Texas 2015 84th Regular

Texas Senate Bill SB1628 Comm Sub / Bill

Filed 04/20/2015

                    By: Taylor of Galveston S.B. No. 1628
 (In the Senate - Filed March 12, 2015; March 23, 2015, read
 first time and referred to Committee on Business and Commerce;
 April 20, 2015, reported adversely, with favorable Committee
 Substitute by the following vote:  Yeas 6, Nays 3; April 20, 2015,
 sent to printer.)
Click here to see the committee vote
 COMMITTEE SUBSTITUTE FOR S.B. No. 1628 By:  Taylor of Galveston


 A BILL TO BE ENTITLED
 AN ACT
 relating to insurance claims and certain prohibited acts and
 practices in or in relation to the business of insurance; amending
 provisions that are or may be subject to a criminal penalty.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 SECTION 1.  Section 541.060, Insurance Code, is amended by
 adding Subsection (c) to read as follows:
 (c)  A bona fide dispute as to whether an insurer is liable
 for a claim made under an insurance policy does not constitute an
 unfair settlement practice under this section.
 SECTION 2.  Section 541.151, Insurance Code, is amended to
 read as follows:
 Sec. 541.151.  PRIVATE ACTION FOR ACTUAL DAMAGES AUTHORIZED.
 (a)  Except as provided by Section 541.1511, a [A] person who
 sustains actual damages may bring an action against another person
 for those damages caused by the other person engaging in an act or
 practice:
 (1)  defined by Subchapter B to be an unfair method of
 competition or an unfair or deceptive act or practice in the
 business of insurance; or
 (2)  specifically enumerated in Section 17.46(b),
 Business & Commerce Code, as an unlawful deceptive trade practice
 if the person bringing the action shows that the person relied on
 the act or practice to the person's detriment.
 (b)  For purposes of this subchapter, "actual damages" means
 an injury independent of the harm resulting from the insurer's
 denial of policy benefits. The policy benefits wrongfully
 withheld, as well as any attorney's fees or costs incurred to
 recover those policy benefits, do not constitute "actual damages"
 for purposes of this subchapter.
 SECTION 3.  Subchapter D, Chapter 541, Insurance Code, is
 amended by adding Section 541.1511 to read as follows:
 Sec. 541.1511.  ACTION RELATING TO CLAIM FOR PROPERTY
 DAMAGE:  INSURER ELECTION FOR LEGAL RESPONSIBILITY FOR ACTIONS OF
 AGENTS AND EMPLOYEES. (a)  This section applies only to an action
 brought by an insured relating to or arising from a claim made under
 an insurance policy for damage to or loss of real property or
 tangible personal property alleged to be covered by the policy.
 (b)  An insured seeking damages in an action to which this
 section applies may not file or maintain an action under this
 subchapter against an employee, agent, representative, or adjuster
 issuing policies, handling claims, or performing other acts on
 behalf of an insurer, and any such action shall be immediately
 dismissed, if:
 (1)  the employee, agent, representative, or adjuster
 was not named in a notice given under Section 541.1541; or
 (2)  not later than the 30th day after the date the
 notice given under Section 541.1541 is received, the insurer agrees
 in writing to be liable for any act or omission of the employee,
 agent, representative, or adjuster related to or arising out of the
 insured's claim.
 SECTION 4.  The heading to Section 541.152, Insurance Code,
 is amended to read as follows:
 Sec. 541.152.  ACTUAL DAMAGES, ATTORNEY'S FEES, AND OTHER
 RELIEF.
 SECTION 5.  The heading to Section 541.154, Insurance Code,
 is amended to read as follows:
 Sec. 541.154.  PRIOR NOTICE OF ACTION OTHER THAN ACTION
 RELATING TO CLAIM FOR PROPERTY DAMAGE.
 SECTION 6.  Section 541.154(a), Insurance Code, is amended
 to read as follows:
 (a)  Except as provided by Section 541.1541, a [A] person
 seeking damages in an action against another person under this
 subchapter must provide written notice to the other person not
 later than the 61st day before the date the action is filed.
 SECTION 7.  Subchapter D, Chapter 541, Insurance Code, is
 amended by adding Section 541.1541 to read as follows:
 Sec. 541.1541.  PRIOR NOTICE OF ACTION RELATING TO CLAIM FOR
 PROPERTY DAMAGE. (a)  This section applies only to an action
 brought by an insured relating to or arising from a claim made under
 an insurance policy for damage to or loss of real property or
 tangible personal property alleged to be covered by the policy.
 (b)  An insured seeking damages in an action to which this
 section applies must provide written notice complying with this
 section to all potential defendants not later than the 61st day
 before the date the action is filed.
 (c)  If the amount sought by the insured in the action
 involves a claim for damage items previously submitted to an
 insurer, the notice must contain a statement signed by the insured:
 (1)  stating the specific damage items and the amount
 alleged to be owed by the insurer under the insurance contract;
 (2)  the amount of the actual damages, other damages,
 interest, and expenses, specifically stated for each item, that the
 insured alleges are owed by the insurer;
 (3)  the amount of attorney's fees the insured
 reasonably has incurred as of the date the notice is given in
 asserting the claim against the insurer;
 (4)  a stated amount that includes the amounts
 described by Subdivisions (1) through (3) that the insured will
 accept in full and final satisfaction of the claim; and
 (5)  the name of every person to whom notice is given
 under this section and a brief description of each person's
 relationship to the insured's claim.
 (d)  If the amount sought by the insured in the action
 involves a claim for damage items not previously submitted to the
 insurer, the notice must contain, in addition to the items listed in
 Subsection (c):
 (1)  a statement of the reason the damage items were not
 previously submitted to the insurer;
 (2)  copies of reports, estimates, photographs, and
 other items reasonably supporting the insured's additional damage
 items; and
 (3)  a statement that the insured will cooperate in
 allowing the insurer to inspect the insured property for purposes
 of investigating the additional damage items.
 (e)  Notice required by this section must be sent to the
 insurer by certified mail, return receipt requested.
 (f)  Notice under this section is not required if giving
 notice is impracticable because the action:
 (1)  must be filed to prevent the statute of
 limitations from expiring; or
 (2)  is asserted as a counterclaim.
 SECTION 8.  Section 541.155, Insurance Code, is amended to
 read as follows:
 Sec. 541.155.  ABATEMENT; DISMISSAL. (a)  A person against
 whom an action under this subchapter is pending who does not receive
 [the] notice as required by Section 541.154 or 541.1541(c) may file
 a plea in abatement not later than the 30th day after the date the
 person files an original answer in the court in which the action is
 pending.
 (b)  The court shall abate the action if, after a hearing,
 the court finds that the person is entitled to an abatement because
 the claimant did not provide [the] notice as required by Section
 541.154 or 541.1541(c).
 (c)  An action is automatically abated without a court order
 beginning on the 11th day after the date a plea in abatement is
 filed if the plea:
 (1)  is verified and alleges that the person against
 whom the action is pending did not receive [the] notice as required
 by Section 541.154 or 541.1541(c); and
 (2)  is not controverted by an affidavit filed by the
 claimant before the 11th day after the date the plea in abatement is
 filed.
 (d)  An abatement under this section continues until the 60th
 day after the date notice is provided in compliance with Section
 541.154 or 541.1541(c).
 (d-1)  A person against whom an action under this subchapter
 is pending who does not receive notice as required by Section
 541.1541(d) may file a motion to dismiss not later than the 30th day
 after the date the person files an original answer in the court in
 which the action is pending.
 (d-2)  The court shall grant the motion under Subsection
 (d-1) if, after a hearing, the court finds that the person is
 entitled to dismissal because the claimant did not provide notice
 as required by Section 541.1541(d).  A dismissal ordered under this
 section is without prejudice to the rights of the parties in a
 subsequent action.
 (e)  Subsections (d-1) and (d-2) do [This section does] not
 apply if Section 541.154(c) or 541.1541(f) applies. If Section
 541.154(c) or 541.1541(f) applies, the action may not be dismissed
 but shall be abated in accordance with Subsections (b), (c), and
 (d).
 SECTION 9.  Subchapter B, Chapter 542, Insurance Code, is
 amended by adding Section 542.0595 to read as follows:
 Sec. 542.0595.  PRIOR NOTICE OF ACTION RELATING TO CLAIM FOR
 PROPERTY DAMAGE; ABATEMENT OR DISMISSAL. (a)  An insured may not
 bring suit under Section 542.060 in connection with a claim made
 under an insurance policy for damage to or loss of real property or
 tangible personal property unless the insured has provided written
 notice to the insurer with respect to the claim in accordance with
 Section 541.1541.
 (b)  A suit under Section 542.060 for which notice is
 required by this section is subject to abatement or dismissal to the
 same extent and in the same manner provided by Section 541.155 for
 an action under Subchapter D, Chapter 541.
 SECTION 10.  Section 542.060, Insurance Code, is amended to
 read as follows:
 Sec. 542.060.  LIABILITY FOR VIOLATION OF SUBCHAPTER.
 (a)  If an insurer that is liable for a claim under an insurance
 policy knowingly fails to act [is not] in compliance with this
 subchapter, the insurer is liable to pay the holder of the policy or
 the beneficiary making the claim under the policy, in addition to
 the amount of the claim, interest on the unpaid amount of the claim
 at the rate of 18 percent a year as damages, together with
 reasonable attorney's fees.
 (a-1)  For purposes of Subsection (a), "knowingly" means
 that the insurer was actually aware at the time of the act or event
 that it was failing to comply with this subchapter.  There is no
 liability under this section for a claim with respect to which there
 is a bona fide dispute as to whether the insurer is liable.
 (b)  If a suit is filed, interest and [the] attorney's fees
 payable under this section shall be taxed as part of the costs in
 the case.
 (c)  The liability for interest and attorney's fees provided
 by this section is the exclusive remedy for a violation of this
 subchapter. This section is not intended to affect a right or
 remedy provided by Chapter 541 or any other law outside this
 subchapter.
 SECTION 11.  Subchapter B, Chapter 542, Insurance Code, is
 amended by adding Section 542.0601 to read as follows:
 Sec. 542.0601.  LIABILITY WITH RESPECT TO CERTAIN CLAIMS.
 An insurer is not liable under Section 542.060 with respect to:
 (1)  a claim received by the insurer if it is determined
 through arbitration, litigation, or another dispute resolution
 process that the claim:
 (A)  is not covered under the insurance policy;
 (B)  was properly rejected;
 (C)  is invalid; or
 (D)  otherwise should not be paid by the insurer;
 or
 (2)  a claim with respect to which an appraisal
 process:
 (A)  is invoked under the terms of the policy:
 (i)  by the insurer or insured before the
 commencement of litigation;
 (ii)  by the defendant within 60 days after
 receiving notice of the commencement of litigation; or
 (iii)  by the plaintiff after the
 commencement of litigation; and
 (B)  results in a valid, signed award the amount
 of which is paid by the insurer not later than the 15th day after the
 date the insurer receives the award, consistent with the coverage,
 conditions, and limits provided by the policy, minus any prior
 payments and any applicable deductible amount.
 SECTION 12.  Subtitle A, Title 10, Insurance Code, is
 amended by adding Chapter 1808 to read as follows:
 CHAPTER 1808. CLAIMS FOR PROPERTY DAMAGE
 Sec. 1808.001.  DEFINITION. In this chapter, "claim for
 property damage" means a request for payment under an insurance
 policy for damage to or loss of real property or tangible personal
 property alleged to be covered by the policy.
 Sec. 1808.002.  APPLICABILITY OF CHAPTER. This chapter
 applies to any claim under or related to an insurance policy that
 provides insurance coverage against damage to or loss of real
 property or tangible personal property, including a policy issued
 by an insurance company, reciprocal or interinsurance exchange,
 mutual insurance company, capital stock insurance company, county
 mutual insurance company, farm mutual insurance company, Lloyd's
 plan, or other legal entity authorized to write property insurance
 in this state or an eligible surplus lines insurer.
 Sec. 1808.003.  CLAIM FILING PERIOD. (a)  A claimant must
 give an insurer prompt written notice of a claim for property damage
 after property covered under the policy is damaged or lost, but in
 no event later than the second anniversary of the date on which the
 damage to or loss of property that is the basis of the claim occurs.
 (b)  Failure to provide notice of a claim for property damage
 by the second anniversary of the date on which the damage to or loss
 of property that is the basis of the claim occurs is an absolute bar
 to recovery on the claim.
 (c)  Nothing in this section precludes an insurer from
 raising any defense available under the terms of its policy
 relating to prompt notice or that is otherwise available under the
 law.
 SECTION 13.  Section 4102.051(a), Insurance Code, is amended
 to read as follows:
 (a)  A person may not act as a public insurance adjuster in
 this state or hold himself or herself out to be a public insurance
 adjuster in this state unless the person holds a license or
 certificate issued by the commissioner under Section 4102.053 or[,]
 4102.054[, or 4102.069].
 SECTION 14.  Section 4102.066(a), Insurance Code, is amended
 to read as follows:
 (a)  The commissioner shall collect in advance the following
 nonrefundable fees:
 (1)  for a public insurance adjuster license, an
 application fee in an amount to be determined by rule by the
 commissioner;
 (2)  for a nonresident public insurance adjuster
 license, an application fee in an amount to be determined by rule by
 the commissioner; and
 (3)  for each public insurance adjuster examination, a
 fee in an amount to be determined by rule by the commissioner[; and
 [(4)     for a public insurance adjuster trainee
 certificate under Section 4102.069, a registration fee in an amount
 to be determined by rule by the commissioner].
 SECTION 15.  Section 4102.103, Insurance Code, is amended by
 adding Subsection (d) to read as follows:
 (d)  A license holder may not enter into a contract with an
 insured and collect a commission as provided by Section 4102.104
 without the intent to actually perform the services customarily
 provided by a licensed public insurance adjuster for the insured.
 SECTION 16.  Section 4102.104(d), Insurance Code, is amended
 to read as follows:
 (d)  A public insurance adjuster may not accept any payment
 that violates the provisions of this section [Subsection (c)].
 SECTION 17.  Section 4102.158, Insurance Code, is amended by
 amending Subsection (a) and adding Subsections (d), (e), and (f) to
 read as follows:
 (a)  A license holder may not:
 (1)  participate directly or indirectly in the
 reconstruction, repair, or restoration of damaged property that is
 the subject of a claim adjusted by the license holder; or
 (2)  engage in any other activities that may reasonably
 be construed as presenting a conflict of interest, including
 soliciting or accepting any remuneration from, [or] having a
 financial interest in, or deriving any direct or indirect financial
 benefit from, any salvage firm, repair firm, construction firm, or
 other firm that obtains business in connection with any claim the
 license holder has a contract or agreement to adjust.
 (d)  A license holder may not directly or indirectly solicit,
 as described by Chapter 38, Penal Code, employment for an attorney
 or enter into a contract with an insured for the primary purpose of
 referring an insured to an attorney and without the intent to
 actually perform the services customarily provided by a licensed
 public insurance adjuster.  This section may not be construed to
 prohibit a license holder from recommending a particular attorney
 to an insured.
 (e)  A license holder may not act on behalf of an attorney in
 having an insured sign an attorney representation agreement.
 (f)  A license holder must become familiar with and at all
 times act in conformance with the criminal barratry statute set
 forth in Section 38.12, Penal Code.
 SECTION 18.  Section 4102.160, Insurance Code, is amended to
 read as follows:
 Sec. 4102.160.  CERTAIN PAYMENTS PROHIBITED. A license
 holder may not:
 (1)  advance money to any potential client or insured;
 or
 (2)  pay, allow, or give, or offer to pay, allow, or
 give, directly or indirectly, to a person who is not a licensed
 public insurance adjuster a fee, commission, or other valuable
 consideration for the referral of an insured to the public
 insurance adjuster for purposes of [based on] the insured entering
 into a contract with that public insurance adjuster or for any other
 purpose[; or
 [(3)     otherwise offer to pay a fee, commission, or
 other valuable consideration exceeding $100 to a person not
 licensed as a public insurance adjuster for referring an insured to
 the license holder].
 SECTION 19.  Subchapter D, Chapter 4102, Insurance Code, is
 amended by adding Section 4102.164 to read as follows:
 Sec. 4102.164.  ACCEPTANCE OF REFERRAL PAYMENTS PROHIBITED.
 (a)  A licensed public insurance adjuster may not accept a fee,
 commission, or other valuable consideration of any nature,
 regardless of form or amount, in exchange for the referral by a
 licensed public insurance adjuster of an insured to any third-party
 individual or firm, including but not limited to an attorney,
 appraiser, umpire, construction company, contractor, or salvage
 company.
 (b)  The commissioner shall adopt rules necessary to
 implement and enforce this section.
 SECTION 20.  The heading to Section 27.02, Business &
 Commerce Code, is amended to read as follows:
 Sec. 27.02.  CERTAIN OFFERS MADE AND INFORMATION PROVIDED IN
 CONNECTION WITH INSURANCE CLAIMS [FOR EXCESSIVE CHARGES].
 SECTION 21.  Sections 27.02(a) and (b), Business & Commerce
 Code, are amended to read as follows:
 (a)  A person who sells goods or services, including a
 contractor, appraiser, estimator, or insurance restoration
 contractor, commits an offense if, in connection with a claim for
 property loss or damage under a property or casualty insurance
 policy:
 (1)  the person advertises or promises to [provide the
 good or service and to] pay, waive, absorb, rebate, subsidize,
 credit, or otherwise cover for any reason[:
 [(A)]  all or part of any applicable insurance
 deductible or other uninsured amount owed by an insured under the
 terms of the policy;[or
 [(B)     a rebate in an amount equal to all or part of
 any applicable insurance deductible;]
 (2)  [the good or service is paid for by the consumer
 from proceeds of a property or casualty insurance policy; and
 [(3)]  the person knowingly provides or causes to be
 provided to an insurer any estimate or other statement as to the
 cost of repair for the good or service to be provided that has been
 increased, inflated, or otherwise manipulated [charges an amount
 for the good or service that exceeds the usual and customary charge
 by the person for the good or service] by an amount equal to or
 greater than all or part of the applicable insurance deductible or
 other uninsured amount owed by an insured under the policy; or
 (3)  the person knowingly provides or causes to be
 provided to an insurer any false information within any estimate,
 bid, proposal, or other statement as to the scope of damage or cost
 of repair for the good or service to be provided [paid by the person
 to an insurer on behalf of an insured or remitted to an insured by
 the person as a rebate].
 (b)  A person who is insured under a property or casualty
 insurance policy commits an offense if the person:
 (1)  knowingly submits a claim under the policy based
 on conduct [charges that are] in violation of Subsection (a) [of
 this section]; or
 (2)  knowingly allows a claim in violation of
 Subsection (a) [of this section] to be submitted, unless the person
 promptly notifies the insurer of the conduct in violation of
 Subsection (a) [excessive charges].
 SECTION 22.  Section 4102.069, Insurance Code, is repealed.
 SECTION 23.  Chapter 541, Insurance Code, as amended by this
 Act, applies only to conduct that occurs on or after the effective
 date of this Act. Conduct that occurs 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 24.  Subchapter B, Chapter 542, Insurance Code, as
 amended by this Act, applies only to a claim for which notice of
 claim is provided to an insurer on or after the effective date of
 this Act. A claim for which notice of claim is provided to an
 insurer 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 25.  Chapter 1808, Insurance Code, as added by this
 Act, applies only to a claim under an insurance policy delivered,
 issued for delivery, or renewed on or after January 1, 2016. A
 claim under a policy delivered, issued for delivery, or renewed
 before January 1, 2016, 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 26.  The repeal by this Act of Section 4102.069,
 Insurance Code, does not affect the authority of a person to act
 under a temporary certificate issued by the Texas Department of
 Insurance under that section before the effective date of this Act.
 SECTION 27.  Sections 4102.103(d) and 4102.158(d),
 Insurance Code, as added by this Act, apply only to a contract
 entered into or solicitation made on or after the effective date of
 this Act.
 SECTION 28.  (a)  Except as provided by this section,
 Section 4102.104, Insurance Code, as amended by this Act, applies
 only to payment for a service performed on or after the effective
 date of this Act.
 (b)  Payment for a service performed before the effective
 date of this Act or performed after the effective date of this Act
 under a contract entered into 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 29.  Section 4102.160, Insurance Code, as amended by
 this Act, and Section 4102.164, Insurance Code, as added by this
 Act, apply only to a referral made on or after the effective date of
 this Act. A referral made 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 30.  The changes in law made by this Act apply only
 to an offense committed on or after the effective date of this Act.
 An offense committed before the effective date of this Act is
 governed by the law in effect when the offense was committed, and
 the former law is continued in effect for that purpose. For
 purposes of this section, an offense was committed before the
 effective date of this Act if any element of the offense occurred
 before that date.
 SECTION 31.  This Act takes effect September 1, 2015.
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