<p> JOHN D. PRINGLE, P.C. Attorney at Law John D. Pringle Board Certified - Administrative Law Texas Board of Legal Specialization</p><p>THE VAUGHN BUILDING 807 BRAZOS, SUITE 200, AUSTIN, TEXAS 78701 TELEPHONE (512) 472-8742 FACSIMILE (512) 472-8745</p><p>WWW.PRINGLETEXASLAWYER.COM</p><p>[email protected]</p><p>October 24, 2011 Via Electronic Mail and Hand Delivery</p><p>Rod Bordelon Commissioner of Workers’ Compensation Texas Department of Insurance, Division of Workers’ Compensation 7551 Metro Center Drive, Suite 100 Austin, Texas 78744-1645 </p><p>Maria Jimenez Texas Department of Insurance, Division of Workers’ Compensation Workers’ Compensation Council MS-4D 7551 Metro Center Drive, Suite 100 Austin, Texas 78744-1645 </p><p>Re: Proposed Chapter 180 amendments and rules</p><p>Dear Commissioner Bordelon and Ms. Jimenez:</p><p>I recognize that House Bill 2605 Section 26(e) requires the Commissioner of Workers’ Compensation to adopt a rule that prescribes the procedures to be used for both announced and unannounced on-site visits as well as specifying the types of records subject to inspection. However, as shown below, the Legislature did not have the authority to provide for unannounced on-site visits. In addition, the announced on-site visits and the records subject to inspection, as proposed by the Division, are in violation of other laws and therefore invalid. </p><p>House Bill 2605 Section 26, has amended Section 414.005, Labor Code, to read as follows: </p><p>Section 414.005, Investigation Unit. </p><p>(a) The division shall maintain an investigation unit to conduct investigations relating to alleged violations of this subtitle, commissioner rules, or a commissioner order or decision, with particular emphasis on violations of Chapters 415 and 416. </p><p>(b) As often as the commissioner considers necessary, the commissioner or the investigation unit may review the operations of a person regulated by the division, including an agent of the person performing functions regulated by the division, to determine compliance with this subtitle. Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -2-</p><p>(c) The review described by Subsection (b) may include on-site visits to the person's premises. The commissioner is not required to announce an on-site visit in advance. </p><p>(d) During an on-site visit, a person regulated by the division shall make available to the division all records relating to the person's participation in the workers' compensation system. </p><p>(e) The commissioner by rule shall prescribe the procedures to be used for both announced and unannounced on-site visits authorized under this section, including specifying the types of records subject to inspection.</p><p>(Emphasis added).</p><p>The Texas Constitution, Article. I, Section 9, Searches and Seizures, provides: </p><p>The people shall be secure in their persons, houses, papers and possessions, from all unreasonable seizures or searches, and no warrant to search any place, or to seize any person or thing, shall issue without describing them as near as may be, nor without probable cause, supported by oath or affirmation.</p><p>TEX. CONST. ART. I, § 9. The Texas Constitution's Bill of Rights is absolute. </p><p>Article I, section 29 of the Texas Constitution states: </p><p>To guard against transgressions of the high powers herein delegated, we declare that everything in this "Bill of Rights" is excepted out of the general powers of government, and shall forever remain inviolate, and all laws contrary thereto, or to the following provisions, shall be void.</p><p>The constitutional prohibition is absolute when it applies to the right to worship, the right to free speech, the freedom from unreasonable search and seizure, the guaranty of due course of law, and the other protections of the Bill of Rights. Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 147 (Tex. 2010).</p><p>Unannounced on site visits to obtain records relating to the person's participation in the workers' compensation system violates the Texas Constitution’s Bill of Rights. Because proposed rules 180.3, 180.4 and 180.5 are based on the statute which is unconstitutional, the rules fall with the statute. Passel v. Ft. Worth Independent School Dist., 440 S.W.2d 61, 64 (Tex. 1969). The Division may not conduct any unannounced on-site visit for the purpose of conducting an audit, inspection, and obtaining records.</p><p>In addition, as stated in Coolidge v. New Hampshire, 403 U.S. 443, 454-55 (1971), “searches conducted outside the judicial process, without prior approval by judge or magistrate, are per se Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -3- unreasonable” under the Fourth Amendment the United States Constitution subject only to a few specifically established and well delineated exceptions.”</p><p>The exceptions are "jealously and carefully drawn," and there must be "a showing by those who seek exemption . . . that the exigencies of the situation made that course imperative." "[T]he burden is on those seeking the exemption to show the need for it.” In times of unrest, whether caused by crime or racial conflict or fear of internal subversion, this basic law and the values that it represents may appear unrealistic or "extravagant" to some. But the values were those of the authors of our fundamental constitutional concepts. In times not altogether unlike our own they won -- by legal and constitutional means in England, and by revolution on this continent -- a right of personal security against arbitrary intrusions by official power. If times have changed, reducing everyman's scope to do as he pleases in an urban and industrial world, the changes have made the values served by the Fourth Amendment more, not less, important.</p><p>Id. at 455.</p><p>The United States Supreme Court has long held that the occupant of a business office may rely on the Fourth Amendment. Mancusi v. DeForte, 392 U.S. 364, 369 (1968). The issue does not depend on property rights but on whether the employee "had a reasonable expectation of freedom from governmental intrusion." Id. at 368. The Mancussi court found that a union official had standing to challenge the seizure of documents from an office he shared with several other employees. Id. at 369-70. The Supreme Court approved Mancussi in O'Connor v. Ortega, holding that an employee can have a reasonable expectation of privacy against government intrusion within the workplace context, even if he does not expect to be completely secure from his supervisor. O'Connor v. Ortega, 480 U.S. 709, 718 (1987). In Ortega, the Supreme Court specifically delineated the boundaries of a workplace to include "those areas and items that are related to work and are generally within the employer's control." Id. </p><p>The Code Construction Act defines the term "person" as including a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association, and any other legal entity. TEX. GOV’T CODE § 311.005(2). The definitions found in Labor Code Section 401.011 show that the term “person” also means a human being. Insurance companies, chiropractors, doctors, hospitals, lawyers, nurses, pharmacists, and therapists are persons. </p><p>The Labor Code does not contain a definition of the term “regulate.” When the Legislature has not defined a term then one uses the definitions listed in commonly used dictionaries to discern the plain meaning of terms. See Powell v. Stover, 165 S.W.3d 322, 326 (Tex. 2005); See Texas Dep't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 196 (Tex. 2004). Regulate is defined as: “To fix, establish, or control; to adjust by rule, method, or established mode; to direct by rule or restriction; to subject to governing principles or laws.” BLACK’S LAW Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -4-</p><p>DICTIONARY 1518 (3d ed.1933). Texas Labor Code Section 402.00114(a) provides in part that the Division shall:</p><p>(1) regulate and administer the business of workers' compensation in this state; and </p><p>(2) ensure that this title and other laws regarding workers' compensation are executed.</p><p>Chiropractors are regulated by the Texas Board of Chiropractic Examiners in the practice of chiropractic. TEX. OCC. CODE § 201.151 et seq. Medical doctors including osteopaths are regulated by the Texas Medical Board. TEX. OCC. CODE § 152.001(a). Lawyers are regulated in the practice of law by the State Bar of Texas, a public corporation and an administrative agency under the control of the Supreme Court of Texas on behalf of the judicial department of government. TEX. GOV’T CODE § 81.011. Nurses are regulated by the Texas Board of Nursing. TEX. OCC. CODE § 301.151(2). Occupational therapists are regulated by the Texas Board of Occupational Therapy Examiners. TEX. OCC. CODE §§ 454.101;101.002.(12). Pharmacists and Pharmacies are regulated by the Texas State Board of Pharmacy. TEX. OCC. CODE § 554.002; 554.001(a)(1). Physical therapists are regulated by the Texas Board of Physical Therapy Examiners. TEX. OCC. CODE §§ 453.052; 101.002.(11). </p><p>The right of injured workers to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated. In re H.V., 252 S.W.3d 319, 327 n.58 (Tex. 2008) citing U.S. CONST. amend. IV.</p><p>Basically it appears the only system participants that the Texas Department of Insurance, Division of Workers’ Compensation may conduct announced on-site visits to the person's premises are workers’ compensation insurance carriers. </p><p>Current rule 180.1(25) defines the term “system participant” as a person or their agent subject to the Act or a rule, order, or decision of the commissioner. 28 TEX. ADMIN. CODE § 180.1(25). Under this broad definition, lawyers who represent doctors, employers, health care providers and injured workers are system participants. Current rule 180.1(4) defines an agent as a “person with whom a system participant utilizes or contracts with for the purpose of providing claims service or fulfilling duties under Labor Code, Title 5 and rules.” 28 TEX. ADMIN. CODE § 180.1(4). In the context of the proposed rules current rule 180.1(4) is overly broad as well as vague and confusing. For example, an insurance carrier may contract with a telephone company such as AT & T to provide telephone services so that the insurance carrier can meet the requirements of the Division’s rules. Under current rule 180.1(4), AT & T would be an agent of the insurance carrier to fulfill duties under the Division’s rules. On information and belief, AT & T is regulated by the Federal Communications Commission and possibly by the Public Utilities Commission. Rules are construed the same as statutes. Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999) citing Lewis v. Jacksonville Bldg. & Loan Ass'n, 540 S.W.2d 307, 310 (Tex. 1976). A statute which forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to it application violates the first essential protection of due process of law. Baker v. State, 50 S.W.3d 143, 145 (Tex. App. – Eastland 2001, pet. ref’d) citing Passmore v. Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -5-</p><p>State, 544 S.W.2d 399 (Tex.Crim.App. 1976).</p><p>The proposed rules taken together are vague and confusing requiring system participants to guess what and how they apply.</p><p>The following paragraphs contain specific comments to proposed rule 180.3.</p><p>Proposed rule 180.3, Compliance Audits, provides the Division shall conduct Compliance Audits of the workers' compensation records of system participants and their agents for compliance with the Act and the Division’s rules. The term “workers’ compensation records” appears to be set out in proposed rule 180.4(g). Attorney-client communications are privileged. Attorney work product is also privileged. The definition of “workers’ compensation records” as applied to proposed rule 180.3 is in conflict with the attorney-client privilege. In Swidler & Berlin v. United States, 524 U.S. 399, 403 (1998) the United States Supreme Court held that the “attorney client privilege is one of the oldest recognized privileges for confidential communications.” citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); Hunt v. Blackburn, 128 U.S. 464, 470 (1888). The privilege is intended to encourage "full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice." Id. citing Upjohn, supra, at 389. Proposed rule 180.3 is invalid.</p><p>Proposed rule §180.3(b) provides the Division may conduct a compliance audit at the offices of a system participant or at any location the division deems appropriate. The Division has no legal authority to conduct an audit at any system participant’s office unless the participant consents to the audit. Absent consent, the Division would be engaged in a trespass. Cain v. Rust Indus. Cleaning Servs., 969 S.W.2d 464, 470 (Tex. App. - Texarkana 1998, pet. denied). Consent may be actual, apparent, implied or legal. Legal consent may be an easement or a license. For example, Texas Alcoholic Beverage Code Section 32.12 authorizes a peace officer to freely enter a club’s premises at any time to conduct an investigation or to inspect the premises for the purpose of performing a duty imposed by the Code. Since chiropractors, doctors, lawyers, nurses, pharmacists, physical therapists, and occupational therapists do not hold licenses from the Division, there is no legal consent for conducting an audit on their premises.</p><p>Proposed rule §180.3(d)(1) provides a system participant being audited shall designate a general contact person. The contact person shall provide reasonable access to requested personnel. The Code Construction Act defines "shall" as imposing a duty to do some act. TEX. GOV'T CODE § 311.016(2). Courts have consistently and repeatedly interpreted the word "shall" to be a mandatory directive. Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 877 (Tex. 2001). The Division has no legal authority to compel access to a person’s home or office.</p><p>Proposed rule §180.3(j) and (k) provide the Division shall submit a bill to the auditee for the actual expenses associated with the compliance audit, including audit staff time, additional expertise, travel and per diem expenses, and copying costs and the auditee shall submit payment by check, made payable to the order of the Texas Department of Insurance, for the expenses within 25 days after Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -6- receipt of the bill. The proposed subsections would deprive a system participant to due process of law by denying a hearing before payment must be made. See Scott v. Alphonso Crutch Life Support Ctr., 2009 Tex. App. LEXIS 5111 *7 (Tex. App. - Austin, July 2, 2009, pet. filed). The procedural due process guarantee protects against arbitrary takings. County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998).</p><p>The following paragraphs contain specific comments to proposed rule 180.4</p><p>Proposed rule 180.4(b) provides that when reviewing the operations of a system participant to determine compliance with the Act or Division rules, the Division may conduct on- site visits to the system participant's premises. On-site visits may be announced or unannounced. As stated above, rule 180.1 (25) defines a system participant as a person or their agent subject to the Act or a rule, order, or decision of the commissioner. Under this broad definition lawyers who represent doctors, employers, health care providers and injured workers are system participants. Proposed rule 180.1(4) defines an agent as a “person with whom a system participant utilizes or contracts with for the purpose of providing claims service or fulfilling duties under Labor Code, Title 5 and rules.” I restate the above comments regarding the lack of authority for the Division to conduct onsite audits whether announced or unannounced of chiropractors, doctors, lawyers, nurses, pharmacists and pharmacies, physical and occupational therapists. The Division should clarify specifically what professions it contends it can regulate under proposed rule 180.4.</p><p>Proposed rule 180.4(d) provides an on-site visit must not disturb a health care provider's provision of health care. Health care providers and their patients have an expectation of privacy. Non-workers’ compensation patients have a right to keep their health care records and reports private. An on-site visit would constitute a trespass as stated above. Proposed rule 180.4(d) would preclude any on-site visit because merely observing can be interference. </p><p>Proposed rule 180.4(f) provides the designated contact person during an on-site visit shall (1) provide access to requested personnel and information; (2) respond to the needs of division staff and to inquiries by division staff; and (3) be familiar with the system participant's procedures and recordkeeping systems that are related to the records and information requested during the on-site visit. The designated contact person may be away from an office during an unannounced on site visit. Based on the proposed rule as written, the system participant may be liable for an administrative violation merely because the contact person is away from the office. The Division’s proposed rule exceeds its authority and amounts to a new or additional power for the purpose of administrative expediency. Texas Natural Res. Conservation Comm'n v. Lakeshore Util. Co., 164 S.W.3d 368, 377 (Tex. 2005) citing Public Util. Comm'n v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 316 (Tex. 2001). The foregoing subsection is invalid as it exceeds the agency’s authority. Proposed rule 180.4(g)(3), (4), (5), (6), (12) and (14) violates the attorney-client privilege and work product doctrine. I restate my comments made above regarding the attorney-client privilege. </p><p>Proposed rule 180.5 provides a system participant shall provide copies of or access to all Letter to Commissioner Rod Bordelon and Maria Jimenez October 24, 2011 Page -7- records and information held by that system participant related to issues being reviewed or investigated in the format and manner specified by the Division. The proposed rule is confusing as to whether copies can be provided to the Division or if access to the records is given, then the Division can specify the format and manner of provision of the copies. The Division should set out in the proposed rule the manner and format of the copies. Of course the comments made above apply to the proposed rule regarding its violation of the attorney client privilege and work product doctrine. </p><p>Please let me know if you have any questions regarding the above comments or wish to discuss them.</p><p>Respectfully,</p><p>John D. Pringle JDP/ cc: Steve Nichols Via Electronic Delivery Insurance Council of Texas 2801 South IH 35 Austin, Texas 78741</p><p>Bill Kidd Via Electronic Delivery Work Comp Central Austin, Texas </p><p> f:\jdp\TWCC\comments to proposed Chapter 180 rules 10-24-11</p>