The Third Court of Appeals at Austin has affirmed a district court ruling that the Texas Department of Insurance, Division of Workers’ Compensation may not apply its rule regarding Supplemental Income Benefits to award SIBs to a claimant based only on so-called “work search contacts,” unless the worker is also using the services of the Texas Workforce Commission to find work. In a decision issued on February 28, 2023 in Texas Department of Insurance, Division of Workers’ Compensation v. Accident Fund Insurance Company of America and Texas Cotton Ginners’ Trust, the appeals court affirmed a ruling of the Travis County district court that claimants who are not using the services of the Texas Workforce Commission and who purport to be looking for work on their own must document their work-search efforts with job applications they have submitted in order to qualify for SIBs and the Division may not allow them to qualify for SIBs if they merely document “work search contacts” instead.  

David Swanson of Stone Loughlin & Swanson, LLP, counsel for Accident Fund, applauded that portion the appeals court’s decision. “The court’s ruling requires the Division to abandon its long-standing practice of awarding SIBs to claimants who make only work search contacts, and it will force the Division to finally begin awarding SIBs only to claimants who submit job applications as the statute requires,” Swanson said. “For too long, the Division has allowed claimants to qualify for SIBs if they check enough boxes on the SIBs application. I am hopeful that the court’s mandate will finally prompt the Division to take a more critical look at a claimant’s work search activity to determine whether the claimant is truly making an active effort to re-enter the work force.” 

The appeals court decision was the result of an action for declaratory relief brought by Accident Fund and joined by Texas Cotton Ginners’ Trust, which argued that the Division’s rule on SIBs is invalid on its face and is being applied incorrectly to workers who are looking for work on their own. Specifically, the carriers argued that the rule impermissibly allows a claimant to qualify for SIBs by making “work search contacts” instead of submitting job applications, which is a problem because the term “work search contacts” is so vague that claimants are qualifying for SIBs even when they do not truly apply for jobs. While the appeals court stopped short of holding the rule facially invalid as the carriers had requested, it held that the term “work search contacts” in the rule applies only to claimants who are looking for work through the Texas Workforce Commission and it does not apply to a claimant who is looking for work on his own. As a result, the Division may no longer award SIBs to claimants on the basis of “work search contacts” unless those contacts are “job applications submitted.”