Texas 2021 - 87th Regular

Texas House Bill HB4313 Compare Versions

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

Old	New	Differences
1	1	By: Vo H.B. No. 4313
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the enforcement of insurance laws, including laws
7	7	governing the unauthorized business of insurance; authorizing
8	8	administrative penalties.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 36.157(b), Insurance Code, is amended to
11	11	read as follows:
12	12	(b) On certification by the commissioner under official
13	13	seal, testimony taken or records produced under this subchapter or
14	14	acquired in response to a request for information under Section
15	15	101.104 and held by the department are admissible in evidence in a
16	16	case without:
17	17	(1) prior proof of correctness; and
18	18	(2) proof, other than the certificate of the
19	19	commissioner, that the testimony or records were received from the
20	20	person testifying or producing the records.
21	21	SECTION 2. Section 36.158(a), Insurance Code, is amended to
22	22	read as follows:
23	23	(a) A record or other evidence acquired under a subpoena
24	24	under this subchapter or in response to a request for information
25	25	under Section 101.104 is not a public record for the period the
26	26	commissioner considers reasonably necessary to:
27	27	(1) complete the investigation;
28	28	(2) protect the person being investigated from
29	29	unwarranted injury; or
30	30	(3) serve the public interest.
31	31	SECTION 3. Section 83.051, Insurance Code, is amended to
32	32	read as follows:
33	33	Sec. 83.051. AUTHORITY OF COMMISSIONER TO ISSUE ORDER. (a)
34	34	The commissioner ex parte may issue an emergency cease and desist
35	35	order if:
36	36	(1) the commissioner believes that:
37	37	(A) an authorized person engaging in the business
38	38	of insurance is:
39	39	(i) committing an unfair act; or
40	40	(ii) in a hazardous condition or a
41	41	hazardous financial condition under Section 843.406 or Subchapter
42	42	A, Chapter 404, as determined by the commissioner; or
43	43	(B) an unauthorized person:
44	44	(i) is engaging in the business of
45	45	insurance in violation of Chapter 101 or in violation of a rule
46	46	adopted under that chapter; and [or]
47	47	(ii) does not meet a statutory exception or
48	48	exemption [is engaging in the business of insurance in violation of
49	49	Chapter 101 and is committing an unfair act]; and
50	50	(2) with respect to conduct described by Subdivision
51	51	(1)(A), it appears to the commissioner that the alleged conduct:
52	52	(A) is fraudulent;
53	53	(B) is hazardous or creates an immediate danger
54	54	to the public safety; or
55	55	(C) is causing or can be reasonably expected to
56	56	cause public injury that:
57	57	(i) is likely to occur at any moment;
58	58	(ii) is incapable of being repaired or
59	59	rectified; and
60	60	(iii) has or is likely to have influence or
61	61	effect.
62	62	(b) An order is final on the 61st [31st] day after the date
63	63	it is served [received], unless the affected person requests a
64	64	hearing under Section 83.053.
65	65	SECTION 4. Section 83.053(b), Insurance Code, is amended to
66	66	read as follows:
67	67	(b) The affected person must request the hearing not later
68	68	than the 60th [30th] day after the date on which the person is
69	69	served with an [receives the] order required by Section 83.052.
70	70	SECTION 5. Sections 83.054(a), (b), and (c), Insurance
71	71	Code, are amended to read as follows:
72	72	(a) On receiving a timely request for a hearing under
73	73	Section 83.053, the department [commissioner] shall docket the case
74	74	at the State Office of Administrative Hearings not later than the
75	75	30th day after the date the department receives the request [serve
76	76	notice of the time and place of the hearing].
77	77	(b) The hearing is subject to the procedures for contested
78	78	cases under Chapter 2001, Government Code. [The hearing must be
79	79	held not later than the 10th day after the date the commissioner
80	80	receives the request for a hearing unless the parties mutually
81	81	agree to a later hearing date.]
82	82	(c) At the hearing, the person requesting the hearing must
83	83	show [is entitled to show cause] why the order should not be
84	84	affirmed.
85	85	SECTION 6. Section 84.021, Insurance Code, is amended to
86	86	read as follows:
87	87	Sec. 84.021. IMPOSITION OF PENALTY. The commissioner may
88	88	impose an administrative penalty on a person licensed or regulated
89	89	under this code or another insurance law of this state, including an
90	90	unauthorized person as defined by Section 83.001, who violates:
91	91	(1) this code;
92	92	(2) another insurance law of this state; or
93	93	(3) a rule or order adopted under this code or another
94	94	insurance law of this state.
95	95	SECTION 7. Section 101.051(b), Insurance Code, is amended
96	96	to read as follows:
97	97	(b) The following acts in this state constitute the business
98	98	of insurance in this state:
99	99	(1) making or proposing to make, as an insurer, an
100	100	insurance contract;
101	101	(2) making or proposing to make, as guarantor or
102	102	surety, a guaranty or suretyship contract as a vocation and not
103	103	merely incidental to another legitimate business or activity of the
104	104	guarantor or surety;
105	105	(3) taking or receiving an insurance application;
106	106	(4) receiving or collecting any consideration for
107	107	insurance, including:
108	108	(A) a premium;
109	109	(B) a commission;
110	110	(C) a membership fee;
111	111	(D) an assessment; or
112	112	(E) dues;
113	113	(5) issuing or delivering an insurance contract to:
114	114	(A) a resident of this state; or
115	115	(B) a person authorized to do business in this
116	116	state;
117	117	(6) directly or indirectly acting as an agent for or
118	118	otherwise representing or assisting an insurer or person in:
119	119	(A) soliciting, negotiating, procuring, or
120	120	effectuating insurance or a renewal of insurance;
121	121	(B) disseminating information relating to
122	122	coverage or rates;
123	123	(C) forwarding an insurance application;
124	124	(D) delivering an insurance policy or contract;
125	125	(E) inspecting a risk;
126	126	(F) setting a rate;
127	127	(G) investigating or adjusting a claim or loss;
128	128	(H) transacting a matter after the effectuation
129	129	of the contract that arises out of the contract; or
130	130	(I) representing or assisting an insurer or
131	131	person in any other manner in the transaction of insurance with
132	132	respect to a subject of insurance that is resident, located, or to
133	133	be performed in this state;
134	134	(7) contracting to provide in this state
135	135	indemnification or expense reimbursement for a medical expense by
136	136	direct payment, reimbursement, or otherwise to a person domiciled
137	137	in this state or for a risk located in this state, whether as an
138	138	insurer, agent, administrator, trust, or funding mechanism or by
139	139	another method;
140	140	(8) doing any kind of insurance business specifically
141	141	recognized as constituting insurance business within the meaning of
142	142	statutes relating to insurance;
143	143	(9) doing or proposing to do any insurance business
144	144	that is in substance equivalent to conduct described by
145	145	Subdivisions (1)-(8) in a manner designed to evade statutes
146	146	relating to insurance or a claimed exception or exemption to
147	147	insurance regulation; or
148	148	(10) any other transaction of business in this state
149	149	by an insurer.
150	150	SECTION 8. Section 101.103(a), Insurance Code, is amended
151	151	to read as follows:
152	152	(a) If the commissioner has reason to believe a person,
153	153	including an insurer, has violated or is threatening to violate
154	154	this chapter or Chapter 226 or a rule adopted under this chapter or
155	155	Chapter 226, or that a person, including an insurer, violating this
156	156	chapter or Chapter 226 has engaged in or is threatening to engage in
157	157	an unfair act, the commissioner may:
158	158	(1) issue a cease and desist order [under Subchapter
159	159	D];
160	160	(2) impose an administrative penalty under Chapter 84
161	161	[seek injunctive relief under Section 101.105];
162	162	(3) direct the person to make restitution;
163	163	(4) [(3)] request the attorney general to recover a
164	164	civil penalty, seek restitution, or seek injunctive relief, or any
165	165	combination of those remedies, under this chapter or another law of
166	166	this state [under Section 101.105]; or
167	167	(5) [(4)] take any combination of those actions.
168	168	SECTION 9. Section 101.104, Insurance Code, is amended to
169	169	read as follows:
170	170	Sec. 101.104. REQUEST FOR INFORMATION. (a) If the
171	171	commissioner or department has reason to believe that a person,
172	172	including an insurer, is performing an act described by Section
173	173	101.051 or 101.052, the commissioner or department may send the
174	174	person or insurer a written request for information [person shall
175	175	immediately provide to the commissioner, on written request of the
176	176	commissioner, information] relating to that act.
177	177	(b) A person receiving an inquiry under Subsection (a) must
178	178	respond to the inquiry in writing not later than the 15th day after
179	179	the day the person receives the inquiry. If the department or
180	180	commissioner receives written notice from the person that
181	181	additional time is required to respond to the inquiry, the
182	182	department or commissioner shall grant a 10-day extension of the
183	183	time to respond to the inquiry.
184	184	(c) Failure of a person or insurer to provide the
185	185	information requested constitutes a violation under this chapter
186	186	and may be used as evidence to support the issuance of a cease and
187	187	desist order under Chapter 83. The commissioner may adopt as
188	188	findings of fact allegations made by the department in a hearing
189	189	under Chapter 83 if the department sought information on the
190	190	allegations from the person or insurer who is the respondent in the
191	191	proceeding in a request for information and the person or insurer
192	192	failed, wholly or partly, to respond to the request.
193	193	SECTION 10. The heading to Section 101.105, Insurance Code,
194	194	is amended to read as follows:
195	195	Sec. 101.105. CIVIL PENALTY; RESTITUTION AND INJUNCTIVE
196	196	RELIEF.
197	197	SECTION 11. Sections 101.105(a) and (c), Insurance Code,
198	198	are amended to read as follows:
199	199	(a) A person or entity, including an insurer, that violates
200	200	this chapter or Chapter 226 is subject to a civil penalty of not
201	201	more than $25,000 [$10,000] for each act of violation and for each
202	202	day of violation.
203	203	(c) On request by the commissioner, the attorney general
204	204	shall institute and conduct a civil suit in the name of the state
205	205	for injunctive relief, to recover a civil penalty, for restitution,
206	206	or for any combination of those remedies [both injunctive relief
207	207	and a civil penalty], as authorized under this subchapter or
208	208	another law of this state.
209	209	SECTION 12. The heading to Subchapter D, Chapter 101,
210	210	Insurance Code, is amended to read as follows:
211	211	SUBCHAPTER D. CONTESTED CASES; PRIOR PROCEEDINGS; RULES [CEASE AND
212	212	DESIST ORDERS]
213	213	SECTION 13. Section 101.151, Insurance Code, is amended to
214	214	read as follows:
215	215	Sec. 101.151. POWERS OF COMMISSIONER; NOTICE OF HEARING.
216	216	(a) The commissioner may set a hearing on whether to seek
217	217	administrative relief under this chapter [issue a cease and desist
218	218	order under Section 101.153] if the commissioner has reason to
219	219	believe that:
220	220	(1) an insurer or person has violated or is
221	221	threatening to violate this chapter or a rule adopted under this
222	222	chapter; or
223	223	(2) an insurer or person acting in violation of this
224	224	chapter has engaged in or is threatening to engage in an unfair act.
225	225	(b) A proceeding under this chapter is a contested case for
226	226	purposes of Chapter 2001, Government Code, and applicable
227	227	rules [The commissioner shall serve on the insurer or person a
228	228	statement of charges and a notice of hearing in the form provided by
229	229	Section 2001.052, Government Code, and applicable rules of the
230	230	commissioner].
231	231	SECTION 14. Section 101.154, Insurance Code, is amended to
232	232	read as follows:
233	233	Sec. 101.154. ENFORCEMENT; REFERRAL TO ATTORNEY GENERAL.
234	234	The commissioner may refer the matter to the attorney general for
235	235	enforcement if the commissioner has reason to believe that an
236	236	insurer or person has:
237	237	(1) violated an [a cease and desist] order issued
238	238	under this chapter [subchapter]; or
239	239	(2) failed to pay an assessed penalty or restitution.
240	240	SECTION 15. Section 101.156, Insurance Code, is amended to
241	241	read as follows:
242	242	Sec. 101.156. RULES. The commissioner may adopt reasonable
243	243	rules necessary to implement this chapter [subchapter].
244	244	SECTION 16. Section 101.201, Insurance Code, is amended to
245	245	read as follows:
246	246	Sec. 101.201. VALIDITY OF INSURANCE CONTRACTS. (a) An
247	247	insurance contract, agreement, or arrangement prohibited by
248	248	Section 101.102, purported to be effective in this state and
249	249	entered into by an unauthorized insurer or person, is unenforceable
250	250	by the unauthorized insurer or person. A person who in any manner
251	251	assisted directly or indirectly in the procurement, processing,
252	252	administration, claims handling, adjusting, or claims payment of
253	253	the contract, agreement, or arrangement is liable to the insured
254	254	for the full amount of a claim or loss under the terms of the
255	255	contract, agreement, or arrangement if the unauthorized insurer or
256	256	person fails to pay the claim or loss.
257	257	(b) This section does not apply to insurance procured by a
258	258	licensed surplus lines agent from an eligible surplus lines
259	259	insurer, as defined by Chapter 981, and independently procured
260	260	contracts of insurance, as described in Section 101.053(b)(4), that
261	261	are reported and on which premium tax is paid in accordance with
262	262	Chapter 225 or 226 or to another arrangement expressly authorized
263	263	by law.
264	264	SECTION 17. Section 101.202, Insurance Code, is amended to
265	265	read as follows:
266	266	Sec. 101.202. ATTORNEY'S FEES. (a) In an action against an
267	267	unauthorized insurer or unauthorized person on a contract,
268	268	agreement, or arrangement of insurance issued or delivered in this
269	269	state to a resident of this state or to a corporation authorized to
270	270	do business in this state, the court may award to the plaintiff a
271	271	reasonable attorney's fee if:
272	272	(1) the insurer or person failed, for at least 30 days
273	273	after a demand made before the commencement of the action, to make
274	274	payment under the terms of the contract, agreement, or arrangement
275	275	[contract's terms]; and
276	276	(2) the failure to make the payment was vexatious and
277	277	without reasonable cause.
278	278	(b) An unauthorized insurer's or person's failure to defend
279	279	an action described by Subsection (a) is prima facie evidence that
280	280	the failure to make payment was vexatious and without reasonable
281	281	cause.
282	282	SECTION 18. Sections 101.203(a) and (b), Insurance Code,
283	283	are amended to read as follows:
284	284	(a) If the commissioner has reason to believe that insurance
285	285	has been effectuated by or for a person in this state with an
286	286	unauthorized person or insurer, the commissioner shall in writing
287	287	order the person to:
288	288	(1) produce for examination all insurance contracts
289	289	and other documents evidencing insurance with both authorized and
290	290	unauthorized persons or insurers; and
291	291	(2) disclose to the commissioner:
292	292	(A) the amount of insurance;
293	293	(B) the name and address of each insurer;
294	294	(C) the gross amount of premiums paid or to be
295	295	paid; and
296	296	(D) the name and address of each person assisting
297	297	in the solicitation, negotiation, or effectuation of the insurance.
298	298	(b) A person who fails to comply with a written order under
299	299	Subsection (a) before the 31st day after the date of the order or
300	300	who wilfully makes a disclosure that is untrue, deceptive, or
301	301	misleading shall forfeit:
302	302	(1) $1,000 [$50]; and
303	303	(2) an additional $1,000 [$50] for each day the person
304	304	continues to fail to comply after expiration of the 30-day period.
305	305	SECTION 19. Sections 101.152 and 101.153, Insurance Code,
306	306	are repealed.
307	307	SECTION 20. The change in law made by this Act applies only
308	308	to an order issued by the commissioner and an action docketed or
309	309	filed by the commissioner, department, or office of attorney
310	310	general on or after the effective date of this Act. An action
311	311	docketed or filed before the effective date of this Act is governed
312	312	by the law as it existed immediately before the effective date of
313	313	this Act, and that law is continued in effect for that purpose.
314	314	SECTION 21. This Act takes effect September 1, 2021.