By: Price, et al. (Senate Sponsor - Duncan) H.B. No. 1869
(In the Senate - Received from the House May 7, 2013;
May 8, 2013, read first time and referred to Committee on State
Affairs; May 10, 2013, reported favorably by the following vote:
Yeas 6, Nays 0; May 10, 2013, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to contractual subrogation and other recovery rights of
certain insurers and benefit plan issuers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 6, Civil Practice and Remedies Code, is
amended by adding Chapter 140 to read as follows:
CHAPTER 140. CONTRACTUAL SUBROGATION RIGHTS OF PAYORS OF CERTAIN
BENEFITS
Sec. 140.001. DEFINITIONS. In this chapter:
(1) "Covered individual" means an individual entitled
to benefits described by Section 140.002.
(2) "Payor of benefits" or "payor" means an issuer of a
plan providing benefits described by Section 140.002 that:
(A) pays benefits to or on behalf of a covered
individual as a result of personal injuries to the covered
individual caused by the tortious conduct of a third party; and
(B) has a contractual right of subrogation
described by Section 140.004.
Sec. 140.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies to an issuer of a health benefit plan that provides benefits
for medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, a disability benefit plan, or an
employee welfare benefit plan, 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, including:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842, Insurance Code;
(3) a fraternal benefit society operating under
Chapter 885, Insurance Code;
(4) a stipulated premium insurance company operating
under Chapter 884, Insurance Code;
(5) a reciprocal exchange operating under Chapter 942,
Insurance Code;
(6) a health maintenance organization operating under
Chapter 843, Insurance Code;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846, Insurance Code; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844, Insurance Code.
(b) Notwithstanding Section 172.014, Local Government Code,
or any other law, this chapter applies to a risk pool providing
health and accident coverage under Chapter 172, Local Government
Code.
(c) Notwithstanding any other law, this chapter applies to
an issuer of a plan or coverage under Chapter 1551, 1575, 1579, or
1601, Insurance Code.
(d) Notwithstanding any other law, this chapter applies to
any self-funded issuer of a plan that provides a benefit described
by Subsection (a).
(e) This chapter applies to any policy, evidence of
coverage, or contract under which a benefit described by Subsection
(a) is provided and:
(1) that is delivered, issued for delivery, or entered
into in this state; or
(2) under which an individual or group in this state is
entitled to benefits.
(f) This chapter does not apply to:
(1) a workers' compensation insurance policy or any
other source of medical benefits under Title 5, Labor Code;
(2) Medicare;
(3) the Medicaid program under Chapter 32, Human
Resources Code;
(4) a Medicaid managed care program operated under
Chapter 533, Government Code;
(5) the state child health plan or any other program
operated under Chapter 62 or 63, Health and Safety Code; or
(6) a self-funded plan that is subject to the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.).
Sec. 140.003. CONFLICTS WITH OTHER LAW. In the event of a
conflict between this chapter and another law, including a rule of
procedure or evidence, this chapter controls to the extent of the
conflict.
Sec. 140.004. CONTRACTUAL SUBROGATION RIGHTS AUTHORIZED.
An issuer of a plan that provides benefits described by Section
140.002 under which the policy or plan issuer may be obligated to
make payments or provide medical or surgical benefits to or on
behalf of a covered individual as a result of a personal injury to
the individual caused by the tortious conduct of a third party may
contract to be subrogated to and have a right of reimbursement for
payments made or costs of benefits provided from the individual's
recovery for that injury, subject to this chapter.
Sec. 140.005. PAYORS' RECOVERY LIMITED. (a) If an injured
covered individual is entitled by law to seek a recovery from the
third-party tortfeasor for benefits paid or provided by a subrogee
as described by Section 140.004, then all payors are entitled to
recover as provided by Subsection (b) or (c).
(b) This subsection applies when a covered individual is not
represented by an attorney in obtaining a recovery. All payors'
share under Subsection (a) of a covered individual's recovery is an
amount that is equal to the lesser of:
(1) one-half of the covered individual's gross
recovery; or
(2) the total cost of benefits paid, provided, or
assumed by the payor as a direct result of the tortious conduct of
the third party.
(c) This subsection applies when a covered individual is
represented by an attorney in obtaining a recovery. All payors'
share under Subsection (a) of a covered individual's recovery is an
amount that is equal to the lesser of:
(1) one-half of the covered individual's gross
recovery less attorney's fees and procurement costs as provided by
Section 140.007; or
(2) the total cost of benefits paid, provided, or
assumed by the payor as a direct result of the tortious conduct of
the third party less attorney's fees and procurement costs as
provided by Section 140.007.
(d) A common law doctrine that requires an injured party to
be made whole before a subrogee makes a recovery does not apply to
the recovery of a payor under this section.
Sec. 140.006. ATTORNEY'S FEES IN DECLARATORY JUDGMENT
ACTION. Notwithstanding Section 37.009 or any other law, if a
declaratory judgment action is brought under this chapter, the
court may not award costs or attorney's fees to any party in the
action.
Sec. 140.007. ATTORNEY'S FEES IN RECOVERY ACTION. (a)
Except as provided by Subsection (c), a payor of benefits whose
interest is not actively represented by an attorney in an action to
recover for a personal injury to a covered individual shall pay to
an attorney representing the covered individual a fee in an amount
determined under an agreement entered into between the attorney and
the payor plus a pro rata share of expenses incurred in connection
with the recovery.
(b) Except as provided by Subsection (c), in the absence of
an agreement described by Subsection (a), the court shall award to
the attorney, payable out of the payor's share of the total gross
recovery, a reasonable fee for recovery of the payor's share, not to
exceed one-third of the payor's recovery.
(c) If an attorney representing the payor's interest
actively participates in obtaining a recovery, the court shall
award and apportion between the covered individual's and the
payor's attorneys a fee payable out of the payor's subrogation
recovery. In apportioning the award, the court shall consider the
benefit accruing to the payor as a result of each attorney's
service. The total attorney's fees may not exceed one-third of the
payor's recovery.
Sec. 140.008. FIRST-PARTY RECOVERY. (a) Except as provided
by Subsection (b), a payor of benefits may not pursue a recovery
against a covered individual's first-party recovery.
(b) A payor of benefits may pursue recovery against
uninsured/underinsured motorist coverage or medical payments
coverage only if the covered individual or the covered individual's
immediate family did not pay the premiums for the coverage.
Sec. 140.009. CONSTRUCTION OF CHAPTER. This chapter does
not create a cause of action. Nothing in this chapter shall be
construed to prevent a payor of benefits from waiving, negotiating,
or not pursuing any claim or recovery described by Section 140.004
or 140.005.
SECTION 2. Section 172.015, Local Government Code, is
repealed.
SECTION 3. It is the intent of the legislature that if any
provision, section, subsection, sentence, clause, phrase, or word
of this Act or the application thereof to any person or circumstance
is found to be unconstitutional, the provision, section,
subsection, sentence, clause, phrase, or word is hereby declared to
be severable and the balance of this Act remains effective
notwithstanding such unconstitutionality. Moreover, the
legislature declares that it would have passed this Act, and each
provision, section, subsection, sentence, clause, phrase, or word
thereof, irrespective of the fact that any provision, section,
subsection, sentence, clause, phrase, or word, or any of their
applications, were to be declared unconstitutional.
SECTION 4. The change in law made by this Act applies only
to a contractual right of subrogation in a cause of action that
accrues on or after the effective date of this Act to assert a
contractual right of subrogation or recovery described by Section
140.004, Civil Practice and Remedies Code, as added by this Act.
SECTION 5. This Act takes effect January 1, 2014.
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