Texas 2019 - 86th Regular

Texas Senate Bill SB1623 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1623
	1	+	By: Zaffirini, et al. S.B. No. 1623
	2	+	(Smithee)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to nonprofit legal services corporations.
6	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
7	9		SECTION 1. Section 501.204(a), Insurance Code, is amended
8	10		to read as follows:
9	11		(a) This section applies to each insurer authorized to
10	12		engage in business in this state under:
11	13		(1) Chapter 841;
12	14		(2) Chapter 842;
13	15		(3) Section 1367.053, Subchapter A, Chapter 1452,
14	16		Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as applicable
15	17		to a health maintenance organization, Chapter 843, Chapter 1271, or
16	18		Chapter 1272;
17	19		(4) Chapter 882;
18	20		(5) Chapter 884;
19	21		(6) Chapter 885;
20	22		(7) Chapter 887;
21	23		(8) Chapter 888;
22	24		(9) [Chapter 961;
23	25		[(10)] Chapter 962;
24	26		(10) [(11)] Chapter 982;
25	27		(11) [(12)] Subchapter B, Chapter 1103;
26	28		(12) [(13)] Subchapter A, Chapter 1104;
27	29		(13) [(14)] Chapter 1201, or a provision listed in
28	30		Section 1201.005;
29	31		(14) [(15)] Chapter 1551;
30	32		(15) [(16)] Chapter 1578; or
31	33		(16) [(17)] Chapter 1601.
32	34		SECTION 2. Section 961.002(a), Insurance Code, is amended
33	35		to read as follows:
34	36		(a) The Texas Nonprofit Corporation Law as described by
35	37		Section 1.008, Business Organizations Code, applies [Texas
36	38		Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
37	39		Vernon's Texas Civil Statutes) and the Texas Non-Profit Corporation
38	40		Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)
39	41		apply] to a nonprofit legal services corporation to the extent
40	42		provided by [not in conflict with] this chapter.
41	43		SECTION 3. Section 961.003, Insurance Code, is amended to
42	44		read as follows:
43	45		Sec. 961.003. CORPORATION NOT SUBJECT TO DEPARTMENT
44	46		REGULATION. A [Each] nonprofit legal services corporation is not
45	47		subject to [this chapter and to direct] regulation by the
46	48		department.
47	49		SECTION 4. Section 961.004, Insurance Code, is amended to
48	50		read as follows:
49	51		Sec. 961.004. CORPORATION NOT ENGAGED IN BUSINESS OF
50	52		INSURANCE. A nonprofit legal services corporation [that complies
51	53		with this chapter] is not engaged in the business of insurance and[,
52	54		except as provided by Section 961.002(b),] is not subject to laws
53	55		relating to insurers.
54	56		SECTION 5. The heading to Section 961.051, Insurance Code,
55	57		is amended to read as follows:
56	58		Sec. 961.051. FILING OF CERTIFICATE OF FORMATION
57	59		[APPLICATION FOR CORPORATE CHARTER]; NONPROFIT STATUS REQUIRED.
58	60		SECTION 6. Section 961.051, Insurance Code, is amended by
59	61		amending Subsection (a) and adding Subsection (a-1) to read as
60	62		follows:
61	63		(a) Seven or more persons may file with [apply to] the
62	64		secretary of state a certificate of formation in accordance with
63	65		Title 1, Business Organizations Code, to form a nonprofit legal
64	66		services corporation.
65	67		(a-1) Notwithstanding Subsection (a), a nonprofit legal
66	68		services corporation that on or before September 1, 2019, was
67	69		organized [for a corporate charter] under the former Texas
68	70		Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
69	71		Texas Civil Statutes) or was formed under the Texas Nonprofit
70	72		Corporation Law, as described by Section 1.008, Business
71	73		Organizations Code, is [for] a nonprofit legal services corporation
72	74		for purposes of this chapter.
73	75		SECTION 7. The heading to Subchapter D, Chapter 961,
74	76		Insurance Code, is amended to read as follows:
75	77		SUBCHAPTER D. OFFICERS [BOARD OF DIRECTORS; PERSONNEL]
76	78		SECTION 8. Section 961.152, Insurance Code, is amended to
77	79		read as follows:
78	80		Sec. 961.152. FINANCIAL OFFICER[; BOND]. [(a)] A
79	81		nonprofit legal services corporation, by resolution entered in its
80	82		minutes, shall designate one or more officers to be responsible for
81	83		handling the corporation's funds. [The president, secretary, or
82	84		general manager of the corporation must certify a copy of the
83	85		resolution, and the corporation shall file the copy with the
84	86		department.
85	87		[(b) Except as provided by Subsection (c), the corporation
86	88		shall make and file a separate or blanket surety bond covering each
87	89		officer designated under Subsection (a). The bond must:
88	90		[(1) be issued by a corporate surety company
89	91		authorized to issue surety bonds in this state;
90	92		[(2) be satisfactory to the department and payable to
91	93		the department for the use and benefit of the corporation;
92	94		[(3) obligate the principal and surety to pay any
93	95		monetary loss to the corporation through an act of fraud,
94	96		dishonesty, forgery, theft, embezzlement, or wilful misapplication
95	97		by a covered officer, whether acting alone or with other persons,
96	98		while employed as or exercising the powers of an officer designated
97	99		under Subsection (a); and
98	100		[(4) be in an amount of at least $25,000 for each
99	101		officer covered.
100	102		[(c) Instead of the bond required by Subsection (b), an
101	103		officer designated under Subsection (a) may deposit with the
102	104		department cash or securities approved by the department in the
103	105		amount and subject to the conditions applicable to the bond.
104	106		[(d) Successive recoveries may be made on a bond under this
105	107		section until the amount of the bond is exhausted.]
106	108		SECTION 9. The heading to Subchapter E, Chapter 961,
107	109		Insurance Code, is amended to read as follows:
108	110		SUBCHAPTER E. OPERATION [REGULATION] OF NONPROFIT LEGAL SERVICES
109	111		CORPORATIONS
110	112		SECTION 10. Section 961.206, Insurance Code, is amended to
111	113		read as follows:
112	114		Sec. 961.206. ADVANCE TO CORPORATION. Any person may
113	115		advance to a nonprofit legal services corporation, on a contingent
114	116		liability basis, money necessary for the purposes of the
115	117		corporation's business or to comply with this chapter[, except that
116	118		the advance may be repaid only on prior approval of the department].
117	119		The advance may be made in an amount and at a rate of interest agreed
118	120		to by the person and the corporation.
119	121		SECTION 11. Section 961.207, Insurance Code, is amended to
120	122		read as follows:
121	123		Sec. 961.207. PARTICIPATION AGREEMENTS. A [(a) Subject to
122	124		Subsection (b), a] nonprofit legal services corporation may:
123	125		(1) contract with another nonprofit legal services
124	126		corporation or an insurer authorized to engage in business in this
125	127		state for joint participation through:
126	128		(A) a mutualization contract agreement; or
127	129		(B) a guaranty treaty; and
128	130		(2) cede or accept a legal services obligation from
129	131		such a corporation or insurer on all or part of a legal services
130	132		obligation.
131	133		[(b) Each document used for a purpose described by
132	134		Subsection (a) must be filed with the department and approved by the
133	135		department to be in accordance with the corporation's plan of
134	136		operation before the document takes effect.
135	137		[(c) To carry out the purposes of this section, the
136	138		commissioner may adopt rules governing an agreement with an insurer
137	139		under Subsection (a).]
138	140		SECTION 12. Section 961.254(a), Insurance Code, is amended
139	141		to read as follows:
140	142		(a) A nonprofit legal services corporation may issue a
141	143		contract for legal services[, as provided by rules adopted by the
142	144		commissioner,] providing for indemnity for costs of services of an
143	145		attorney who is not a contracting attorney [if the department is
144	146		satisfied that the corporation's plan of operation, experience, and
145	147		financial standing, including a proper amount of unencumbered
146	148		surplus, are adequate to ensure performance of the contract].
147	149		SECTION 13. Section 961.301, Insurance Code, is amended to
148	150		read as follows:
149	151		Sec. 961.301. CONTRACTS WITH ATTORNEYS. [(a)] A nonprofit
150	152		legal services corporation may contract with qualified attorneys
151	153		[as provided by this chapter] to ensure to each participant legal
152	154		services performed by the attorneys under the contract for legal
153	155		services between the corporation and the participant. A
154	156		contracting attorney must be licensed to practice law in the
155	157		jurisdiction in which legal services are to be provided.
156	158		[(b) Before issuing a contract for legal services and while
157	159		the corporation continues to issue those contracts, the corporation
158	160		must maintain the number of contracting attorneys that the
159	161		department determines is necessary to service the participant
160	162		contracts contemplated by the corporation's plan of operation.]
161	163		SECTION 14. Section 961.307, Insurance Code, is amended to
162	164		read as follows:
163	165		Sec. 961.307. COMPLAINT REGARDING ATTORNEY. If a nonprofit
164	166		legal services corporation [the department] receives a complaint
165	167		concerning the performance of an attorney connected with the [a
166	168		nonprofit legal services] corporation, the corporation
167	169		[department] shall refer the complaint to:
168	170		(1) the supreme court of this state or a person that
169	171		the supreme court designates to receive attorney grievances from
170	172		the public, if the attorney is licensed by this state; or
171	173		(2) the appropriate licensing agency of another
172	174		jurisdiction where the attorney is licensed, if the attorney is not
173	175		licensed by this state.
174	176		SECTION 15. Section 961.402, Insurance Code, is amended to
175	177		read as follows:
176	178		Sec. 961.402. VOLUNTARY DISSOLUTION. (a) The board of
177	179		directors of a nonprofit legal services corporation may vote to
178	180		dissolve the corporation at any time[, but the corporation may not
179	181		be dissolved without the department's approval].
180	182		(b) In a dissolution under this section, the officers of the
181	183		corporation shall settle all outstanding obligations to
182	184		participants and otherwise dispose of the corporation's affairs.
183	185		After the officers have completed the corporation's liquidation
184	186		[and a final settlement has been filed with and approved by the
185	187		department], the corporation shall be dissolved as provided by:
186	188		(1) the provisions relating to winding up and
187	189		termination under Subchapter G, Chapter 22, Business Organizations
188	190		Code; or
189	191		(2) if the corporation was organized [to voluntary
190	192		dissolution] under the former Texas Non-Profit Corporation Act
191	193		(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), the
192	194		provisions relating to voluntary dissolution under that former law.
193	195		SECTION 16. Section 4001.002(a), Insurance Code, is amended
194	196		to read as follows:
195	197		(a) Except as otherwise provided by this code, this title
196	198		applies to each person licensed under:
197	199		(1) Subchapter H, Chapter 885;
198	200		(2) Subchapter F, Chapter 911;
199	201		(3) Section 912.251;
200	202		(4) [Section 961.005;
201	203		[(5)] Subchapter E, Chapter 981;
202	204		(5) [(6)] Subchapter D, Chapter 1152;
203	205		(6) [(7)] Subchapter C or D of this chapter;
204	206		(7) [(8)] Subtitle B, C, or D of this title; or
205	207		(8) [(9)] Subsection (c), Article 5.13-1.
206	208		SECTION 17. The following provisions of the Insurance Code
207	209		are repealed:
208	210		(1) Chapter 260;
209	211		(2) Sections 961.002(b) and 961.005;
210	212		(3) Section 961.052;
211	213		(4) Subchapter C, Chapter 961;
212	214		(5) Sections 961.151 and 961.153;
213	215		(6) Sections 961.201, 961.202, 961.203, 961.204,
214	216		961.205, 961.208, 961.209, 961.210, 961.211(b), and 961.212;
215	217		(7) Section 961.252;
216	218		(8) Sections 961.304 and 961.305(b); and
217	219		(9) Sections 961.401, 961.403, and 961.404.
218	220		SECTION 18. This Act takes effect September 1, 2019.
219		-	______________________________ ______________________________
220		-	President of the Senate Speaker of the House
221		-	I hereby certify that S.B. No. 1623 passed the Senate on
222		-	May 10, 2019, by the following vote: Yeas 31, Nays 0.
223		-	______________________________
224		-	Secretary of the Senate
225		-	I hereby certify that S.B. No. 1623 passed the House on
226		-	May 22, 2019, by the following vote: Yeas 142, Nays 2, two
227		-	present not voting.
228		-	______________________________
229		-	Chief Clerk of the House
230		-	Approved:
231		-	______________________________
232		-	Date
233		-	______________________________
234		-	Governor