take a brief break and when we return we will pick this up with Bill Minick of PartnerSource in Texas. We will be right back.
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Alan Pierce: Well, welcome back to Workers Comp Matters and our conversation with Bill Minick.
Bill, we were talking about a product that is named QCARE and you are directly involved in this product. It’s not an insurance policy, it’s not an insurance program, I think it’s a designation. Could you expand upon exactly what QCARE is and how it is utilized in the State of Texas?
Bill Minick: Sure. Well, QCARE stands for a Qualified Compensation Alternative for Recovering Employees. The genesis of this goes decades back where as you can imagine back in the 1990s, late ‘80s, early ‘90s especially, it was the Wild West of workers’ comp in Texas when employers began to develop these benefit plans, but there is absolutely no standards for them, no best practices in benefit delivery, claims administration or anything and the insurance markets were rapidly evolving.
So we began to talk about the concept that there are responsible non-subscribers and there are irresponsible non-subscribers or opt-out, and we knew that there needed to be some definition, some standard applied to what it requires to be a responsible employer outside of the workers’ comp system.
Well, fast forward 25 years, 26 years to the big opt-out debates, if you will, in 2015, when there was a lot going on in workers’ comp across the country. Workers’ comp industry kind of had a triple threat of constitutional challenges, the media, particularly NPR and ProPublica and DOL looking hard at workers comp’ and very critical in this concept of opt-out. And there was some very positive responses from the workers’ comp industry on things like employee advocacy and addressing the opioid crisis.
The message on opt-out was that that’s all bad and there was enormous resources put into defining that as a very bad thing and killing any meaningful innovation on claims handling or regulation or competition.
So over the past five years a lot of time and energy have been invested by a lot of people across the State of Texas and actually across the United States in developing and defining a standard for responsibility on these Injury Benefit Plans.
So QCARE was developed as a simple, no cost online designation to recognize employers with a responsible Texas Injury Benefit Program. So what does that mean? That program has to satisfy 10 standards and those 10 standards focus on the liability exposure, the fact that the grand bargain does not apply here. There is an awareness of negligence liability exposure and the powerful incentive of that and the seriousness of that.
Also of a matter of fairness, I mean, Alan, you and many of your colleagues at WILG and in other quarters of the workers’ comp industry put a spotlight on some of the weaknesses in these injury benefit programs and we worked very hard to improve those programs and establish a greater measure of transparency and fairness.
And so, QCARE reflects those discussions, those innovations, to try to really emphasize the need for fairness and benefit plan design, insurance coverage, professional claims administration, and then recognize those employers that meet those high standards.
Alan S. Pierce: Well, those are lofty goals and if we are going to have a system such as Texas where 20% of the workforce is not covered under traditional workers’ comp programs, I would suggest that in the absence of making all employment mandatory for workers’ comp that there be a better and responsible and fair system, we can always argue about the individual provisions that a benefit plan — injury benefit plan may differ from traditional workers’ comp and I guess we can agree to disagree that those of us who believe that workers’ comp as a concept, as private insurance or self-insurance is under a state control system rather than something guided by ERISA, that’s a debate that I guess we will continue to have.
But as I spent some time going through the QCARE website I do see that QCARE focuses on a lot of the problem areas, which might have to deal with delay, uncertainty, inconsistent claims handling and things like that.
Bill Minick: Yes, significant improvements.
Alan S. Pierce: Yeah, I mean, they are definite, you are highlighting and pinpointing areas that even under traditional workers’ comp systems have been a bone of contention to those of us who represent injured workers, and for the same point for the employers, I guess they would have more direct control than the typical employer that buys insurance and then it’s pretty much left to the insurance company to be the decision driver in terms of claims.
So there are some benefits for both sides. Philosophically we can always differ on the umbrella that would cover employees. So how does QCARE work, in other words let’s say, I’m an employer and I have a benefit plan that has been devised for me by a company or do I purchase the benefit plan from QCARE, how is QCARE engaged, who are your customers?
Bill Minick: QCARE and Texas Injury Benefit Plans generally are distributed or developed for employers just like workers’ comp. Most of these programs are presented by an insurance agent, an independent insurance agent, to the employer who would review quotes for workers’ compensation insurance and for an injury benefit program, and again, make that choice between workers’ comp, a QCARE program or opt out.
By having an employer registry, there’s actually two registries; one is at the Texas Division of Workers’ Compensation, they maintain a list of all employers that do not have workers’ compensation insurance, who are all required to file a basic annual form identifying themselves. Obviously that’s not a perfect compliance either, but there is a state list with over a hundred thousand Texas employers that do not carry workers’ comp insurance.
What QCARE does is say if I’m an employer that wants to be recognized as responsible as having satisfied these ten essential standards, I’m going to get that designation and then have the ability to add my name to the employer registry. So I don’t want to just be on the what some people called the bad list of all the companies that simply don’t have workers’ comp, I want to be recognized as being a good employer that respects their employees and takes good care of them and who’s taking the steps, invested significant time and effort into the development of one of these programs.
Alan S. Pierce: Now what are the ramifications for an employer that somehow violates the provisions of QCARE and delivers less than optimal service, how does — how is this policed or enforced?
Bill Minick: It’s a good question, Alan. So in this environment where there have been no standards historically, the development of standards has taken time and their adoption will take time, but as we see employers moving to the QCARE Designation, it is a self-certifying process on the front end, but there are several checks and verifications on the back end at the ARAWC level. So ARAWC is the Association for Responsible Alternatives to Workers’ Compensation, arawc.org, that developed the designation called QCARE at qcare.org.
And so ARAWC has set up an administrative process, so that when an employer applies for the QCARE designation, checks on their program begin and then a sampling of programs that apply for the QCARE Designation go through further verification checks to confirm that the benefit plan has these key provisions, that the insurance and claims administration processes are in place and has an independent program administrator named Virtual, Inc. and Virtual is a Association and Certification Manager, they handle trade group administration for over 100 trade groups and they do designations for hundreds of thousands of professionals and different types of certifications and designations across the country. So ARAWC retained Virtual to handle the program administration certification process.
So that’s the first level of check. Another level of check would obviously be the State and Federal regulators who for example are confirming that compliance with State law, employee notices and filings has been done as well as Federal requirements under the jurisdiction of the US Department of Labor where they had the ability to verify reporting and disclosure criteria have been met, fiduciary standards have been met, and then lastly, I’d say that the insurance markets have a significant role in this process.
With insurance companies writing both employee benefits and the liability exposure, they are keenly focused on requiring the employer to have an injury benefit program that meets certain standards. They want to make sure that the employer is committed to caring for the injured workers so that the liability claims don’t blow back on them. Does that make sense? It’s a push and pull of this benefits and liability dynamic that helped establish these standards, and now we’re just bringing them forward in a more transparent way.
Alan S. Pierce: Got you, now QCARE is relatively new, is it already operational; and if so, how many non-subscribing employers have achieved the QCARE Designation, and is it still a work in progress?
Bill Minick: The program is live, that went live in January, I believe it was January 21st, 2020 and approaching 50 employers I believe that represents roughly 400,000 Texas workers. So it’s off to a very strong start. The adoption won’t be immediate by any means, but — and nothing happens immediate in the workers’ comp environment as you know, but we’re happy to see get off to a good start and the quality of companies that are stepping toward really speaks for themselves.
During this COVID-19 crisis and relying upon grocery store workers, healthcare workers, food service and transportation workers, almost all of those companies. The most recognized brands in America that operate in Texas, have an injury benefit plan, and you can see some of those moving towards QCARE in the employer registry on the website.
Alan S. Pierce: Of any of these 50 employers are any of them formerly traditional workers’ comp employers are non-subscribers who did not have an injury benefit plan or are they pretty much already existing in injury benefit plan employers?
Bill Minick: I can’t answer that exactly. I think the vast majority of them did have injury benefit plans previously, virtually all of them have been further updated. Well, I know they’ve all been updated over the past five years for a variety of things including the latest DOL disability regulations.
So it’s taken quite a time to gain industry agreement on what standard should be and what the insurance markets would support and what employers would support, now we just need to continue to drive that message of responsibility and good faith delivery of benefits in this competitive environment and people want a competitive environment.
I mean the fact is, we don’t want the US Postal Service to be the only way we get our mail, we want competition in so many different industries across country and frankly our philosophical focus is on competition-raising expectations and standards. We have had almost no meaningful progress on benefit adequacy and complexity in the workers’ comp systems across the country. I know that’s something very important to you. We think that by achieving better medical outcomes we can pay significantly better benefits to injured workers and we really want to see workers’ comp systems continue to evolve and improve and reduce the complexity and make benefits more accessible and the only way to do that is getting better medical outcomes, driving away some of the bureaucracy, competition will do that.
Alan S. Pierce: Well, on some or a lot of those points I agree the method and how we get there I guess is something that we can talk about as we go forward, but I want to thank you for being our guest today explaining, the confusing nature of workers’ comp especially in Texas which is I mentioned at the outset and we have accentuated as a standalone, it’s an anomaly among the other 49 states and that to the extent that we can have better provisions for employees who work the non-subscribing employers, you can’t argue against that, I want to thank you for being an innovator to continue to think and work towards a solution and to have a dialogue with those of us who may fundamentally disagree with you in terms of the alternative to workers’ comp or strengthening the existing workers’ comp.
We are not going to solve that debate. Here, we are not going to solve it at anytime in the future, but I think as long as the parties talk to each other, listen from each other and learn from each other, I think in the end of the day it should be for the benefit of employers and employees, and not to their determent.
So, Bill, I want to first of all wish you and yours good health during this COVID crisis that we are going through, I know that’s going to beg a lot of other issues both in workers’ comp and employer liability side, and we don’t know where that’s going to end up, but more importantly, we want to stay healthy, we want to all get back to work and get back to work healthy.
So Bill, thank you for what you are doing and for being somebody who listens to us and somebody that is available to hear us when we may disagree with you. So thank you for being our guest and any closing thoughts?
Bill Minick: Well, thank you Alan. I think that we kind of buried constructive dialogue over the past five years, it wasn’t always pleasant, but I think it is — it has turned out to be very constructive, and I do appreciate the opportunity for myself, PartnerSource and for the industry to work further with you and your law firm and — well again, other workers’ comp stakeholders to see what we can do to keep making workers’ comp systems work better and deliver better medical outcomes, improved benefits for injured workers as well as cost savings. And it’s an honor to be with you today. So, thank you for this opportunity.
Alan S. Pierce: Okay, well, thank you. And good luck and good health and to those of you tune in to our next podcast here on Workers’ Comp Matters and other than that, go out and make it a day that matters. Bye-bye.
Narrator: Thanks for listening to Workers’ Comp Matters today on the Legal Talk Network, hosted by attorney Alan S. Pierce, when we try to make a difference in workers’ comp legal cases for people injured at work. Be sure to listen to other workers’ comp matters shows on the Legal Talk Network, your only choice for legal talk.