Injuries, Nonsubscription

Workers' Comp is
Voluntary, Not Mandatory
in Texas.

Texas is the last state to continue to offer a truly voluntary workers’ compensation system in the private sector.  This means that unlike other states, employers in Texas have the right to buy workers’ compensation insurance or to “opt out” or “nonsubscribe” from workers’ compensation.  Surveys show that anywhere from 35 to 40% of Texas employers have chosen to nonsubscribe.  In some industrial categories, the rate has been as high as 50% or more.

More information on the details about nonsubscription can be found in the “articles/info” section of our website.

Are You Aware About “Going Bare?”

Opting out of the workers’ compensation system is sometimes referred to as “going bare” because the employer is going without workers’ compensation insurance.  This means the employer is exposed to work injury negligence lawsuits, which cannot be brought against an employer with workers’ compensation insurance.  Nonsubscribing by opting out of the workers’ compensation system is an accepted method of doing business in Texas when appropriate precautions are taken.  We recommend purchasing alternative insurance products that protect both the employer from work injury negligence lawsuits and provide insurance to back up basic medical and wage benefits for injured employees, including those who do not sue.  

We Help You Choose.

We handle all aspects of opting out of workers’ comp, from analyzing feasibility, risks and pros and cons, analysis of indemnity and excess policy coverage (e.g., selecting an appropriate deductible or SIR, understanding scope of liability and benefit coverage and exclusions), and initial and on-going regulatory compliance at the state and federal level.  

We Help You Customize Benefits to Suit Your Workforce.

We are experienced in benefit plan design and innovations.  While there are some good insurance products available which provide generic benefit plans, clients often prefer to customize their plan.  The “one size fits all” approach often fails to adequately address certain aspects that are unique to some client’s industry, philosophy, personnel policies or corporate culture.  

Unique circumstances.  For example, some employers have large numbers of part-time and under-age employees.  Generic plans rarely adequately address issues unique to those types of employees (e.g., the calculation of wages and the application of modified duty, the problem of getting a binding settlement with minors, and issues involving tips, etc.).  

Post-incident negligence waivers and releases.  Most generic plans also fail to address the opportunity to condition some or all of the benefits on obtaining an enforceable post-incident release or waiver from employees.  Depending on the workforce, waivers can be very valuable in avoiding “double-dipping” litigation that can otherwise be brought after an employee draws all the benefits from the plan.  

Customization of benefit plans.  We offer custom plans as well as amendments to key portions of generic plans to maximize each client’s risk management strategy and unique workforce characteristics.  We have worked with many different carriers and have been able to satisfy their interests while still achieving the plan design needed by the employer.  Other items typically not included with generic insurance documentation are modified duty policies and forms to facilitate return to work, ERISA claim disclosure requirements and employee accountability.  

We Help with Difficult Claims.

We assist clients with decision-making for the occasional “red flag” claims in order to comply with ERISA standards and to minimize collateral employment liabilities that are often associated with employee injuries, such as ADA discrimination or accommodation issues, FMLA compliance and retaliation.

Injuries Can Lead to Other Costly Liabilities.

Work injuries represent a significant liability for employers.  In addition to lost work time and insurance and other costs for medical expenses and wage replacement, injuries often lead to complications in complying with a wide variety of laws, leaving employers exposed to future litigation in addition to the injury losses.  For example, if the employee is replaced before returning from an injury, there may be a lawsuit for claim retaliation under the ERISA or workers’ compensation act.  Additionally, the employee may claim violations of FMLA leave rights or for failing to offer a reasonable accommodation if the injured worker qualifies for protection as a disabled person under the Americans with Disabilities Act (ADA).  Getting the right help at the right time can be invaluable in avoiding additional liabilities of this type.

We Help with ERISA Plan Administration.

We regularly advise our nonsubscribing clients on proper ERISA plan administration and claim management to avoid benefit claim liabilities. This involves establishing practical claim procedures and forms (e.g., standard denial and other notices) that properly document routine claim denials and approvals within the regulatory standards for timeliness and provide required disclosures.  We develop and implement internal appeal process as required by ERISA, and advise with regard to privacy and record management requirements imposed by Texas law and potentially by HIPAA.  We design litigation risk containment measures, such as post-incident releases, mandatory arbitration and individual claim settlements.  

We Help Clients Save Money
and Protect Their Employees.

Our consulting efforts in this area have helped our clients substantially avoid litigation and enjoy significant savings in premiums and claim costs over many years.  Surveys have shown employees have high satisfaction levels with nonsubscription benefit plans.

We’ve successfully implemented nonsubscription plans in virtually every business and industry sector:

• hospitality clients (hotels, resorts, restaurants, fast food, etc.)
• manufacturing
• construction
• retail
• healthcare
• transportation

Even if Uninsured, We Help Plug the Gaps in Your Defenses.  Some employers decide to “go bare” and have no insurance or minimal insurance for work injuries.  We help these employers understand their risks and options to reduce their potential liabilities with appropriate legal strategies and documents.  

Some insurance still leaves you exposed to lawsuit liability.  Sometimes employers do not realize they are as “bare” as they are, because they may have bought some form of insurance that they think protects them.  Unfortunately, most low cost insurance only provides accidental medical or wage benefits to the employee, such as OccAcc or AD&D coverage.  Not all employers understand that most of those kinds of policies do not provide any coverage for the employer.  Such policies typically do not pay for work injury lawsuits brought against the employer.  One lawsuit of this type can be devastatingly expensive.  

Enforceable negligence waivers.  We can help you limit the risk from such liabilities even if you decide against insurance.  For example, one approach is implementing a simple, uninsured benefit plan with reasonable caps that conditions benefits on an employee’s agreement to a post incident negligence waiver.  Such waivers are now statutorily enforceable when implemented correctly.  

Jury waivers and mandatory arbitration.  We can help with employee agreements to avoid costly and risky jury trials.  We have systems whereby employers can lawfully mandate that all employees use binding arbitration instead of jury trials for work injuries and other employment disputes, provided the employer is similarly bound by the arbitration agreement.  Another type of agreement (sometimes called a “jury waiver”) involves limiting the employer and employee to a judge trial instead of a jury trial.  This has the advantage of allowing the parties to use the court system, which is paid for by taxpayers.  By contrast, arbitrators must be paid solely by the litigants.  For this reason, arbitration often costs thousands more than court filing fees (usually just a few hundred dollars).  Staying in court allows the parties to file motions to dismiss or narrow the case before it is tried, and to appeal bad results.  

Limited liability entities.  We can also help with appropriate business formation approaches to protect your personal assets and interests.  Employers who are “proprietors” operating only as a “d/b/a” or “doing business as” are putting their families and personal assets at a substantial and unnecessary risk.

We Are Involved in the Legislative Process.

Scott Agthe has been a major participant in the Legislative Review Committee for the Texas Association of Business Nonsubscriber Task Force, which is actively involved in monitoring and informing the Texas Legislature on nonsubscription for more than five years. Mr. Agthe has testified on behalf of the Texas Association of Business as an expert on nonsubscriber issues during Legislative hearings before the State Affairs Committee in the Texas Senate.  Mr. Agthe is also a frequent speaker and writer on alternatives to workers' compensation, nonsubscription, workers' compensation reform and labor and employment issues in the State of Texas.