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.