1-1 By: Shields (Senate Sponsor - Parker) H.B. No. 1540
1-2 (In the Senate - Received from the House May 13, 1993;
1-3 May 14, 1993, read first time and referred to Committee on Economic
1-4 Development; May 22, 1993, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 11, Nays 0;
1-6 May 22, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 COMMITTEE SUBSTITUTE FOR H.B. No. 1540 By: Parker
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to the regulation of multiple employer welfare
1-24 arrangements; creating offenses and providing civil and criminal
1-25 penalties; providing for fees.
1-26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-27 SECTION 1. Chapter 3, Insurance Code, is amended by adding
1-28 Subchapter H to read as follows:
1-29 SUBCHAPTER H. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
1-30 Art. 3.80. DEFINITIONS. In this subchapter:
1-31 (1) "Board" means the State Board of Insurance.
1-32 (2) "Commissioner" means the commissioner of
1-33 insurance.
1-34 (3) "Employee welfare benefit plan" has the meaning
1-35 assigned by Section 3(1) of the Employee Retirement Income Security
1-36 Act of 1974 (29 U.S.C. Section 1002(1)).
1-37 (4) "Fully insured multiple employer welfare
1-38 arrangement" means a multiple employer welfare arrangement that
1-39 provides benefits to its participating employees and beneficiaries
1-40 for which 100 percent of the liability has been assumed by an
1-41 insurance company authorized to do business in this state.
1-42 (5) "Multiple employer welfare arrangement" has the
1-43 meaning assigned by Section 3(40) of the Employee Retirement Income
1-44 Security Act of 1974 (29 U.S.C. Section 1002(40)) to describe an
1-45 entity which meets either or both of the following criteria:
1-46 (A) one or more of the employer members in the
1-47 multiple employer welfare arrangement is either domiciled in this
1-48 state or has its principal headquarters or principal administrative
1-49 office in this state; or
1-50 (B) the multiple employer welfare arrangement
1-51 solicits an employer that is domiciled in this state or has its
1-52 principal headquarters or principal administrative office in this
1-53 state.
1-54 Art. 3.81. CERTIFICATE OF AUTHORITY. (a) A person shall
1-55 not establish or maintain an employee welfare benefit plan which is
1-56 a multiple employer welfare arrangement in this state unless the
1-57 multiple employer welfare arrangement obtains and maintains a
1-58 certificate of authority pursuant to this subchapter. This
1-59 subchapter shall not apply to a fully insured multiple employer
1-60 welfare arrangement for so long as such multiple employer welfare
1-61 arrangement remains fully insured. The commissioner may, from time
1-62 to time, require proof that the multiple employer welfare
1-63 arrangement is fully insured.
1-64 (b) A person wishing to establish an employee welfare
1-65 benefit plan which is a multiple employer welfare arrangement shall
1-66 apply for an initial certificate of authority on a form prescribed
1-67 by the commissioner. The application shall be completed and
1-68 submitted along with all information required by the commissioner,
2-1 including:
2-2 (1) copies of all articles, bylaws, agreements,
2-3 trusts, or other documents or instruments describing the rights and
2-4 obligations of employers, employees, and beneficiaries with respect
2-5 to the multiple employer welfare arrangement;
2-6 (2) current financial statements of the multiple
2-7 employer welfare arrangement;
2-8 (3) proof of a fidelity bond which shall protect
2-9 against acts of fraud or dishonesty in servicing the multiple
2-10 employer welfare arrangement, covering each person responsible for
2-11 servicing the employee welfare benefit plan in an amount equal to
2-12 the greater of 10 percent of the premiums and contributions
2-13 received by the multiple employer welfare arrangement, or 10
2-14 percent of the benefits paid, during the preceding calendar year,
2-15 with a minimum of $10,000 and a maximum of $500,000; no additional
2-16 bond shall be required of a third-party administrator licensed to
2-17 engage in business in this state;
2-18 (4) a statement showing in full detail the plan on
2-19 which the multiple employer welfare arrangement proposes to
2-20 transact business;
2-21 (5) an initial actuarial opinion in compliance with
2-22 the requirements of Article 3.87(a)(2) and subject to Article
2-23 3.87(c) of this code; and
2-24 (6) a certification by the applicant that the multiple
2-25 employer welfare arrangement is in compliance with all applicable
2-26 provisions of the Employee Retirement Income Security Act of 1974
2-27 (29 U.S.C. Section 1001 et seq.).
2-28 (c) The commissioner shall promptly examine the application
2-29 and documents submitted by the applicant and shall have the power
2-30 to conduct any investigation which the commissioner may deem
2-31 necessary and to examine under oath any persons interested in or
2-32 connected with the multiple employer welfare arrangement.
2-33 (d) Within 60 days of the filing of the application, the
2-34 commissioner shall issue the initial certificate of authority,
2-35 which shall be a temporary certificate for a term of one year, to a
2-36 multiple employer welfare arrangement, provided all of the
2-37 following conditions have been met:
2-38 (1) the employers in the multiple employer welfare
2-39 arrangement are members of an association or group of five or more
2-40 businesses which are in the same trade or industry, including
2-41 closely related businesses which provide support, services, or
2-42 supplies primarily to that trade or industry; a group of employee
2-43 leasing companies or staff leasing service companies is not
2-44 considered to be in the same trade or industry for purposes of this
2-45 article;
2-46 (2) if an association, that the association in the
2-47 multiple employer welfare arrangement is engaged in substantial
2-48 activity for its members other than sponsorship of an employee
2-49 welfare benefit plan;
2-50 (3) if an association, that the association in the
2-51 multiple employer welfare arrangement has been in existence for a
2-52 period of not less than two years prior to engaging in any
2-53 activities relating to the provision of employee health benefits to
2-54 its members;
2-55 (4) the employee welfare plan of the association or
2-56 group in the multiple employer welfare arrangement is controlled
2-57 and sponsored directly by participating employers, participating
2-58 employees, or both;
2-59 (5) the association or group of employers in the
2-60 multiple employer welfare arrangement is a not-for-profit
2-61 organization;
2-62 (6) the multiple employer welfare arrangement has
2-63 within its own organization adequate facilities and competent
2-64 personnel, as determined by the commissioner, to service the
2-65 employee benefit plan or has contracted with a third-party
2-66 administrator licensed to engage in business in this state;
2-67 (7) the multiple employer welfare arrangement has
2-68 applications from not less than five employers and will provide
2-69 similar benefits for not less than 200 separate participating
2-70 employees, and the annual gross premiums of or contributions to the
3-1 plan will be not less than $20,000 for a plan that provides only
3-2 vision benefits, $75,000 for a plan that provides only dental
3-3 benefits, and $200,000 for all other plans;
3-4 (8) the multiple employer welfare arrangement
3-5 possesses a written commitment, binder, or policy for stop-loss
3-6 insurance issued by an insurer authorized to do business in this
3-7 state providing not less than 30 days notice to the commissioner of
3-8 any cancellation or nonrenewal of coverage and which provides both
3-9 specific and aggregate coverage with an aggregate retention of no
3-10 more than 125 percent of the amount of expected claims for the next
3-11 plan year and a specific retention amount annually determined by
3-12 the actuarial report required by Article 3.87 of this code;
3-13 (9) both the specific and aggregate coverage will
3-14 require all claims to be submitted within 90 days after the claim
3-15 is incurred and provide a 12-month claims incurred period and a
3-16 15-month paid claims period for each policy year;
3-17 (10) the contributions shall be set to fund at least
3-18 100 percent of the aggregate retention plus all other costs of the
3-19 multiple employer welfare arrangements;
3-20 (11) if the reserves required by Article 3.87(a)(2)(B)
3-21 of this code exceed the greater of 40 percent of the total
3-22 contributions for the preceding plan year or 40 percent of the
3-23 total contributions expected for the current plan year, the
3-24 contributions may be reduced to fund less than 100 percent of the
3-25 aggregate retention plus all other costs of the multiple employer
3-26 welfare arrangement, but in no event less than the level of
3-27 contributions necessary to fund the minimum reserves required under
3-28 Article 3.87(a)(2)(B) of this code;
3-29 (12) the reserves described in Article 3.87(a)(2)(B)
3-30 of this code have been established or will be established before
3-31 the final certificate of authority is issued;
3-32 (13) the multiple employer welfare arrangement has
3-33 established a procedure for handling claims for benefits in the
3-34 event of dissolution of the multiple employer welfare arrangement;
3-35 and
3-36 (14) the multiple employer welfare arrangement has
3-37 obtained the required bond.
3-38 (e) On receipt of its initial certificate of authority, the
3-39 multiple employer welfare arrangement shall commence business.
3-40 (f) The multiple employer welfare arrangement, each of its
3-41 trustees or directors and officers, and any agent or other person
3-42 associated with the multiple employer welfare arrangement, other
3-43 than a participating employer in its capacity as such and its
3-44 participating employees, shall be subject to disqualification if
3-45 the person:
3-46 (1) made a material misstatement or omission in an
3-47 application for a certificate of authority under this subchapter;
3-48 (2) obtained or attempted to obtain at any time a
3-49 certificate of authority or license for an insurance entity through
3-50 intentional misrepresentation or fraud;
3-51 (3) misappropriated or converted to the person's own
3-52 use or improperly withheld money under an employee welfare benefit
3-53 plan or multiple employer welfare arrangement;
3-54 (4) is prohibited from serving in any capacity with
3-55 the multiple employer welfare arrangement under Section 411 of the
3-56 Employee Retirement Income Security Act of 1974 (28 U.S.C. Section
3-57 1111);
3-58 (5) without reasonable cause or excuse failed to
3-59 appear in response to a subpoena, examination, warrant, or any
3-60 other order lawfully issued by the commissioner; or
3-61 (6) has previously been subject to a determination by
3-62 the commissioner resulting in the suspension or revocation of a
3-63 certificate of authority or license or denial of a certificate of
3-64 authority or license on grounds that would be sufficient for
3-65 suspension or revocation.
3-66 (g) A multiple employer welfare arrangement in existence on
3-67 June 1, 1993, shall file notice with the commissioner by
3-68 December 31, 1993, of its intent to apply for an initial
3-69 certificate of authority and shall file for its initial certificate
3-70 of authority by June 1, 1994. The multiple employer welfare
4-1 arrangement may continue to conduct business until the initial
4-2 certificate of authority is granted or finally denied by the
4-3 commissioner.
4-4 (h) A multiple employer welfare arrangement possessing an
4-5 initial certificate of authority must apply for a final certificate
4-6 of authority no later than one year after issuance of its initial
4-7 certificate of authority. The multiple employer welfare
4-8 arrangement shall file an application on a form prescribed by the
4-9 commissioner and furnish such information as may be required by the
4-10 commissioner. The application shall include only:
4-11 (1) the names and addresses of:
4-12 (A) the association or group of employers
4-13 sponsoring the multiple employer welfare arrangement;
4-14 (B) the members of the board of trustees or
4-15 directors, as applicable, of the multiple employer welfare
4-16 arrangement; and
4-17 (C) if not an association, at least five
4-18 employers, which information shall be retained by the commissioner
4-19 as confidential;
4-20 (2) evidence that the bonding requirements have been
4-21 met;
4-22 (3) copies of all plan documents and agreements with
4-23 service providers, which shall be retained by the commissioner as
4-24 confidential; and
4-25 (4) a funding report containing:
4-26 (A) a statement certified by the board of
4-27 trustees or directors, as applicable, and an actuarial opinion that
4-28 all applicable requirements of Article 3.87 of this code have been
4-29 met;
4-30 (B) an actuarial opinion which sets forth a
4-31 description of the extent to which contributions or premium rates:
4-32 (i) are not excessive;
4-33 (ii) are not unfairly discriminatory; and
4-34 (iii) are adequate to provide for the
4-35 payment of all obligations and the maintenance of required cash
4-36 reserves and surplus by the multiple employer welfare arrangement;
4-37 (C) a statement of the current value of the
4-38 assets and liabilities accumulated by the multiple employer welfare
4-39 arrangement and a projection of the assets, liabilities, income,
4-40 and expenses of the multiple employer welfare arrangement for the
4-41 next 12-month period; and
4-42 (D) a statement of the costs of coverage to be
4-43 charged, including an itemization of amounts for administration,
4-44 reserves, and other expenses associated with operation of the
4-45 multiple employer welfare arrangement.
4-46 (i) After examination and investigation, the commissioner
4-47 shall issue a final certificate of authority to the multiple
4-48 employer welfare arrangement if the commissioner is satisfied that
4-49 the multiple employer welfare arrangement meets the requirements of
4-50 this subchapter. The commissioner shall refuse to grant a final
4-51 certificate of authority to an applicant that fails to meet the
4-52 requirements of this subchapter. Notice of refusal shall be in
4-53 writing, shall set forth the basis for the refusal, and shall also
4-54 constitute 30 days' advance notice of revocation of the initial
4-55 certificate of authority. The initial certificate of authority may
4-56 be extended for up to one year at the discretion of the
4-57 commissioner on a determination that the multiple employer welfare
4-58 arrangement is likely to meet the requirements of this subchapter
4-59 within one year. No more than one extension of the initial
4-60 certificate of authority shall be granted regardless of the length
4-61 of time for which an extension was granted.
4-62 (j) If the applicant submits a written request for hearing
4-63 within 30 days after mailing of the notice of refusal, revocation
4-64 of the initial certificate of authority shall be temporarily stayed
4-65 and the commissioner shall promptly conduct a hearing in which the
4-66 applicant shall be given an opportunity to show compliance with the
4-67 requirements of this subchapter.
4-68 Art. 3.82. FEES. (a) The commissioner shall collect and
4-69 the multiple employer welfare arrangement shall pay fees to the
4-70 commissioner as set by the commissioner not to exceed the
5-1 following:
5-2 (1) application for initial certificate of
5-3 authority...................................................$1,000;
5-4 (2) application for final certificate of
5-5 authority...................................................$1,000;
5-6 (3) filing fee for annual statement..............$250.
5-7 (b) Each multiple employer welfare arrangement shall appoint
5-8 the commissioner as its resident agent for purposes of service of
5-9 process. The fee for such service shall be $50, payable at the
5-10 time of appointment.
5-11 (c) Fees paid under this article shall be deposited in the
5-12 state treasury to the credit of the State Board of Insurance
5-13 operating fund.
5-14 Art. 3.83. BENEFITS ALLOWED. (a) A multiple employer
5-15 welfare arrangement authorized under this subchapter shall be
5-16 limited to providing any one or more of the following:
5-17 (1) medical, dental, optical, surgical, or hospital
5-18 care;
5-19 (2) benefits in the event of sickness, accident,
5-20 disability, or death;
5-21 (3) any other benefit authorized for health insurers
5-22 in this state; and
5-23 (4) prepaid legal services.
5-24 (b) A multiple employer welfare arrangement may only provide
5-25 benefits to active or retired owners, officers, directors, or
5-26 employees of or partners in participating employers, or the
5-27 beneficiaries of such persons, except as may otherwise be limited
5-28 by provisions of the Employee Retirement Income Security Act of
5-29 1974 (29 U.S.C. Section 1001 et seq.).
5-30 Art. 3.84. NAME; EVIDENCE OF EXISTENCE. No multiple
5-31 employer welfare arrangement authorized under this subchapter shall
5-32 take any name which is the same as or closely resembles the name of
5-33 any other multiple employer welfare arrangement possessing a
5-34 certificate of authority and doing business in this state. A
5-35 multiple employer welfare arrangement shall transact its business
5-36 under its own name and shall not adopt any assumed name, except
5-37 that a multiple employer welfare arrangement by amending its
5-38 articles may change its name or take a new name with the approval
5-39 of the commissioner. Whenever it shall be necessary in any legal
5-40 proceeding to prove the existence of a multiple employer welfare
5-41 arrangement, a certified copy of the multiple employer welfare
5-42 arrangement's certificate of authority shall be prima facie
5-43 evidence of the existence of the multiple employer welfare
5-44 arrangement.
5-45 Art. 3.85. POWERS OF MULTIPLE EMPLOYER WELFARE ARRANGEMENTS.
5-46 Every multiple employer welfare arrangement, unless otherwise
5-47 provided in or inconsistent with this subchapter, shall have power:
5-48 (1) to have succession, by its name, for the term
5-49 stated in its trust agreement;
5-50 (2) to sue and be sued, to complain and defend in any
5-51 court of law or equity, or to be a party to any proceedings before
5-52 any board or commission or other public body of this state or of
5-53 any other state or government; suits at law may be maintained by
5-54 the multiple employer welfare arrangement against any of its
5-55 participating employers, employees, or beneficiaries for any cause
5-56 relating to the business of the multiple employer welfare
5-57 arrangement;
5-58 (3) to have a seal which may be altered at pleasure
5-59 and to use the seal by causing it or a facsimile of it to be
5-60 impressed, affixed, or otherwise reproduced;
5-61 (4) to appoint such officers and agents as the
5-62 business of the multiple employer welfare arrangement shall require
5-63 and to allow them suitable compensation;
5-64 (5) to make, alter, amend, and repeal bylaws for the
5-65 regulation and government of its affairs; and
5-66 (6) to conduct its business in this state, other
5-67 states, the District of Columbia, the territories and colonies of
5-68 the United States, and foreign countries and their territories and
5-69 colonies; to have one or more offices out of this state; and to
5-70 acquire, purchase, hold, mortgage, pledge, assign, transfer, and
6-1 convey real and personal property subject to the provisions of this
6-2 subchapter.
6-3 Art. 3.86. FILING OF ARTICLES; NOTICE OF ELECTIONS; BOARD OF
6-4 TRUSTEES OR DIRECTORS. (a) The articles or bylaws, or trust
6-5 agreement, as applicable, of the multiple employer welfare
6-6 arrangement and all appurtenant amendments shall be filed with the
6-7 commissioner before becoming operative.
6-8 (b) At least 75 percent of the trustees or directors shall
6-9 be elected by the member employers of the multiple employer welfare
6-10 arrangement. Each trustee or director shall be elected for at
6-11 least a two-year term. Each member employer of a multiple employer
6-12 welfare arrangement shall be given notice of every election of
6-13 trustees or directors and shall be entitled to an equal vote either
6-14 in person or by proxy in writing signed by the member employer. No
6-15 owner, officer, or employee of a third-party administrator who
6-16 provides services to the multiple employer welfare arrangement or
6-17 of any other person who has received compensation from the multiple
6-18 employer welfare arrangement may serve as proxy.
6-19 (c) The powers of a multiple employer welfare arrangement,
6-20 except as otherwise provided, shall be exercised by the board of
6-21 trustees or directors chosen to carry out the purposes of the
6-22 organizational documents. Not less than 75 percent of the trustees
6-23 or directors shall be persons who are covered under the multiple
6-24 employer welfare arrangement, and no trustee or director shall be
6-25 an owner, officer, or employee of a third-party administrator who
6-26 provides services to the multiple employer welfare arrangement or
6-27 of any other person who has received compensation from the multiple
6-28 employer welfare arrangement.
6-29 Art. 3.87. FILINGS BY MULTIPLE EMPLOYER WELFARE
6-30 ARRANGEMENTS; REPORT OF CASH RESERVES; APPROVAL BY COMMISSIONER;
6-31 ADDITIONAL ACTUARIAL REVIEW. (a) Each multiple employer welfare
6-32 arrangement transacting business in this state shall file the
6-33 following with the commissioner on forms approved by the
6-34 commissioner:
6-35 (1) within 90 days of the end of the fiscal year,
6-36 financial statements audited by a certified public accountant; and
6-37 (2) within 90 days of the end of the fiscal year, an
6-38 actuarial opinion prepared and certified by an actuary who is not
6-39 an employee of the multiple employer welfare arrangement and who is
6-40 a fellow of the Society of Actuaries, a member of the American
6-41 Academy of Actuaries, or an enrolled actuary under the Employee
6-42 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
6-43 seq.). The actuarial opinion shall include:
6-44 (A) a description of the actuarial soundness of
6-45 the multiple employer welfare arrangement, including any
6-46 recommended actions that the multiple employer welfare arrangement
6-47 should take to improve its actuarial soundness;
6-48 (B) the recommended amount of cash reserves the
6-49 multiple employer welfare arrangement should maintain which shall
6-50 not be less than the greater of 20 percent of the total
6-51 contributions in the preceding plan year or 20 percent of the total
6-52 estimated contributions for the current plan year; cash reserves
6-53 shall be calculated with proper actuarial regard for known claims,
6-54 paid and outstanding, a history of incurred but not reported
6-55 claims, claims handling expenses, unearned premium, an estimate for
6-56 bad debts, a trend factor, and a margin for error; cash reserves
6-57 required by this article shall be maintained in cash or federally
6-58 guaranteed obligations of less than five-year maturity that have a
6-59 fixed or recoverable principal amount or such other investments as
6-60 the commissioner or board may authorize by rule; and
6-61 (C) the recommended level of specific and
6-62 aggregate stop-loss insurance the multiple employer welfare
6-63 arrangement should maintain.
6-64 (b) The commissioner shall review the forms required by
6-65 Article 3.87(a) of this code. The commissioner shall renew a
6-66 multiple employer welfare arrangement's certificate of authority
6-67 unless the commissioner finds that the multiple employer welfare
6-68 arrangement does not meet the requirements of this subchapter. The
6-69 cash reserves required by this article shall be maintained in cash
6-70 or federally guaranteed obligations of less than five-year maturity
7-1 that have a fixed or recoverable principal amount or such other
7-2 investments as the commissioner or board may authorize by rule.
7-3 (c) On a finding of good cause, the commissioner may order
7-4 an actuarial review of a multiple employer welfare arrangement in
7-5 addition to the actuarial opinion required by Article 3.87(a)(2) of
7-6 this code. The cost of any such additional actuarial review shall
7-7 be paid by the multiple employer welfare arrangement.
7-8 (d) On application of a multiple employer welfare
7-9 arrangement, the commissioner may waive or reduce the requirement
7-10 for aggregate stop-loss coverage and the amount of reserves
7-11 required by Article 3.87(a)(2)(B) of this code on a determination
7-12 that the interests of the participating employers and employees are
7-13 adequately protected.
7-14 Art. 3.88. EXAMINATION OF MULTIPLE EMPLOYER WELFARE
7-15 ARRANGEMENTS. The commissioner or any person appointed by the
7-16 commissioner shall have the power to examine the affairs of any
7-17 multiple employer welfare arrangement and for such purposes shall
7-18 have free access to all the books, records, and documents that
7-19 relate to the business of the plan and may examine under oath its
7-20 trustees or directors, officers, agents, and employees in relation
7-21 to the affairs, transactions, and conditions of the multiple
7-22 employer welfare arrangement. Expenses of examination shall be
7-23 paid by each multiple employer welfare arrangement as provided in
7-24 Article 1.16 of this code.
7-25 Art. 3.89. DUTIES OF TRUSTEES OR DIRECTORS; COMPENSATION OF
7-26 TRUSTEES, DIRECTORS, OR OFFICERS. (a) The trustees or directors
7-27 of a multiple employer welfare arrangement shall give the
7-28 attention and exercise the vigilance, diligence, care, and skill
7-29 that prudent persons use in like or similar circumstances.
7-30 Trustees or directors shall be responsible for all operations of
7-31 the multiple employer welfare arrangement and shall take all
7-32 necessary precautions to safeguard the assets of the multiple
7-33 employer welfare arrangement. No trustee or director shall be held
7-34 liable in a private cause of action for any delinquency under this
7-35 article after six years from the date of delinquency or after two
7-36 years from the time when the delinquency is discovered by a person
7-37 complaining of the delinquency, whichever occurs sooner.
7-38 (b) The board of trustees or directors shall select such
7-39 officers as designated in the articles or bylaws or trust agreement
7-40 and may appoint agents as deemed necessary for the transaction of
7-41 the business of the multiple employer welfare arrangement. All
7-42 officers and agents shall respectively have such authority and
7-43 perform such duties in the management of the property and affairs
7-44 of the multiple employer welfare arrangement as may be delegated by
7-45 the board of trustees or directors. Any officer or agent may be
7-46 removed by the board of trustees or directors whenever in their
7-47 judgment the business interests of the multiple employer welfare
7-48 arrangement will be served by the removal. The board of trustees
7-49 or directors shall secure the fidelity of any or of all such
7-50 officers or agents who handle the funds of the multiple employer
7-51 welfare arrangement by bond or otherwise.
7-52 (c) Trustees or directors shall serve without compensation
7-53 from the multiple employer welfare arrangement except for actual
7-54 and necessary expenses. A multiple employer welfare arrangement
7-55 shall not pay any salary, compensation, or emolument to any officer
7-56 of the multiple employer welfare arrangement unless the payment is
7-57 first authorized by a majority vote of the board of trustees or
7-58 directors of the multiple employer welfare arrangement.
7-59 (d) An officer, employee, or agent of a multiple employer
7-60 welfare arrangement shall not be compensated unreasonably. The
7-61 compensation of any officer or employee of a multiple employer
7-62 welfare arrangement shall not be calculated directly or indirectly
7-63 as a percentage of money or premium collected. The compensation of
7-64 any agent shall not exceed five percent of the money or premium
7-65 collected.
7-66 Art. 3.90. RECEIPT OF THING OF VALUE BY OFFICER, TRUSTEE,
7-67 DIRECTOR, OR EMPLOYEE; PENALTY. (a) An officer, trustee,
7-68 director, or employee of a multiple employer welfare arrangement
7-69 shall not knowingly and intentionally, directly or indirectly,
7-70 receive any money or valuable thing for negotiating, procuring,
8-1 recommending, or aiding in any purchase by or sale to the multiple
8-2 employer welfare arrangement of any property or any loan from the
8-3 multiple employer welfare arrangement or be pecuniarily interested
8-4 either as principal, coprincipal, agent, or beneficiary in any such
8-5 purchase, sale, or loan.
8-6 (b) A person who violates this article is guilty of an
8-7 offense. An offense under this section is a felony of the third
8-8 degree.
8-9 Art. 3.91. WRITTEN NOTICE TO EMPLOYEES COVERED. A multiple
8-10 employer welfare arrangement, in connection with an employee
8-11 welfare benefit plan, shall provide to each participating employee
8-12 covered by the plan the following written notice at the time his or
8-13 her coverage becomes effective:
8-14 (1) that individuals covered by the plan are only
8-15 partially insured; and
8-16 (2) that in the event the plan or the multiple
8-17 employer welfare arrangement does not ultimately pay medical
8-18 expenses that are eligible for payment under the plan for any
8-19 reason, the participating employer or its participating employee
8-20 covered by the plan may be liable for those expenses.
8-21 Art. 3.92. APPLICABILITY OF OTHER STATUTES. A multiple
8-22 employer welfare arrangement shall be exempt from the operation of
8-23 all insurance laws of this state, except such laws as are made
8-24 applicable by their specific terms or as specified in this
8-25 subchapter. Multiple employer welfare arrangements shall be
8-26 subject to Articles 1.04, 1.10A, 1.10B, 1.10C, 1.10D, 1.12, 1.13,
8-27 1.14, 1.14A, 1.15, 1.16, 1.19, 1.19-1, 1.24, 1.28, 1.29, 1.31,
8-28 1.35, 1.36, 3.55, 3.56, 3.56-1, 3.67, 21.21, 21.28, 21.28-A, and
8-29 21.28-E and Section 7 of Article 1.10 of this code. A multiple
8-30 employer welfare arrangement will be considered an insurer for
8-31 purposes of these sections only.
8-32 Art. 3.93. SUSPENSION, REVOCATION, OR LIMITATION OF
8-33 CERTIFICATE OF AUTHORITY: OTHER REMEDIES. (a) In addition to any
8-34 requirements or remedies set out in Article 3.92 of this code, the
8-35 commissioner may suspend, revoke, or limit the certificate of
8-36 authority of a multiple employer welfare arrangement if the
8-37 commissioner finds, after motion and hearing, that the multiple
8-38 employer welfare agreement does not meet the requirements of this
8-39 subchapter.
8-40 (b) The commissioner may notify the attorney general of a
8-41 violation of this subchapter, and the attorney general may apply to
8-42 a district court in Travis County for leave to file suit in the
8-43 nature of quo warranto or for injunctive relief or both. The
8-44 attorney general may seek and the court may order restitution for
8-45 victims of an act declared to be unlawful under this subchapter, a
8-46 fine under this code, and recovery of reasonable attorney's fees.
8-47 Art. 3.94. PROCEEDINGS BEFORE THE BOARD OF INSURANCE.
8-48 (a) The board may, on notice and opportunity for all interested
8-49 persons to be heard, issue such rules, regulations, and orders as
8-50 are reasonably necessary to augment and carry out the provisions of
8-51 this subchapter.
8-52 (b) A person affected by a final ruling or action of the
8-53 commissioner under this subchapter is entitled to have that ruling
8-54 or action reviewed by the board by submitting an application to the
8-55 board as provided by Subsection (d) of Article 1.04 of this code.
8-56 Appeal of the commissioner's ruling or action to the board does not
8-57 operate as a stay of the ruling or action except as otherwise
8-58 ordered by the board on application by the appellant.
8-59 (c) A person affected by the board's order may appeal that
8-60 order by filing suit in a district court in Travis County pursuant
8-61 to Subsection (f) of Article 1.04 of this code.
8-62 SECTION 2. This Act does not exempt a multiple employer
8-63 welfare arrangement from any other license requirement imposed
8-64 under local, state, or federal law.
8-65 SECTION 3. (a) Except as provided by Subsection (b) of this
8-66 section, this Act takes effect September 1, 1993.
8-67 (b) An entity in existence on June 1, 1993, that is required
8-68 to hold a certificate of authority under this Act shall not be
8-69 prosecuted for engaging in the unauthorized business of insurance
8-70 if it timely files notice and applies for an initial and a final
9-1 certificate of authority unless either is finally denied. If an
9-2 existing multiple employer welfare arrangement timely files notice
9-3 and applies for an initial and a final certificate of authority,
9-4 the fact that such multiple employer welfare arrangement engaged in
9-5 the business of insurance in this state prior to the effective date
9-6 of this Act shall not provide a basis for denial of a certificate
9-7 of authority.
9-8 SECTION 4. The importance of this legislation and the
9-9 crowded condition of the calendars in both houses create an
9-10 emergency and an imperative public necessity that the
9-11 constitutional rule requiring bills to be read on three several
9-12 days in each house be suspended, and this rule is hereby suspended.
9-13 * * * * *
9-14 Austin,
9-15 Texas
9-16 May 22, 1993
9-17 Hon. Bob Bullock
9-18 President of the Senate
9-19 Sir:
9-20 We, your Committee on Economic Development to which was referred
9-21 H.B. No. 1540, have had the same under consideration, and I am
9-22 instructed to report it back to the Senate with the recommendation
9-23 that it do not pass, but that the Committee Substitute adopted in
9-24 lieu thereof do pass and be printed.
9-25 Parker,
9-26 Chairman
9-27 * * * * *
9-28 WITNESSES
9-29 FOR AGAINST ON
9-30 ___________________________________________________________________
9-31 Name: Jim Warren x
9-32 Representing: Printing Industries Assn (TX)
9-33 City: Austin
9-34 -------------------------------------------------------------------
9-35 Name: Jimmy Cathey x
9-36 Representing: Printing Industries Assn (TX)
9-37 City: Dallas
9-38 -------------------------------------------------------------------
9-39 Name: Geoffrey Winzl x
9-40 Representing: Self
9-41 City: Austin
9-42 -------------------------------------------------------------------
9-43 Name: Everette Jobe x
9-44 Representing: Attorney General's Office
9-45 City: Austin
9-46 -------------------------------------------------------------------
9-47 Name: Burnie Burner x
9-48 Representing: Various Clients
9-49 City: Austin
9-50 -------------------------------------------------------------------