By Berlanga, et al. H.B. No. 1880
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the establishment, certification, organization, and
1-3 regulation of dental referral plan organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-6 amended by adding Article 21.53B to read as follows:
1-7 Art. 21.53B. DENTAL REFERRAL PLAN ORGANIZATIONS
1-8 Sec. 1. SHORT TITLE. This article may be cited as the Texas
1-9 Dental Referral Plan Organization Act.
1-10 Sec. 2. DEFINITIONS. In this article:
1-11 (1) "Dental care" means those services specifically
1-12 defined as practicing dentistry under the laws of this state.
1-13 (2) "Dental care service" means a service incident to
1-14 the furnishing of dental care.
1-15 (3) "Dental referral plan" means a plan under which a
1-16 person undertakes to arrange for the availability of dental care
1-17 services from one or more participating dentists on a
1-18 fee-for-service basis according to predetermined fees. The term
1-19 does not include a plan in which a part of the plan consists of
1-20 arranging for, or the provision of, dental care services on a
1-21 pre-paid basis through insurance or otherwise, or the
1-22 indemnification against or reimbursement for the cost of dental
1-23 care services.
1-24 (4) "Dental referral plan organization" means a person
2-1 that arranges for or provides a dental referral plan to the
2-2 person's members for a fee or other consideration.
2-3 (5) "Dentist" means a person licensed to practice
2-4 dentistry in this state.
2-5 (6) "Member" means an individual who is enrolled in a
2-6 dental referral plan and therefore is eligible to seek dental care
2-7 services from a participating dentist according to predetermined
2-8 fees.
2-9 (7) "Person" means an individual, partnership,
2-10 association, organization, trust, or corporation or other entity.
2-11 Sec. 3. REQUIREMENT OF CERTIFICATE OF AUTHORITY. (a)
2-12 Notwithstanding any other provision of law, a person may apply to
2-13 the commissioner for and obtain a certificate of authority to
2-14 establish and operate a dental referral plan organization in
2-15 accordance with this article.
2-16 (b) A person may not establish or operate a dental referral
2-17 plan organization in this state, or sell or offer to sell or
2-18 solicit offers to purchase or receive advance or periodic
2-19 consideration in conjunction with a dental referral plan, unless
2-20 the person has a valid certificate of authority under this article.
2-21 (c) A foreign corporation registered to do business in this
2-22 state as a foreign corporation under the Texas Business Corporation
2-23 Act may obtain a certificate of authority in accordance with this
2-24 article and other applicable state statutes.
2-25 Sec. 4. INITIAL CERTIFICATE. (a) An applicant for an
2-26 initial certificate of authority must submit an application on a
2-27 form prescribed by the commissioner. The application must:
3-1 (1) be accompanied by the nonrefundable application
3-2 fee prescribed by Section 19 of this article;
3-3 (2) be verified by the applicant or by an officer or
3-4 other authorized representative of the applicant; and
3-5 (3) include:
3-6 (A) a copy of the applicant's basic
3-7 organizational document, if any, including the articles of
3-8 incorporation, articles of association, partnership agreement, or
3-9 trust agreement, as applicable, any documents evidencing assumed
3-10 names used, other applicable documents, and all amendments;
3-11 (B) a copy of the bylaws, rules, or similar
3-12 documents, if any, regulating the conduct of the applicant's
3-13 internal affairs;
3-14 (C) a list of the names, addresses, and official
3-15 positions of the persons who are to be responsible for the conduct
3-16 of the applicant's affairs, including each member of the board of
3-17 directors, board of trustees, executive committee, or other
3-18 governing body or committee, the principal officers if a
3-19 corporation, and the partners or members if a partnership or
3-20 association;
3-21 (D) a sample copy of the form of a contract made
3-22 or to be made between a dentist, other provider, or person listed
3-23 in Paragraph (C) of this subdivision and the applicant;
3-24 (E) a sample copy of the form of the schedule of
3-25 dental care service fees to be issued by the applicant under
3-26 Section 9 of this article;
3-27 (F) a current audited financial statement that
4-1 includes:
4-2 (i) a balance sheet;
4-3 (ii) a statement of income and retained
4-4 earnings; and
4-5 (iii) a statement of cash flow;
4-6 (G) a statement reasonably describing the
4-7 geographic or metropolitan area, or both if applicable, to be
4-8 served by the applicant;
4-9 (H) a description of the procedures to be used
4-10 by the applicant under Section 10 of this article in resolving a
4-11 complaint from a member or participating dentist;
4-12 (I) a copy of the dental referral plan
4-13 organization's surety bond as required by Section 11(b) of this
4-14 article; and
4-15 (J) other information as the commissioner may
4-16 require to make the determinations required by this article.
4-17 (b) The commissioner shall review an application when filed.
4-18 The commissioner shall promptly notify the applicant of any
4-19 deficiencies in the application and shall give the applicant an
4-20 adequate opportunity to correct the deficiencies. The commissioner
4-21 may delay final action on the application to give the applicant an
4-22 opportunity to correct the deficiencies.
4-23 (c) If possible, the commissioner shall issue the
4-24 certificate or deny the application not later than the 60th day
4-25 after the date the commissioner receives the application. However,
4-26 the applicant may request and the commissioner may grant a delay if
4-27 necessary.
5-1 (d) The commissioner shall issue the certificate if the
5-2 commissioner is satisfied that:
5-3 (1) each item in the application appears satisfactory;
5-4 (2) each person responsible for the conduct of the
5-5 applicant's affairs is competent, trustworthy, and of good
5-6 reputation;
5-7 (3) the dental referral plan organization constitutes
5-8 an appropriate mechanism that effectively provides or arranges for
5-9 the availability of dental care services on a fee-for-service basis
5-10 at predetermined rates;
5-11 (4) the dental referral plan organization is fully
5-12 responsible and may reasonably be expected to meet its obligations
5-13 to members and prospective members; and
5-14 (5) the proposed method of operation, as shown by the
5-15 information submitted under this section, or as determined by
5-16 independent investigation by the commissioner, is not contrary to
5-17 state law.
5-18 (e) In making the determination under Subsection (d)(4) of
5-19 this section, the commissioner shall consider:
5-20 (1) the dental referral plan organization's
5-21 arrangement for availability of dental care services on a
5-22 fee-for-service basis at predetermined rates, including the number
5-23 of participating dentists as compared with the projected number of
5-24 members, and its contractual relationships with its participating
5-25 dentists;
5-26 (2) the schedule of dental care service fees; and
5-27 (3) the organization's financial soundness and the
6-1 adequacy of its working capital.
6-2 (f) If after reviewing the application and giving the
6-3 applicant a reasonable opportunity to correct any deficiencies the
6-4 commissioner is of the opinion that the dental referral plan
6-5 organization's proposed plan of operation does not meet the
6-6 requirements of this section, the commissioner shall deny the
6-7 application. The commissioner shall notify the applicant of the
6-8 denial and shall specify the reasons for the denial.
6-9 Sec. 5. RENEWAL. (a) A certificate of authority expires
6-10 annually on April 1.
6-11 (b) An applicant must submit an application for renewal on a
6-12 form prescribed by the commissioner. The application must:
6-13 (1) be accompanied by the nonrefundable renewal fee
6-14 prescribed by Section 19 of this article; and
6-15 (2) include any modifications or amendments of
6-16 information required under Section 4(a) of this article as
6-17 necessary to reflect any changes since the issuance of the
6-18 preceding certificate.
6-19 (c) The commissioner is considered to have approved a
6-20 modification or amendment unless the commissioner specifically
6-21 disapproves of the change not later than the 30th day after the
6-22 date the commissioner receives the information. However, the
6-23 commissioner may postpone action on the amendment or modification
6-24 for an additional 30 days if necessary.
6-25 (d) A dental referral plan organization that files an
6-26 application for renewal under this section may continue to operate
6-27 while the application is pending.
7-1 (e) Sections 4(c)-(f) of this article apply to an
7-2 application for renewal.
7-3 Sec. 6. ANNUAL REPORT. (a) A dental referral plan
7-4 organization shall file with an application for renewal of a
7-5 certificate of authority a report covering the preceding calendar
7-6 year.
7-7 (b) The annual report shall include an audited financial
7-8 statement of the dental referral plan organization for the
7-9 preceding year that is attested to by an independent certified
7-10 public accountant. The financial statement must include a balance
7-11 sheet, statement of income and retained earnings, and statement of
7-12 cash flow.
7-13 Sec. 7. NOTIFICATION OF CHANGE. If a change in the
7-14 ownership or control of a dental referral plan organization occurs,
7-15 the organization shall file with the commissioner information
7-16 relating to the change not later than the 15th day of the first
7-17 month that begins after the month in which the change of ownership
7-18 or control occurs.
7-19 Sec. 8. POWERS OF DENTAL REFERRAL PLAN ORGANIZATION. (a) A
7-20 dental referral plan organization may arrange for the availability
7-21 of dental care services on a fee-for-service basis according to
7-22 predetermined rates with dentists or groups of dentists who have
7-23 independent contracts with the organization. A fee must be charged
7-24 for each service available under the plan. A dental referral plan
7-25 organization may not:
7-26 (1) pay consideration to a dentist in a manner that
7-27 would constitute payment for dental care services rendered to a
8-1 member; or
8-2 (2) employ or contract with a dentist in a manner that
8-3 is prohibited by a licensing law of this state under which the
8-4 dentist is licensed.
8-5 (b) A dental referral plan organization may contract with a
8-6 person for the performance on its behalf of functions such as
8-7 marketing, enrollment, and administration. A person who renders
8-8 administrative services on behalf of an organization is not
8-9 considered an "administrator" for purposes of Article 21.07-6 of
8-10 this code.
8-11 (c) In addition to the powers provided by this article, a
8-12 dental referral plan organization has all powers given to a
8-13 corporation, partnership, or association under the entity's
8-14 organizational documents that do not conflict with this article or
8-15 other applicable law.
8-16 Sec. 9. SCHEDULE OF DENTAL CARE SERVICE FEES. (a) A member
8-17 of a dental referral plan organization who resides in this state is
8-18 entitled to receive a schedule of dental care service fees that
8-19 lists the predetermined fees for the dental care services available
8-20 from the participating dentists.
8-21 (b) A schedule of dental care service fees may not contain a
8-22 provision or statement that is unjust, unfair, inequitable,
8-23 misleading, or deceptive or that encourages misrepresentation.
8-24 (c) At a minimum, a schedule of dental care service fees
8-25 shall contain:
8-26 (1) a clear and complete statement of the dental care
8-27 services that are available from the participating dentists and any
9-1 limitation or exclusion on the services available, including any
9-2 payment features; and
9-3 (2) a clear and complete statement that:
9-4 (A) the dental referral plan does not constitute
9-5 dental insurance and is not a health maintenance organization
9-6 contract; and
9-7 (B) the dental referral plan does not reimburse
9-8 the dentists or indemnify its members for the cost of dental care
9-9 services received by the members.
9-10 (d) A schedule of dental care services may not be issued or
9-11 delivered to a person until a copy has been filed with and approved
9-12 by the commissioner.
9-13 (e) The commissioner, after notice and hearing, may
9-14 disapprove any schedule that the commissioner determines violates
9-15 or does not comply with this article or a rule adopted by the
9-16 commissioner under this article. A dental referral plan
9-17 organization may not issue a disapproved schedule. The
9-18 commissioner shall notify the applicant of the disapproval of a
9-19 schedule and specify the reason for the disapproval. The
9-20 commissioner is considered to have approved a schedule unless the
9-21 commissioner disapproves the schedule not later than the 30th day
9-22 after the date the schedule is filed. However, the commissioner
9-23 may by written notice postpone action on the schedule for an
9-24 additional 30 days if necessary.
9-25 (f) The commissioner may require the dental referral plan
9-26 organization to submit any relevant information the commissioner
9-27 considers necessary in considering a filing made under this
10-1 section.
10-2 Sec. 10. COMPLAINT RESOLUTION PROCEDURE. (a) A dental
10-3 referral plan organization shall establish and maintain a complaint
10-4 resolution system to provide reasonable procedures for the
10-5 resolution of written complaints initiated by members that relate
10-6 to the dental referral plan.
10-7 (b) The commissioner may examine the complaint resolution
10-8 system.
10-9 Sec. 11. PROTECTION AGAINST INSOLVENCY. (a) A dental
10-10 referral plan organization to which a certificate of authority is
10-11 issued shall maintain a minimum surplus, net of accrued
10-12 liabilities, of not less than $100,000. The minimum surplus may
10-13 consist only of cash, bonds of the United States, bonds of this
10-14 state, or a combination of those items. If a dental referral plan
10-15 organization fails to comply with the surplus requirement of this
10-16 section, the commissioner shall take appropriate action to assure
10-17 that the continued operation of the dental referral plan
10-18 organization is not hazardous to its members. The commissioner may
10-19 suspend, revoke, or fail to renew a certificate of authority for
10-20 failure to comply with this section.
10-21 (b) A dental referral plan organization shall post with the
10-22 state treasury a surety bond in the amount of $100,000 on a form
10-23 approved by the commissioner to secure the debts and obligations of
10-24 the organization to its members.
10-25 Sec. 12. PROHIBITED PRACTICES. (a) A dental referral plan
10-26 organization or a representative of an organization may not cause
10-27 or knowingly permit the use of:
11-1 (1) advertising that is untrue or is misleading;
11-2 (2) a solicitation that is untrue or misleading; or
11-3 (3) a schedule issued to members that is deceptive.
11-4 (b) The Deceptive Trade Practices-Consumer Protection Act
11-5 (Subchapter E, Chapter 17, Business & Commerce Code) and its
11-6 subsequent amendments apply to:
11-7 (1) a dental referral plan organization;
11-8 (2) the schedule of dental care service fees issued by
11-9 a dental referral plan organization; and
11-10 (3) the sale of a dental referral plan by a
11-11 representative of a dental referral plan organization.
11-12 Sec. 13. SUSPENSION, REVOCATION, OR NONRENEWAL OF
11-13 CERTIFICATE OF AUTHORITY. (a) The commissioner may suspend or
11-14 revoke a certificate of authority issued to a dental referral plan
11-15 organization under this article if the commissioner finds that:
11-16 (1) the dental referral plan organization is operating
11-17 significantly in contravention of its basic organizational
11-18 documents or its dental referral plan, or in a manner contrary to
11-19 that described in and reasonably inferred from any other
11-20 information submitted under Section 4 of this article;
11-21 (2) the dental referral plan organization has issued
11-22 or used a schedule of dental care service fees that does not comply
11-23 with Section 9 of this article;
11-24 (3) the dental referral plan organization cannot meet
11-25 its obligations to its members or prospective members;
11-26 (4) the dental referral plan organization has failed
11-27 to implement or maintain the complaint resolution system required
12-1 by Section 10 of this article in a manner that allows for the
12-2 reasonable resolution of valid complaints;
12-3 (5) the dental referral plan organization has
12-4 advertised or marketed its dental referral plan in an untrue,
12-5 misrepresentative, misleading, deceptive, or unfair manner;
12-6 (6) the continued operation of the dental referral
12-7 plan organization would be hazardous to its members; or
12-8 (7) the dental referral plan organization has
12-9 otherwise failed to comply substantially with this article or with
12-10 a rule adopted under this article.
12-11 (b) A dental referral plan organization may not, during the
12-12 time a certificate of authority is suspended, enroll additional
12-13 members or engage in advertising or solicitation.
12-14 (c) A dental referral plan organization whose certificate of
12-15 authority is revoked or not renewed shall proceed to wind up its
12-16 affairs immediately after the effective date of the order of
12-17 revocation or the expiration date of its previous certificate of
12-18 authority. The organization may not:
12-19 (1) conduct further business except as essential to
12-20 the orderly conclusion of the organization's affairs; or
12-21 (2) engage in further advertising or solicitation.
12-22 (d) The commissioner may, by written order, permit further
12-23 operation of the organization as the commissioner may find is in
12-24 the best interest of the members of the organization.
12-25 Sec. 14. RULES AND REGULATIONS. The board may adopt
12-26 reasonable rules as are necessary and proper to carry out this
12-27 article.
13-1 Sec. 15. APPEALS. (a) A person who is affected by a rule,
13-2 ruling, or decision of the department is entitled to have the rule,
13-3 ruling, or decision reviewed by the board in accordance with the
13-4 procedures prescribed by Article 1.04 of this code. The hearings
13-5 requirements for a contested case prescribed by the Administrative
13-6 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
13-7 Civil Statutes) and its subsequent amendments apply to an appeal of
13-8 a rule, ruling, or decision under this article.
13-9 (b) A person may appeal a board decision in accordance with
13-10 Article 1.04 of this code. The decision of the board may not be
13-11 stayed except on application to the district court and after notice
13-12 to the board. The proceeding on appeal is by trial de novo.
13-13 Either party to the appeal may appeal to the appellate court having
13-14 jurisdiction of the cause and the appeal shall at once be
13-15 returnable to the appellate court having jurisdiction of the cause.
13-16 The appeal has precedence in the appellate court over all pending
13-17 causes of different nature.
13-18 Sec. 16. STATUTORY CONSTRUCTION IN RELATION TO OTHER LAWS.
13-19 (a) A solicitation of a member by a representative of a dental
13-20 referral plan organization that has a certificate of authority does
13-21 not violate a provision of law relating to solicitation or
13-22 advertising by a dentist.
13-23 (b) This article does not permit a dental referral plan
13-24 organization to practice dentistry as defined by the laws of this
13-25 state. A dental referral plan organization is not exempt from
13-26 those laws.
13-27 (c) The provision of factually accurate information
14-1 regarding dental care services, charges, and names and locations of
14-2 participating dentists by the dental referral plan organization or
14-3 its representatives to a potential member is not a violation of a
14-4 law relating to solicitation or advertising by a dentist. The
14-5 information with respect to a participating dentist is not
14-6 considered contrary to or in conflict with a law or regulation in
14-7 the practice of dentistry.
14-8 (d) Except as herein provided, dental referral plans and
14-9 dental referral plan organizations shall be governed by this
14-10 article and shall be exempt from all other provisions of the
14-11 insurance laws of this state, not only in governmental relations
14-12 with the state but for every other purpose. No insurance law
14-13 enacted after the effective date of this article shall apply to
14-14 them, unless they be expressly designated therein.
14-15 Sec. 17. PUBLIC RECORD. An application, filing, or report
14-16 required under this article is a public document, except that a
14-17 report of an examination conducted by the department of a dental
14-18 referral plan organization is considered a confidential document.
14-19 That document may be released if, in the opinion of the
14-20 commissioner, release is in the public interest.
14-21 Sec. 18. INJUNCTIONS. The commissioner may bring suit in a
14-22 district court of Travis County against a dental referral plan
14-23 organization or other person that appears to be violating or has
14-24 violated this article or a rule issued under this article. The
14-25 commissioner may obtain injunctive and other relief as the court
14-26 may consider appropriate.
14-27 Sec. 19. FEES. (a) A dental referral plan organization
15-1 subject to this article shall pay to the department the following
15-2 fees:
15-3 (1) for filing the original application for
15-4 certificate of authority, a fee in an amount not to exceed $2,500
15-5 as determined by the board;
15-6 (2) for annual renewal of the certificate of authority
15-7 under this article, a fee in an amount not to exceed $2,500 as
15-8 determined by the board;
15-9 (3) for filing the annual report as required under
15-10 this article, a fee in an amount not to exceed $500; and
15-11 (4) for filing each schedule of dental care service
15-12 fees as required under this article, a fee in an amount not to
15-13 exceed $100.
15-14 (b) The board shall, within the limits prescribed by this
15-15 section, set the fees to be charged under this section.
15-16 (c) The commissioner shall deposit fees collected under this
15-17 section in the state treasury to the credit of the department's
15-18 operating fund.
15-19 SECTION 2. (a) This Act takes effect September 1, 1993.
15-20 (b) An existing dental referral plan organization must file
15-21 an application for an initial certificate of authority not later
15-22 than December 1, 1993.
15-23 (c) An applicant may continue to operate until the
15-24 commissioner of insurance acts on the application. The applicant
15-25 is considered for the purposes of Article 21.53B, Insurance Code,
15-26 as added by this Act, to have a valid certificate while the
15-27 application is pending.
16-1 (d) If the commissioner denies an application for a
16-2 certificate of authority, the dental referral plan organization
16-3 shall proceed to wind up its affairs in accordance with Section 13,
16-4 Article 21.53B, Insurance Code, as added by this Act.
16-5 SECTION 3. The importance of this legislation and the
16-6 crowded condition of the calendars in both houses create an
16-7 emergency and an imperative public necessity that the
16-8 constitutional rule requiring bills to be read on three several
16-9 days in each house be suspended, and this rule is hereby suspended.