By: Smithee (Senate Sponsor - Duncan) H.B. No. 3017
(In the Senate - Received from the House May 11, 2011;
May 11, 2011, read first time and referred to Committee on State
Affairs; May 17, 2011, reported favorably by the following vote:
Yeas 9, Nays 0; May 17, 2011, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the prohibited use of discretionary clauses in certain
health maintenance organization and insurance contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 1271, Insurance Code, is
amended by adding Section 1271.057 to read as follows:
Sec. 1271.057. DISCRETIONARY CLAUSES PROHIBITED. (a) An
evidence of coverage may not contain a discretionary clause
provision.
(b) A discretionary clause provision includes a provision
that:
(1) purports or acts to bind the enrollee to, or grant
deference in subsequent proceedings to, adverse eligibility or
benefit decisions or interpretations of the evidence of coverage by
the health maintenance organization; or
(2) specifies:
(A) that an enrollee or other claimant may not
contest or appeal a denial of a benefit;
(B) that the health maintenance organization's
interpretation of the terms of an evidence of coverage or other form
or its decision to deny coverage or the amount of benefits is
binding on an enrollee or other claimant;
(C) that in an appeal, the health maintenance
organization's decision-making power as to the interpretation of
the terms of an evidence of coverage or other form, or as to
coverage, is binding; or
(D) a standard of review in any appeal process
that gives deference to the original benefit decision or provides
standards of interpretation or review that are inconsistent with
the laws of this state, including the common law.
SECTION 2. Subchapter B, Chapter 1701, Insurance Code, is
amended by adding Section 1701.062 to read as follows:
Sec. 1701.062. DISCRETIONARY CLAUSES PROHIBITED. (a) An
insurer may not use a document described by Section 1701.002 in this
state if the document contains a discretionary clause.
(b) A discretionary clause includes a provision that:
(1) purports or acts to bind the claimant to, or grant
deference in subsequent proceedings to, adverse eligibility or
claim decisions or policy interpretations by the insurer; or
(2) specifies:
(A) that a policyholder or other claimant may not
contest or appeal a denial of a claim;
(B) that the insurer's interpretation of the
terms of a document or decision to deny coverage or the amount of
benefits is binding upon a policyholder or other claimant;
(C) that in an appeal, the insurer's decision
about or interpretation of the terms of a document or coverage is
binding; or
(D) a standard of review in any appeal process
that gives deference to the original claim decision or provides
standards of interpretation or review that are inconsistent with
the laws of this state, including the common law.
SECTION 3. The change in law made by this Act applies only
to a document or evidence of coverage that is delivered, issued for
delivery, or renewed on or after January 1, 2012. A document or
evidence of coverage that is 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.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.
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