By: Taylor of Galveston H.B. No. 1951
A BILL TO BE ENTITLED
AN ACT
relating to the continuation and operation of the Texas Department
of Insurance and the operation of certain insurance programs;
imposing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. GENERAL PROVISIONS
SECTION 1.001. Section 31.002, Insurance Code, is amended
to read as follows:
Sec. 31.002. DUTIES OF DEPARTMENT. In addition to the other
duties required of the Texas Department of Insurance, the
department shall:
(1) regulate the business of insurance in this state;
(2) administer the workers' compensation system of
this state as provided by Title 5, Labor Code; [and]
(3) ensure that this code and other laws regarding
insurance and insurance companies are executed;
(4) protect and ensure the fair treatment of
consumers; and
(5) ensure fair competition in the insurance industry
in order to foster a competitive market.
SECTION 1.002. Section 31.004(a), Insurance Code, is
amended to read as follows:
(a) The Texas Department of Insurance is subject to Chapter
325, Government Code (Texas Sunset Act). Unless continued in
existence as provided by that chapter, the department is abolished
September 1, 2023 [2011].
SECTION 1.003. Subchapter B, Chapter 36, Insurance Code, is
amended by adding Section 36.110 to read as follows:
Sec. 36.110. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE
RESOLUTION POLICY. (a) The commissioner shall develop and
implement a policy to encourage the use of:
(1) negotiated rulemaking procedures under Chapter
2008, Government Code, for the adoption of department rules; and
(2) appropriate alternative dispute resolution
procedures under Chapter 2009, Government Code, to assist in the
resolution of internal and external disputes under the department's
jurisdiction.
(b) The department's procedures relating to alternative
dispute resolution must conform, to the extent possible, to any
model guidelines issued by the State Office of Administrative
Hearings for the use of alternative dispute resolution by state
agencies.
(c) The commissioner shall:
(1) coordinate the implementation of the policy
adopted under Subsection (a);
(2) provide training as needed to implement the
procedures for negotiated rulemaking or alternative dispute
resolution; and
(3) collect data concerning the effectiveness of those
procedures.
SECTION 1.004. Section 559.003, Insurance Code, is amended
to read as follows:
Sec. 559.003. INFORMATION PROVIDED TO PUBLIC. The
department shall:
(1) update insurer profiles maintained on the
department's Internet website to provide information to consumers
stating whether or not an insurer uses credit scoring; and
(2) post on the department's Internet website:
(A) the report required under former Section 15,
Article 21.49-2U; and
(B) information as to how consumers may obtain
copies of individual credit reports and claims history reports,
including posting the Internet website address for each nationwide
credit reporting agency[, on the department's Internet website].
SECTION 1.005. Subchapter A, Chapter 2301, Insurance Code,
is amended by adding Section 2301.010 to read as follows:
Sec. 2301.010. CONTRACTUAL LIMITATIONS PERIOD AND CLAIM
FILING PERIOD IN CERTAIN PROPERTY INSURANCE FORMS. (a) A policy
form or printed endorsement form for residential or commercial
property insurance that is filed by an insurer or adopted by the
department under this subchapter may provide for a contractual
limitations period for filing suit on a first-party claim under the
policy. The contractual limitations period may not end before the
earlier of:
(1) two years from the date the insurer accepts or
rejects the claim; or
(2) three years from the date of the loss that is the
subject of the claim.
(b) A policy or endorsement described by Subsection (a) may
contain a provision requiring that a claim be filed with the insurer
not later than one year after the date of the loss that is the
subject of the claim. A provision under this subsection must
include a provision allowing the filing of claims after the first
anniversary of the date of the loss for good cause shown by the
person filing the claim.
(c) A contractual provision contrary to Subsection (a) or
(b) is void. This subsection does not affect the validity of other
provisions of a contract that may be given effect without the voided
provision to the extent those provisions are severable.
SECTION 1.006. Section 16.070, Civil Practice and Remedies
Code, is amended by amending Subsection (a) and adding Subsection
(c) to read as follows:
(a) Except as provided by Subsections [Subsection] (b) and
(c), a person may not enter a stipulation, contract, or agreement
that purports to limit the time in which to bring suit on the
stipulation, contract, or agreement to a period shorter than two
years. A stipulation, contract, or agreement that establishes a
limitations period that is shorter than two years is void in this
state.
(c) This section does not apply to provisions related to
claims covered by a residential or commercial property insurance
policy that complies with Section 2301.010, Insurance Code.
SECTION 1.007. (a) The Texas Department of Insurance shall
conduct a study concerning the feasibility and effectiveness of the
establishment of a mandatory medical reinsurance program in this
state through which issuers of group health benefit plans offered
by employers with 100 or fewer employees would be required to
purchase reinsurance.
(b) The study conducted under this section must:
(1) include an analysis of data from calendar years
2009, 2010, and 2011; and
(2) seek to determine what effect, if any, the
establishment of a medical reinsurance program described by
Subsection (a) of this section would have had on premium rates,
renewal rates, and overall costs to employers during calendar years
2009, 2010, and 2011, had the program been operational during those
years.
(c) The department may request information from the
Employees Retirement System of Texas, the Teacher Retirement System
of Texas, and health benefit plan issuers in this state as necessary
to complete the study required under this section.
(d) The department shall include the results of the study
conducted under this section in the biennial report submitted to
the legislature under Section 32.022, Insurance Code, nearest to
December 31, 2012.
SECTION 1.008. Section 2301.010, Insurance Code, as added
by this article, applies only to an insurance policy that is
delivered, issued for delivery, or renewed on or after January 1,
2012. A policy delivered, issued for delivery, or renewed before
January 1, 2012, is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
ARTICLE 2. CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS AND
RELATED TECHNICAL CORRECTIONS
SECTION 2.001. Chapter 32, Insurance Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES
Sec. 32.151. RULEMAKING AUTHORITY. (a) The commissioner
shall adopt rules, in compliance with Section 39.003 of this code
and Chapter 2110, Government Code, regarding the purpose,
structure, and use of advisory committees by the commissioner, the
state fire marshal, or department staff, including rules governing
an advisory committee's:
(1) purpose, role, responsibility, and goals;
(2) size and quorum requirements;
(3) qualifications for membership, including
experience requirements and geographic representation;
(4) appointment procedures;
(5) terms of service;
(6) training requirements; and
(7) duration.
(b) An advisory committee must be structured and used to
advise the commissioner, the state fire marshal, or department
staff. An advisory committee may not be responsible for rulemaking
or policymaking.
Sec. 32.152. PERIODIC EVALUATION. The commissioner shall
by rule establish a process by which the department shall
periodically evaluate an advisory committee to ensure its continued
necessity. The department may retain or develop committees as
appropriate to meet changing needs.
Sec. 32.153. COMPLIANCE WITH OPEN MEETINGS ACT. A
department advisory committee must comply with Chapter 551,
Government Code.
SECTION 2.002. Section 843.441, Insurance Code, is
transferred to Subchapter L, Chapter 843, Insurance Code,
redesignated as Section 843.410, Insurance Code, and amended to
read as follows:
Sec. 843.410 [843.441]. ASSESSMENTS. (a) To provide
funds for the administrative expenses of the commissioner regarding
rehabilitation, liquidation, supervision, conservatorship, or
seizure [conservation] of a [an impaired] health maintenance
organization in this state that is placed under supervision or in
conservatorship under Chapter 441 or against which a delinquency
proceeding is commenced under Chapter 443 and that is found by the
commissioner to have insufficient funds to pay the total amount of
health care claims and the administrative[, including] expenses
incurred by the commissioner regarding the rehabilitation,
liquidation, supervision, conservatorship, or seizure, the
commissioner [acting as receiver or by a special deputy receiver,
the committee, at the commissioner's direction,] shall assess each
health maintenance organization in the proportion that the gross
premiums of the health maintenance organization that were written
in this state during the preceding calendar year bear to the
aggregate gross premiums that were written in this state by all
health maintenance organizations, as found [provided to the
committee by the commissioner] after review of annual statements
and other reports the commissioner considers necessary.
(b) [(c)] The commissioner may abate or defer an assessment
in whole or in part if, in the opinion of the commissioner, payment
of the assessment would endanger the ability of a health
maintenance organization to fulfill its contractual obligations.
If an assessment is abated or deferred in whole or in part, the
amount of the abatement or deferral may be assessed against the
remaining health maintenance organizations in a manner consistent
with the calculations made by the commissioner under Subsection (a)
[basis for assessments provided by the approved plan of operation].
(c) [(d)] The total of all assessments on a health
maintenance organization may not exceed one-fourth of one percent
of the health maintenance organization's gross premiums in any one
calendar year.
(d) [(e)] Notwithstanding any other provision of this
subchapter, funds derived from an assessment made under this
section may not be used for more than 180 consecutive days for the
expenses of administering the affairs of a [an impaired] health
maintenance organization the surplus of which is impaired and that
is [while] in supervision[, rehabilitation,] or conservatorship
[conservation for more than 150 days]. The commissioner
[committee] may extend the period during which the commissioner
[it] makes assessments for the administrative expenses [of an
impaired health maintenance organization as it considers
appropriate].
SECTION 2.003. Section 1660.004, Insurance Code, is amended
to read as follows:
Sec. 1660.004. GENERAL RULEMAKING. The commissioner may
adopt rules as necessary to implement this chapter[, including
rules requiring the implementation and provision of the technology
recommended by the advisory committee].
SECTION 2.004. Section 1660.102(b), Insurance Code, is
amended to read as follows:
(b) The commissioner may consider [the] recommendations [of
the advisory committee] or any other information provided in
response to a department-issued request for information relating to
electronic data exchange, including identification card programs,
before adopting rules regarding:
(1) information to be included on the identification
cards;
(2) technology to be used to implement the
identification card pilot program; and
(3) confidentiality and accuracy of the information
required to be included on the identification cards.
SECTION 2.005. Section 4001.009(a), Insurance Code, is
amended to read as follows:
(a) As referenced in Section 4001.003(9), a reference to an
agent in the following laws includes a subagent without regard to
whether a subagent is specifically mentioned:
(1) Chapters 281, 402, 421-423, 441, 444, 461-463,
[523,] 541-556, 558, 559, [702,] 703, 705, 821, 823-825, 827, 828,
844, 963, 1108, 1205-1208 [1205-1209], 1211, 1213, 1214
[1211-1214], 1352, 1353, 1357, 1358, 1360-1363, 1369, 1453-1455,
1503, 1550, 1801, 1803, 2151-2154, 2201-2203, 2205-2213, 3501,
3502, 4007, 4102, and 4201-4203;
(2) Chapter 403, excluding Section 403.002;
(3) Subchapter A, Chapter 491;
(4) Subchapter C, Chapter 521;
(5) Subchapter A, Chapter 557;
(6) Subchapter B, Chapter 805;
(7) Subchapters D, E, and F, Chapter 982;
(8) Subchapter D, Chapter 1103;
(9) Subchapters B, C, D, and E, Chapter 1204,
excluding Sections 1204.153 and 1204.154;
(10) Subchapter B, Chapter 1366;
(11) Subchapters B, C, and D, Chapter 1367, excluding
Section 1367.053(c);
(12) Subchapters A, C, D, E, F, H, and I, Chapter 1451;
(13) Subchapter B, Chapter 1452;
(14) Sections 551.004, 841.303, 982.001, 982.002,
982.004, 982.052, 982.102, 982.103, 982.104, 982.106, 982.107,
982.108, 982.110, 982.111, 982.112, and 1802.001; and
(15) Chapter 107, Occupations Code.
SECTION 2.006. Section 4102.005, Insurance Code, is amended
to read as follows:
Sec. 4102.005. CODE OF ETHICS. The commissioner[, with
guidance from the public insurance adjusters examination advisory
committee,] by rule shall adopt:
(1) a code of ethics for public insurance adjusters
that fosters the education of public insurance adjusters concerning
the ethical, legal, and business principles that should govern
their conduct;
(2) recommendations regarding the solicitation of the
adjustment of losses by public insurance adjusters; and
(3) any other principles of conduct or procedures that
the commissioner considers necessary and reasonable.
SECTION 2.007. Section 2154.052(a), Occupations Code, is
amended to read as follows:
(a) The commissioner:
(1) shall administer this chapter through the state
fire marshal; and
(2) may issue rules to administer this chapter [in
compliance with Section 2154.054].
SECTION 2.008. The following laws are repealed:
(1) Article 3.70-3D(d), Insurance Code, as effective
on appropriation in accordance with Section 5, Chapter 1457 (H.B.
3021), Acts of the 76th Legislature, Regular Session, 1999;
(2) Chapter 523, Insurance Code;
(3) Section 524.061, Insurance Code;
(4) the heading to Subchapter M, Chapter 843,
Insurance Code;
(5) Sections 843.435, 843.436, 843.437, 843.438,
843.439, and 843.440, Insurance Code;
(6) Chapter 1212, Insurance Code;
(7) Section 1660.002(2), Insurance Code;
(8) Subchapter B, Chapter 1660, Insurance Code;
(9) Section 1660.101(c), Insurance Code;
(10) Sections 4002.004, 4004.002, 4101.006, and
4102.059, Insurance Code;
(11) Sections 4201.003(c) and (d), Insurance Code;
(12) Subchapter C, Chapter 6001, Insurance Code;
(13) Subchapter C, Chapter 6002, Insurance Code;
(14) Subchapter C, Chapter 6003, Insurance Code;
(15) Section 2154.054, Occupations Code; and
(16) Section 2154.055(c), Occupations Code.
SECTION 2.009. (a) The following boards, committees,
councils, and task forces are abolished on the effective date of
this Act:
(1) the consumer assistance program for health
maintenance organizations advisory committee;
(2) the executive committee of the market assistance
program for residential property insurance;
(3) the TexLink to Health Coverage Program task force;
(4) the health maintenance organization solvency
surveillance committee;
(5) the technical advisory committee on claims
processing;
(6) the technical advisory committee on electronic
data exchange;
(7) the examination of license applicants advisory
board;
(8) the advisory council on continuing education for
insurance agents;
(9) the insurance adjusters examination advisory
board;
(10) the public insurance adjusters examination
advisory committee;
(11) the utilization review agents advisory
committee;
(12) the fire extinguisher advisory council;
(13) the fire detection and alarm devices advisory
council;
(14) the fire protection advisory council; and
(15) the fireworks advisory council.
(b) All powers, duties, obligations, rights, contracts,
funds, records, and real or personal property of a board,
committee, council, or task force listed under Subsection (a) of
this section shall be transferred to the Texas Department of
Insurance not later than February 28, 2012.
SECTION 2.010. The changes in law made by this Act by
repealing Sections 523.003 and 843.439, Insurance Code, apply only
to a cause of action that accrues on or after the effective date of
this Act. A cause of action that accrues before the effective date
of this Act is governed by the law in effect immediately before that
date, and that law is continued in effect for that purpose.
ARTICLE 3. RATE REGULATION
SECTION 3.001. Subchapter F, Chapter 843, Insurance Code,
is amended by adding Section 843.2071 to read as follows:
Sec. 843.2071. NOTICE OF INCREASE IN CHARGE FOR COVERAGE.
(a) Not less than 60 days before the date on which an increase in a
charge for coverage under this chapter takes effect, a health
maintenance organization shall:
(1) give to each enrollee under an individual evidence
of coverage written notice of the effective date of the increase;
and
(2) provide the enrollee a table that clearly lists:
(A) the actual dollar amount of the charge for
coverage on the date of the notice;
(B) the actual dollar amount of the charge for
coverage after the charge increase; and
(C) the percentage change between the amounts
described by Paragraphs (A) and (B).
(b) The notice required by this section must be based on
coverage in effect on the date of the notice.
(c) This section may not be construed to prevent a health
maintenance organization, at the request of an enrollee, from
negotiating a change in benefits or rates after delivery of the
notice required by this section.
(d) A health maintenance organization may not require an
enrollee entitled to notice under this section to respond to the
health maintenance organization to renew the coverage or take other
action relating to the renewal or extension of the coverage before
the 45th day after the date the notice described by Subsection (a)
is given.
(e) The notice required by this section must include:
(1) contact information for the department, including
information concerning how to file a complaint with the department;
(2) contact information for the Texas Consumer Health
Assistance Program, including information concerning how to
request from the program consumer protection information or
assistance with filing a complaint; and
(3) the addresses of Internet websites that provide
consumer information related to rate increase justifications,
including the websites of the department and the United States
Department of Health and Human Services.
SECTION 3.002. Subchapter C, Chapter 1201, Insurance Code,
is amended by adding Section 1201.109 to read as follows:
Sec. 1201.109. NOTICE OF RATE INCREASE. (a) Not less than
60 days before the date on which a premium rate increase takes
effect on an individual accident and health insurance policy
delivered or issued for delivery in this state by an insurer, the
insurer shall:
(1) give written notice to the insured of the
effective date of the increase; and
(2) provide the insured a table that clearly lists:
(A) the actual dollar amount of the premium on
the date of the notice;
(B) the actual dollar amount of the premium after
the premium rate increase; and
(C) the percentage change between the amounts
described by Paragraphs (A) and (B).
(b) The notice required by this section must be based on
coverage in effect on the date of the notice.
(c) This section may not be construed to prevent an insurer,
at the request of an insured, from negotiating a change in benefits
or rates after delivery of the notice required by this section.
(d) An insurer may not require an insured entitled to notice
under this section to respond to the insurer to renew the policy or
take other action relating to the renewal or extension of the policy
before the 45th day after the date the notice described by
Subsection (a) is given.
(e) The notice required by this section must include:
(1) contact information for the department, including
information concerning how to file a complaint with the department;
(2) contact information for the Texas Consumer Health
Assistance Program, including information concerning how to
request from the program consumer protection information or
assistance with filing a complaint; and
(3) the addresses of Internet websites that provide
consumer information related to rate increase justifications,
including the websites of the department and the United States
Department of Health and Human Services.
SECTION 3.003. Subchapter E, Chapter 1501, Insurance Code,
is amended by adding Section 1501.216 to read as follows:
Sec. 1501.216. PREMIUM RATES: NOTICE OF INCREASE. (a) Not
less than 60 days before the date on which a premium rate increase
takes effect on a small employer health benefit plan delivered or
issued for delivery in this state by an insurer, the insurer shall:
(1) give written notice to the small employer of the
effective date of the increase; and
(2) provide the small employer a table that clearly
lists:
(A) the actual dollar amount of the premium on
the date of the notice;
(B) the actual dollar amount of the premium after
the premium rate increase; and
(C) the percentage change between the amounts
described by Paragraphs (A) and (B).
(b) The notice required by this section must be based on
coverage in effect on the date of the notice.
(c) This section may not be construed to prevent an insurer,
at the request of a small employer, from negotiating a change in
benefits or rates after delivery of the notice required by this
section.
(d) An insurer may not require a small employer entitled to
notice under this section to respond to the insurer to renew the
policy or take other action relating to the renewal or extension of
the policy before the 45th day after the date the notice described
by Subsection (a) is given.
(e) The notice required by this section must include:
(1) contact information for the department, including
information concerning how to file a complaint with the department;
(2) contact information for the Texas Consumer Health
Assistance Program, including information concerning how to
request from the program consumer protection information or
assistance with filing a complaint; and
(3) the addresses of Internet websites that provide
consumer information related to rate increase justifications,
including the websites of the department and the United States
Department of Health and Human Services.
SECTION 3.004. Section 2251.002(8), Insurance Code, is
amended to read as follows:
(8) "Supporting information" means:
(A) the experience and judgment of the filer and
the experience or information of other insurers or advisory
organizations on which the filer relied;
(B) the interpretation of any other information
on which the filer relied;
(C) a description of methods used in making a
rate; and
(D) any other information the department
receives from a filer as a response to a request under Section
38.001 [requires to be filed].
SECTION 3.005. Section 2251.101, Insurance Code, is amended
to read as follows:
Sec. 2251.101. RATE FILINGS AND SUPPORTING INFORMATION.
(a) Except as provided by Subchapter D, for risks written in this
state, each insurer shall file with the commissioner all rates,
applicable rating manuals, supplementary rating information, and
additional information as required by the commissioner. An insurer
may use a rate filed under this subchapter on and after the date the
rate is filed.
(b) The commissioner by rule shall:
(1) determine the information required to be included
in the filing, including:
(A) [(1)] categories of supporting information
and supplementary rating information;
(B) [(2)] statistics or other information to
support the rates to be used by the insurer, including information
necessary to evidence that the computation of the rate does not
include disallowed expenses; and
(C) [(3)] information concerning policy fees,
service fees, and other fees that are charged or collected by the
insurer under Section 550.001 or 4005.003; and
(2) prescribe the process through which the department
requests supplementary rating information and supporting
information under this section, including:
(A) the number of times the department may make a
request for information; and
(B) the types of information the department may
request when reviewing a rate filing.
SECTION 3.006. Section 2251.103, Insurance Code, is amended
to read as follows:
Sec. 2251.103. COMMISSIONER ACTION CONCERNING [DISAPPROVAL
OF RATE IN] RATE FILING NOT YET IN EFFECT; HEARING AND ANALYSIS.
(a) Not later than the earlier of the date the rate takes effect or
the 30th day after the date a rate is filed with the department
under Section 2251.101, the [The] commissioner shall disapprove the
[a] rate if the commissioner determines that the rate [filing made
under this chapter] does not comply with the requirements of this
chapter [meet the standards established under Subchapter B].
(b) Except as provided by Subsection (c), if a rate has not
been disapproved by the commissioner before the expiration of the
30-day period described by Subsection (a), the rate is not
considered disapproved under this section.
(c) For good cause, the commissioner may, on the expiration
of the 30-day period described by Subsection (a), extend the period
for disapproval of a rate for one additional 30-day period. The
commissioner and the insurer may not by agreement extend the 30-day
period described by Subsection (a) or this subsection.
(d) If the commissioner disapproves a rate under this
section [filing], the commissioner shall issue an order specifying
in what respects the rate [filing] fails to meet the requirements of
this chapter.
(e) An insurer that files a rate that is disapproved under
this section [(c) The filer] is entitled to a hearing on written
request made to the commissioner not later than the 30th day after
the date the order disapproving the rate [filing] takes effect.
(f) The department shall track, compile, and routinely
analyze the factors that contribute to the disapproval of rates
under this section.
SECTION 3.007. Subchapter C, Chapter 2251, Insurance Code,
is amended by adding Section 2251.1031 to read as follows:
Sec. 2251.1031. REQUESTS FOR ADDITIONAL INFORMATION.
(a) If the department determines that the information filed by an
insurer under this subchapter or Subchapter D is incomplete or
otherwise deficient, the department may request additional
information from the insurer.
(b) If the department requests additional information from
the insurer during the 30-day period described by Section
2251.103(a) or 2251.153(a) or under a second 30-day period
described by Section 2251.103(c) or 2251.153(c), as applicable, the
time between the date the department submits the request to the
insurer and the date the department receives the information
requested is not included in the computation of the first 30-day
period or the second 30-day period, as applicable.
(c) For purposes of this section, the date of the
department's submission of a request for additional information is
the earlier of:
(1) the date of the department's electronic mailing or
documented telephone call relating to the request for additional
information; or
(2) the postmarked date on the department's letter
relating to the request for additional information.
(d) The department shall track, compile, and routinely
analyze the volume and content of requests for additional
information made under this section to ensure that all requests for
additional information are fair and reasonable.
SECTION 3.008. The heading to Section 2251.104, Insurance
Code, is amended to read as follows:
Sec. 2251.104. COMMISSIONER DISAPPROVAL OF RATE IN EFFECT;
HEARING.
SECTION 3.009. Section 2251.107, Insurance Code, is amended
to read as follows:
Sec. 2251.107. PUBLIC [INSPECTION OF] INFORMATION. Each
filing made, and any supporting information filed, under this
chapter is public information subject to Chapter 552, Government
Code, including any applicable exception from required disclosure
under that chapter [open to public inspection as of the date of the
filing].
SECTION 3.010. Section 2251.151, Insurance Code, is amended
by adding Subsections (c-1) and (f) and amending Subsection (e) to
read as follows:
(c-1) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall
periodically assess whether the conditions described by Subsection
(a) continue to exist. If the commissioner determines that the
conditions no longer exist, the commissioner shall issue an order
excusing the insurer from filing the insurer's rates under this
section.
(e) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall issue an
order specifying the commissioner's reasons for requiring the rate
filing and explaining any steps the insurer must take and any
conditions the insurer must meet in order to be excused from filing
the insurer's rates under this section. An affected insurer is
entitled to a hearing on written request made to the commissioner
not later than the 30th day after the date the order is issued.
(f) The commissioner by rule shall define:
(1) the financial conditions and rating practices that
may subject an insurer to this section under Subsection (a)(1); and
(2) the process by which the commissioner determines
that a statewide insurance emergency exists under Subsection
(a)(2).
SECTION 3.011. Section 2251.156, Insurance Code, is amended
to read as follows:
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
HEARING. (a) If the commissioner disapproves a rate filing under
Section 2251.153(a)(2), the commissioner shall issue an order
disapproving the filing in accordance with Section 2251.103(d)
[2251.103(b)].
(b) An insurer whose rate filing is disapproved is entitled
to a hearing in accordance with Section 2251.103(e) [2251.103(c)].
(c) The department shall track precedents related to
disapprovals of rates under this subchapter to ensure uniform
application of rate standards by the department.
SECTION 3.012. Section 2254.003(a), Insurance Code, is
amended to read as follows:
(a) This section applies to a rate for personal automobile
insurance or residential property insurance filed on or after the
effective date of Chapter 206, Acts of the 78th Legislature,
Regular Session, 2003.
SECTION 3.013. Section 2251.154, Insurance Code, is
repealed.
SECTION 3.014. Sections 843.2071, 1201.109, and 1501.216,
Insurance Code, as added by this Act, apply only to a health
maintenance organization individual evidence of coverage, an
individual accident and health insurance policy, or a small
employer health benefit plan that is delivered, issued for
delivery, or renewed on or after the effective date of this Act. An
evidence of coverage, policy, or plan delivered, issued for
delivery, or renewed before the effective date of this Act is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
SECTION 3.015. Sections 2251.002(8) and 2251.107,
Insurance Code, as amended by this Act, apply only to a request to
inspect information or to obtain public information made to the
Texas Department of Insurance on or after the effective date of this
Act. A request made before the effective date of this Act is
governed by the law in effect immediately before the effective date
of this Act, and the former law is continued in effect for that
purpose.
SECTION 3.016. Section 2251.103, Insurance Code, as amended
by this Act, and Section 2251.1031, Insurance Code, as added by this
Act, apply only to a rate filing made on or after the effective date
of this Act. A rate filing made before the effective date of this
Act is governed by the law in effect at the time the filing was made,
and that law is continued in effect for that purpose.
SECTION 3.017. Section 2251.151(c-1), Insurance Code, as
added by this Act, applies to an insurer that is required to file
the insurer's rates for approval under Section 2251.151, Insurance
Code, on or after the effective date of this Act, regardless of when
the order requiring the insurer to file the insurer's rates for
approval under that section is first issued.
SECTION 3.018. Section 2251.151(e), Insurance Code, as
amended by this Act, applies only to an order issued by the
commissioner of insurance on or after the effective date of this
Act. An order of the commissioner issued before the effective date
of this Act is governed by the law in effect on the date the order
was issued, and that law is continued in effect for that purpose.
ARTICLE 4. STATE FIRE MARSHAL'S OFFICE
SECTION 4.001. Section 417.008, Government Code, is amended
by adding Subsection (f) to read as follows:
(f) The commissioner by rule shall prescribe a reasonable
fee for an inspection performed by the state fire marshal that may
be charged to a property owner or occupant who requests the
inspection, as the commissioner considers appropriate. In
prescribing the fee, the commissioner shall consider the overall
cost to the state fire marshal to perform the inspections,
including the approximate amount of time the staff of the state fire
marshal needs to perform an inspection, travel costs, and other
expenses.
SECTION 4.002. Section 417.0081, Government Code, is
amended to read as follows:
Sec. 417.0081. INSPECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS. (a) The state fire marshal, at the
commissioner's direction, shall periodically inspect public
buildings under the charge and control of the Texas Facilities
[General Services] Commission and buildings leased for the use of a
state agency by the Texas Facilities Commission.
(b) For the purpose of determining a schedule for conducting
inspections under this section, the commissioner by rule shall
adopt guidelines for assigning potential fire safety risk to
state-owned and state-leased buildings. Rules adopted under this
subsection must provide for the inspection of each state-owned and
state-leased building to which this section applies, regardless of
how low the potential fire safety risk of the building may be.
(c) On or before January 1 of each year, the state fire
marshal shall report to the governor, lieutenant governor, speaker
of the house of representatives, and appropriate standing
committees of the legislature regarding the state fire marshal's
findings in conducting inspections under this section.
SECTION 4.003. Section 417.0082, Government Code, is
amended to read as follows:
Sec. 417.0082. PROTECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS. (a) The state fire
marshal, under the direction of the commissioner, shall take any
action necessary to protect a public building under the charge and
control of the Texas Facilities [Building and Procurement]
Commission, and the building's occupants, and the occupants of a
building leased for the use of a state agency by the Texas
Facilities Commission, against an existing or threatened fire
hazard. The state fire marshal and the Texas Facilities [Building
and Procurement] Commission shall include the State Office of Risk
Management in all communication concerning fire hazards.
(b) The commissioner, the Texas Facilities [Building and
Procurement] Commission, and the risk management board shall make
and each adopt by rule a memorandum of understanding that
coordinates the agency's duties under this section.
SECTION 4.004. Section 417.010, Government Code, is amended
to read as follows:
Sec. 417.010. DISCIPLINARY AND ENFORCEMENT ACTIONS;
ADMINISTRATIVE PENALTIES [ALTERNATE REMEDIES]. (a) This section
applies to each person and firm licensed, registered, or otherwise
regulated by the department through the state fire marshal,
including:
(1) a person regulated under Title 20, Insurance Code;
and
(2) a person licensed under Chapter 2154, Occupations
Code.
(b) The commissioner by rule shall delegate to the state
fire marshal the authority to take disciplinary and enforcement
actions, including the imposition of administrative penalties in
accordance with this section on a person regulated under a law
listed under Subsection (a) who violates that law or a rule or order
adopted under that law. In the rules adopted under this subsection,
the commissioner shall:
(1) specify which types of disciplinary and
enforcement actions are delegated to the state fire marshal; and
(2) outline the process through which the state fire
marshal may, subject to Subsection (e), impose administrative
penalties or take other disciplinary and enforcement actions.
(c) The commissioner by rule shall adopt a schedule of
administrative penalties for violations subject to a penalty under
this section to ensure that the amount of an administrative penalty
imposed is appropriate to the violation. The department shall
provide the administrative penalty schedule to the public on
request. The amount of an administrative penalty imposed under
this section must be based on:
(1) the seriousness of the violation, including:
(A) the nature, circumstances, extent, and
gravity of the violation; and
(B) the hazard or potential hazard created to the
health, safety, or economic welfare of the public;
(2) the economic harm to the public interest or public
confidence caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation;
(6) whether the violation was intentional; and
(7) any other matter that justice may require.
(d) In [The state fire marshal, in] the enforcement of a law
that is enforced by or through the state fire marshal, the state
fire marshal may, in lieu of cancelling, revoking, or suspending a
license or certificate of registration, impose on the holder of the
license or certificate of registration an order directing the
holder to do one or more of the following:
(1) cease and desist from a specified activity;
(2) pay an administrative penalty imposed under this
section [remit to the commissioner within a specified time a
monetary forfeiture not to exceed $10,000 for each violation of an
applicable law or rule]; or [and]
(3) make restitution to a person harmed by the holder's
violation of an applicable law or rule.
(e) The state fire marshal shall impose an administrative
penalty under this section in the manner prescribed for imposition
of an administrative penalty under Subchapter B, Chapter 84,
Insurance Code. The state fire marshal may impose an
administrative penalty under this section without referring the
violation to the department for commissioner action.
(f) An affected person may dispute the imposition of the
penalty or the amount of the penalty imposed in the manner
prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to
pay an administrative penalty imposed under this section is subject
to enforcement by the department.
ARTICLE 5. TITLE INSURANCE
SECTION 5.001. Chapter 2501, Insurance Code, is amended by
adding Section 2501.009 to read as follows:
Sec. 2501.009. GIFTS, GRANTS, AND DONATIONS FOR EDUCATIONAL
PURPOSES. (a) The department may accept gifts, grants, and
donations to enable employees of the department to participate in
educational events, and for other educational purposes, related to
title insurance.
(b) The commissioner may adopt rules related to the
acceptance of gifts, grants, and donations described in Subsection
(a).
SECTION 5.002. Section 2502.055(a), Insurance Code, is
amended to read as follows:
(a) The activities described in this section are not
rebates. Nothing in this subchapter prohibits a title insurance
company or a title insurance agent from:
(1) engaging in [legal] promotional and educational
activities that are not conditioned on the referral of title
insurance business and not prohibited by Subchapter B, Chapter 541;
(2) purchasing advertising promoting the title
insurance company or the title insurance agent at market rates from
any person in any publication, event, or media;
(3) delivering to a party in the transaction or the
party's representative legal documents or funds which are directly
or indirectly related to a transaction closed by the title
insurance company or title insurance agent; [or]
(4) participating in an association of attorneys,
builders, developers, realtors, or other real estate practitioners
provided that the level of such participation does not exceed
normal participation of a volunteer member of the association and
is not activity that would ordinarily be performed by paid staff of
an association; or
(5) providing continuing education courses at market
rates, regardless of whether participants receive credit hours.
SECTION 5.003. Section 2551.302, Insurance Code, is amended
to read as follows:
Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES. A
title insurance company may reinsure any of its policies and
contracts issued on real property located in this state or on
policies and contracts issued in this state under Chapter 2751, if:
(1) the reinsuring title insurance company is
authorized to engage in business in this state under this title; or
[and]
(2) the title insurance company acquires reinsurance
in accordance with Section 2551.305 [the department first approves
the form of the reinsurance contract].
SECTION 5.004. Section 2551.305, Insurance Code, is amended
to read as follows:
Sec. 2551.305. CERTAIN REINSURANCE ALLOWED.
(a) Notwithstanding any other provision of this subchapter, a
title insurance company may acquire reinsurance on an individual
policy or facultative basis from a title insurance company not
authorized to engage in the business of title insurance in this
state if:
(1) the title insurance company from which the
reinsurance is acquired:
(A) has a combined capital and surplus of at
least $20 million as stated in the company's most recent annual
statement preceding the acceptance of reinsurance; and
(B) is domiciled in another state and is
authorized to engage in the business of title insurance in one or
more states; and
(2) the title insurance company acquiring reinsurance
gives written notice to the department at least 30 days before
acquiring the reinsurance, and the commissioner does not, before
the expiration of the 30-day period and on the ground that the
transaction may result in a hazardous financial condition, prohibit
the title insurance company from obtaining reinsurance under this
section.
(b) The notice required under Subsection (a)(2) must
provide sufficient information to enable the commissioner to
evaluate the proposed transaction, including a summary of the
significant terms of the reinsurance, the financial impact of the
transaction on the title insurance company acquiring reinsurance,
and the specific identity and state of domicile of each title
insurance company from which reinsurance is acquired.
(c) Notwithstanding any other provision of this subchapter,
the department may, on application and hearing, permit a title
insurance company to acquire reinsurance that does not comply with
Subsection (a) on an individual policy or facultative basis from a
title insurance company domiciled in another state and not
authorized to engage in the business of title insurance in this
state, if:
(1) the company has exhausted the opportunity to
acquire reinsurance from all other authorized title insurance
companies; and
(2) the title insurance company from which the
reinsurance is acquired has a combined capital and surplus of at
least $2 [$1.4] million as stated in its annual statement preceding
the acceptance of reinsurance.
(d) [(b)] Notwithstanding any other provision of this
subchapter, the department may, on application and hearing, permit
a title insurance company, including an authorized reinsuring title
insurance company, to retain an additional potential liability of
not more than 40 percent of the company's capital stock and surplus
as stated in the most recent annual statement of the company, if:
(1) the company has exhausted the opportunity to
acquire reinsurance under Subsection (c) [(a)]; and
(2) the additional potential liability of the company
is incurred only if the loss suffered by the insured under the
policy exceeds the amount of insurance and reinsurance accepted by
the company and its reinsuring title insurance companies under the
other provisions of this subchapter.
SECTION 5.005. Section 2651.007, Insurance Code, is amended
by adding Subsections (d), (e), (f), and (g) to read as follows:
(d) Not later than the 20th business day after the date the
department receives a renewal application, the department shall
notify the applicant in writing of any deficiencies in the
application that render the renewal application incomplete.
(e) Not later than the fifth business day after the date the
renewal application is complete, the department shall notify the
applicant in writing of the date that the renewal application is
complete.
(f) A renewal application is automatically approved on the
30th business day after the date the renewal application is
complete, unless on or before that date the department notifies the
applicant in writing of the factual grounds on which the department
proposes to deny the license under Section 2651.301.
(g) The department may provide a notice required under this
section by e-mail.
SECTION 5.006. Section 2651.009, Insurance Code, is amended
by amending Subsection (c) and adding Subsections (c-1), (c-2), and
(c-3) to read as follows:
(c) Not later than the 20th business day after the date the
department receives a notice under Subsection (b), the department
shall notify the title insurance agent and appointing title
insurance company in writing of any deficiencies in the notice that
render the notice incomplete. A notice under Subsection (b) is
considered complete on the date the department receives the notice,
unless the department provides notice of the deficiencies under
this section.
(c-1) Not later than the fifth business day after the date
the notice under Subsection (b) is complete, the department shall
notify the title insurance agent and appointing title insurance
company in writing of the date that the notice under Subsection (b)
is complete.
(c-2) The appointment is effective on the eighth business
day following the date [the department receives] the [completed]
notice of appointment is complete and the department receives the
fee, unless the department proposes to reject [rejects] the
appointment. If the department proposes to reject [rejects] the
appointment, the department shall notify the title insurance agent
and the appointing title insurance company [state] in writing of
the factual grounds on which the department proposes to reject the
appointment [reasons for rejection] not later than the seventh
business day after the date on which the [department receives the
completed] notice of appointment is complete.
(c-3) The department may provide a notice required under
this section by e-mail.
SECTION 5.007. Subchapter G, Chapter 2651, Insurance Code,
is amended by adding Sections 2651.3015 and 2651.303 to read as
follows:
Sec. 2651.3015. PROHIBITED GROUNDS FOR REJECTION, DELAY, OR
DENIAL. (a) Except as provided by Subsection (b) or (c), the
department may not reject, delay, or deny a notice of appointment
under Section 2651.009 based wholly or partly on a pending
department audit or complaint investigation or a pending
disciplinary action against a title insurance agent or appointing
title insurance company that has not been finally closed or
resolved by a final order issued by the commissioner on or before
the date on which the notice is received by the department.
(b) The department may reject a notice of appointment under
Section 2651.009 if the department determines that the appointing
title insurance company or the title insurance agent intentionally
made a material misstatement in the notice of appointment or
attempted to have the appointment approved by fraud or
misrepresentation.
(c) The department may delay approval of a notice of
appointment if:
(1) the title insurance agent or the appointing title
insurance company is the subject of a criminal investigation or
prosecution; or
(2) the deputy commissioner of the title division of
the department makes a good faith determination that there is a
credible suspicion that there are ongoing or continuing acts of
fraud by the title insurance agent or appointing title insurance
company.
(d) Except as provided by Subsection (e) or (f), the
department may not delay or deny a renewal application under
Section 2651.007 based wholly or partly on a department audit or
complaint investigation of, or disciplinary or enforcement action
against, an applicant or license holder that is pending and has not
been finally closed or resolved by a final order issued by the
commissioner on or before the date on which the application is
filed.
(e) The department may deny a renewal application under
Section 2651.007 if the department determines that the applicant or
license holder intentionally made a material misstatement in the
renewal application or attempted to obtain the license renewal by
fraud or misrepresentation.
(f) The department may delay a renewal application if:
(1) the applicant or license holder is the subject of a
criminal investigation or prosecution; or
(2) the deputy commissioner of the title division of
the department makes a good faith determination that there is a
credible suspicion that there are ongoing or continuing acts of
fraud by the applicant or license holder.
Sec. 2651.303. NOTICE OF DISCIPLINARY OR ENFORCEMENT
ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a
license holder in writing of a disciplinary or enforcement action
against the license holder not later than the 30th business day
after the date the department assigns a file number to the action,
except that this subsection does not apply to a file or action:
(1) that is the subject of a pending criminal
investigation or prosecution; or
(2) about which the deputy commissioner of the title
division of the department makes a good faith determination that
there is a credible suspicion that there are ongoing or continuing
acts of fraud by a person who is the subject of the action.
(b) A notice required by Subsection (a) may be provided by
e-mail and must provide a license holder fair notice of the alleged
facts known by the department on the date of the notice that
constitute grounds for the action.
(c) A disciplinary or enforcement action is automatically
dismissed with prejudice, unless the department serves a notice of
hearing on the license holder not later than the 60th business day
after the date the department receives a hearing request from the
license holder.
(d) The department may provide information about an
enforcement action, including a copy of a notice issued under this
section, to each title insurance company with which a title
insurance agent has, or proposes to obtain, an appointment.
SECTION 5.008. Subchapter B, Chapter 2652, Insurance Code,
is amended by adding Section 2652.059 to read as follows:
Sec. 2652.059. DENIAL OF LICENSE APPLICATION OR LICENSE
RENEWAL; APPROVAL. (a) Not later than the 20th business day after
the date the department receives a license application or a license
renewal under this chapter, the department shall notify the
applicant or license holder in writing of any deficiencies in the
application that render the application incomplete.
(b) Not later than the fifth business day after the date the
application is complete, the department shall notify the applicant
or license holder in writing of the date that the license
application or license renewal is complete.
(c) An application is automatically approved on the 30th
business day after the date the application is complete, unless on
or before that date the department notifies the applicant or
license holder in writing of the factual grounds on which the
department proposes to deny the application.
(d) The department may provide a notice required under this
section by e-mail.
SECTION 5.009. Subchapter E, Chapter 2652, Insurance Code,
is amended by adding Sections 2652.2015 and 2652.203 to read as
follows:
Sec. 2652.2015. PROHIBITED GROUNDS FOR DELAY OR DENIAL.
(a) Except as provided by Subsection (b) or (c), the department may
not delay or deny a license application or a license renewal based
wholly or partly on a department audit or complaint investigation
of, or disciplinary or enforcement action against, a license holder
or applicant that is pending and has not been closed or finally
adjudicated on or before the date on which the initial or renewal
application is filed.
(b) The department may delay a license application or
license renewal if:
(1) the applicant or license holder is the subject of a
criminal investigation or prosecution; or
(2) the deputy commissioner of the title division of
the department makes a good faith determination that there is a
credible suspicion that there are ongoing or continuing acts of
fraud by the applicant or license holder.
(c) The department may deny a license application or license
renewal if the department determines that the applicant or license
holder intentionally made a material misstatement in the license
application or license renewal or the applicant or license holder
attempted to obtain the license or renewal by fraud or
misrepresentation.
Sec. 2652.203. NOTICE OF DISCIPLINARY OR ENFORCEMENT
ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a
license holder of a disciplinary action or enforcement action
against the license holder not later than the 30th business day
after the date the department assigns a file number to the action,
except that this subsection does not apply to a file or action:
(1) that is the subject of a pending criminal
investigation or prosecution; or
(2) about which the deputy commissioner of the title
division of the department makes a good faith determination that
there is a credible suspicion that there are ongoing or continuing
acts of fraud by a person who is the subject of the action.
(b) A notice required by Subsection (a) must provide a
license holder fair notice of the alleged facts known by the
department on the date of the notice that constitute grounds for the
action.
(c) A disciplinary or enforcement action is automatically
dismissed with prejudice, unless the department serves a notice of
hearing on the license holder not later than the 60th business day
after the date the department receives a hearing request from the
license holder.
(d) The department may provide information about an
enforcement action, including a copy of a notice issued under this
section, to each title insurance agent or direct operation with
which an escrow officer has, or proposes to obtain, employment.
SECTION 5.010. Subchapter B, Chapter 2703, Insurance Code,
is amended by adding Section 2703.0515 to read as follows:
Sec. 2703.0515. CERTAIN REQUIREMENTS PROHIBITED. (a) A
title insurance company is not required to offer or provide in
connection with a title insurance policy an endorsement insuring a
loss from damage resulting from the use of the surface of the land
for the extraction or development of coal, lignite, oil, gas, or
another mineral if the policy includes a general exception or
exclusion from coverage a loss from damage resulting from the use of
the surface of the land for the extraction or development of coal,
lignite, oil, gas, or another mineral.
(b) In this section, "general exception or exclusion" means
a provision in a title insurance policy or other title insuring form
that provides that title insurance coverage under the policy or
form:
(1) is subject to, and the title insurer does not
insure title to, and excepts from the description of the covered
property, coal, lignite, oil, gas, and other minerals in and under
and that may be produced from the covered property, together with
related rights, privileges, and immunities; or
(2) does not cover a lease, grant, exception, or
reservation of coal, lignite, oil, gas, or other minerals, or
related rights, privileges, and immunities, appearing in the public
records.
(c) An additional premium or other amount may not be charged
for an endorsement to a loan policy of title insurance if the
endorsement:
(1) insures against loss from damage to improvements
or permanent buildings located on land that results from the future
exercise of any right existing on the date of the loan policy to use
the surface of the land for the extraction or development of coal,
lignite, oil, gas, or another mineral;
(2) expressly does not insure against loss resulting
from subsidence; and
(3) was promulgated by the commissioner in calendar
year 2009.
SECTION 5.011. Subchapter B, Chapter 2703, Insurance Code,
is amended by adding Sections 2703.055 and 2703.056 to read as
follows:
Sec. 2703.055. REQUIREMENT OF CERTAIN PROVISIONS
PROHIBITED. The commissioner may not require by rule, or through
adoption of a title insurance policy or other insuring form, that a
title insurance policy delivered or issued for delivery in this
state:
(1) insure against a loss that a person with an
interest in real property sustains from damage to the property by
reason of severance of minerals from the surface estate; or
(2) provide insurance as to ownership of minerals.
Sec. 2703.056. EXCEPTIONS; MINERAL INTERESTS. (a) Subject
to the underwriting standards of the title insurance company, a
title insurance company may in a commitment for title insurance or a
title insurance policy include a general exception or a special
exception to except from coverage a mineral estate or an instrument
that purports to reserve or transfer all or part of a mineral
estate.
(b) The inclusion in a title insurance policy of a general
exception or a special exception described by Subsection (a) does
not create title insurance coverage as to the condition or
ownership of the mineral estate.
SECTION 5.012. Section 2703.153, Insurance Code, is amended
by amending Subsections (c) and (d) and adding Subsections (h) and
(i) to read as follows:
(c) Not less frequently than once every five years, the
commissioner shall evaluate the information required under this
section to determine whether the department needs additional or
different information or no longer needs certain information to
promulgate rates. If the department requires a title insurance
company or title insurance agent to include new or different
information in the statistical report, that information may be
considered by the commissioner in fixing premium rates if the
information collected is reasonably credible for the purposes for
which the information is to be used.
(d) A title insurance company or a title insurance agent
aggrieved by a department requirement concerning the submission of
information may bring a suit in a district court in Travis County
alleging that the request for information:
(1) is unduly burdensome; or
(2) is not a request for information material to
fixing and promulgating premium rates or another matter that may be
the subject of the periodic [biennial] hearing and is not a request
reasonably designed to lead to the discovery of that information.
(h) The contents of the statistical report, including any
amendments to the statistical report, must be established in a
rulemaking hearing under Subchapter B, Chapter 2001, Government
Code.
(i) An amendment to the contents of the statistical report
may not apply retroactively.
SECTION 5.013. Section 2703.202, Insurance Code, is amended
by amending Subsections (b) and (d) and adding Subsections (g),
(h), (i), (j), (k), (l), (m), (n), and (o) to read as follows:
(b) The commissioner shall order a public hearing to
consider changing a premium rate, including fixing a new premium
rate, in response to a written [At the] request of:
(1) a title insurance company;
(2) an association composed of at least 50 percent of
the number of title insurance agents and title insurance companies
licensed or authorized by the department;
(3) an association composed of at least 20 percent of
the number of title insurance agents licensed or authorized by the
department; or
(4) the office of public insurance counsel[, the
commissioner shall order a public hearing to consider changing a
premium rate].
(d) Notwithstanding Subsection (c), [at the request of a
title insurance company or the public insurance counsel,] a public
hearing held under Subsection (a) or under Section 2703.206 must be
conducted by the commissioner as a contested case hearing under
Subchapters C through H and Subchapter Z, Chapter 2001, Government
Code, at the request of:
(1) a title insurance company;
(2) an association composed of at least 50 percent of
the number of title insurance agents and title insurance companies
licensed or authorized by the department;
(3) an association composed of at least 20 percent of
the number of title insurance agents licensed or authorized by the
department; or
(4) the office of public insurance counsel.
(g) If a hearing held under Subsection (a) is not conducted
as a contested case hearing, the commissioner shall render a
decision and issue a final order not later than the 120th day after
the date the commissioner receives a written request under
Subsection (b).
(h) If a hearing held under Subsection (a) is conducted as a
contested case hearing:
(1) not later than the 30th day after the date the
commissioner receives a request for a public hearing under
Subsection (b), the commissioner shall issue a notice of call for
items to be considered at the hearing;
(2) the commissioner may not require responses to the
notice of call before the 60th day after the date the commissioner
issues the notice of call;
(3) the commissioner shall issue a notice of public
hearing requested under Subsection (d) not later than the 30th day
after the date responses to the notice of call are required under
Subdivision (2);
(4) the commissioner shall commence the public hearing
not earlier than the 120th day after the date the commissioner
issues a notice of hearing under Subdivision (3);
(5) the commissioner shall close the public hearing
not later than the 150th day after the date the commissioner issues
the notice of hearing under Subdivision (3); and
(6) the commissioner shall render a decision and issue
a final order not later than the 60th day after the record made in
the public hearing is closed under Subdivision (5).
(i) A party's presentation of relevant, admissible oral
testimony in a hearing under this section may not be limited.
(j) The commissioner shall consider each matter presented
in a hearing under this section and announce in a public hearing all
decisions on all matters considered.
(k) A party described by Subsection (b) may petition a
district court in Travis County to enter an order requiring the
commissioner to comply with the deadlines described by this section
if the commissioner fails to meet a requirement in Subsection (g) or
(h).
(l) Subject to Subsection (m), if the commissioner fails to
comply with the requirements under Subsection (g) or (h)(6), a
combination of at least three associations, persons, or entities
listed in Subsection (b) may jointly petition a district court of
Travis County to adopt a rate based on the record made in the
hearing before the commissioner under this section.
(m) If the record made in the hearing before the
commissioner is not complete before the request for the court to
adopt a premium rate under Subsection (l), the court shall hold an
evidentiary hearing to establish a record before adopting the
premium rate.
(n) After a petition has been filed under Subsection (l),
the commissioner may not issue findings or an order related to the
subject matter of the petition until after the date the court enters
a final judgment.
(o) A district court may appoint a magistrate to adopt a
rate under this section.
SECTION 5.014. Section 2703.203, Insurance Code, is amended
to read as follows:
Sec. 2703.203. PERIODIC [BIENNIAL] HEARING. The
commissioner shall hold a [biennial] public hearing not earlier
than July 1 after the fifth anniversary of the closing of a hearing
held under this chapter [of each even-numbered year] to consider
adoption of premium rates and other matters relating to regulating
the business of title insurance that an association, title
insurance company, title insurance agent, or member of the public
admitted as a party under Section 2703.204 requests to be
considered or that the commissioner determines necessary to
consider.
SECTION 5.015. Section 2703.204, Insurance Code, is amended
to read as follows:
Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC [BIENNIAL]
HEARING. (a) Subject to this section, a trade association whose
membership is composed of at least 20 percent of the members of an
industry or group represented by the trade association, an
association, a person or entity described by Section 2703.202(b),
or department staff [an individual or association or other entity
recommending adoption of a premium rate or another matter relating
to regulating the business of title insurance] shall be admitted as
a party to the periodic [biennial] hearing under Section 2703.203.
(b) A party to any portion of the periodic [the ratemaking
phase of the biennial] hearing relating to ratemaking may request
that the commissioner remove any other party to that portion of [the
ratemaking phase of] the hearing on the grounds that the other party
does not have a substantial interest in title insurance. A decision
of the commission to deny or grant the request is final and subject
to appeal in accordance with Section 36.202.
SECTION 5.016. Section 2703.207, Insurance Code, is amended
to read as follows:
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than
the 60th day before the date of a hearing under Section 2703.202,
2703.203, or 2703.206, notice of the hearing and of each item to be
considered at the hearing shall be:
(1) sent directly to all parties to the previous
hearing conducted under Section 2703.202, 2703.203, or 2703.206, if
the hearing was conducted as a contested case hearing [title
insurance companies and title insurance agents]; and
(2) published in the Texas Register and on the
department's Internet website [provided to the public in a manner
that gives fair notice concerning the hearing].
SECTION 5.017. Section 2551.303, Insurance Code, is
repealed.
SECTION 5.018. Section 2703.205, Insurance Code, is
repealed.
SECTION 5.019. Section 2703.0515, Insurance Code, as added
by this article, applies only to a title insurance policy that is
delivered or issued for delivery on or after January 1, 2012. A
policy delivered or issued for delivery before January 1, 2012, is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
SECTION 5.020. Sections 2703.055 and 2703.056, Insurance
Code, as added by this article, apply only to a title insurance
policy that is delivered or issued for delivery on or after January
1, 2012. A policy delivered or issued for delivery before January
1, 2012, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 5.021. Sections 2551.302 and 2551.305, Insurance
Code, as amended by this article, and the repeal of Section
2551.303, Insurance Code, by this article, apply only to a
reinsurance contract entered into by a title insurance company on
or after the effective date of this Act. A reinsurance contract
entered into by a title insurance company before the effective date
of this Act is governed by the law in effect immediately before the
effective date of this Act, and the former law is continued in
effect for that purpose.
ARTICLE 6. ELECTRONIC TRANSACTIONS
SECTION 6.001. Subtitle A, Title 2, Insurance Code, is
amended by adding Chapter 35 to read as follows:
CHAPTER 35. ELECTRONIC TRANSACTIONS
Sec. 35.001. DEFINITIONS. In this chapter:
(1) "Conduct business" includes engaging in or
transacting any business in which a regulated entity is authorized
to engage or is authorized to transact under the law of this state.
(2) "Regulated entity" means each insurer or other
organization regulated by the department, including:
(A) a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
(B) a domestic or foreign, stock or mutual, fire
or casualty insurance company;
(C) a Mexican casualty company;
(D) a domestic or foreign Lloyd's plan;
(E) a domestic or foreign reciprocal or
interinsurance exchange;
(F) a domestic or foreign fraternal benefit
society;
(G) a domestic or foreign title insurance
company;
(H) an attorney's title insurance company;
(I) a stipulated premium company;
(J) a nonprofit legal service corporation;
(K) a health maintenance organization;
(L) a statewide mutual assessment company;
(M) a local mutual aid association;
(N) a local mutual burial association;
(O) an association exempt under Section 887.102;
(P) a nonprofit hospital, medical, or dental
service corporation, including a company subject to Chapter 842;
(Q) a county mutual insurance company; and
(R) a farm mutual insurance company.
Sec. 35.002. CONSTRUCTION WITH OTHER LAW.
(a) Notwithstanding any other provision of this code, a regulated
entity may conduct business electronically in accordance with this
chapter and the rules adopted under Section 35.004.
(b) To the extent of any conflict between another provision
of this code and a provision of this chapter, the provision of this
chapter controls.
Sec. 35.003. ELECTRONIC TRANSACTIONS AUTHORIZED. A
regulated entity may conduct business electronically to the same
extent that the entity is authorized to conduct business otherwise
if before the conduct of business each party to the business agrees
to conduct the business electronically.
Sec. 35.004. RULES. (a) The commissioner shall adopt
rules necessary to implement and enforce this chapter.
(b) The rules adopted by the commissioner under this section
must include rules that establish minimum standards with which a
regulated entity must comply in the entity's electronic conduct of
business with other regulated entities and consumers.
SECTION 6.002. Chapter 35, Insurance Code, as added by this
Act, applies only to business conducted on or after the effective
date of this Act. Business conducted before the effective date of
this Act is governed by the law in effect on the date the business
was conducted, and that law is continued in effect for that purpose.
ARTICLE 7. DATA COLLECTION
SECTION 7.001. Chapter 38, Insurance Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. DATA COLLECTION RELATING TO
CERTAIN PERSONAL LINES OF INSURANCE
Sec. 38.401. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to an insurer who writes personal automobile insurance
or residential property insurance in this state.
Sec. 38.402. FILING OF CERTAIN CLAIMS INFORMATION.
(a) The commissioner shall require each insurer described by
Section 38.401 to file with the commissioner aggregate personal
automobile insurance and residential property insurance claims
information for the period covered by the filing, including the
number of claims:
(1) filed during the reporting period;
(2) pending on the last day of the reporting period,
including pending litigation;
(3) closed with payment during the reporting period;
(4) closed without payment during the reporting
period; and
(5) carrying over from the reporting period
immediately preceding the current reporting period.
(b) An insurer described by Section 38.401 must file the
information described by Subsection (a) on an annual basis. The
information filed must be broken down by quarter.
Sec. 38.403. PUBLIC INFORMATION. (a) The department shall
post the data contained in claims information filings under Section
38.402 on the department's Internet website. The commissioner by
rule may establish a procedure for posting data under this
subsection that includes a description of the data that must be
posted and the manner in which the data must be posted.
(b) Information provided under this section must be
aggregate data by line of insurance for each insurer and may not
reveal proprietary or trade secret information of any insurer.
Sec. 38.404. RULES. The commissioner may adopt rules
necessary to implement this subchapter.
ARTICLE 7A. HEALTH BENEFIT PLAN INNOVATIONS PROGRAM
SECTION 7A.001. Subtitle B, Title 5, Insurance Code, is
amended by adding Chapter 525 to read as follows:
CHAPTER 525. HEALTH BENEFIT PLAN INNOVATIONS PROGRAM
Sec. 525.001. PROGRAM ESTABLISHED. (a) The department
shall develop and implement a health benefit plan innovations
program to study the number of uninsured individuals in this state,
the reasons those individuals are uninsured, and possible solutions
that would expand access to affordable health benefit plan coverage
in this state.
(b) The department shall use department employees already
employed in the consumer protection division of the department to
implement the program. The department may not hire full-time
employees whose primary job functions would solely be
implementation of the program.
Sec. 525.002. PROGRAM COMPONENTS. (a) Except as provided
by Subsection (b), the program implemented under this chapter must:
(1) collect and analyze data concerning the number,
age, and demographic characteristics of uninsured individuals in
this state;
(2) identify the reasons why individuals in this state
are uninsured;
(3) examine and evaluate the effectiveness of programs
implemented in other states to reduce the number of uninsured
residents in those states;
(4) monitor and evaluate the health benefit market in
this state and determine whether residents of this state have
sufficient access to a variety of health benefit plan products to
ensure adequate health benefit plan coverage; and
(5) make recommendations to the department and to the
legislature concerning programs or initiatives to be implemented in
this state to reduce the number of uninsured residents in this
state.
(b) The program must supplement and may not duplicate a
service or function of another existing program or state agency and
shall refer consumers to other programs and agencies where
appropriate.
(c) The program may:
(1) operate a statewide clearinghouse for objective
consumer information about health care coverage, including options
for obtaining health care coverage;
(2) collect, track, and quantify problems and
inquiries encountered by consumers;
(3) educate consumers on their rights and
responsibilities with respect to group health plans and health
insurance coverages;
(4) provide existing health-related information to
the general public and health care providers to improve the quality
of and access to health care; and
(5) establish an advisory committee composed of state
agencies to increase collaboration and coordination of
health-related programs and benefits.
(d) The department shall coordinate program components that
involve market and cost research or data collection and analysis
with health benefit plan issuers and the Health and Human Services
Commission to ensure the collection and analysis of complete and
accurate information.
Sec. 525.003. REPORT. The department shall include in its
biennial report to the legislature under Section 32.022 the
program's findings concerning the information and recommendations
described by Section 525.002.
Sec. 525.004. FUNDING. The department shall make a
reasonable effort to obtain funding in the form of gifts and grants
from the federal government or an organization or other private
party that does not have a potential conflict of interest with the
department or the goals of this chapter to assist with funding the
program. The department shall adopt rules governing acceptance of
gifts and grants that are consistent with the provisions for
acceptance of gifts under Chapter 575, Government Code. Before
adopting rules under this section, the department shall:
(1) submit the proposed rules to the Texas Ethics
Commission for review; and
(2) consider that commission's recommendations
regarding the proposed rules.
Sec. 525.005. RULES. The commissioner may adopt rules as
necessary to implement this chapter.
ARTICLE 8. STUDY ON RATE FILING AND APPROVAL
REQUIREMENTS FOR CERTAIN INSURERS WRITING IN
UNDERSERVED AREAS; UNDERSERVED AREA DESIGNATION
SECTION 8.001. Section 2004.002, Insurance Code, is amended
by amending Subsection (b) and adding Subsections (c) and (d) to
read as follows:
(b) In determining which areas to designate as underserved,
the commissioner shall consider:
(1) whether residential property insurance is not
reasonably available to a substantial number of owners of insurable
property in the area; [and]
(2) whether access to the full range of coverages and
policy forms for residential property insurance does not reasonably
exist; and
(3) any other relevant factor as determined by the
commissioner.
(c) The commissioner shall determine which areas to
designate as underserved under this section not less than once
every six years.
(d) The commissioner shall conduct a study concerning the
accuracy of current designations of underserved areas under this
section for the purpose of increasing and improving access to
insurance in those areas not less than once every six years.
SECTION 8.002. Subchapter F, Chapter 2251, Insurance Code,
is amended by adding Section 2251.253 to read as follows:
Sec. 2251.253. REPORT. (a) The commissioner shall conduct
a study concerning the impact of increasing the percentage of the
total amount of premiums collected by insurers for residential
property insurance under Section 2251.252.
(b) The commissioner shall report the results of the study
in the biennial report required under Section 32.022.
(c) This section expires September 1, 2013.
ARTICLE 9. TEXAS WINDSTORM INSURANCE ASSOCIATION
SECTION 9.001. Section 83.002, Insurance Code, is amended
by adding Subsection (c) to read as follows:
(c) This chapter also applies to:
(1) a person appointed as a qualified inspector under
Section 2210.254 or 2210.255; and
(2) a person acting as a qualified inspector under
Section 2210.254 or 2210.255 without being appointed as a qualified
inspector under either of those sections.
SECTION 9.002. Section 2210.105, Insurance Code, is amended
by amending Subsection (b) and adding Subsections (b-1), (e), and
(f) to read as follows:
(b) Except for a closed meeting authorized by Subchapter D,
Chapter 551, Government Code, a meeting of the board of directors or
of the members of the association is open to[:
[(1) the commissioner or the commissioner's designated
representative; and
[(2)] the public.
(b-1) A meeting of the board of directors or the members of
the association, including a closed meeting authorized by
Subchapter D, Chapter 551, Government Code, is open to the
commissioner or the commissioner's designated representative.
(e) The association shall:
(1) broadcast live on the association's Internet
website all meetings of the board of directors, other than closed
meetings; and
(2) maintain on the association's Internet website an
archive of meetings of the board of directors.
(f) A recording of a meeting must be maintained in the
archive required under Subsection (e) through and including the
fifth anniversary of the meeting. A recording of a meeting may be
maintained for a period longer than the period required by this
subsection.
SECTION 9.003. Subchapter C, Chapter 2210, Insurance Code,
is amended by adding Section 2210.108 to read as follows:
Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. Except as
specifically provided by this chapter or another law, the
association is subject to Chapters 551 and 552, Government Code.
SECTION 9.004. Section 2210.202(b), Insurance Code, is
amended to read as follows:
(b) A property and casualty agent must submit an application
for initial [the] insurance coverage on behalf of the applicant on
forms prescribed by the association. The association shall develop
a simplified renewal process that allows for the acceptance of an
application for renewal coverage, and payment of premiums, from a
property and casualty agent or a person insured under this chapter.
An [The] application for initial or renewal coverage must contain:
(1) a statement as to whether the applicant has
submitted or will submit the premium in full from personal funds or,
if not, to whom a balance is or will be due; and
(2) [. Each application for initial or renewal
coverage must also contain] a statement that the agent acting on
behalf of the applicant possesses proof of the declination
described by Subsection (a) and proof of flood insurance coverage
or unavailability of that coverage as described by Section
2210.203(a-1).
SECTION 9.005. Sections 2210.203(a) and (c), Insurance
Code, are amended to read as follows:
(a) If the association determines that the property for
which an application for initial insurance coverage is made is
insurable property, the association, on payment of the premium,
shall direct the issuance of an insurance policy as provided by the
plan of operation.
(c) A policy may be renewed annually on application for
renewal as long as the property continues to be insurable property.
If the association determines that the property for which an
application for renewal insurance coverage is made is insurable
property, the association shall direct the issuance of a renewal
insurance policy as provided by the plan of operation and may
collect the premium for the policy directly from the applicant for
renewal insurance coverage.
SECTION 9.006. Sections 2210.204(d) and (e), Insurance
Code, are amended to read as follows:
(d) If an insured requests cancellation of the insurance
coverage, the association shall refund the unearned premium, less
any minimum retained premium set forth in the plan of operation,
payable to the insured and the holder of an unpaid balance. The
property and casualty agent who received a commission as the result
of the issuance of an association policy providing the canceled
coverage [submitted the application] shall refund the agent's
commission on any unearned premium in the same manner.
(e) For cancellation of insurance coverage under this
section, the minimum retained premium in the plan of operation must
be for a period of not less than 90 [180] days, except for events
specified in the plan of operation that reflect a significant
change in the exposure or the policyholder concerning the insured
property, including:
(1) the purchase of similar coverage in the voluntary
market;
(2) sale of the property to an unrelated party;
(3) death of the policyholder; or
(4) total loss of the property.
SECTION 9.007. Section 2210.254, Insurance Code, is amended
by adding Subsection (e) to read as follows:
(e) The department may establish an annual renewal period
for persons appointed as qualified inspectors.
SECTION 9.008. Subchapter F, Chapter 2210, Insurance Code,
is amended by adding Section 2210.2551 to read as follows:
Sec. 2210.2551. EXCLUSIVE ENFORCEMENT AUTHORITY; RULES.
(a) The department has exclusive authority over all matters
relating to the appointment and oversight of qualified inspectors
for purposes of this chapter.
(b) The commissioner by rule shall establish criteria to
ensure that a person seeking appointment as a qualified inspector
under this subchapter, including an engineer seeking appointment
under Section 2210.255, possesses the knowledge, understanding,
and professional competence to perform windstorm inspections under
this chapter and to comply with other requirements of this chapter.
(c) Subsection (b) applies only to a determination
concerning the appointment of a qualified inspector under this
chapter. The exclusive jurisdiction of the department under this
section does not apply to the practice of engineering as defined by
Section 1001.003, Occupations Code, or to a license issued,
qualification required, determination made, order issued, judgment
rendered, or other action of a board operating under Chapter 1001,
Occupations Code. In the event of conflict, the authority of that
board prevails with regard to the practice of engineering.
SECTION 9.009. The heading to Section 2210.256, Insurance
Code, is amended to read as follows:
Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING
APPOINTED INSPECTORS AND CERTAIN OTHER PERSONS.
SECTION 9.010. Section 2210.256, Insurance Code, is amended
by adding Subsection (a-2) to read as follows:
(a-2) In addition to any other action authorized under this
section, the commissioner ex parte may enter an emergency cease and
desist order under Chapter 83 against a qualified inspector, or a
person acting as a qualified inspector, if:
(1) the commissioner believes that:
(A) the qualified inspector has:
(i) through submitting or failing to submit
to the department sealed plans, designs, calculations, or other
substantiating information, failed to demonstrate that a structure
or a portion of a structure subject to inspection meets the
requirements of this chapter and department rules; or
(ii) refused to comply with requirements
imposed under this chapter or department rules; or
(B) the person acting as a qualified inspector is
acting without appointment as a qualified inspector under Section
2210.254 or 2210.255; and
(2) the commissioner determines that the conduct
described by Subdivision (1) is fraudulent or hazardous or creates
an immediate danger to the public.
SECTION 9.011. Section 2210.258(b), Insurance Code, is
amended to read as follows:
(b) The association may not insure a structure described by
Subsection (a) until:
(1) the structure has been inspected for compliance
with the plan of operation in accordance with Section 2210.251(a);
and
(2) except as provided by Section 2210.260, a
certificate of compliance has been issued for the structure in
accordance with Section 2210.251(g).
SECTION 9.012. Subchapter F, Chapter 2210, Insurance Code,
is amended by adding Section 2210.260 to read as follows:
Sec. 2210.260. ALTERNATIVE ELIGIBILITY FOR COVERAGE. (a)
On and after January 1, 2012, a person who has an insurable interest
in a residential structure may obtain insurance coverage through
the association for that structure without obtaining a certificate
of compliance under Section 2210.251(g) in accordance with this
section and rules adopted by the commissioner.
(b) The department may issue an alternative certification
for a residential structure if the person who has an insurable
interest in the structure demonstrates that at least one qualifying
structural building component of the structure has been:
(1) inspected by a department inspector or by a
qualified inspector; and
(2) determined to be in compliance with applicable
building code standards, as set forth in the plan of operation.
(c) The commissioner shall adopt reasonable and necessary
rules to implement this section. The rules adopted under this
section must establish which structural building components are
considered qualifying structural building components for the
purposes of Subsection (b), taking into consideration those items
that are most probable to generate losses for the association's
policyholders and the cost to upgrade those items.
(d) Except as provided in Section 2210.251(f), a person who
has an insurable interest in a residential structure that is
insured by the association as of January 1, 2012, but for which the
person has not obtained a certificate of compliance under Section
2210.251(g), must obtain an alternative certification under this
section before the association, on or after January 1, 2013, may
renew coverage for the structure.
(e) Each residential structure for which a person obtains an
alternative certification under this section must comply with:
(1) the requirements of this chapter, including
Section 2210.258; and
(2) the association's underwriting requirements,
including maintaining the structure in an insurable condition and
paying premiums in the manner required by the association.
(f) The association shall develop and implement an
actuarially sound rate, credit, or surcharge that reflects the
risks presented by structures with reference to which alternative
certifications have been obtained under this section. A rate,
credit, or surcharge under this subsection may vary based on the
number of qualifying structural building components included in a
structure with reference to which an alternative certification is
obtained under this section.
SECTION 9.013. This article applies only to a Texas
windstorm and hail insurance policy delivered, issued for delivery,
or renewed by the Texas Windstorm Insurance Association on or after
the 30th day after the effective date of this Act. A Texas
windstorm and hail insurance policy delivered, issued for delivery,
or renewed by the Texas Windstorm Insurance Association before the
30th day after the effective date of this Act is governed by the law
in effect immediately before the effective date of this Act, and the
former law is continued in effect for that purpose.
SECTION 9.014. The Texas Windstorm Insurance Association
shall, not later than January 1, 2012, amend the association's plan
of operation as necessary to conform to the changes in law made by
this article.
ARTICLE 10. ADJUSTER ADVISORY BOARD
SECTION 10.001. (a) The adjuster advisory board
established under this section is composed of the following nine
members appointed by the commissioner:
(1) two public insurance adjusters;
(2) two members who represent the general public;
(3) two independent adjusters;
(4) one adjuster who represents a domestic insurer
authorized to engage in business in this state;
(5) one adjuster who represents a foreign insurer
authorized to engage in business in this state; and
(6) one representative of the Independent Insurance
Agents of Texas.
(b) A member who represents the general public may not be:
(1) an officer, director, or employee of:
(A) an adjuster or adjusting company;
(B) an insurance agent or agency;
(C) an insurance broker;
(D) an insurer; or
(E) any other business entity regulated by the
department;
(2) a person required to register as a lobbyist under
Chapter 305, Government Code; or
(3) a person related within the second degree of
affinity or consanguinity to a person described by Subdivision (1)
or (2).
(c) The advisory board shall make recommendations to the
commissioner regarding:
(1) matters related to the licensing, testing, and
continuing education of licensed adjusters;
(2) matters related to claims handling, catastrophic
loss preparedness, ethical guidelines, and other professionally
relevant issues; and
(3) any other matter the commissioner submits to the
advisory board for a recommendation.
(d) A member of the advisory board serves without
compensation. If authorized by the commissioner, a member is
entitled to reimbursement for reasonable expenses incurred in
attending meetings of the advisory board.
(e) The advisory board is subject to Chapter 2110,
Government Code.
ARTICLE 11. TEXLINK TO HEALTH COVERAGE PROGRAM
SECTION 11.001. Chapter 524, Insurance Code, as amended by
Chapter 721 (S.B. 78), Acts of the 81st Legislature, Regular
Session, 2009, is amended by adding Section 524.004 to read as
follows:
Sec. 524.004. INFORMATION SHARING AGREEMENTS. The division
may enter into information sharing agreements with federal and
state agencies to carry out the division's responsibilities under
this chapter. An agreement entered into under this section must
include adequate protection with respect to the confidentiality of
any information shared and comply with all applicable state and
federal law.
SECTION 11.002. Section 524.051, Insurance Code, as added
by Chapter 721 (S.B. 78), Acts of the 81st Legislature, Regular
Session, 2009, is amended to read as follows:
Sec. 524.051. INFORMATION ABOUT SPECIFIC HEALTH BENEFIT
PLAN ISSUERS. (a) In materials produced for the program, the
division may include information about specific health benefit plan
issuers but may not favor or endorse one particular issuer over
another.
(b) The division may:
(1) establish a procedure by which issuers of health
benefit plans, including plans offered by regional or local health
care programs under Chapter 75, Health and Safety Code, may submit
health plans for certification by the division as qualified health
plans;
(2) establish a multi-tiered rating system and assign
ratings for certified health plans based upon the actuarial level
of coverage offered through the plan; and
(3) provide information regarding the availability of
and the cost of coverage after the application of any applicable
credits.
(c) Notwithstanding Section 75.104(d), Health and Safety
Code, a regional or local health care program operating under
Chapter 75, Health and Safety Code, that seeks to obtain
certification from the division that a plan offered by the program
is a qualified health plan is subject to regulation by the
department under this code, including provisions of this code
designated by the commissioner by rule as necessary for the
protection of the public, in the same manner as an insurer.
SECTION 11.003. Section 524.053, Insurance Code, as added
by Chapter 721 (S.B. 78), Acts of the 81st Legislature, Regular
Session, 2009, is amended by adding Subsection (d) to read as
follows:
(d) The division may provide on an Internet website
comparative information on health plans offered for sale in the
state that are certified by the division using a standardized
format for presenting health benefit plan options.
SECTION 11.004. Chapter 524, Insurance Code, as amended by
Chapter 721 (S.B. 78), Acts of the 81st Legislature, Regular
Session, 2009, is amended by adding Section 524.0545 to read as
follows:
Sec. 524.0545. INFORMATION REGARDING ELIGIBILITY
REQUIREMENTS. (a) The division may make available information
regarding eligibility requirements for enrollment in medical
assistance programs offered by the state.
(b) The division, in coordination with the Health and Human
Services Commission, may assist in the facilitation of enrollment
of individuals identified as eligible for programs described under
Subsection (a).
ARTICLE 12. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES FOR CERTAIN
DISPUTES
SECTION 12.001. Chapter 541, Insurance Code, is amended by
adding Subchapter D-1 to read as follows:
SUBCHAPTER D-1. DISPUTES SUBJECT TO ALTERNATIVE DISPUTE RESOLUTION
PROCEDURES
Sec. 541.181. PRIVATE ACTION SUBJECT TO ALTERNATIVE DISPUTE
RESOLUTION PROCEDURE. (a) In this subchapter:
(1) "Alternative dispute resolution procedure" means
a procedure included in an insurance policy to resolve disputes
arising under the policy, including arbitration, mediation, and
appraisal procedures.
(2) "Residential property insurance" has the meaning
assigned by Section 544.352.
(b) Before filing a private action for damages under this
chapter, an insured who disputes the amount of a loss of or damage
to property covered by a residential property insurance policy that
includes an alternative dispute resolution procedure must:
(1) send the insurer written notice of the dispute;
and
(2) comply with all applicable policy terms and
conditions with respect to the dispute.
(c) The insurer shall initiate the alternative dispute
resolution procedure included in the residential property
insurance policy with respect to the dispute not later than:
(1) the 45th day after the date the insurer receives
the notice required by Subsection (b); or
(2) an earlier date provided by the policy.
(d) If the insurer does not timely initiate an alternative
dispute resolution procedure as required by Subsection (c), the
insured may, to the extent otherwise authorized by this chapter,
initiate a private action for damages under this chapter.
Sec. 541.182. ENFORCEMENT AND REMEDIES. (a) If a court
determines that a party has initiated a private action for damages
in violation of Section 541.181, the court shall:
(1) abate the action and order the parties to
participate in the alternative dispute resolution procedure to the
extent required by this section; and
(2) subject to this section, award to the insurer the
insurer's court costs and reasonable and necessary attorney's fees
for which the party who initiated the action and each attorney
representing that party in the action are jointly and severally
liable.
(b) An insurer may not execute, collect, or enforce an award
under Subsection (a)(2) before initiating the alternative dispute
resolution procedure.
(c) If an insurer does not comply with a court order under
this section by initiating the alternative dispute resolution
procedure before the 45th day after the date the order is entered:
(1) the insured is not required to participate in the
alternative dispute resolution procedure and the action may proceed
in court; and
(2) the insured and the insured's attorney are not
required to pay court costs and attorney's fees awarded under
Subsection (a)(2).
(d) An insurer may not recover court costs and attorney's
fees awarded under Subsection (a)(2) out of money awarded to a
person who prevails in an alternative dispute resolution procedure.
Sec. 541.183. NOTICE OF ALTERNATIVE DISPUTE RESOLUTION
REQUIRED. On receipt of written notice from the insured of a
dispute arising under the policy, an insurer shall provide an
insured under a residential property insurance policy that includes
an alternative dispute resolution procedure with all necessary
information relating to the prerequisites for bringing a private
action for damages in compliance with the policy and this
subchapter.
SECTION 12.002. Section 542.058(b), Insurance Code, is
amended to read as follows:
(b) Subsection (a) does not apply in a case in which it is
found as a result of arbitration or litigation that a claim received
by an insurer is invalid and should not be paid by the insurer or in
a case in which an insurer and a claimant participate in an
alternative dispute resolution procedure included in the relevant
insurance policy.
SECTION 12.003. Subchapter D-1, Chapter 541, Insurance
Code, as added by this Act, and Section 542.058(b), Insurance Code,
as amended by this Act, apply only to a residential property
insurance policy delivered, issued for delivery, or renewed on or
after January 1, 2012. A residential property insurance policy
delivered, issued for delivery, or renewed before January 1, 2012,
is governed by the law in effect immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
ARTICLE 13. CLAIMS REPORTING BY INSURERS
SECTION 13.001. Subtitle C, Title 5, Insurance Code, is
amended by adding Chapter 563 to read as follows:
CHAPTER 563. PRACTICES RELATING TO CLAIMS REPORTING
Sec. 563.001. DEFINITIONS. In this chapter:
(1) "Claims database" means a database used by
insurers to share, among insurers, insureds' claims histories or
damage reports concerning covered properties.
(2) "Insurer," "personal automobile insurance," and
"residential property insurance" have the meanings assigned by
Section 2254.001.
Sec. 563.002. REPORTING TO CLAIMS DATABASE. An insurer or
an insurer's agent may not report to a claims database information
regarding an inquiry by an insured regarding coverage provided
under a personal automobile insurance policy or a residential
property insurance policy unless and until the insured files a
claim under the policy.
ARTICLE 14. PAYMENT OF CLAIMS TO PHARMACIES AND PHARMACISTS
SECTION 14.001. Section 843.002, Insurance Code, is amended
by amending Subdivision (9-a) and adding Subdivision (9-b) to read
as follows:
(9-a) "Extrapolation" means a mathematical process or
technique used by a health maintenance organization or pharmacy
benefit manager that administers pharmacy claims for a health
maintenance organization in the audit of a pharmacy or pharmacist
to estimate audit results or findings for a larger batch or group of
claims not reviewed by the health maintenance organization or
pharmacy benefit manager.
(9-b) "Freestanding emergency medical care facility"
means a facility licensed under Chapter 254, Health and Safety
Code.
SECTION 14.002. Section 843.338, Insurance Code, is amended
to read as follows:
Sec. 843.338. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
as provided by Sections [Section] 843.3385 and 843.339, not later
than the 45th day after the date on which a health maintenance
organization receives a clean claim from a participating physician
or provider in a nonelectronic format or the 30th day after the date
the health maintenance organization receives a clean claim from a
participating physician or provider that is electronically
submitted, the health maintenance organization shall make a
determination of whether the claim is payable and:
(1) if the health maintenance organization determines
the entire claim is payable, pay the total amount of the claim in
accordance with the contract between the physician or provider and
the health maintenance organization;
(2) if the health maintenance organization determines
a portion of the claim is payable, pay the portion of the claim that
is not in dispute and notify the physician or provider in writing
why the remaining portion of the claim will not be paid; or
(3) if the health maintenance organization determines
that the claim is not payable, notify the physician or provider in
writing why the claim will not be paid.
SECTION 14.003. Section 843.339, Insurance Code, is amended
to read as follows:
Sec. 843.339. DEADLINE FOR ACTION ON [CERTAIN] PRESCRIPTION
CLAIMS; PAYMENT. (a) A [Not later than the 21st day after the date
a] health maintenance organization, or a pharmacy benefit manager
that administers pharmacy claims for the health maintenance
organization, that affirmatively adjudicates a pharmacy claim that
is electronically submitted[, the health maintenance organization]
shall pay the total amount of the claim through electronic funds
transfer not later than the 18th day after the date on which the
claim was affirmatively adjudicated.
(b) A health maintenance organization, or a pharmacy
benefit manager that administers pharmacy claims for the health
maintenance organization, that affirmatively adjudicates a
pharmacy claim that is not electronically submitted shall pay the
total amount of the claim not later than the 21st day after the date
on which the claim was affirmatively adjudicated.
SECTION 14.004. Subchapter J, Chapter 843, Insurance Code,
is amended by adding Section 843.3401 to read as follows:
Sec. 843.3401. AUDIT OF PHARMACIST OR PHARMACY. (a) A
health maintenance organization or a pharmacy benefit manager that
administers pharmacy claims for the health maintenance
organization may not use extrapolation to complete the audit of a
provider who is a pharmacist or pharmacy. A health maintenance
organization may not require extrapolation audits as a condition of
participation in the health maintenance organization's contract,
network, or program for a provider who is a pharmacist or pharmacy.
(b) A health maintenance organization or a pharmacy benefit
manager that administers pharmacy claims for the health maintenance
organization that performs an on-site audit under this chapter of a
provider who is a pharmacist or pharmacy shall provide the provider
reasonable notice of the audit and accommodate the provider's
schedule to the greatest extent possible. The notice required
under this subsection must be in writing and must be sent by
certified mail to the provider not later than the 15th day before
the date on which the on-site audit is scheduled to occur.
SECTION 14.005. Section 843.344, Insurance Code, is amended
to read as follows:
Sec. 843.344. APPLICABILITY OF SUBCHAPTER TO ENTITIES
CONTRACTING WITH HEALTH MAINTENANCE ORGANIZATION. This subchapter
applies to a person, including a pharmacy benefit manager, with
whom a health maintenance organization contracts to:
(1) process or pay claims;
(2) obtain the services of physicians and providers to
provide health care services to enrollees; or
(3) issue verifications or preauthorizations.
SECTION 14.006. Subchapter J, Chapter 843, Insurance Code,
is amended by adding Section 843.354 to read as follows:
Sec. 843.354. LEGISLATIVE DECLARATION. It is the intent of
the legislature that the requirements contained in this subchapter
regarding payment of claims to providers who are pharmacists or
pharmacies apply to all health maintenance organizations and
pharmacy benefit managers unless otherwise prohibited by federal
law.
SECTION 14.007. Section 1301.001, Insurance Code, is
amended by amending Subdivision (1) and adding Subdivision (1-a) to
read as follows:
(1) "Extrapolation" means a mathematical process or
technique used by an insurer or pharmacy benefit manager that
administers pharmacy claims for an insurer in the audit of a
pharmacy or pharmacist to estimate audit results or findings for a
larger batch or group of claims not reviewed by the insurer or
pharmacy benefit manager.
(1-a) "Health care provider" means a practitioner,
institutional provider, or other person or organization that
furnishes health care services and that is licensed or otherwise
authorized to practice in this state. The term includes a
pharmacist and a pharmacy. The term does not include a physician.
SECTION 14.008. Section 1301.103, Insurance Code, is
amended to read as follows:
Sec. 1301.103. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
as provided by Sections 1301.104 and [Section] 1301.1054, not later
than the 45th day after the date an insurer receives a clean claim
from a preferred provider in a nonelectronic format or the 30th day
after the date an insurer receives a clean claim from a preferred
provider that is electronically submitted, the insurer shall make a
determination of whether the claim is payable and:
(1) if the insurer determines the entire claim is
payable, pay the total amount of the claim in accordance with the
contract between the preferred provider and the insurer;
(2) if the insurer determines a portion of the claim is
payable, pay the portion of the claim that is not in dispute and
notify the preferred provider in writing why the remaining portion
of the claim will not be paid; or
(3) if the insurer determines that the claim is not
payable, notify the preferred provider in writing why the claim
will not be paid.
SECTION 14.009. Section 1301.104, Insurance Code, is
amended to read as follows:
Sec. 1301.104. DEADLINE FOR ACTION ON [CERTAIN] PHARMACY
CLAIMS; PAYMENT. (a) An [Not later than the 21st day after the date
an] insurer, or a pharmacy benefit manager that administers
pharmacy claims for the insurer under a preferred provider benefit
plan, that affirmatively adjudicates a pharmacy claim that is
electronically submitted[, the insurer] shall pay the total amount
of the claim through electronic funds transfer not later than the
18th day after the date on which the claim was affirmatively
adjudicated.
(b) An insurer, or a pharmacy benefit manager that
administers pharmacy claims for the insurer under a preferred
provider benefit plan, that affirmatively adjudicates a pharmacy
claim that is not electronically submitted shall pay the total
amount of the claim not later than the 21st day after the date on
which the claim was affirmatively adjudicated.
SECTION 14.010. Subchapter C, Chapter 1301, Insurance Code,
is amended by adding Section 1301.1041 to read as follows:
Sec. 1301.1041. AUDIT OF PHARMACIST OR PHARMACY. (a) An
insurer or a pharmacy benefit manager that administers pharmacy
claims for the insurer may not use extrapolation to complete the
audit of a preferred provider that is a pharmacist or pharmacy. An
insurer may not require extrapolation audits as a condition of
participation in the insurer's contract, network, or program for a
preferred provider that is a pharmacist or pharmacy.
(b) An insurer or a pharmacy benefit manager that
administers pharmacy claims for the insurer that performs an
on-site audit of a preferred provider who is a pharmacist or
pharmacy shall provide the provider reasonable notice of the audit
and accommodate the provider's schedule to the greatest extent
possible. The notice required under this subsection must be in
writing and must be sent by certified mail to the preferred provider
not later than the 15th day before the date on which the on-site
audit is scheduled to occur.
SECTION 14.011. Section 1301.109, Insurance Code, is
amended to read as follows:
Sec. 1301.109. APPLICABILITY TO ENTITIES CONTRACTING WITH
INSURER. This subchapter applies to a person, including a pharmacy
benefit manager, with whom an insurer contracts to:
(1) process or pay claims;
(2) obtain the services of physicians and health care
providers to provide health care services to insureds; or
(3) issue verifications or preauthorizations.
SECTION 14.012. Subchapter C-1, Chapter 1301, Insurance
Code, is amended by adding Section 1301.139 to read as follows:
Sec. 1301.139. LEGISLATIVE DECLARATION. It is the intent
of the legislature that the requirements contained in this
subchapter regarding payment of claims to preferred providers who
are pharmacists or pharmacies apply to all insurers and pharmacy
benefit managers unless otherwise prohibited by federal law.
SECTION 14.013. (a) With respect to pharmacy benefits
provided under a contract, the changes in law made by this article
apply only to a contract entered into or renewed on or after the
effective date of this Act and payment for pharmacy benefits
provided under the contract. A contract entered into before the
effective date of this Act and not renewed or that was last renewed
before the effective date of this Act, and payment for pharmacy
benefits provided under the contract, are governed by the law in
effect immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
(b) With respect to payment for pharmacy benefits not
provided under a contract to which Subsection (a) of this section
applies, the changes in law made by this article apply only to
payment for benefits provided on or after the effective date of this
Act. Payment for benefits not subject to Subsection (a) of this
section and provided before the effective date of this Act is
governed by the law in effect immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
(c) Sections 843.3401 and 1301.1041, Insurance Code, as
added by this article, apply to an audit of a pharmacist or pharmacy
performed on or after the effective date of this Act unless the
audit is performed under a contract that is entered into before the
effective date of this Act and that, at the time of the audit, has
not been renewed or was last renewed before the effective date of
this Act.
ARTICLE 15. PAYMENT OF BENEFITS
SECTION 15.001. Chapter 1102, Insurance Code, is amended to
read as follows:
CHAPTER 1102. PAYMENT OF INSURANCE BENEFITS [IN CURRENCY]
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1102.001. DEFINITIONS. In this chapter:
(1) "Insurance policy" means a policy, certificate, or
contract of:
(A) life, term, or endowment insurance,
including an annuity or pure endowment contract;
(B) group life or term insurance, including a
group annuity contract;
(C) industrial life insurance;
(D) accident or health insurance;
(E) group accident or health insurance;
(F) hospitalization insurance;
(G) group hospitalization insurance;
(H) medical or surgical insurance;
(I) group medical or surgical insurance; or
(J) fraternal benefit insurance.
(2) "Insurer" means any insurer, including a:
(A) life, accident, health, or casualty
insurance company;
(B) mutual life insurance company;
(C) mutual insurance company other than a life
insurance company;
(D) mutual or natural premium life insurance
company;
(E) general casualty company;
(F) Lloyd's plan or a reciprocal or
interinsurance exchange;
(G) fraternal benefit society; or
(H) group hospital service corporation.
(3) "Life insurance policy" means a policy,
certificate, or contract of:
(A) life, term, or endowment insurance,
including an annuity or pure endowment contract;
(B) group life or term insurance, including a
group annuity contract;
(C) industrial life insurance; or
(D) fraternal benefit insurance, other than
insurance for:
(i) benefits for hospital, medical, or
nursing expenses resulting from sickness, bodily infirmity, or
accident; or
(ii) other accident or health insurance.
(4) "Retained asset account" means any mechanism
whereby the settlement of proceeds payable under a life insurance
policy, including but not limited to the payment of cash surrender
value, is accomplished by the insurer or an entity acting on behalf
of the insurer depositing the proceeds into an account, where those
proceeds are retained by the insurer, pursuant to a supplementary
contract not involving annuity benefits.
Sec. 1102.002. RULES. The commissioner may adopt
reasonable rules to accomplish the purposes of this chapter,
including rules requiring:
(1) appropriate reserves for insurance policies
subject to this chapter; or
(2) prudent investment of premiums collected from
insurance policies subject to this chapter regardless of any other
provision of this code related to the investment of money by an
insurance company.
SUBCHAPTER B. PAYMENT OF BENEFITS IN CURRENCY
Sec. 1102.051 [1102.002]. BENEFITS PAYABLE IN CURRENCY.
Each benefit payable under an insurance policy delivered, issued,
or used in this state by an insurer shall be payable in currency.
Sec. 1102.052 [1102.003]. STATEMENT REGARDING VALUE OF
FOREIGN CURRENCY. (a) An insurance policy described by Section
1102.051 [1102.002] providing that benefits are payable in foreign
currency must include a conspicuous statement that the value of the
currency denominated in the policy can fluctuate as compared to the
value of United States currency.
(b) The statement must be:
(1) included as part of the policy; or
(2) attached to the insurance policy at the time it is
issued.
Sec. 1102.053 [1102.004]. PREVIOUSLY APPROVED INSURANCE
POLICY FORM PAYABLE IN FOREIGN CURRENCY. (a) The commissioner may
disapprove or withdraw approval of a previously approved insurance
policy form that provides benefits payable in foreign currency if
the commissioner determines that the foreign currency has been less
stable than United States currency in the previous 20-year period.
(b) This section does not require the resubmission for
approval of any previously approved insurance policy form unless:
(1) withdrawal of approval is authorized under this
section or Chapter 1701; or
(2) after notice and hearing, the commissioner
determines that approval was obtained by improper means, including
by misrepresentation, fraud, or a misleading statement or
document[.
[Sec. 1102.005. RULES. The commissioner may adopt
reasonable rules to accomplish the purposes of this chapter,
including rules requiring:
[(1) appropriate reserves for insurance policies
subject to this chapter; or
[(2) prudent investment of premiums collected from
insurance policies subject to this chapter regardless of any other
provision of this code related to the investment of money by an
insurance company].
SUBCHAPTER C. RETAINED ASSET ACCOUNTS
Sec. 1102.101. RETAINED ASSET ACCOUNT ELECTION. (a) An
insurer may not transfer proceeds payable under a life insurance
policy to a retained asset account unless the insurer discloses
such option to the beneficiary or the beneficiary's legal
representative, or in the case of a group contract, the contract
holder or policy owner before transferring the proceeds to the
account.
(b) A beneficiary shall be informed of the beneficiary's
rights to receive a lump-sum payment of life insurance proceeds in
the form of a bank check or other form of immediate full payment of
benefits.
(c) When an insurer offers multiple modes of settlement to a
beneficiary, the insurer may not use a retained asset account as the
default mode of settlement unless the insurer conspicuously
discloses that fact.
Sec. 1102.102. DISCLOSURE REQUIREMENTS. (a) The claim
form for payment of proceeds under a life insurance policy must
include a statement, written in plain language, disclosing benefit
payment options available under the policy, including payment
through the use of a retained asset account or by check directly to
the claimant.
(b) An insurer may not transfer proceeds payable under a
life insurance policy to a retained asset account unless the
insurer, before transferring the proceeds and in a written
document, discloses to the claimant, or advises the claimant
concerning, the following information:
(1) a recommendation to consult a tax, investment, or
other financial advisor about tax liability and investment options;
(2) when and how interest rates may change, and any
dividends and other gains that may be paid or distributed to the
account holder;
(3) the name and address of the custodian of the
retained asset account;
(4) any coverage of the retained asset account
guaranteed by the Federal Deposit Insurance Corporation and the
amount of the coverage;
(5) any limitations on withdrawal of funds from the
retained asset account, including any minimum or maximum benefit
payment amounts;
(6) the anticipated duration of any delays that the
retained asset account holder might encounter in completing an
authorized transaction;
(7) any fees for services provided, including a list
of the fees and the method of the fee calculation;
(8) the nature and frequency with which statements
concerning the retained asset account are issued, which must be not
less than once annually;
(9) that some or all of the benefit may be paid through
check, draft, or other instrument;
(10) that the entire proceeds are available to the
retained asset account holder by the use of a single check, draft,
or other instrument;
(11) whether the insurer or a related party may earn
income from the retained asset account, in addition to any fees
charged on the account, from the total gains received on the
investment of the balance of funds in the account;
(12) the telephone number, address, and other contact
information, including website address, to obtain additional
information regarding the retained asset account;
(13) a description of the insurer's policy regarding
retained asset accounts that may become inactive; and
(14) any other information prescribed by the
commissioner by rule.
SECTION 15.002. Chapter 1102, Insurance Code, as amended by
this article, applies only to a claim made under a life insurance
policy on or after September 1, 2011. A claim made before September
1, 2011, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
ARTICLE 16. PROHIBITION OF COERCION OF PRACTITIONERS BY MANAGED
CARE PLANS
SECTION 16.001. Section 1451.153, Insurance Code, is
amended by amending Subsection (a) and adding Subsection (c) to
read as follows:
(a) A managed care plan may not:
(1) discriminate against a health care practitioner
because the practitioner is an optometrist, therapeutic
optometrist, or ophthalmologist;
(2) restrict or discourage a plan participant from
obtaining covered vision or medical eye care services or procedures
from a participating optometrist, therapeutic optometrist, or
ophthalmologist solely because the practitioner is an optometrist,
therapeutic optometrist, or ophthalmologist;
(3) exclude an optometrist, therapeutic optometrist,
or ophthalmologist as a participating practitioner in the plan
because the optometrist, therapeutic optometrist, or
ophthalmologist does not have medical staff privileges at a
hospital or at a particular hospital; [or]
(4) exclude an optometrist, therapeutic optometrist,
or ophthalmologist as a participating practitioner in the plan
because the services or procedures provided by the optometrist,
therapeutic optometrist, or ophthalmologist may be provided by
another type of health care practitioner; or
(5) as a condition for a therapeutic optometrist or
ophthalmologist to be included in one or more of the plan's medical
panels, require the therapeutic optometrist or ophthalmologist to
be included in, or to accept the terms of payment under or for, a
particular vision panel in which the therapeutic optometrist or
ophthalmologist does not otherwise wish to be included.
(c) For the purposes of Subsection (a)(5), "medical panel"
and "vision panel" have the meanings assigned by Section
1451.154(a).
SECTION 16.002. The change in law made by Section 16.001 of
this Act applies only to a contract entered into or renewed by a
therapeutic optometrist or ophthalmologist and an issuer of a
managed care plan on or after January 1, 2012. A contract entered
into or renewed before January 1, 2012, is governed by the law in
effect immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
ARTICLE 17. PROVIDER NETWORK CONTRACT ARRANGEMENTS
SECTION 17.001. Subtitle F, Title 8, Insurance Code, is
amended by adding Chapter 1458 to read as follows:
CHAPTER 1458. PROVIDER NETWORK CONTRACT ARRANGEMENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1458.001. GENERAL DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who, directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with another person.
(2) "Contracting entity" means a person that:
(A) enters into a direct contract with a provider
for the delivery of health care services to covered individuals;
and
(B) in the ordinary course of business
establishes a provider network for access by another party.
(3) "Covered individual" means an individual who is
covered under a health benefit plan.
(4) "Direct notification" means a written or
electronic communication from a contracting entity to a physician
or other health care provider documenting third party access to a
provider network.
(5) "Health care services" means services provided for
the diagnosis, prevention, treatment, or cure of a health
condition, illness, injury, or disease.
(6) "Person" has the meaning assigned by Section
823.002.
(7) "Provider" means a physician, a professional
association composed solely of physicians, a single legal entity
authorized to practice medicine owned by two or more physicians, a
nonprofit health corporation certified by the Texas Medical Board
under Chapter 162, Occupations Code, a partnership composed solely
of physicians, a physician-hospital organization that acts
exclusively as an administrator for a provider to facilitate the
provider's participation in health care contracts, or an
institution licensed under Chapter 241, Health and Safety Code.
The term does not include a physician-hospital organization that
leases or rents the physician-hospital organization's network to a
third party.
(8) "Provider network contract" means a contract
between a contracting entity and a provider for the delivery of, and
payment for, health care services to a covered individual.
(9) "Third party" means a person that contracts with a
contracting entity or another party to gain access to a provider
network contract.
Sec. 1458.002. DEFINITION OF HEALTH BENEFIT PLAN. (a) In
this chapter, "health benefit plan" means:
(1) a hospital and medical expense incurred policy;
(2) a nonprofit health care service plan contract;
(3) a health maintenance organization subscriber
contract; or
(4) any other health care plan or arrangement that
pays for or furnishes medical or health care services.
(b) "Health benefit plan" does not include one or more or
any combination of the following:
(1) coverage only for accident or disability income
insurance or any combination of those coverages;
(2) credit-only insurance;
(3) coverage issued as a supplement to liability
insurance;
(4) liability insurance, including general liability
insurance and automobile liability insurance;
(5) workers' compensation or similar insurance;
(6) a discount health care program, as defined by
Section 7001.001;
(7) coverage for on-site medical clinics;
(8) automobile medical payment insurance; or
(9) other similar insurance coverage, as specified by
federal regulations issued under the Health Insurance Portability
and Accountability Act of 1996 (Pub. L. No. 104-191), under which
benefits for medical care are secondary or incidental to other
insurance benefits.
(c) "Health benefit plan" does not include the following
benefits if they are provided under a separate policy, certificate,
or contract of insurance, or are otherwise not an integral part of
the coverage:
(1) dental or vision benefits;
(2) benefits for long-term care, nursing home care,
home health care, community-based care, or any combination of these
benefits;
(3) other similar, limited benefits, including
benefits specified by federal regulations issued under the Health
Insurance Portability and Accountability Act of 1996 (Pub. L. No.
104-191); or
(4) a Medicare supplement benefit plan described by
Section 1652.002.
(d) "Health benefit plan" does not include coverage limited
to a specified disease or illness or hospital indemnity coverage or
other fixed indemnity insurance coverage if:
(1) the coverage is provided under a separate policy,
certificate, or contract of insurance;
(2) there is no coordination between the provision of
the coverage and any exclusion of benefits under any group health
benefit plan maintained by the same plan sponsor; and
(3) the coverage is paid with respect to an event
without regard to whether benefits are provided with respect to
such an event under any group health benefit plan maintained by the
same plan sponsor.
Sec. 1458.003. EXEMPTIONS. This chapter does not apply:
(1) to a provider network contract for services
provided to a beneficiary under the Medicaid program, the Medicare
program, or the state child health plan established under Chapter
62, Health and Safety Code, or the comparable plan under Chapter 63,
Health and Safety Code;
(2) under circumstances in which access to the
provider network is granted to an entity that operates under the
same brand licensee program as the contracting entity; or
(3) to a contract between a contracting entity and a
discount health care program operator, as defined by Section
7001.001.
[Sections 1458.004-1458.050 reserved for expansion]
SUBCHAPTER B. REGISTRATION REQUIREMENTS
Sec. 1458.051. REGISTRATION REQUIRED. (a) Unless the
person holds a certificate of authority issued by the department to
engage in the business of insurance in this state or operate a
health maintenance organization under Chapter 843, a person must
register with the department not later than the 30th day after the
date on which the person begins acting as a contracting entity in
this state.
(b) Notwithstanding Subsection (a), under Section 1458.055
a contracting entity that holds a certificate of authority issued
by the department to engage in the business of insurance in this
state or is a health maintenance organization shall file with the
commissioner an application for exemption from registration under
which the affiliates may access the contracting entity's network.
(c) An application for an exemption filed under Subsection
(b) must be accompanied by a list of the contracting entity's
affiliates. The contracting entity shall update the list with the
commissioner on an annual basis.
(d) A list of affiliates filed with the commissioner under
Subsection (c) is public information and is not exempt from
disclosure under Chapter 552, Government Code.
Sec. 1458.052. DISCLOSURE OF INFORMATION. (a) A person
required to register under Section 1458.051 must disclose:
(1) all names used by the contracting entity,
including any name under which the contracting entity intends to
engage or has engaged in business in this state;
(2) the mailing address and main telephone number of
the contracting entity's headquarters;
(3) the name and telephone number of the contracting
entity's primary contact for the department; and
(4) any other information required by the commissioner
by rule.
(b) The disclosure made under Subsection (a) must include a
description or a copy of the applicant's basic organizational
structure documents and a copy of organizational charts and lists
that show:
(1) the relationships between the contracting entity
and any affiliates of the contracting entity, including subsidiary
networks or other networks; and
(2) the internal organizational structure of the
contracting entity's management.
Sec. 1458.053. SUBMISSION OF INFORMATION. Information
required under this subchapter must be submitted in a written or
electronic format adopted by the commissioner by rule.
Sec. 1458.054. FEES. The department may collect a
reasonable fee set by the commissioner as necessary to administer
the registration process. Fees collected under this chapter shall
be deposited in the Texas Department of Insurance operating fund.
Sec. 1458.055. EXEMPTION FOR AFFILIATES. (a) The
commissioner shall grant an exemption for affiliates of a
contracting entity if the contracting entity holds a certificate of
authority issued by the department to engage in the business of
insurance in this state or is a health maintenance organization if
the commissioner determines that:
(1) the affiliate is not subject to a disclaimer of
affiliation under Chapter 823; and
(2) the relationships between the person who holds a
certificate of authority and all affiliates of the person,
including subsidiary networks or other networks, are disclosed and
clearly defined.
(b) An exemption granted under this section applies only to
registration. An entity granted an exemption is otherwise subject
to this chapter.
(c) The commissioner shall establish a reasonable fee as
necessary to administer the exemption process.
[Sections 1458.056-1458.100 reserved for expansion]
SUBCHAPTER C. RIGHTS AND RESPONSIBILITIES OF A CONTRACTING ENTITY
Sec. 1458.101. CONTRACT REQUIREMENTS. A contracting entity
may not provide a person access to health care services or
contractual discounts under a provider network contract unless the
provider network contract specifically states that:
(1) the contracting entity may contract with a third
party to provide access to the contracting entity's rights and
responsibilities under a provider network contract; and
(2) the third party must comply with all applicable
terms, limitations, and conditions of the provider network
contract.
Sec. 1458.102. DUTIES OF CONTRACTING ENTITY. (a) A
contracting entity that has granted access to health care services
and contractual discounts under a provider network contract shall:
(1) notify each provider of the identity of, and
contact information for, each third party that has or may obtain
access to the provider's health care services and contractual
discounts;
(2) provide each third party with sufficient
information regarding the provider network contract to enable the
third party to comply with all relevant terms, limitations, and
conditions of the provider network contract;
(3) require each third party to disclose the identity
of the contracting entity and the existence of a provider network
contract on each remittance advice or explanation of payment form;
and
(4) notify each third party of the termination of the
provider network contract not later than the 30th day after the
effective date of the contract termination.
(b) If a contracting entity knows that a third party is
making claims under a terminated contract, the contracting entity
must take reasonable steps to cause the third party to cease making
claims under the provider network contract. If the steps taken by
the contracting entity are unsuccessful and the third party
continues to make claims under the terminated provider network
contract, the contracting entity must:
(1) terminate the contracting entity's contract with
the third party; or
(2) notify the commissioner, if termination of the
contract is not feasible.
(c) Any notice provided by a contracting entity to a third
party under Subsection (b) must include a statement regarding the
third party's potential liability under this chapter for using a
provider's contractual discount for services provided after the
termination date of the provider network contract.
(d) The notice required under Subsection (a)(1):
(1) must be provided by:
(A) providing for a subscription to receive the
notice by e-mail; or
(B) posting the information on an Internet
website at least once each calendar quarter; and
(2) must include a separate prominent section that
lists:
(A) each third party that the contracting entity
knows will have access to a discounted fee of the provider in the
succeeding calendar quarter; and
(B) the effective date and termination or renewal
dates, if any, of the third party's contract to access the network.
(e) The e-mail notice described by Subsection (d) may
contain a link to an Internet web page that contains a list of third
parties that complies with this section.
(f) The notice described by Subsection (a)(1) is not
required to include information regarding payors who are insurers
or health maintenance organizations.
Sec. 1458.103. EFFECT OF CONTRACT TERMINATION. Subject to
continuity of care requirements, agreements, or contractual
provisions:
(1) a third party may not access health care services
and contractual discounts after the date the provider network
contract terminates;
(2) claims for health care services performed after
the termination date may not be processed or paid under the provider
network contract after the termination; and
(3) claims for health care services performed before
the termination date and processed after the termination date may
be processed and paid under the provider network contract after the
date of termination.
Sec. 1458.104. AVAILABILITY OF CODING GUIDELINES. (a) A
contract between a contracting entity and a provider must provide
that:
(1) the provider may request a description and copy of
the coding guidelines, including any underlying bundling,
recoding, or other payment process and fee schedules applicable to
specific procedures that the provider will receive under the
contract;
(2) the contracting entity or the contracting entity's
agent will provide the coding guidelines and fee schedules not
later than the 30th day after the date the contracting entity
receives the request;
(3) the contracting entity or the contracting entity's
agent will provide notice of changes to the coding guidelines and
fee schedules that will result in a change of payment to the
provider not later than the 90th day before the date the changes
take effect and will not make retroactive revisions to the coding
guidelines and fee schedules; and
(4) if the requested information indicates a reduction
in payment to the provider from the amounts agreed to on the
effective date of the contract, the contract may be terminated by
the provider on written notice to the contracting entity on or
before the 30th day after the date the provider receives
information requested under this subsection without penalty or
discrimination in participation in other health care products or
plans.
(b) A provider who receives information under Subsection
(a) may only:
(1) use or disclose the information for the purpose of
practice management, billing activities, and other business
operations; and
(2) disclose the information to a governmental agency
involved in the regulation of health care or insurance.
(c) The contracting entity shall, on request of the
provider, provide the name, edition, and model version of the
software that the contracting entity uses to determine bundling and
unbundling of claims.
(d) The provisions of this section may not be waived,
voided, or nullified by contract.
(e) If a contracting entity is unable to provide the
information described by Subsection (a)(1), (a)(3), or (c), the
contracting entity shall by telephone provide a readily available
medium in which providers may obtain the information, which may
include an Internet website.
[Sections 1458.105-1458.150 reserved for expansion]
SUBCHAPTER D. RIGHTS AND RESPONSIBILITIES OF THIRD PARTY
Sec. 1458.151. THIRD-PARTY RIGHTS AND RESPONSIBILITIES. A
third party that leases, sells, aggregates, assigns, or otherwise
conveys a provider's contractual discount to another party who is
not a covered individual must comply with the responsibilities of a
contracting entity under Subchapters C and E.
Sec. 1458.152. DISCLOSURE BY THIRD PARTY. (a) A third
party shall disclose, to the contracting entity and providers under
the provider network contract, the identity of a person other than a
covered individual to whom the third party leases, sells,
aggregates, assigns, or otherwise conveys a provider's contractual
discounts through an electronic notification that complies with
Section 1458.102 and includes a link to the Internet website
described by Section 1458.102(d).
(b) A third party that uses an Internet website under this
section must update the website on a quarterly basis. On request, a
contracting entity shall disclose the information by telephone or
through direct notification.
[Sections 1458.153-1458.200 reserved for expansion]
SUBCHAPTER E. UNAUTHORIZED ACCESS TO PROVIDER NETWORK CONTRACTS
Sec. 1458.201. UNAUTHORIZED ACCESS TO OR USE OF DISCOUNT.
(a) A person who knowingly accesses or uses a provider's
contractual discount under a provider network contract without a
contractual relationship established under this chapter commits an
unfair or deceptive act in the business of insurance that violates
Subchapter B, Chapter 541. The remedies available for a violation
of Subchapter B, Chapter 541, under this subsection do not include a
private cause of action under Subchapter D, Chapter 541, or a class
action under Subchapter F, Chapter 541.
(b) A contracting entity or third party must comply with the
disclosure requirements under Sections 1458.102 and 1458.152
concerning the services listed on a remittance advice or
explanation of payment. A provider may refuse a discount taken
without a contract under this chapter or in violation of those
sections.
(c) Notwithstanding Subsection (b), an error in the
remittance advice or explanation of payment may be corrected by a
contracting entity or third party not later than the 30th day after
the date the provider notifies in writing the contracting entity or
third party of the error.
Sec. 1458.202. ACCESS TO THIRD PARTY. A contracting entity
may not provide a third party access to a provider network contract
unless the third party is:
(1) a payor or person who administers or processes
claims on behalf of the payor;
(2) a preferred provider benefit plan issuer or
preferred provider network, including a physician-hospital
organization; or
(3) a person who transports claims electronically
between the contracting entity and the payor and does not provide
access to the provider's services and discounts to any other third
party.
[Sections 1458.203-1458.250 reserved for expansion]
SUBCHAPTER F. ENFORCEMENT
Sec. 1458.251. UNFAIR CLAIM SETTLEMENT PRACTICE. (a) A
contracting entity that violates this chapter commits an unfair
claim settlement practice under Subchapter A, Chapter 542, and is
subject to sanctions under that subchapter as if the contracting
entity were an insurer.
(b) A provider who is adversely affected by a violation of
this chapter may make a complaint under Subchapter A, Chapter 542.
Sec. 1458.252. REMEDIES NOT EXCLUSIVE. The remedies
provided by this subchapter are in addition to any other defense,
remedy, or procedure provided by law, including common law.
SECTION 17.002. The change in law made by this article
applies only to a provider network contract entered into or renewed
on or after January 1, 2012. A provider network contract entered
into or renewed before January 1, 2012, is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
ARTICLE 18. FAIR PLAN ASSOCIATION
SECTION 18.001. Subchapter A, Chapter 2211, Insurance Code,
is amended by adding Section 2211.004 to read as follows:
Sec. 2211.004. APPLICABILITY OF CERTAIN OTHER LAW;
LIMITATION ON DAMAGES. (a) The association may not be held liable
for any amount on a claim filed under an insurance policy issued by
the association other than:
(1) as applicable, amounts payable under the terms of
the policy for loss to an insured structure, loss to contents of an
insured structure, and additional living expenses; and
(2) court costs and reasonable attorney's fees.
(b) An insured may not recover consequential, punitive, or
exemplary damages in a cause of action against the association,
including damages under Section 541.152(b) of this code or Section
17.50, Business & Commerce Code, or interest in the amount
described by Section 542.060 of this code.
SECTION 18.002. Section 2211.004, Insurance Code, as added
by this article, applies only to a cause of action that accrues
against the FAIR Plan Association on or after the effective date of
this Act. A cause of action that accrues before the effective date
of this Act is governed by the law in effect on the date the cause of
action accrued, and the former law is continued in effect for that
purpose.
ARTICLE 19. STANDARD FORMS
SECTION 19.001. Section 2301.008, Insurance Code, is
amended to read as follows:
Sec. 2301.008. ADOPTION AND USE OF STANDARD FORMS. The
commissioner shall [may] adopt standard insurance policy forms,
printed endorsement forms, and related forms other than insurance
policy forms and printed endorsement forms, that an insurer shall
[may] use in addition to [instead of] the insurer's own forms in
writing insurance subject to this subchapter.
SECTION 19.002. Section 2301.052(b), Insurance Code, is
amended to read as follows:
(b) Subject to Section 2301.0525, an [An] insurer may
continue to use an insurance policy form or endorsement
promulgated, approved, or adopted under Article 5.06 or 5.35 before
June 11, 2003, on written notification to the commissioner that the
insurer will continue to use the form or endorsement.
SECTION 19.003. Subchapter B, Chapter 2301, Insurance Code,
is amended by adding Section 2301.0525 to read as follows:
Sec. 2301.0525. USE OF MINIMUM STANDARD INSURANCE POLICY
FORMS REQUIRED. (a) Each insurer that writes residential property
insurance in this state shall use the standard insurance policy
forms adopted by the commissioner under Section 2301.008 for
residential property insurance and, subject to Subsection (b), may
also use alternative policy forms approved by the commissioner
under Section 2301.006.
(b) An insurer may not deliver or issue for delivery in this
state a residential property insurance policy unless the insurer
informs each applicant for that insurance coverage, in the manner
prescribed by commissioner rule, that an applicant otherwise
qualified for that insurance coverage under this code may elect to
obtain residential property insurance coverage under a standard
insurance policy adopted by the commissioner under Section
2301.008.
(c) An insurer that offers coverage under the standard
policy forms shall disclose to the applicant or insured, at the time
of the initial application and each renewal, each policy limit and
type of coverage available to the insured and the respective costs
for each coverage. The form of the disclosure shall be specified by
the commissioner, subject to Section 2301.053(c).
(d) An insurer that offers coverage under approved forms
other than the standard policy forms shall disclose to the
applicant or insured, at the time of the initial application and
each renewal, in comparison to the standard policy forms each
additional coverage that is provided and the additional cost, each
reduction in coverage or exclusion of coverage and the reduced
cost, and each policy limit and type of coverage available to the
insured and the respective costs for each coverage. The form of the
disclosure shall be specified by the commissioner, subject to
Section 2301.053(c). At a minimum, the disclosure must refer the
applicant or insured to the Internet website described by Section
32.102 and state that the applicant may compare the rates of
insurers at that site.
SECTION 19.004. The change in law made by this article
applies only to an insurance policy delivered, issued for delivery,
or renewed on or after January 1, 2012. A policy delivered, issued
for delivery, or renewed before January 1, 2012, is governed by the
law as it existed immediately before the effective date of this Act,
and that law is continued in effect for that purpose.
ARTICLE 20. SURETY BONDS AND RELATED INSTRUMENTS
SECTION 20.001. Section 3503.005(a), Insurance Code, is
amended to read as follows:
(a) A bond that is made, given, tendered, or filed under
Chapter 53, Property Code, or Chapter 2253, Government Code, may be
executed only by a surety company that is authorized to write surety
bonds in this state. If the amount of the bond exceeds $100,000,
the surety company must also:
(1) hold a certificate of authority from the United
States secretary of the treasury to qualify as a surety on
obligations permitted or required under federal law; or
(2) have obtained reinsurance for any liability in
excess of $1 million [$100,000] from a reinsurer that:
(A) is an authorized reinsurer in this state; or
[and]
(B) holds a certificate of authority from the
United States secretary of the treasury to qualify as a surety or
reinsurer on obligations permitted or required under federal law.
SECTION 20.002. Section 3503.004(b), Insurance Code, is
repealed.
ARTICLE 21. APPRAISALS UNDER PROPERTY INSURANCE POLICIES
SECTION 21.001. Subchapter B, Chapter 542, Insurance Code,
is amended by adding Section 542.063 to read as follows:
Sec. 542.063. APPRAISALS. (a) A request for appraisal with
respect to a claim under a property insurance policy shall not stay
court proceedings during the appraisal process.
(b) A decision resulting from the appraisal process under a
property insurance policy is binding only as to the amount of loss.
An appraisal may not be used to determine liability issues such as
coverage, causation, or conditions or limits imposed by the policy.
The appraisal decision does not affect any other remedy available
at law.
SECTION 21.002. The heading to Subchapter B, Chapter 542,
Insurance Code, is amended to read as follows:
SUBCHAPTER B. PROMPT PAYMENT OF CLAIMS; APPRAISALS
SECTION 21.003. Section 542.063, Insurance Code, as added
by this article, applies only to a dispute that arises on or after
the effective date of this Act. A dispute that arises before the
effective date of this Act is governed by the law in effect
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
ARTICLE 22. EMPLOYER CONTRIBUTIONS TO INDIVIDUAL HEALTH INSURANCE
POLICIES
SECTION 22.001. Subtitle A, Title 8, Insurance Code, is
amended by adding Chapter 1221 to read as follows:
CHAPTER 1221. EMPLOYER CONTRIBUTIONS TO INDIVIDUAL HEALTH
INSURANCE POLICIES
Sec. 1221.001. RULES; EMPLOYER CONTRIBUTIONS. The
commissioner by rule, unless it would violate state or federal law,
may develop procedures to allow an employer to make financial
contributions to or premium payments for an employee or retiree's
individual consumer directed health insurance policy in a manner
that eliminates or minimizes the state or federal tax consequences,
or provides positive state or federal tax consequences, to the
employer.
ARTICLE 23. REQUIRED OFFER TO EXCLUDE NAMED DRIVERS FROM PERSONAL
AUTOMOBILE INSURANCE POLICIES
SECTION 23.001. Subchapter B, Chapter 1952, Insurance Code,
is amended by adding Section 1952.059 to read as follows:
Sec. 1952.059. REQUIRED OFFER: EXCLUSION OF NAMED DRIVERS.
(a) In addition to applying to the insurers subject to this chapter
under Section 1952.001, this section applies to a county mutual
insurance company.
(b) An insurer that delivers or issues for delivery in this
state a personal automobile insurance policy, including a policy
provided through the Texas Automobile Insurance Plan Association
under Chapter 2151, that covers liability arising out of the
ownership, maintenance, or use of a motor vehicle and that would
otherwise cover all residents in the named insured's household must
offer the insured a provision that would exclude from coverage
under the policy any resident of the named insured's household who
is specifically named as being excluded.
(c) An exclusion under this section must be in writing and
must:
(1) include the name of the person excluded from
coverage;
(2) be signed by the named insured; and
(3) be attached to the policy and stated on the
liability insurance card or any other form of proof of liability
insurance verification.
ARTICLE 24. RESIDENTIAL FIRE ALARM TECHNICIANS
SECTION 24.001. Section 6002.158(e), Insurance Code, is
amended to read as follows:
(e) The curriculum for a residential fire alarm technician
course must consist of at least seven [eight] hours of instruction
on installing, servicing, and maintaining single-family and
two-family residential fire alarm systems as defined by National
Fire Protection Standard No. 72 and an examination on National Fire
Protection Standard No. 72 for which at least one hour is allocated
for completion. The examination must consist of at least 25
questions, and an applicant must accurately answer at least 80
percent of the questions to pass the examination.
SECTION 24.002. The changes in law made by this Act to
Section 6002.158, Insurance Code, apply only to an application for
approval or renewal of approval of a training school submitted to
the state fire marshal on or after the effective date of this Act.
An application submitted before the effective date of this Act is
governed by the law in effect immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
ARTICLE 25. EXTRA HAZARDOUS COVERAGES
SECTION 25.001. Subchapter A, Chapter 2502, Insurance Code,
is amended by adding Section 2502.006 to read as follows:
Sec. 2502.006. CERTAIN EXTRA HAZARDOUS COVERAGES
PROHIBITED. (a) A title insurance company may not insure against
loss or damage sustained by reason of any claim that under federal
bankruptcy, state insolvency, or similar creditor's rights laws the
transaction vesting title in the insured as shown in the policy or
creating the lien of the insured mortgage is:
(1) a preference or preferential transfer under 11
U.S.C. Section 547;
(2) a fraudulent transfer under 11 U.S.C. Section 548;
(3) a transfer that is fraudulent as to present and
future creditors under Section 24.005, Business & Commerce Code, or
a similar law of another state; or
(4) a transfer that is fraudulent as to present
creditors under Section 24.006, Business & Commerce Code, or a
similar law of another state.
(b) The commissioner may by rule designate coverages that
violate this section. It is not a defense against a claim that a
title insurance company has violated this section that the
commissioner has not adopted a rule under this subsection.
(c) Title insurance issued in or on a form prescribed by the
commissioner shall be considered to comply with this section.
(d) Nothing in this section prohibits title insurance with
respect to liens, encumbrances, or other defects to title to land
that:
(1) appear in the public records before the date on
which the contract of title insurance is made;
(2) occur or result from transactions before the
transaction vesting title in the insured or creating the lien of the
insured mortgage; or
(3) result from failure to timely perfect or record
any instrument before the date on which the contract of title
insurance is made.
(e) A title insurance company may not engage in the business
of title insurance in this state if the title insurance company
provides insurance of the type prohibited by Subsection (a)
anywhere in the United States, except to the extent that the laws of
another state require the title insurance company to provide that
type of insurance.
SECTION 25.002. Section 2502.006, Insurance Code, as added
by this Act, applies only to an insurance policy that is delivered,
issued for delivery, or renewed on or after January 1, 2012. A
policy delivered, issued for delivery, or renewed before January 1,
2012, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
ARTICLE 26. RESCISSION OF HEALTH BENEFIT PLAN
SECTION 26.001. Chapter 1202, Insurance Code, is amended by
adding Subchapter C to read as follows:
SUBCHAPTER C. RESCISSION OF HEALTH BENEFIT PLAN
Sec. 1202.101. DEFINITION. In this subchapter,
"rescission" means the termination of an insurance agreement,
contract, evidence of coverage, insurance policy, or other similar
coverage document in which the health benefit plan issuer, as
applicable, refunds premium payments or demands the recoupment of
any benefit already paid under the plan.
Sec. 1202.102. APPLICABILITY. (a) This subchapter applies
only to a health benefit plan, including a small or large employer
health benefit plan written under Chapter 1501, that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a Lloyd's plan operating under Chapter 941;
(7) a health maintenance organization operating under
Chapter 843;
(8) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(9) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844.
(b) This subchapter does not apply to:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease or for another
limited benefit other than an accident policy;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy;
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan described by
Subsection (a);
(6) a Medicaid managed care plan offered under Chapter
533, Government Code;
(7) any policy or contract of insurance with a state
agency, department, or board providing health services to eligible
individuals under Chapter 32, Human Resources Code; or
(8) a child health plan offered under Chapter 62,
Health and Safety Code, or a health benefits plan offered under
Chapter 63, Health and Safety Code.
Sec. 1202.103. RESCISSION PROHIBITED; EXCEPTION. (a)
Notwithstanding any other law, except as provided by Subsection
(b), a health benefit plan issuer may not rescind coverage under a
health benefit plan with respect to an enrollee in the plan.
(b) A health benefit plan issuer may rescind coverage under
a health benefit plan with respect to an enrollee if the enrollee
engages in conduct that constitutes fraud or makes an intentional
misrepresentation of a material fact.
Sec. 1202.104. NOTICE OF INTENT TO RESCIND. (a) A health
benefit plan issuer may not rescind a health benefit plan without
first notifying the affected enrollee in writing at least 30 days in
advance of the issuer's intent to rescind the health benefit plan.
(b) The notice required under Subsection (a) must include,
as applicable:
(1) the principal reasons for the decision to rescind
the health benefit plan;
(2) the date on which the rescission is effective and
the prior date to which the rescission retroactively reaches;
(3) an itemized list of any pending or paid claims the
health benefit plan issuer intends to recoup following the
rescission;
(4) an explanation of how the enrollee may obtain any
documentation used by the health benefit plan issuer to justify the
rescission;
(5) a statement that the enrollee is entitled to
appeal a rescission decision to an independent review organization
and that the health benefit plan issuer bears the burden of proof on
appeal;
(6) an explanation of any time limit with which the
enrollee must comply to appeal the rescission decision to an
independent review organization, and a description of the
consequences of failure to appeal within that time limit; and
(7) a statement that there is no cost to the individual
to appeal the rescission decision to an independent review
organization.
Sec. 1202.105. INDEPENDENT REVIEW PROCESS; PAYMENT OF
CLAIMS. (a) An enrollee may appeal a health benefit plan issuer's
rescission decision to an independent review organization in the
manner prescribed by the commissioner by rule.
(b) A health benefit plan issuer shall comply with all
requests for information made by the independent review
organization and with the independent review organization's
determination regarding the appropriateness of the issuer's
decision to rescind.
(c) A health benefit plan issuer shall pay all otherwise
valid medical claims under an individual's plan until the later of:
(1) the date on which an independent review
organization determines that the decision to rescind is
appropriate; or
(2) the time to appeal to an independent review
organization has expired without an affected individual initiating
an appeal.
(d) The commissioner shall adopt rules necessary to
implement and enforce this section, including rules establishing
certification standards for independent review organizations for
purposes of this chapter.
Sec. 1202.106. BURDEN OF PROOF. In an appeal to an
independent review organization under Section 1202.105 or an
enforcement action or cause of action based on a violation of this
subchapter by a health benefit plan issuer, the health benefit plan
issuer must prove that the issuer did not violate this subchapter.
SECTION 26.002. The change in law made by this article
applies only to a health benefit plan that is delivered, issued for
delivery, or renewed on or after January 1, 2012. A health benefit
plan that is delivered, issued for delivery, or renewed before
January 1, 2012, is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
ARTICLE 27. TRANSITION; EFFECTIVE DATE
SECTION 27.001. Except as otherwise provided by this Act,
this Act applies only to an insurance policy, contract, or evidence
of coverage that is delivered, issued for delivery, or renewed on or
after January 1, 2012. A policy, contract, or evidence of coverage
delivered, issued for delivery, or renewed before January 1, 2012,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 27.002. This Act takes effect September 1, 2011.