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SOAH Rules Against DWC in Significant Enforcement Decision

A three-judge panel at the State Office of Administrative Hearings (SOAH) rejected numerous allegations made by DWC that the City of Baytown (a self-insured governmental entity) violated the law when it denied two first responder cancer claims.

DWC sought to fine Baytown $80,000 based on charges that it failed to adequately investigate and process claims by two firefighters diagnosed with cancer while working for Baytown.  However, in a 66-page decision the three judges found that Baytown committed no violations.

The decision bears a close read by system participants for the guidance it provides about what the law does and does not require when handling not only cancer claims but all claims.  Hopefully, DWC will consider the judges’ guidance in future cases.

Among the ALJs’ conclusions:

  • The burden to prove the prima facie elements of the cancer presumption rests with the claimant seeking the benefit of the claimed presumption, and that the insurance carrier is not required to gather specific documents and evidence while investigating a claim.

  • The reasonableness and thoroughness of Baytown’s investigations should be informed by the fact that they must be completed within 15 days before making an initial determination. And, in determining whether an investigation was reasonable, the scope of applicable information should be limited to what was available at the time, without the benefit of hindsight.

  • The reasonableness and thoroughness of Baytown’s investigations should be informed by the uncertainty of the law at the time of the claims (i.e., the lack of precedent and DWC guidance regarding elements of the presumption such as what constitutes “regularly responded” to fires).

The ALJs also expressed concerns with DWC’s $80,000 penalty stating that “no evidence was presented to prove how Staff’s proposed penalty was calculated or allocated among the claims.” The ALJs stated that, as such, “imposition of an administrative penalty based on Staff’s proposed sanction may result in an arbitrary decision.”  DWC’s unwillingness to explain, in any meaningful fashion, how it arrives at its proposed fine amounts has been a source of ongoing criticism from system participants for many years.

Although DWC’s allegations focused on Baytown’s actions during the initial fifteen-day investigation period, Baytown’s denials seem to have been borne out by the fact that in the first claim, the employee and his family never challenged Baytown’s denials, and in the second claim, the employee signed an agreed judgment finding that his claim was not compensable.
First responders are often accorded special treatment in the workers’ compensation system and that was likely a factor in DWC’s decision to prosecute what seems like a questionable case based on the ALJs’ decision.  DWC’s enforcement action was also likely intended to serve as a “reminder” to carriers to be very cautious about denying first responder claims.

The ALJs’ decision highlights the lack of DWC guidance regarding elements of the law Baytown allegedly violated.  Advisories and bulletins are often a better tool for communicating agency policy to system participants than enforcement actions.  However, DWC has made little use of such tools in recent years.

Copyright 2023, Stone Loughlin & Swanson, LLP