H.B. No. 1540
1-1 AN ACT
1-2 relating to the regulation of multiple employer welfare
1-3 arrangements; creating offenses and providing civil and criminal
1-4 penalties; providing for fees.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 3, Insurance Code, is amended by adding
1-7 Subchapter I to read as follows:
1-8 SUBCHAPTER I. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
1-9 Art. 3.95-1. DEFINITIONS. In this subchapter:
1-10 (1) "Board" means the State Board of Insurance.
1-11 (2) "Commissioner" means the commissioner of
1-12 insurance.
1-13 (3) "Employee welfare benefit plan" has the meaning
1-14 assigned by Section 3(1) of the Employee Retirement Income Security
1-15 Act of 1974 (29 U.S.C. Section 1002(1)).
1-16 (4) "Fully insured multiple employer welfare
1-17 arrangement" means a multiple employer welfare arrangement that
1-18 provides benefits to its participating employees and beneficiaries
1-19 for which 100 percent of the liability has been assumed by an
1-20 insurance company authorized to do business in this state.
1-21 (5) "Multiple employer welfare arrangement" has the
1-22 meaning assigned by Section 3(40) of the Employee Retirement Income
1-23 Security Act of 1974 (29 U.S.C. Section 1002(40)) to describe an
1-24 entity which meets either or both of the following criteria:
2-1 (A) one or more of the employer members in the
2-2 multiple employer welfare arrangement is either domiciled in this
2-3 state or has its principal headquarters or principal administrative
2-4 office in this state; or
2-5 (B) the multiple employer welfare arrangement
2-6 solicits an employer that is domiciled in this state or has its
2-7 principal headquarters or principal administrative office in this
2-8 state.
2-9 Art. 3.95-2. CERTIFICATE OF AUTHORITY. (a) A person shall
2-10 not establish or maintain an employee welfare benefit plan which is
2-11 a multiple employer welfare arrangement in this state unless the
2-12 multiple employer welfare arrangement obtains and maintains a
2-13 certificate of authority pursuant to this subchapter. This
2-14 subchapter shall not apply to a fully insured multiple employer
2-15 welfare arrangement for so long as such multiple employer welfare
2-16 arrangement remains fully insured. The commissioner may, from time
2-17 to time, require proof that the multiple employer welfare
2-18 arrangement is fully insured.
2-19 (b) A person wishing to establish an employee welfare
2-20 benefit plan which is a multiple employer welfare arrangement shall
2-21 apply for an initial certificate of authority on a form prescribed
2-22 by the commissioner. The application shall be completed and
2-23 submitted along with all information required by the commissioner,
2-24 including:
2-25 (1) copies of all articles, bylaws, agreements,
2-26 trusts, or other documents or instruments describing the rights and
2-27 obligations of employers, employees, and beneficiaries with respect
3-1 to the multiple employer welfare arrangement;
3-2 (2) current financial statements of the multiple
3-3 employer welfare arrangement;
3-4 (3) proof of a fidelity bond which shall protect
3-5 against acts of fraud or dishonesty in servicing the multiple
3-6 employer welfare arrangement, covering each person responsible for
3-7 servicing the employee welfare benefit plan in an amount equal to
3-8 the greater of 10 percent of the premiums and contributions
3-9 received by the multiple employer welfare arrangement, or 10
3-10 percent of the benefits paid, during the preceding calendar year,
3-11 with a minimum of $10,000 and a maximum of $500,000; no additional
3-12 bond shall be required of a third-party administrator licensed to
3-13 engage in business in this state;
3-14 (4) a statement showing in full detail the plan on
3-15 which the multiple employer welfare arrangement proposes to
3-16 transact business;
3-17 (5) an initial actuarial opinion in compliance with
3-18 the requirements of Subsection (a)(2), Article 3.95-8, of this code
3-19 and subject to Subsection (c), Article 3.95-8, of this code; and
3-20 (6) a certification by the applicant that the multiple
3-21 employer welfare arrangement is in compliance with all applicable
3-22 provisions of the Employee Retirement Income Security Act of 1974
3-23 (29 U.S.C. Section 1001 et seq.).
3-24 (c) The commissioner shall promptly examine the application
3-25 and documents submitted by the applicant and shall have the power
3-26 to conduct any investigation which the commissioner may deem
3-27 necessary and to examine under oath any persons interested in or
4-1 connected with the multiple employer welfare arrangement.
4-2 (d) Within 60 days of the filing of the application, the
4-3 commissioner shall issue the initial certificate of authority,
4-4 which shall be a temporary certificate for a term of one year, to a
4-5 multiple employer welfare arrangement, provided all of the
4-6 following conditions have been met:
4-7 (1) the employers in the multiple employer welfare
4-8 arrangement are members of an association or group of five or more
4-9 businesses which are in the same trade or industry, including
4-10 closely related businesses which provide support, services, or
4-11 supplies primarily to that trade or industry;
4-12 (2) if an association, that the association in the
4-13 multiple employer welfare arrangement is engaged in substantial
4-14 activity for its members other than sponsorship of an employee
4-15 welfare benefit plan;
4-16 (3) if an association, that the association in the
4-17 multiple employer welfare arrangement has been in existence for a
4-18 period of not less than two years prior to engaging in any
4-19 activities relating to the provision of employee health benefits to
4-20 its members;
4-21 (4) the employee welfare plan of the association or
4-22 group in the multiple employer welfare arrangement is controlled
4-23 and sponsored directly by participating employers, participating
4-24 employees, or both;
4-25 (5) the association or group of employers in the
4-26 multiple employer welfare arrangement is a not-for-profit
4-27 organization;
5-1 (6) the multiple employer welfare arrangement has
5-2 within its own organization adequate facilities and competent
5-3 personnel, as determined by the commissioner, to service the
5-4 employee benefit plan or has contracted with a third-party
5-5 administrator licensed to engage in business in this state;
5-6 (7) the multiple employer welfare arrangement has
5-7 applications from not less than five employers and will provide
5-8 similar benefits for not less than 200 separate participating
5-9 employees, and the annual gross premiums of or contributions to the
5-10 plan will be not less than $20,000 for a plan that provides only
5-11 vision benefits, $75,000 for a plan that provides only dental
5-12 benefits, and $200,000 for all other plans;
5-13 (8) the multiple employer welfare arrangement
5-14 possesses a written commitment, binder, or policy for stop-loss
5-15 insurance issued by an insurer authorized to do business in this
5-16 state providing not less than 30 days notice to the commissioner of
5-17 any cancellation or nonrenewal of coverage and which provides both
5-18 specific and aggregate coverage with an aggregate retention of no
5-19 more than 125 percent of the amount of expected claims for the next
5-20 plan year and a specific retention amount annually determined by
5-21 the actuarial report required by Article 3.95-8 of this code;
5-22 (9) both the specific and aggregate coverage will
5-23 require all claims to be submitted within 90 days after the claim
5-24 is incurred and provide a 12-month claims incurred period and a
5-25 15-month paid claims period for each policy year;
5-26 (10) the contributions shall be set to fund at least
5-27 100 percent of the aggregate retention plus all other costs of the
6-1 multiple employer welfare arrangements;
6-2 (11) if the reserves required by Subsection (a)(2)(B),
6-3 Article 3.95-8, of this code exceed the greater of 40 percent of
6-4 the total contributions for the preceding plan year or 40 percent
6-5 of the total contributions expected for the current plan year, the
6-6 contributions may be reduced to fund less than 100 percent of the
6-7 aggregate retention plus all other costs of the multiple employer
6-8 welfare arrangement, but in no event less than the level of
6-9 contributions necessary to fund the minimum reserves required under
6-10 Subsection (a)(2)(B), Article 3.95-8, of this code;
6-11 (12) the reserves described in Subsection (a)(2)(B),
6-12 Article 3.95-8, of this code have been established or will be
6-13 established before the final certificate of authority is issued;
6-14 (13) the multiple employer welfare arrangement has
6-15 established a procedure for handling claims for benefits in the
6-16 event of dissolution of the multiple employer welfare arrangement;
6-17 and
6-18 (14) the multiple employer welfare arrangement has
6-19 obtained the required bond.
6-20 (e) On receipt of its initial certificate of authority, the
6-21 multiple employer welfare arrangement shall commence business.
6-22 (f) The multiple employer welfare arrangement, each of its
6-23 trustees or directors and officers, and any agent or other person
6-24 associated with the multiple employer welfare arrangement, other
6-25 than a participating employer in its capacity as such and its
6-26 participating employees, shall be subject to disqualification if
6-27 the person:
7-1 (1) made a material misstatement or omission in an
7-2 application for a certificate of authority under this subchapter;
7-3 (2) obtained or attempted to obtain at any time a
7-4 certificate of authority or license for an insurance entity through
7-5 intentional misrepresentation or fraud;
7-6 (3) misappropriated or converted to the person's own
7-7 use or improperly withheld money under an employee welfare benefit
7-8 plan or multiple employer welfare arrangement;
7-9 (4) is prohibited from serving in any capacity with
7-10 the multiple employer welfare arrangement under Section 411 of the
7-11 Employee Retirement Income Security Act of 1974 (28 U.S.C. Section
7-12 1111);
7-13 (5) without reasonable cause or excuse failed to
7-14 appear in response to a subpoena, examination, warrant, or any
7-15 other order lawfully issued by the commissioner; or
7-16 (6) has previously been subject to a determination by
7-17 the commissioner resulting in the suspension or revocation of a
7-18 certificate of authority or license or denial of a certificate of
7-19 authority or license on grounds that would be sufficient for
7-20 suspension or revocation.
7-21 (g) A multiple employer welfare arrangement in existence on
7-22 June 1, 1993, shall file notice with the commissioner by
7-23 December 31, 1993, of its intent to apply for an initial
7-24 certificate of authority and shall file for its initial certificate
7-25 of authority by June 1, 1994. The multiple employer welfare
7-26 arrangement may continue to conduct business until the initial
7-27 certificate of authority is granted or finally denied by the
8-1 commissioner.
8-2 (h) A multiple employer welfare arrangement possessing an
8-3 initial certificate of authority must apply for a final certificate
8-4 of authority no later than one year after issuance of its initial
8-5 certificate of authority. The multiple employer welfare
8-6 arrangement shall file an application on a form prescribed by the
8-7 commissioner and furnish such information as may be required by the
8-8 commissioner. The application shall include only:
8-9 (1) the names and addresses of:
8-10 (A) the association or group of employers
8-11 sponsoring the multiple employer welfare arrangement;
8-12 (B) the members of the board of trustees or
8-13 directors, as applicable, of the multiple employer welfare
8-14 arrangement; and
8-15 (C) if not an association, at least five
8-16 employers, which information shall be retained by the commissioner
8-17 as confidential;
8-18 (2) evidence that the bonding requirements have been
8-19 met;
8-20 (3) copies of all plan documents and agreements with
8-21 service providers, which shall be retained by the commissioner as
8-22 confidential; and
8-23 (4) a funding report containing:
8-24 (A) a statement certified by the board of
8-25 trustees or directors, as applicable, and an actuarial opinion that
8-26 all applicable requirements of Article 3.95-8 of this code have
8-27 been met;
9-1 (B) an actuarial opinion which sets forth a
9-2 description of the extent to which contributions or premium rates:
9-3 (i) are not excessive;
9-4 (ii) are not unfairly discriminatory; and
9-5 (iii) are adequate to provide for the
9-6 payment of all obligations and the maintenance of required cash
9-7 reserves and surplus by the multiple employer welfare arrangement;
9-8 (C) a statement of the current value of the
9-9 assets and liabilities accumulated by the multiple employer welfare
9-10 arrangement and a projection of the assets, liabilities, income,
9-11 and expenses of the multiple employer welfare arrangement for the
9-12 next 12-month period; and
9-13 (D) a statement of the costs of coverage to be
9-14 charged, including an itemization of amounts for administration,
9-15 reserves, and other expenses associated with operation of the
9-16 multiple employer welfare arrangement.
9-17 (i) After examination and investigation, the commissioner
9-18 shall issue a final certificate of authority to the multiple
9-19 employer welfare arrangement if the commissioner is satisfied that
9-20 the multiple employer welfare arrangement meets the requirements of
9-21 this subchapter. The commissioner shall refuse to grant a final
9-22 certificate of authority to an applicant that fails to meet the
9-23 requirements of this subchapter. Notice of refusal shall be in
9-24 writing, shall set forth the basis for the refusal, and shall also
9-25 constitute 30 days' advance notice of revocation of the initial
9-26 certificate of authority. The initial certificate of authority may
9-27 be extended for up to one year at the discretion of the
10-1 commissioner on a determination that the multiple employer welfare
10-2 arrangement is likely to meet the requirements of this subchapter
10-3 within one year. No more than one extension of the initial
10-4 certificate of authority shall be granted regardless of the length
10-5 of time for which an extension was granted.
10-6 (j) If the applicant submits a written request for hearing
10-7 within 30 days after mailing of the notice of refusal, revocation
10-8 of the initial certificate of authority shall be temporarily stayed
10-9 and the commissioner shall promptly conduct a hearing in which the
10-10 applicant shall be given an opportunity to show compliance with the
10-11 requirements of this subchapter.
10-12 Art. 3.95-3. FEES. (a) The commissioner shall collect and
10-13 the multiple employer welfare arrangement shall pay fees to the
10-14 commissioner as set by the commissioner for:
10-15 (1) application for initial certificate of
10-16 authority;
10-17 (2) application for final certificate of
10-18 authority; and
10-19 (3) filing fee for annual statement.
10-20 (b) The commissioner shall set the fees established in
10-21 accordance with Subsection (a) of this article in amounts
10-22 reasonable and necessary to defray the cost of administration of
10-23 this subchapter.
10-24 (c) Each multiple employer welfare arrangement shall appoint
10-25 the commissioner as its resident agent for purposes of service of
10-26 process. The fee for such service shall be $50, payable at the
10-27 time of appointment.
11-1 (d) Fees paid under this article shall be deposited in the
11-2 state treasury to the credit of the State Board of Insurance
11-3 operating fund.
11-4 Art. 3.95-4. BENEFITS ALLOWED. (a) A multiple employer
11-5 welfare arrangement authorized under this subchapter shall be
11-6 limited to providing any one or more of the following:
11-7 (1) medical, dental, optical, surgical, or hospital
11-8 care;
11-9 (2) benefits in the event of sickness, accident,
11-10 disability, or death;
11-11 (3) any other benefit authorized for health insurers
11-12 in this state; and
11-13 (4) prepaid legal services.
11-14 (b) A multiple employer welfare arrangement may only provide
11-15 benefits to active or retired owners, officers, directors, or
11-16 employees of or partners in participating employers, or the
11-17 beneficiaries of such persons, except as may otherwise be limited
11-18 by provisions of the Employee Retirement Income Security Act of
11-19 1974 (29 U.S.C. Section 1001 et seq.).
11-20 Art. 3.95-5. NAME; EVIDENCE OF EXISTENCE. No multiple
11-21 employer welfare arrangement authorized under this subchapter shall
11-22 take any name which is the same as or closely resembles the name of
11-23 any other multiple employer welfare arrangement possessing a
11-24 certificate of authority and doing business in this state. A
11-25 multiple employer welfare arrangement shall transact its business
11-26 under its own name and shall not adopt any assumed name, except
11-27 that a multiple employer welfare arrangement by amending its
12-1 articles may change its name or take a new name with the approval
12-2 of the commissioner. Whenever it shall be necessary in any legal
12-3 proceeding to prove the existence of a multiple employer welfare
12-4 arrangement, a certified copy of the multiple employer welfare
12-5 arrangement's certificate of authority shall be prima facie
12-6 evidence of the existence of the multiple employer welfare
12-7 arrangement.
12-8 Art. 3.95-6. POWERS OF MULTIPLE EMPLOYER WELFARE
12-9 ARRANGEMENTS. Every multiple employer welfare arrangement, unless
12-10 otherwise provided in or inconsistent with this subchapter, shall
12-11 have power:
12-12 (1) to have succession, by its name, for the term
12-13 stated in its trust agreement;
12-14 (2) to sue and be sued, to complain and defend in any
12-15 court of law or equity, or to be a party to any proceedings before
12-16 any board or commission or other public body of this state or of
12-17 any other state or government; suits at law may be maintained by
12-18 the multiple employer welfare arrangement against any of its
12-19 participating employers, employees, or beneficiaries for any cause
12-20 relating to the business of the multiple employer welfare
12-21 arrangement;
12-22 (3) to have a seal which may be altered at pleasure
12-23 and to use the seal by causing it or a facsimile of it to be
12-24 impressed, affixed, or otherwise reproduced;
12-25 (4) to appoint such officers and agents as the
12-26 business of the multiple employer welfare arrangement shall require
12-27 and to allow them suitable compensation;
13-1 (5) to make, alter, amend, and repeal bylaws for the
13-2 regulation and government of its affairs; and
13-3 (6) to conduct its business in this state, other
13-4 states, the District of Columbia, the territories and colonies of
13-5 the United States, and foreign countries and their territories and
13-6 colonies; to have one or more offices out of this state; and to
13-7 acquire, purchase, hold, mortgage, pledge, assign, transfer, and
13-8 convey real and personal property subject to the provisions of this
13-9 subchapter.
13-10 Art. 3.95-7. FILING OF ARTICLES; NOTICE OF ELECTIONS; BOARD
13-11 OF TRUSTEES OR DIRECTORS. (a) The articles or bylaws, or trust
13-12 agreement, as applicable, of the multiple employer welfare
13-13 arrangement and all appurtenant amendments shall be filed with the
13-14 commissioner before becoming operative.
13-15 (b) At least 75 percent of the trustees or directors shall
13-16 be elected by the member employers of the multiple employer welfare
13-17 arrangement. Each trustee or director shall be elected for at
13-18 least a two-year term. Each member employer of a multiple employer
13-19 welfare arrangement shall be given notice of every election of
13-20 trustees or directors and shall be entitled to an equal vote either
13-21 in person or by proxy in writing signed by the member employer. No
13-22 owner, officer, or employee of a third-party administrator who
13-23 provides services to the multiple employer welfare arrangement or
13-24 of any other person who has received compensation from the multiple
13-25 employer welfare arrangement may serve as proxy.
13-26 (c) The powers of a multiple employer welfare arrangement,
13-27 except as otherwise provided, shall be exercised by the board of
14-1 trustees or directors chosen to carry out the purposes of the
14-2 organizational documents. Not less than 75 percent of the trustees
14-3 or directors shall be persons who are covered under the multiple
14-4 employer welfare arrangement, and no trustee or director shall be
14-5 an owner, officer, or employee of a third-party administrator who
14-6 provides services to the multiple employer welfare arrangement or
14-7 of any other person who has received compensation from the multiple
14-8 employer welfare arrangement.
14-9 Art. 3.95-8. FILINGS BY MULTIPLE EMPLOYER WELFARE
14-10 ARRANGEMENTS; REPORT OF CASH RESERVES; APPROVAL BY COMMISSIONER;
14-11 ADDITIONAL ACTUARIAL REVIEW. (a) Each multiple employer welfare
14-12 arrangement transacting business in this state shall file the
14-13 following with the commissioner on forms approved by the
14-14 commissioner:
14-15 (1) within 90 days of the end of the fiscal year,
14-16 financial statements audited by a certified public accountant; and
14-17 (2) within 90 days of the end of the fiscal year, an
14-18 actuarial opinion prepared and certified by an actuary who is not
14-19 an employee of the multiple employer welfare arrangement and who is
14-20 a fellow of the Society of Actuaries, a member of the American
14-21 Academy of Actuaries, or an enrolled actuary under the Employee
14-22 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
14-23 seq.). The actuarial opinion shall include:
14-24 (A) a description of the actuarial soundness of
14-25 the multiple employer welfare arrangement, including any
14-26 recommended actions that the multiple employer welfare arrangement
14-27 should take to improve its actuarial soundness;
15-1 (B) the recommended amount of cash reserves the
15-2 multiple employer welfare arrangement should maintain which shall
15-3 not be less than the greater of 20 percent of the total
15-4 contributions in the preceding plan year or 20 percent of the total
15-5 estimated contributions for the current plan year; cash reserves
15-6 shall be calculated with proper actuarial regard for known claims,
15-7 paid and outstanding, a history of incurred but not reported
15-8 claims, claims handling expenses, unearned premium, an estimate for
15-9 bad debts, a trend factor, and a margin for error; cash reserves
15-10 required by this article shall be maintained in cash or federally
15-11 guaranteed obligations of less than five-year maturity that have a
15-12 fixed or recoverable principal amount or such other investments as
15-13 the commissioner or board may authorize by rule; and
15-14 (C) the recommended level of specific and
15-15 aggregate stop-loss insurance the multiple employer welfare
15-16 arrangement should maintain.
15-17 (b) The commissioner shall review the forms required by
15-18 Subsection (a) of this article. The commissioner shall renew a
15-19 multiple employer welfare arrangement's certificate of authority
15-20 unless the commissioner finds that the multiple employer welfare
15-21 arrangement does not meet the requirements of this subchapter. The
15-22 cash reserves required by this article shall be maintained in cash
15-23 or federally guaranteed obligations of less than five-year maturity
15-24 that have a fixed or recoverable principal amount or such other
15-25 investments as the commissioner or board may authorize by rule.
15-26 (c) On a finding of good cause, the commissioner may order
15-27 an actuarial review of a multiple employer welfare arrangement in
16-1 addition to the actuarial opinion required by Subsection (a)(2) of
16-2 this article. The cost of any such additional actuarial review
16-3 shall be paid by the multiple employer welfare arrangement.
16-4 (d) On application of a multiple employer welfare
16-5 arrangement, the commissioner may waive or reduce the requirement
16-6 for aggregate stop-loss coverage and the amount of reserves
16-7 required by Subsection (a)(2)(B) of this article on a determination
16-8 that the interests of the participating employers and employees are
16-9 adequately protected.
16-10 Art. 3.95-9. EXAMINATION OF MULTIPLE EMPLOYER WELFARE
16-11 ARRANGEMENTS. The commissioner or any person appointed by the
16-12 commissioner shall have the power to examine the affairs of any
16-13 multiple employer welfare arrangement and for such purposes shall
16-14 have free access to all the books, records, and documents that
16-15 relate to the business of the plan and may examine under oath its
16-16 trustees or directors, officers, agents, and employees in relation
16-17 to the affairs, transactions, and conditions of the multiple
16-18 employer welfare arrangement. Expenses of examination shall be
16-19 paid by each multiple employer welfare arrangement as provided in
16-20 Article 1.16 of this code.
16-21 Art. 3.95-10. DUTIES OF TRUSTEES OR DIRECTORS; COMPENSATION
16-22 OF TRUSTEES, DIRECTORS, OR OFFICERS. (a) The trustees or
16-23 directors of a multiple employer welfare arrangement shall give
16-24 the attention and exercise the vigilance, diligence, care, and
16-25 skill that prudent persons use in like or similar circumstances.
16-26 Trustees or directors shall be responsible for all operations of
16-27 the multiple employer welfare arrangement and shall take all
17-1 necessary precautions to safeguard the assets of the multiple
17-2 employer welfare arrangement. No trustee or director shall be held
17-3 liable in a private cause of action for any delinquency under this
17-4 article after six years from the date of delinquency or after two
17-5 years from the time when the delinquency is discovered by a person
17-6 complaining of the delinquency, whichever occurs sooner.
17-7 (b) The board of trustees or directors shall select such
17-8 officers as designated in the articles or bylaws or trust agreement
17-9 and may appoint agents as deemed necessary for the transaction of
17-10 the business of the multiple employer welfare arrangement. All
17-11 officers and agents shall respectively have such authority and
17-12 perform such duties in the management of the property and affairs
17-13 of the multiple employer welfare arrangement as may be delegated by
17-14 the board of trustees or directors. Any officer or agent may be
17-15 removed by the board of trustees or directors whenever in their
17-16 judgment the business interests of the multiple employer welfare
17-17 arrangement will be served by the removal. The board of trustees
17-18 or directors shall secure the fidelity of any or of all such
17-19 officers or agents who handle the funds of the multiple employer
17-20 welfare arrangement by bond or otherwise.
17-21 (c) Trustees or directors shall serve without compensation
17-22 from the multiple employer welfare arrangement except for actual
17-23 and necessary expenses. A multiple employer welfare arrangement
17-24 shall not pay any salary, compensation, or emolument to any officer
17-25 of the multiple employer welfare arrangement unless the payment is
17-26 first authorized by a majority vote of the board of trustees or
17-27 directors of the multiple employer welfare arrangement.
18-1 (d) An officer, employee, or agent of a multiple employer
18-2 welfare arrangement shall not be compensated unreasonably. The
18-3 compensation of any officer or employee of a multiple employer
18-4 welfare arrangement shall not be calculated directly or indirectly
18-5 as a percentage of money or premium collected. The compensation of
18-6 any agent shall not exceed five percent of the money or premium
18-7 collected.
18-8 Art. 3.95-11. RECEIPT OF THING OF VALUE BY OFFICER, TRUSTEE,
18-9 DIRECTOR, OR EMPLOYEE; PENALTY. (a) An officer, trustee,
18-10 director, or employee of a multiple employer welfare arrangement
18-11 shall not knowingly and intentionally, directly or indirectly,
18-12 receive any money or valuable thing for negotiating, procuring,
18-13 recommending, or aiding in any purchase by or sale to the multiple
18-14 employer welfare arrangement of any property or any loan from the
18-15 multiple employer welfare arrangement or be pecuniarily interested
18-16 either as principal, coprincipal, agent, or beneficiary in any such
18-17 purchase, sale, or loan.
18-18 (b) A person who violates this article is guilty of an
18-19 offense. An offense under this section is a felony of the third
18-20 degree.
18-21 Art. 3.95-12. WRITTEN NOTICE TO EMPLOYEES COVERED. A
18-22 multiple employer welfare arrangement, in connection with an
18-23 employee welfare benefit plan, shall provide to each participating
18-24 employee covered by the plan the following written notice at the
18-25 time his or her coverage becomes effective:
18-26 (1) that individuals covered by the plan are only
18-27 partially insured; and
19-1 (2) that in the event the plan or the multiple
19-2 employer welfare arrangement does not ultimately pay medical
19-3 expenses that are eligible for payment under the plan for any
19-4 reason, the participating employer or its participating employee
19-5 covered by the plan may be liable for those expenses.
19-6 Art. 3.95-13. APPLICABILITY OF OTHER STATUTES. A multiple
19-7 employer welfare arrangement shall be exempt from the operation of
19-8 all insurance laws of this state, except such laws as are made
19-9 applicable by their specific terms or as specified in this
19-10 subchapter. Multiple employer welfare arrangements shall be
19-11 subject to Articles 1.04, 1.10A, 1.10B, 1.10C, 1.10D, 1.12, 1.13,
19-12 1.14, 1.14A, 1.15, 1.16, 1.19, 1.19-1, 1.24, 1.28, 1.29, 1.31,
19-13 1.35, 1.36, 3.55, 3.56, 3.56-1, 3.67, 21.21, 21.28, 21.28-A, and
19-14 21.28-E and Section 7 of Article 1.10 of this code. A multiple
19-15 employer welfare arrangement will be considered an insurer for
19-16 purposes of these sections only.
19-17 Art. 3.95-14. SUSPENSION, REVOCATION, OR LIMITATION OF
19-18 CERTIFICATE OF AUTHORITY: OTHER REMEDIES. (a) In addition to any
19-19 requirements or remedies set out in Article 3.95-13 of this code,
19-20 the commissioner may suspend, revoke, or limit the certificate of
19-21 authority of a multiple employer welfare arrangement if the
19-22 commissioner finds, after motion and hearing, that the multiple
19-23 employer welfare agreement does not meet the requirements of this
19-24 subchapter.
19-25 (b) The commissioner may notify the attorney general of a
19-26 violation of this subchapter, and the attorney general may apply to
19-27 a district court in Travis County for leave to file suit in the
20-1 nature of quo warranto or for injunctive relief or both. The
20-2 attorney general may seek and the court may order restitution for
20-3 victims of an act declared to be unlawful under this subchapter, a
20-4 fine under this code, and recovery of reasonable attorney's fees.
20-5 Art. 3.95-15. PROCEEDINGS BEFORE THE BOARD OF INSURANCE.
20-6 (a) The board may, on notice and opportunity for all interested
20-7 persons to be heard, issue such rules, regulations, and orders as
20-8 are reasonably necessary to augment and carry out the provisions of
20-9 this subchapter.
20-10 (b) A person affected by a final ruling or action of the
20-11 commissioner under this subchapter is entitled to have that ruling
20-12 or action reviewed by the board by submitting an application to the
20-13 board as provided by Subsection (d) of Article 1.04 of this code.
20-14 Appeal of the commissioner's ruling or action to the board does not
20-15 operate as a stay of the ruling or action except as otherwise
20-16 ordered by the board on application by the appellant.
20-17 (c) A person affected by the board's order may appeal that
20-18 order by filing suit in a district court in Travis County pursuant
20-19 to Subsection (f) of Article 1.04 of this code.
20-20 SECTION 2. This Act does not exempt a multiple employer
20-21 welfare arrangement from any other license requirement imposed
20-22 under local, state, or federal law.
20-23 SECTION 3. (a) Except as provided by Subsection (b) of this
20-24 section, this Act takes effect September 1, 1993.
20-25 (b) An entity in existence on June 1, 1993, that is required
20-26 to hold a certificate of authority under this Act shall not be
20-27 prosecuted for engaging in the unauthorized business of insurance
21-1 if it timely files notice and applies for an initial and a final
21-2 certificate of authority unless either is finally denied. If an
21-3 existing multiple employer welfare arrangement timely files notice
21-4 and applies for an initial and a final certificate of authority,
21-5 the fact that such multiple employer welfare arrangement engaged in
21-6 the business of insurance in this state prior to the effective date
21-7 of this Act shall not provide a basis for denial of a certificate
21-8 of authority.
21-9 SECTION 4. The importance of this legislation and the
21-10 crowded condition of the calendars in both houses create an
21-11 emergency and an imperative public necessity that the
21-12 constitutional rule requiring bills to be read on three several
21-13 days in each house be suspended, and this rule is hereby suspended.