Austin Court of Appeals Finds DWC Is Misapplying SIBs Rule

In an important decision, the Austin Court of Appeals has determined that while the DWC rule is not itself invalid, the Division has been misapplying its own rule in violation of the statute.

The court observed that the statute unambiguously creates three categories of “work search efforts” that an injured employee may engage in, in order to satisfy the “work search efforts” requirement: (1) active participation in a vocational rehabilitation program; (2) work-search efforts through the Texas Workforce Commission (TWC); or (3) work-search efforts done outside of TWC participation by a claimant, which must be documented by job applications.

Since the agency adopted the SIBs rules in 2009 to implement the 2005 Legislative amendments, the Appeals Panel has allowed claimants to count “work search contacts,” as defined by TWC, as “work search efforts” without having to document those work-search efforts with job applications as required by the Statute. This, according to the Court of Appeals, violates the plain language of the statute.

This interpretation was first articulated by the Appeals Panel in APD 100229-s, which it then cited in numerous decisions thereafter. Although the carriers argued that this decision itself constituted an invalid rule, the Court noted that the agency took the position that Appeals Panel decisions are never to be considered as an agency statement of general applicability; rather they simply explain the resolution of a particular contested case that involve only the rights of the parties to that case. However, the Court said, by summarizing the decision and restating the holding of the decision in the Appeals Panel Decision Manual, the agency elevated the statement from simply a discussion of a particular case to a legal principles that it expects to follow in deciding future cases and, as such, constitutes a rule. Because the legal principle did not go through the appropriate rulemaking process, it was an invalid exercise of agency authority.

This decision is important for several reasons. First, it firmly establishes that Appeals Panel decisions are not to be considered to articulate legal principles of general applicability. Second, it establishes that any efforts to do so are invalid. Third, it clarifies that if a claimant applies for SIBs, the claimant has only three ways of establishing “work search efforts” and if the claimant is not working through the TWC, the claimant must actually apply for a job and submit documentation that permits verification.

Insurance carriers should ensure that a claimant has complied with the requirements before approving a quarter of SIBs. This can involve contacting the potential employer to find out if the claimant actually applied for a job; if he or she did not, then the contact does not constitute a work search effort. Failure to make the proper number of work search efforts per week will preclude a finding of entitlement.

The decision was Texas Department of Insurance, Division of Worker’s Compensation v. Accident Fund Insurance Company of America, No. 03-21-00074-CV (Tex. App. – Austin 2023) (mem. op.)