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Occupational Accident Insurance:


Q: Does Texas law require employers to carry Workers’ Compensation Insurance?

A: No. Employers may be either subscribers (purchasers of W.C.) or non-subscribes.


Q: How difficult is it to become a non-subscriber?

A: It’s a simple three-step process:

1.)  File annually the form DWC-5 with the Texas Department of Insurance.

2.)  Post on your bulletin board in English and Spanish, the required non-subscription form.

3.)  Advise your employees.


Q: Are there many non-subscribing employers in Texas?

A: It is estimated that in 2004, 38 percent of the employers in Texas had opted out of the Worker’s Compensation system, and they employed approximately 16 percent of the Texas Work force.


Q: How does being a non-subscriber differ from being a purchaser of Worker’s Compensation?

A: First, elimination of fraudulent claims, by employee or health provider, is generally easier as a non-subscriber. If you purchase Workers’ Compensation, it is a violation of the law to force the employee to the doctor of your choice. As a non-subscriber, no such prohibition exists. In fact, direction of employees is a key fraud-fighting tool. Second, as a subscriber you are prohibited from involving yourself in the claims process unless you are a qualified self-insurer in the State of Texas. As a non-subscriber, the employee can be required to prove he was injured during the course and scope of employment. Third, to deny a claim as a subscriber, the insurer must be able to prove the employee was not injured during the course and scope of employment. This is especially difficult on alleged non-witnessed injuries. As a non-subscriber, the employee can be required to prove he was injured during the course and scope of employment. Fourth, employee benefits under Worker’s Compensation are unchangeable. As a non-subscriber, benefits can be tailored to fit the needs of your employees: Weekly benefits can be increased (up to $1,000 under our plan) and various lump sum death benefits may be provided. Fifth, Workers’ Compensation is the sole remedy for occupational injuries for subscribers. Non-subscribers fall within the general tort system similar to your general liability exposures. There are other differences but we consider the above to be the most significant.


Q: As a non-subscriber, how does my Company handle the common-law liability that it becomes subject to for on-the-job injuries?

A: There are three ways. First, the use of the ERISA Plan that comes with the non-subscriber policy “federalizes” all claims and disputes about the payment or denial of benefits to employees. Second, the Mandatory Arbitration Agreement requires employees to arbitrate all of their disputes with the Company, including not only on-the-job injury claims, but also claims for all types of discrimination, retaliation, defamation, breach of contract, etc. Third, the non-subscriber policy provides liability overage for all employees’ on-the-job damages claims, including amounts for approved settlements, adverse judgments and arbitration awards of compensatory and even punitive damages, and defense attorneys’ fees.


Q: As a non-subscriber, if a case does go to trial, do I lose all common-law defenses?

A: No. Since the first Texas Worker’s Compensation Act in 1913, it has always expressly deprived non-subscribers of the common-law defenses of assumption of the risk, contributory negligence and negligence of a fellow servant. Since then, however, the Texas Supreme Court has eliminated those three defenses from the Texas common law for all defendants. The statutory defense of proportionate responsibility is not available to defend an employee’s occupational injury negligence claim against a non-subscriber, and pre-injury waiver agreements signed after June 17, 2001 are not enforceable as a defense to such a claim.


Q: Do you require a written ERISA Plan?

A: Yes, an ERISA Plan is provided at a charge of $200 to the insured.


Q: Why does the Mandatory and Arbitration Agreement cover more than on-the-job injury claims?

A: Although the non-subscriber policy only provides coverage for on-the-job injury benefits and liability, employees frequently bring suit against employers for a wide range of alleged wrongs. Arbitration is a fast, fair, efficient means for resolving disputes, eliminating the delay, expense, acrimony and irrationality of many jury trials. If an employer is going to rollout and arbitration program like the Mandatory Arbitration Agreement, we think most employers will benefit from it having coverage as broad as possible.


Q: If one of my Texas employees is injured outside Texas, is he covered?

A: Yes, our coverage is worldwide.


Q: Are we required to utilize your Preferred Provider Organization?

A: No, we will utilize the doctors of your choice if you so desire.


Q: How does your non-subscriber pricing compare with Workers’ Compensation?

A: We are very competitive and are generally priced at least 30 percent less than Workers’ Compensation. Our ability to virtually eliminate fraud and control medical costs allows us to pass these savings on to the employer in the form of an up-front price savings.