By: Zaffirini S.B. No. 1499
(In the Senate - Filed March 8, 2017; March 20, 2017, read
first time and referred to Committee on Business & Commerce;
April 18, 2017, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 18, 2017,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 1499 By: Zaffirini
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of for-profit legal service contract
companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 953.001(1), Occupations Code, is amended
to read as follows:
(1) "Administrator" means the person responsible for
the administration of a legal service contract. [The term includes
a person responsible for any filing required by this chapter.]
SECTION 2. Section 953.156, Occupations Code, is amended to
read as follows:
Sec. 953.156. FORM OF LEGAL SERVICE CONTRACT AND REQUIRED
DISCLOSURES. [(a) A legal service contract must be filed with the
executive director before it is marketed, sold, offered for sale,
administered, or issued in this state. Any subsequent endorsement
or attachment to the contract must also be filed with the executive
director before the endorsement or attachment is delivered to legal
service contract holders.
[(b)] A legal service contract marketed, sold, offered for
sale, administered, or issued in this state must:
(1) be written, printed, or typed in clear,
understandable language that is easy to read;
(2) include the name and full address of the company;
(3) include the purchase price of the contract and the
terms under which the contract is sold;
(4) include the terms and restrictions governing
cancellation of the contract by the company or the legal service
contract holder;
(5) identify:
(A) any administrator, if the administrator is
not the company;
(B) the sales representative; and
(C) the name of the legal service contract
holder;
(6) include the amount of any deductible or copayment;
(7) specify the legal services and other benefits to
be provided under the contract, and any limitation, exception, or
exclusion;
(8) specify the legal services, if any, for which the
company will provide reimbursement and the amount of that
reimbursement;
(9) specify any restriction governing the
transferability of the contract or the assignment of benefits;
(10) include the duties of the legal service contract
holder;
(11) [include the contact information for the
department, including the department's toll-free number and
electronic mail address, as well as a statement that the department
regulates the company and the company's sales representatives;
[(12)] explain the method to be used in resolving the
legal service contract holder's complaints and grievances;
(12) [(13)] explain how legal services may be obtained
under the legal service contract;
(13) [(14)] include a provision stating that no change
in the contract is valid until the change has been approved by an
executive officer of the company and unless the approval is
endorsed or attached to the contract;
(14) [(15)] include any eligibility and effective
date requirements, including a definition of eligible dependents
and the effective date of their coverage;
(15) [(16)] include the conditions under which
coverage will terminate;
(16) [(17)] explain any subrogation arrangements;
(17) [(18)] contain a payment provision that provides
for a grace period of at least 31 days; and
(18) [(19)] include conditions under which contract
rates may be modified[; and
[(20) include any other items required by the
executive director as determined by rule].
SECTION 3. Section 953.162, Occupations Code, is amended to
read as follows:
Sec. 953.162. APPOINTMENT AND RESPONSIBILITIES OF
ADMINISTRATOR. [(a)] A company may appoint an administrator or
designate a person to be responsible for:
(1) all or any part of the administration or sale of
legal service contracts; and
(2) compliance with this chapter.
[(b) The executive director may adopt rules regarding the
registration of an administrator with the department.]
SECTION 4. Chapter 953, Occupations Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. ENFORCEMENT
Sec. 953.251. DECEPTIVE TRADE PRACTICE. A violation of
this chapter is a deceptive trade practice actionable under
Subchapter E, Chapter 17, Business & Commerce Code.
SECTION 5. The following provisions of the Occupations Code
are repealed:
(1) Sections 953.001(4), (5), and (6);
(2) Sections 953.004, 953.005, and 953.155; and
(3) Subchapters B, C, and E, Chapter 953.
SECTION 6. (a) On the effective date of this Act, a
registration issued under former Subchapter B, Chapter 953,
Occupations Code, expires.
(b) On the effective date of this Act, a pending proceeding
under Chapter 953, Occupations Code, including a complaint
investigation, disciplinary action, or administrative penalty
proceeding, relating to a registration issued under former
Subchapter B, Chapter 953, Occupations Code, or relating to another
former provision of Chapter 953, Occupations Code, that is repealed
by this Act, is dismissed.
SECTION 7. This Act takes effect only if a specific
appropriation for the implementation of the Act is provided in a
general appropriations act of the 85th Legislature.
SECTION 8. This Act takes effect September 1, 2019.
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