PCI: Texas Gov. Signs Asbestos Litigation Reform; Other Issues Remain as Session Wanes

Texas Gov. Rick Perry has signed important asbestos litigation reform legislation, however, with one week remaining in the session, lawmakers are still grappling with workers compensation reform, a tax on business for school funding, and interest penalties for insurers who unsuccessfully appeal a commissioner’s order on a rate filing, according to the Property Casualty Insurers Association of America.

Texas became the third state this year to pass legislation that requires medical criteria be met before an asbestos lawsuit can be filed. Gov. Perry signed Senate Bill 15 in Houston and Beaumont stating that he was proud to sign the bill 15 into law because it ensures that every person made sick by asbestos exposure has their day in court while reducing the junk lawsuits that have forced dozens of innocent employers into bankruptcy.

Perry noted that Texas has become the national haven for questionable and frivolous asbestos lawsuits. An estimated 40 percent of all of the nation’s asbestos claims are filed in Texas courts, although a vast number of these lawsuits have little, if any, connection to Texas. In many cases workers from all over the country have been encouraged to file in Texas rather than in their home states with the hope that Texas courts would give bigger awards.

“PCI supported the bill because it provides the proper balance in the civil justice system,” said Joe Woods, assistant vice president and regional manager for PCI. “Senate Bill 15 will ensure that individuals who are impaired from asbestos or silica exposure receive first priority in the Texas courts, by requiring that persons first be diagnosed with asbestos or silica-related impairments. A person must prove that they have an asbestos or silica-related injury before they file a civil action to get compensated – thus, removing the majority of claims that are clogging up the system and allowing the true asbestos victims to obtain quick and fair compensation.”

The House and Senate are negotiating the details of a major overhaul of the Texas workers compensation system. The workers compensation system has been rife with abuse in the delivery of medical care. This has resulted in Texas having the highest per injury medical costs and one of the worst return-to-work outcomes in the United States. Important aspects of the reform supported by PCI include the abolition of the six-member Texas Workers Compensation Commission and placing control of workers compensation in the hands of one person who is accountable to the governor and the Legislature. PCI also supports the streamlined dispute resolution process and the change to medical networks for medical care within the system.

“We are confident that lawmakers will be able to pass legislation that will result in positive reforms and addresses the issues in the workers compensation system that has developed into a major problem for all participants,” Woods said.

School financing has been one of the biggest issues before lawmakers this session and they are going down to the wire in finding a compromise approach. To support public schools in Texas, the House passed legislation that heavily relied on business taxes. House Bill 3 would have forced all businesses to pay either a franchise tax or an employee payroll tax. The bill also removed the premium tax offset and made the new tax a disallowed expense for rate calculations. The Senate version did not include the payroll tax language and removed the double taxation of the insurance industry. PCI and other insurance industry groups are working with lawmakers to ensure that they understand that insurers already pay a higher tax burden than most businesses.

Senate Bill 14 and House Bill 3540 are also under consideration. These bills contain language that would impose a penalty of prime rate plus six percent on the amount that must be returned to consumers as a result of an unsuccessful challenge to a commissioner’s order on a rate filing.