Is an Employer Required to File the DWC-3 and DWC-6 Forms?
The attorneys at FOL field questions to this effect with some frequency, and we understand it is due in part because employers receive inconsistent advice in this regard.
The Act and rules both specifically require that the employer file DWC-3 and DWC-6 forms.
In order to understand the importance of the filing of the DWC-3 and DWC-6, it is worth remembering that there are three (3) separate authorities that control what all parties (and particularly the employer and carrier) do on a WC claim in Texas:
- The statutory provisions promulgated by the Texas legislature as the Texas Workers’ Compensation Act (the “Act”);
- The rules promulgated by the Division of Workers’ Compensation (the “rules”);
- DWC Compliance & Investigations and their Enforcement unit.
If the rules and the Act ever conflict, the Act always controls. And DWC C&I are charged with enforcing compliance, by issuing administrative violations (fines). The amount they can fine an employer or carrier is not always specified, and is often subjective. It is something that can frequently be negotiated down, but that negotiated figure is rarely if ever $0.
DWC-3 Wage Statement
Sections 408.063(b) and (c) of the Act could not be clearer: “Not later than the 30th day after the date the employer receives notice of an injury to the employee, the employer shall file a wage statement showing the amount of all wages paid to the employee. An employer who fails to file a wage statement…commits an administrative violation.”
Rule 120.4 is similarly clear: under (a) the employer is required to file a completed wage statement with the carrier, the claimant and the claimant’s representative, if any, within 30 days. And the rule goes on to explain what the employer shall do with the completion and delivery of the DWC-3.
This is not optional language.
Note that under rule 120.4(b) if agreed upon by the employer and the carrier, the wage statement can be filed with the carrier orally. Additionally, the carrier may agree to complete and then provide the wage statement to the claimant and to the claimant’s attorney. But, the employer remains responsible for ensuring the timely delivery of the wage statement and the employer has the burden of proving the wage statement was timely filed. The point is that if the carrier agrees to do so, the duty is delegated to the carrier to file the DWC 3 with the claimant and the claimant’s attorney.
But, if anything should go wrong, the rule makes clear that it is the employer that is liable for any failure to produce the wage statement even when the carrier has taken on the burden. Which is why 120.4(b) says “employers should file the wage statement by verifiable means and maintain a record of the (1) information provided; (2) date filed; and (3) means of filing with each recipient required to receive the report.”
Importantly, while the employer has the duty to produce the wage statement, if the wage statement is not produced, then the carrier has the duty to notify the employer of the employer’s duty. Specifically, at Rule 128.2(e), if, at the time the income benefits or death benefits first accrue, the carrier has not received a complete wage statement as required by Rule 120.4, the carrier shall notify the employer that the wage statement is now required. This duty applies to a situation (1) in which the carrier has not received a wage statement and (2) where the carrier has received a wage statement but it is not a complete statement.
And, importantly, over the years DWC C&I has fined carriers millions of dollars over their failure to require a completed wage statement from the employer.
An employer who fails or refuses to produce a wage statement will most likely cost their workers’ comp carrier a violation for either not paying or underpaying income or death benefits. This typically arises in two scenarios.
The first scenario involves the carrier’s duty to either initiate temporary income benefits or to dispute disability no later than the later of either the 15th day following the carrier’s notice of injury or the seventh day after the eighth day of disability. In order for the carrier to make the decision to either initiate TIBS or to dispute disability, the carrier is dependent upon the employer to provide to the carrier the claimant’s post injury earnings as well as the wage statement. From those two documents, the carrier can determine the average weekly wage and whether the claimant has a loss of wages following the work injury. That allows the carrier to make a timely determination of whether to initiate TIBS or to dispute disability. We see this first scenario if DWC conducts an initial payment of TIBS and data accuracy audit or if someone on the claimant’s behalf files a complaint concerning the carrier’s failure to timely initiate TIBS.
The second scenario arises during an indemnity benefit accuracy (IBA) audit. Those audits review death benefits and lifetime income benefits to determine primarily whether those benefits have been paid accurately. The auditor will request that the carrier produce specific documents including the wage statement and the payment summary. These audits which began a decade ago resulted from DWC reviewing carrier’s requests to pay the benefits through in an annuity. DWC was greatly surprised by the number of underpayments and the size of the underpayments.
If the final IBA audit findings indicate that the care has underpaid either death benefits or lifetime income benefits, DWC will pursue a consent order against that carrier with a penalty that is roughly equivalent to or slightly greater than the underpayment discovered during the audit. This last year we have seen consent orders in excess of $250,000. In almost every case, the carrier did not have a complete wage statement, yet the carrier is required request a complete wage statement from the insured when it has not received one. Rule 128.2 provides that a carrier is to promptly initiate the payment of income or death benefits and to expedite payment, the carrier shall presume that multiplying the employee’s hourly rate times the average number of hours in the employee’s standard work week is the claimant’s average weekly wage. If that information is not available, then the carrier may use the employer’s last payment to the employee for personal services based on a full week’s work.
However, DWC’s Enforcement Division ignored that rule earlier this year in pursuing penalties against a carrier that had requested a complete wage statement from the insured but had not received one. During the audit, the DWC auditor intimidated the insured into producing a complete wage statement that the carrier had been unable to secure.
The best way to avoid a similar situation is for the insured to timely produce a complete wage statement for its carrier. Otherwise the carrier will probably face a huge penalty or the carrier will be required to defend its position at the state office of administrative hearings which is a costly procedure.
DWC-6 Supplemental Report of Injury
There are 2 rules that govern DWC-6s, Rule 120.3 and 129.4. As with the DWC-3 rule (above), these rules mandate that the employer shall file the DWC-6 with the carrier and the claimant, and provides the deadline for doing so (they vary depending on the circumstance).
As with the DWC-3, Carrier needs to know about post-injury earnings in order to timely and accurately pay TIBs, and without the DWC-6 information the carrier runs the risk of an IP (initial payment) violation.
Note also that there are requirements within Rule 120.3(e) under which the employer has to maintain records of their delivery of DWC-6 forms. The only conceivable reason DWC would require those records be kept is because the employer could be audited by DWC C&I for compliance with these rules.
DWC C&I and Enforcement
Considering how frequently the issue of timely DWC-3s and DWC-6s comes up in the IP carrier audits our firm is involved in, we feel confident that penalties against carriers tied to these forms will only continue to rise.
If you have any follow up questions on any of these topics, please reach out to James Sheffield (jrs@fol.com).
FOLIO
