The Texas Labor Code provides that an attorney’s fee for representing a claimant or defending an insurance carrier or self-insured employer in a workers’ compensation action must be approved by the Texas Department of Insurance Division of Workers’ Compensation (“DWC”) or by the court to be reasonable and necessary.[1]DWC has established administrative rules prescribing billing guidelines and other additional requirements for submission and approval of attorney’s fee.[2]
              Pursuant to the Labor Code and DWC rules, the DWC has enabled an online service called Web-based Attorney Fee Processing System (“WAFPS”) through which an attorney should claim the fee.  To claim the fee, an attorney must submit Form DWC-152 entitled “Application for Attorney’s Fees,” with “time, hourly rate, and expenses itemized separately for the attorney and for any legal assistant.”[3]  On the form, the attorney must list the category of service rendered, the date of the service, the person who provided the service, the actions performed, the recipient of the action, and the hours requested. Similarly, a statement of the expenses also should be categorized and included in the form as per the attorney expense code provided.  The DWC rules provides guidelines for the approval of attorney’s fees that include a list of a maximum number of hours allowed per month for various tasks e.g., initial review and research (1 hour); setting up file, completing and filing forms (0.5 hours); communications (2.5 hours) etc.[4]  Any billing entry for a specific service exceeding such hourly limitation shall still be submitted provided a justification text attached to the form.[5]  However, the finalized attorney fee payable shall not exceed 25% of the income benefit allowed to the injured.[6]
            The guidelines have restricted the maximum hourly rate for an attorney at $150 and for legal assistants at $50.[7]  Although this rate looks much lesser than the existing average rate for an attorney and legal assistant, they may not be expected to remain the same.  In fact these maximum rates were establishing in 1991 and recently the DWC invited opinions from the stakeholders regarding increasing the maximum hourly rates.  Therefore, it is likely that the maximum rates might soon be increased.
              WAFPS would automatically review and approve the form for payment if the form meets the billing guidelines.[8]However, according to DWC, “[t]he automated system will flag as ‘duplicate services’ such actions as multiple telephone calls made or several letters drafted on the same date by the same attorney or legal assistant to the same recipient.”[9]  Which means all the fee items without duplication will be approved if they are billed within the prescribed time cap.[10]  On the other hand, though the guidelines for billing expense items have categorized the billable and non-billable items, there are no amount limitations mentioned for each of these expenses, meaning all the expenses billed under the billable expense category will be automatically approved by the system.[11]  Therefore, the only possible way the WAFPS could flag a form DWC 152 would be if the total amount exceeds 25% of the income benefit allowed to the injured or if the individual tasks billed exceeds the permitted hours cap.[12]  Any form flagged will be processed further for manual review approval by a designated DWC staff.[13]
               The review process in WAFPS as outlined by DWC clearly indicates that an attorney fee claim will be automatically approved provided they are within the limits prescribed by the guidelines.  Even if flagged and processed for manual review, such manual review is limited within the scope of the justification text.  The DWC requires that the justification text should be in the form of a summary paragraph explaining the justification for the excess amount claimed. Moreover, the Form DWC-152 also does not contain any fields for line item text describing the activity performed. This shows DWC’s complete disregard for the invoice descriptions.  Activity described in a billing entry is the key factor while analyzing the relevancy and reasonableness of the time billed.  In the absence of considering the line entry description, the finalized amount approved by the DWC would fail the relevancy and reasonable test.  Further, various billing irregularities such as blocked billing, vague entries, duplication of efforts etc., will get completely unnoticed. In effect, the DWC’s WAFPS has prevented the opportunities of a client to evaluate the quality of services rendered by the attorneys.
Keeping aside the foregoing lapse in the manual review, the automatic review of the WAFPS is also not adequate enough to catch fraudulent billing practices employed by attorneys.  One of the classic examples is Eureste v. Comm’n for Lawyer Discipline case.  In Eureste a Texas court suspended attorney Bernardo Eureste for overbilling in WAFPS.  At the time relevant, Eureste had offices in thirteen cities across Texas, over 60 employees, and approximately 1,200 clients.  At the time of trial, Eureste had already submitted approximately 200,000 DWC–152 forms without accounting for actual time spent by him or his employees.  In fact, he always reported he had personally worked a number of hours that, when multiplied by the statutory attorney rate of $150.00, resulted in a fee that was at least 25% of the monthly income benefit and it was his policy to bill the maximum allowed by the guidelines on every file.  His DWC-152 form submissions did not arouse any suspicion and were always automatically approved because they were always within the guidelines.
On most files, even though actual activities performed and time spent varied from client to client, Eureste billed each client 2.5 hours per month (resulting in a fee of $375.00) for “file review” under the “Communications” category. According to the DWC billing guideline, “file review” is a non-billable task and “communications” are billable up to 2.5 hours.  Since the WAFPS lacked the ability review line entry descriptions, Eureste was successful in billing non-billable item under a billable item category. 
Eureste testified that on many of the cases, he was not spending the number of hours he billed every month. He spent 80% of his time on administrative matters and 20% of his time on individual client’s cases, yet he billed all time on the client’s file under his name and at the attorney rate. He admitted that most of the attorney time he billed during the period was performed by non-attorneys or attorneys other than himself.  Eureste estimated that only 25% of the work billed was performed by attorneys, while 75% of the work billed was performed by non-attorneys. The non-attorney time was billed by Eureste at the higher attorney rate of $150.00. Eureste never billed legal assistant time at the legal assistant rate.  Only a bill review process with the ability to review the line entry descriptions would be capable of flagging such entries and reduce the timekeeper rate.
Eureste billed as his own time more than twenty-four hours almost daily and on many days, he billed more than 100 hours. At the time relevant, he billed an average of 80 to 90 hours per day – a billing irregularly identifiable with basic logic that 24 hours = a day. The fact that WAFPS was incapable of identifying such irregularities indicates that its review is limited to each DWC-152 form submitted and there is no validation against all the forms submitted by an attorney on a given day.
Although the very purpose of the Texas law based on which the DWC established the billing guidelines and the WAFPS; both the billing guideline and the billing review system are incapable of achieving the statutory purpose.  See Tex. Lab. Code Ann. § 408.222 (mandating attorneys to have their fee claims reviewed and approved by DWC for the reasonableness and necessityof such fee claims.) (emphasis added). Considering the fact that the WAFPS is vulnerable to attorney’s fraudulent billing practice and also that the Texas Commission for Lawyer Discipline has authority to investigate and take disciplinary actions on attorneys despite their fee claims are already approved by the DWC, it would be advisable for the clients to implement additional billing terms while engaging a law firm and have them bill accordingly.  Moreover, the Texas law, though mandates attorney fee claims to be reviewed and approved by the DWC, it did not explicitly prohibit a client from implementing additional measures.  In fact, such measures would help achieve the purpose of the Texas Labor Code.

[1]Tex. Lab. Code Ann. §§ 408.221, 408.222.
[2]28 TX ADC §§ 152.1-5.
[3]Id. § 152.3(a)
[4]See id. § 152.4(c)
[5]Id. § 152.3(a)
[6]Id. § 152.1(c)
[7]Id. § 1524(d)
[10]See id. § 152.4(c)
[11]id. § 152.5
[12]Id. § 152.1&4(c)