Texas 2019 - 86th Regular

Texas House Bill HB3308 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	86R10733 JES-F
2	2	By: Smithee H.B. No. 3308
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to nonprofit legal services corporations.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 501.204(a), Insurance Code, is amended
10	10	to read as follows:
11	11	(a) This section applies to each insurer authorized to
12	12	engage in business in this state under:
13	13	(1) Chapter 841;
14	14	(2) Chapter 842;
15	15	(3) Section 1367.053, Subchapter A, Chapter 1452,
16	16	Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as applicable
17	17	to a health maintenance organization, Chapter 843, Chapter 1271, or
18	18	Chapter 1272;
19	19	(4) Chapter 882;
20	20	(5) Chapter 884;
21	21	(6) Chapter 885;
22	22	(7) Chapter 887;
23	23	(8) Chapter 888;
24	24	(9) [Chapter 961;
25	25	[(10)] Chapter 962;
26	26	(10) [(11)] Chapter 982;
27	27	(11) [(12)] Subchapter B, Chapter 1103;
28	28	(12) [(13)] Subchapter A, Chapter 1104;
29	29	(13) [(14)] Chapter 1201, or a provision listed in
30	30	Section 1201.005;
31	31	(14) [(15)] Chapter 1551;
32	32	(15) [(16)] Chapter 1578; or
33	33	(16) [(17)] Chapter 1601.
34	34	SECTION 2. Section 961.002(a), Insurance Code, is amended
35	35	to read as follows:
36	36	(a) The Texas Nonprofit Corporation Law as described by
37	37	Section 1.008, Business Organizations Code, applies [Texas
38	38	Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
39	39	Vernon's Texas Civil Statutes) and the Texas Non-Profit Corporation
40	40	Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)
41	41	apply] to a nonprofit legal services corporation to the extent
42	42	provided by [not in conflict with] this chapter.
43	43	SECTION 3. Section 961.003, Insurance Code, is amended to
44	44	read as follows:
45	45	Sec. 961.003. CORPORATION NOT SUBJECT TO DEPARTMENT
46	46	REGULATION. A [Each] nonprofit legal services corporation is not
47	47	subject to [this chapter and to direct] regulation by the
48	48	department.
49	49	SECTION 4. Section 961.004, Insurance Code, is amended to
50	50	read as follows:
51	51	Sec. 961.004. CORPORATION NOT ENGAGED IN BUSINESS OF
52	52	INSURANCE. A nonprofit legal services corporation [that complies
53	53	with this chapter] is not engaged in the business of insurance and[,
54	54	except as provided by Section 961.002(b),] is not subject to laws
55	55	relating to insurers.
56	56	SECTION 5. The heading to Section 961.051, Insurance Code,
57	57	is amended to read as follows:
58	58	Sec. 961.051. FILING OF CERTIFICATE OF FORMATION
59	59	[APPLICATION FOR CORPORATE CHARTER]; NONPROFIT STATUS REQUIRED.
60	60	SECTION 6. Section 961.051, Insurance Code, is amended by
61	61	amending Subsection (a) and adding Subsection (a-1) to read as
62	62	follows:
63	63	(a) Seven or more persons may file with [apply to] the
64	64	secretary of state a certificate of formation in accordance with
65	65	Title 1, Business Organizations Code, to form a nonprofit legal
66	66	services corporation.
67	67	(a-1) Notwithstanding Subsection (a), a nonprofit legal
68	68	services corporation that on or before September 1, 2019, was
69	69	organized [for a corporate charter] under the former Texas
70	70	Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
71	71	Texas Civil Statutes) or was formed under the Texas Nonprofit
72	72	Corporation Law, as described by Section 1.008, Business
73	73	Organizations Code, is [for] a nonprofit legal services corporation
74	74	for purposes of this chapter.
75	75	SECTION 7. The heading to Subchapter D, Chapter 961,
76	76	Insurance Code, is amended to read as follows:
77	77	SUBCHAPTER D. OFFICERS [BOARD OF DIRECTORS; PERSONNEL]
78	78	SECTION 8. Section 961.152, Insurance Code, is amended to
79	79	read as follows:
80	80	Sec. 961.152. FINANCIAL OFFICER[; BOND]. [(a)] A nonprofit
81	81	legal services corporation, by resolution entered in its minutes,
82	82	shall designate one or more officers to be responsible for handling
83	83	the corporation's funds. [The president, secretary, or general
84	84	manager of the corporation must certify a copy of the resolution,
85	85	and the corporation shall file the copy with the department.
86	86	[(b) Except as provided by Subsection (c), the corporation
87	87	shall make and file a separate or blanket surety bond covering each
88	88	officer designated under Subsection (a). The bond must:
89	89	[(1) be issued by a corporate surety company
90	90	authorized to issue surety bonds in this state;
91	91	[(2) be satisfactory to the department and payable to
92	92	the department for the use and benefit of the corporation;
93	93	[(3) obligate the principal and surety to pay any
94	94	monetary loss to the corporation through an act of fraud,
95	95	dishonesty, forgery, theft, embezzlement, or wilful misapplication
96	96	by a covered officer, whether acting alone or with other persons,
97	97	while employed as or exercising the powers of an officer designated
98	98	under Subsection (a); and
99	99	[(4) be in an amount of at least $25,000 for each
100	100	officer covered.
101	101	[(c) Instead of the bond required by Subsection (b), an
102	102	officer designated under Subsection (a) may deposit with the
103	103	department cash or securities approved by the department in the
104	104	amount and subject to the conditions applicable to the bond.
105	105	[(d) Successive recoveries may be made on a bond under this
106	106	section until the amount of the bond is exhausted.]
107	107	SECTION 9. The heading to Subchapter E, Chapter 961,
108	108	Insurance Code, is amended to read as follows:
109	109	SUBCHAPTER E. OPERATION [REGULATION] OF NONPROFIT LEGAL SERVICES
110	110	CORPORATIONS
111	111	SECTION 10. Section 961.206, Insurance Code, is amended to
112	112	read as follows:
113	113	Sec. 961.206. ADVANCE TO CORPORATION. Any person may
114	114	advance to a nonprofit legal services corporation, on a contingent
115	115	liability basis, money necessary for the purposes of the
116	116	corporation's business or to comply with this chapter[, except that
117	117	the advance may be repaid only on prior approval of the department].
118	118	The advance may be made in an amount and at a rate of interest agreed
119	119	to by the person and the corporation.
120	120	SECTION 11. Section 961.207, Insurance Code, is amended to
121	121	read as follows:
122	122	Sec. 961.207. PARTICIPATION AGREEMENTS. A [(a) Subject to
123	123	Subsection (b), a] nonprofit legal services corporation may:
124	124	(1) contract with another nonprofit legal services
125	125	corporation or an insurer authorized to engage in business in this
126	126	state for joint participation through:
127	127	(A) a mutualization contract agreement; or
128	128	(B) a guaranty treaty; and
129	129	(2) cede or accept a legal services obligation from
130	130	such a corporation or insurer on all or part of a legal services
131	131	obligation.
132	132	[(b) Each document used for a purpose described by
133	133	Subsection (a) must be filed with the department and approved by the
134	134	department to be in accordance with the corporation's plan of
135	135	operation before the document takes effect.
136	136	[(c) To carry out the purposes of this section, the
137	137	commissioner may adopt rules governing an agreement with an insurer
138	138	under Subsection (a).]
139	139	SECTION 12. Section 961.254(a), Insurance Code, is amended
140	140	to read as follows:
141	141	(a) A nonprofit legal services corporation may issue a
142	142	contract for legal services[, as provided by rules adopted by the
143	143	commissioner,] providing for indemnity for costs of services of an
144	144	attorney who is not a contracting attorney [if the department is
145	145	satisfied that the corporation's plan of operation, experience, and
146	146	financial standing, including a proper amount of unencumbered
147	147	surplus, are adequate to ensure performance of the contract].
148	148	SECTION 13. Section 961.301, Insurance Code, is amended to
149	149	read as follows:
150	150	Sec. 961.301. CONTRACTS WITH ATTORNEYS. [(a)] A nonprofit
151	151	legal services corporation may contract with qualified attorneys
152	152	[as provided by this chapter] to ensure to each participant legal
153	153	services performed by the attorneys under the contract for legal
154	154	services between the corporation and the participant. A contracting
155	155	attorney must be licensed to practice law in the jurisdiction in
156	156	which legal services are to be provided.
157	157	[(b) Before issuing a contract for legal services and while
158	158	the corporation continues to issue those contracts, the corporation
159	159	must maintain the number of contracting attorneys that the
160	160	department determines is necessary to service the participant
161	161	contracts contemplated by the corporation's plan of operation.]
162	162	SECTION 14. Section 961.307, Insurance Code, is amended to
163	163	read as follows:
164	164	Sec. 961.307. COMPLAINT REGARDING ATTORNEY. If a nonprofit
165	165	legal services corporation [the department] receives a complaint
166	166	concerning the performance of an attorney connected with the [a
167	167	nonprofit legal services] corporation, the corporation
168	168	[department] shall refer the complaint to:
169	169	(1) the supreme court of this state or a person that
170	170	the supreme court designates to receive attorney grievances from
171	171	the public, if the attorney is licensed by this state; or
172	172	(2) the appropriate licensing agency of another
173	173	jurisdiction where the attorney is licensed, if the attorney is not
174	174	licensed by this state.
175	175	SECTION 15. Section 961.402, Insurance Code, is amended to
176	176	read as follows:
177	177	Sec. 961.402. VOLUNTARY DISSOLUTION. (a) The board of
178	178	directors of a nonprofit legal services corporation may vote to
179	179	dissolve the corporation at any time[, but the corporation may not
180	180	be dissolved without the department's approval].
181	181	(b) In a dissolution under this section, the officers of the
182	182	corporation shall settle all outstanding obligations to
183	183	participants and otherwise dispose of the corporation's affairs.
184	184	After the officers have completed the corporation's liquidation
185	185	[and a final settlement has been filed with and approved by the
186	186	department], the corporation shall be dissolved as provided by:
187	187	(1) the provisions relating to winding up and
188	188	termination under Subchapter G, Chapter 22, Business Organizations
189	189	Code; or
190	190	(2) if the corporation was organized [to voluntary
191	191	dissolution] under the former Texas Non-Profit Corporation Act
192	192	(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), the
193	193	provisions relating to voluntary dissolution under that former law.
194	194	SECTION 16. Section 4001.002(a), Insurance Code, is amended
195	195	to read as follows:
196	196	(a) Except as otherwise provided by this code, this title
197	197	applies to each person licensed under:
198	198	(1) Subchapter H, Chapter 885;
199	199	(2) Subchapter F, Chapter 911;
200	200	(3) Section 912.251;
201	201	(4) [Section 961.005;
202	202	[(5)] Subchapter E, Chapter 981;
203	203	(5) [(6)] Subchapter D, Chapter 1152;
204	204	(6) [(7)] Subchapter C or D of this chapter;
205	205	(7) [(8)] Subtitle B, C, or D of this title; or
206	206	(8) [(9)] Subsection (c), Article 5.13-1.
207	207	SECTION 17. The following provisions of the Insurance Code
208	208	are repealed:
209	209	(1) Chapter 260;
210	210	(2) Sections 961.002(b) and 961.005;
211	211	(3) Section 961.052;
212	212	(4) Subchapter C, Chapter 961;
213	213	(5) Sections 961.151 and 961.153;
214	214	(6) Sections 961.201, 961.202, 961.203, 961.204,
215	215	961.205, 961.208, 961.209, 961.210, 961.211(b), and 961.212;
216	216	(7) Section 961.252;
217	217	(8) Sections 961.304 and 961.305(b); and
218	218	(9) Sections 961.401, 961.403, and 961.404.
219	219	SECTION 18. This Act takes effect September 1, 2019.