The beginnings of workers' compensation in Texas extend back to 1913, when the Texas Legislature passed a law establishing the Industrial Accident Board and the Texas Employers' Insurance Association to provide for adequate compensation for job injuries or death resulting from accidents on the job. A Workmen's Compensation Law, passed in 1917, further supported the compensation movement. The Industrial Accident Board was composed of three members appointed by the governor for six-year terms. One member had to be an employer working under the compensation law, one member was a wage earner, and the third member was an attorney and served as chairman of the board. The chief functions of the board were to hear and settle claims concerning compensation due employees injured in the course of their employment and to make rules for enforcing the workmen's compensation law of the state. The board kept records of claims and supervised medical treatment in some cases.
By the 1980s many critics claimed that the compensation system was too expensive and paid too little benefits. In an effort to overhaul the system, the Texas Legislature passed the Texas Workers' Compensation Act, signed on December 13, 1989. As a result of the new law the Industrial Accident Board was discontinued on April 1, 1990, and a newly-established Texas Workers' Compensation Commission assumed the duties of the board and sought to enforce the new law, which took effect on January 1, 1991. The new act increased maximum benefits from $238 to $416 a week and initiated a series of programs designed to improve the compensation system. In general, it sought to replace litigation with an administrative review process. Some practices included setting up worker health and safety programs, establishing penalties for fraudulent claims, streamlining medical costs, and establishing a research center for studying worker-related issues.
The Texas Workers' Compensation Commission is headed by a six-member board appointed by the governor, consisting of three employers and three wage earners. The commission administers the new compensation law that also provides for an Internal Audit Division in the agency and an Ombudsman Program ensuring that equitable resolutions are reached by all involved parties in claims disputes. The commission's eight divisions carry out the various tasks related to workers' compensation. The Division of Workers' Health and Safety enforces state laws regarding worker safety and sponsors educational programs, and the Division of Medical Review monitors health care and insurance institutions, ensuring compliance and maintaining a statewide database of medical charges, payments, and other matters. The Division of Hearings and Review handles contested case hearings, arbitration, and appeals relating to compensation claims. The Risk Management division seeks to identify administrative costs to agencies and reduce property and liability losses. The Division of Compliance and Practice monitors workers, employers, insurance carriers, attorneys, or any other related parties for compliance to the compensation act. Employers participating in the self-insurers programs are examined and administered by the agency's Division of Self-Insurance that went into operation in September 1993. The agency's Administration and Data Services divisions oversee a vast network of computer information systems controlling personnel, administrative, and financial management. Additionally, the Crime Victims' Compensation Program assists the victims of crime with regard to lost wages and medical costs. A Legislative Oversight Committee regularly reviews the compensation system and activities of the commission to seek improvement.
In 1991 the Texas Workers' Compensation Commission employed over 580 people. It had a budget of over $58 million. In the early 1990s there was some debate between business and labor as to the overall benefits of the new compensation laws, with labor interests alleging that the system was unfair, while others pointed to a reduction of claims, litigation, and medical costs.