In Texas, there are a few circumstances when you can have an attorney represent you without cost to you-- paid for by the insurance carrier.
In the typical workers' compensation claim, the attorney receives payment as a deduction from the injured employee's income benefits. The attorney is paid for his time and expenses on the case, billed by the hour, and those fees, once approved, are deducted by the insurance carrier and sent to the attorney by a separate check. So, for example, and employee receiving $400 per week in income benefits will have that check reduced to $300 per week to pay the attorney until the attorney's fees are all paid out, or until income benefits end, whichever comes first.
An insurance carrier may be required to pay your lawyer for you in the event of certain disputes, if you win. That can definitely turn the advantage to the injured employee because now the attorney has a financial incentive to make sure he wins the case for you and the insurance knows that it will cost them perhaps more than they hoped to win if they lose the case.
There are two types of disputes where this happens.
One is a dispute over supplemental income benefits. The statute provides that if the insurance carrier disputes supplemental income benefits after a DWC determination of entitlement, the claimant's attorney is to be paid fees directly by the insurance carrier, not as a deduction out of benefits, if the claimant prevails in the dispute.
(c) If an insurance carrier disputes the commissioner's determination that an employee is entitled to supplemental income benefits or the amount of supplemental income benefits due and the employee prevails on any disputed issue, the insurance carrier is liable for reasonable and necessary attorney's fees incurred by the employee as a result of the insurance carrier's dispute and for supplemental income benefits accrued but not paid and interest on that amount, according to Section 408.064 . Attorney's fees awarded under this subsection are not subject to Sections 408.221(b) , (f) , and (i) .
(e) Liability. An insurance carrier who unsuccessfully contests a Division determination of entitlement to supplemental income benefits is liable for: (1) all accrued, unpaid supplemental income benefits, and interest on that amount; and (2) reasonable and necessary attorney's fees incurred by the injured employee as a result of the insurance carrier's dispute which have been ordered by the Division or court.
It is important to note that these fees are not subject to the limitations of other attorney's fees which are deducted from benefits. Fees deducted from benefits are limited in their hourly rate, limited in the amount of time that can be spent on tasks without justification, and limited in terms of overall quantity (never more than 25% of benefits). Attorney's fees in this dispute can be at any hourly rate determined to be reasonable and necessary. The quantity of hours is only limited by that same factor. And the overall amount of fees can even exceed, and often does exceed, the amount of benefits at issue.
Let's talk about how that is interpreted. The DWC Appeals Panel has interpreted that to mean either the DWC has issued an initial determination of entitlement or an order for payment, or the insurance carrier has paid benefits on a prior quarter either voluntarily or by agreement following a dispute. For these reasons it is important to have an attorney to make sure that the application for benefits is in order so that the DWC issues an initial determination of entitlement, putting the insurance carrier on the defensive if it disputes.
The second type of dispute to which this applies is a situation where the insurance carrier has filed suit in court to reverse a decision of the DWC. So after a benefit review conference, there is a contested case hearing. After the contested case hearing the judge issues a decision and order awarding benefits. That can be appealed to the DWC Appeals Panel. If the insurance carrier disagrees with that Appeals Panel decision, it can file suit in the appropriate state court venue to challenge this agency determination in an action for "judicial review" of that decision. That is a fancy way of saying that the insurance has the right to go to court and potentially have a trial by jury to determine if the DWC was wrong in ordering the benefits.
If the claimant hires an attorney, then the fees generated by pursuing this matter into court can be paid by the insurance carrier directly if the claimant prevails in court, either as a result of jury verdict, summary judgment, bench trial, or even appeal.
The Texas Labor Code Sec. 408.221(c) provides:
(c) An insurance carrier that seeks judicial review under Subchapter G, Chapter 410, of a final decision of the appeals panel regarding compensability or eligibility for, or the amount of, income or death benefits is liable for reasonable and necessary attorney's fees as provided by Subsection (d) incurred by the claimant as a result of the insurance carrier's appeal if the claimant prevails on an issue on which judicial review is sought by the insurance carrier in accordance with the limitation of issues contained in Section 410.302 . If the carrier appeals multiple issues and the claimant prevails on some, but not all, of the issues appealed, the court shall apportion and award fees to the claimant's attorney only for the issues on which the claimant prevails. In making that apportionment, the court shall consider the factors prescribed by Subsection (d). This subsection does not apply to attorney's fees for which an insurance carrier may be liable under Section 408.147 . An award of attorney's fees under this subsection is not subject to commissioner rules adopted under Subsection (f).
This section was put in the law to fight back against the abusive practices of some insurance carriers in the decade following the passage of the new law on workers' compensation. It was very common then for a claimant to be sued after winning benefits at the administrative level following a contested case hearing. The insurance carrier would go to the Appeals Panel, get rejected, and then file suit in court. Often the injured employee had no attorney when originally appearing for the case, and did not know that a lawsuit could result from a successful claim and that one could lose benefits that way.
There was often no way of paying an attorney (most injured employees don't have $25-50k to drop to defend their workers' compensation benefits). Even claimants who had attorneys could see them walk away from defending the employee in a suit because there was no money in it for them after winning the case in the administrative hearing. Insurance carriers would bully an unrepresented party in court, obtain a victory, cut off medical treatment based on the court judgment, and then file to get the benefits paid back from the state Subsequent Injury Fund. This law levels the playing field and creates an incentive for attorneys to assist in defending such claims.
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