By: Berlanga H.B. No. 1880 73R4197 CBH-F 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. SHORT TITLE. This Act may be cited as the Texas 1-6 Dental Referral Plan Organization Act. 1-7 SECTION 2. DEFINITIONS. In this Act: 1-8 (1) "Commission" means the Texas Commission of 1-9 Licensing and Regulation. 1-10 (2) "Commissioner" means the commissioner of licensing 1-11 and regulation. 1-12 (3) "Dental care" means those services specifically 1-13 defined as practicing dentistry under the laws of this state. 1-14 (4) "Dental care service" means a service incident to 1-15 the furnishing of dental care. 1-16 (5) "Dental referral plan" means a plan under which a 1-17 person undertakes to arrange for the availability of dental care 1-18 services from one or more participating dentists on a 1-19 fee-for-service basis and according to predetermined fees. The 1-20 term does not include a plan in which a fee is not paid for each 1-21 dental care service available under the plan or in which a part of 1-22 the plan consists of arranging for, or the provision of, dental 1-23 care services on a pre-paid basis through insurance or otherwise, 1-24 or the indemnification against or reimbursement for the cost of 2-1 dental care services. 2-2 (6) "Dental referral plan organization" means a person 2-3 that arranges for or provides a dental referral plan to the 2-4 person's members for a fee or other consideration. 2-5 (7) "Dentist" means a person licensed to practice 2-6 dentistry in this state. 2-7 (8) "Department" means the Texas Department of 2-8 Licensing and Regulation. 2-9 (9) "Member" means an individual who is enrolled in a 2-10 dental referral plan and therefore is eligible to seek dental care 2-11 services from a participating dentist according to predetermined 2-12 fees. 2-13 (10) "Person" means an individual, partnership, 2-14 association, organization, trust, or corporation or other entity. 2-15 SECTION 3. REQUIREMENT OF CERTIFICATE OF AUTHORITY. (a) 2-16 Notwithstanding any other provision of law, a person may apply to 2-17 the commissioner for and obtain a certificate of authority to 2-18 establish and operate a dental referral plan organization in 2-19 accordance with this Act. 2-20 (b) A person may not establish or operate a dental referral 2-21 plan organization in this state, or sell or offer to sell or 2-22 solicit offers to purchase or receive advance or periodic 2-23 consideration in conjunction with a dental referral plan, unless 2-24 the person has a valid certificate of authority under this Act. 2-25 (c) A foreign corporation registered to do business in this 2-26 state as a foreign corporation under the Texas Business Corporation 2-27 Act may obtain a certificate of authority in accordance with this 3-1 Act and other applicable state statutes. 3-2 SECTION 4. INITIAL CERTIFICATE. (a) An applicant for an 3-3 initial certificate of authority must submit an application on a 3-4 form prescribed by the commissioner. The application must: 3-5 (1) be accompanied by the nonrefundable application 3-6 fee prescribed by Section 19 of this Act; 3-7 (2) be verified by the applicant or by an officer or 3-8 other authorized representative of the applicant; and 3-9 (3) include: 3-10 (A) a copy of the applicant's basic 3-11 organizational document, if any, including the articles of 3-12 incorporation, articles of association, partnership agreement, or 3-13 trust agreement, as applicable, any documents evidencing assumed 3-14 names used, other applicable documents, and all amendments; 3-15 (B) a copy of the bylaws, rules, or similar 3-16 documents, if any, regulating the conduct of the applicant's 3-17 internal affairs; 3-18 (C) a list of the names, addresses, and official 3-19 positions of the persons who are to be responsible for the conduct 3-20 of the applicant's affairs, including each member of the board of 3-21 directors, board of trustees, executive committee, or other 3-22 governing body or committee, the principal officers if a 3-23 corporation, and the partners or members if a partnership or 3-24 association; 3-25 (D) a sample copy of the form of a contract made 3-26 or to be made between a dentist, other provider, or person listed 3-27 in Paragraph (C) of this subdivision and the applicant; 4-1 (E) a sample copy of the form of the schedule of 4-2 dental care service fees to be issued by the applicant under 4-3 Section 9 of this Act; 4-4 (F) a current audited financial statement that 4-5 includes: 4-6 (i) a balance sheet; 4-7 (ii) a statement of income and retained 4-8 earnings; and 4-9 (iii) a statement of cash flow; 4-10 (G) a statement reasonably describing the 4-11 geographic or metropolitan area, or both if applicable, to be 4-12 served by the applicant; 4-13 (H) a description of the procedures to be used 4-14 by the applicant under Section 10 of this Act in resolving a 4-15 complaint from a member or participating dentist; 4-16 (I) a copy of the dental referral plan 4-17 organization's surety bond as required by Section 11(b) of this 4-18 Act; and 4-19 (J) other information as the commissioner may 4-20 require to make the determinations required by this Act. 4-21 (b) The commissioner shall review an application when filed. 4-22 The commissioner shall promptly notify the applicant of any 4-23 deficiencies in the application and shall give the applicant an 4-24 adequate opportunity to correct the deficiencies. The commissioner 4-25 may delay final action on the application to give the applicant an 4-26 opportunity to correct the deficiencies. 4-27 (c) If possible, the commissioner shall issue the 5-1 certificate or deny the application not later than the 60th day 5-2 after the date the commissioner receives the application. However, 5-3 the applicant may request and the commissioner may grant a delay if 5-4 necessary. 5-5 (d) The commissioner shall issue the certificate if the 5-6 commissioner is satisfied that: 5-7 (1) each item in the application appears satisfactory; 5-8 (2) each person responsible for the conduct of the 5-9 applicant's affairs is competent, trustworthy, and of good 5-10 reputation; 5-11 (3) the dental referral plan organization constitutes 5-12 an appropriate mechanism that effectively provides or arranges for 5-13 the availability of dental care services on a fee-for-service basis 5-14 at predetermined rates; 5-15 (4) the dental referral plan organization is fully 5-16 responsible and may reasonably be expected to meet its obligations 5-17 to members and prospective members; and 5-18 (5) the proposed method of operation, as shown by the 5-19 information submitted under this section, or as determined by 5-20 independent investigation by the commissioner, is not contrary to 5-21 state law. 5-22 (e) In making the determination under Subsection (d)(4) of 5-23 this section, the commissioner shall consider: 5-24 (1) the dental referral plan organization's 5-25 arrangement for availability of dental care services on a 5-26 fee-for-service basis at predetermined rates, including the number 5-27 of participating dentists as compared with the projected number of 6-1 members, and its contractual relationships with its participating 6-2 dentists; 6-3 (2) the schedule of dental care service fees; and 6-4 (3) the organization's financial soundness and the 6-5 adequacy of its working capital. 6-6 (f) If after reviewing the application and giving the 6-7 applicant a reasonable opportunity to correct any deficiencies, the 6-8 commissioner is of the opinion that the dental referral plan 6-9 organization's proposed plan of operation does not meet the 6-10 requirements of this section, the commissioner shall deny the 6-11 application. The commissioner shall notify the applicant of the 6-12 denial and shall specify the reasons for the denial. 6-13 SECTION 5. RENEWAL. (a) A certificate of authority expires 6-14 annually on April 1. 6-15 (b) An applicant must submit an application for renewal on a 6-16 form prescribed by the commissioner. The application must: 6-17 (1) be accompanied by the nonrefundable renewal fee 6-18 prescribed by Section 19 of this Act; and 6-19 (2) include any modifications or amendments of 6-20 information required under Section 4(a) of this Act as necessary to 6-21 reflect any changes since the issuance of the preceding 6-22 certificate. 6-23 (c) The commissioner is considered to have approved a 6-24 modification or amendment unless the commissioner specifically 6-25 disapproves of the change not later than the 30th day after the 6-26 date the commissioner receives the information. However, the 6-27 commissioner may postpone action on the amendment or modification 7-1 for an additional 30 days if necessary. 7-2 (d) A dental referral plan organization that files an 7-3 application for renewal under this section may continue to operate 7-4 while the application is pending. 7-5 (e) Sections 4(c)-(f) of this Act apply to an application 7-6 for renewal. 7-7 SECTION 6. ANNUAL REPORT. (a) A dental referral plan 7-8 organization shall file with an application for certificate of 7-9 authority renewal a report covering the preceding calendar year. 7-10 (b) The annual report shall include an audited financial 7-11 statement of the dental referral plan organization for the 7-12 preceding year that is attested to by an independent certified 7-13 public accountant. The financial statement must include a balance 7-14 sheet, statement of income and retained earnings, and statement of 7-15 cash flow. 7-16 SECTION 7. NOTIFICATION OF CHANGE. If a change in the 7-17 ownership or control of a dental referral plan organization occurs, 7-18 the organization shall file with the commissioner information 7-19 relating to the change not later than the 15th day of the first 7-20 month that begins after the month in which the change of ownership 7-21 or control occurs. 7-22 SECTION 8. POWERS OF DENTAL REFERRAL PLAN ORGANIZATION. (a) 7-23 A dental referral plan organization may arrange for the 7-24 availability of dental care services on a fee-for-service basis 7-25 according to predetermined rates with dentists or groups of 7-26 dentists who have independent contracts with the organization. A 7-27 fee must be charged for each service available under the plan. A 8-1 dental referral plan organization may not: 8-2 (1) pay consideration to a dentist in a manner that 8-3 would constitute payment for dental care services rendered to a 8-4 member; or 8-5 (2) employ or contract with a dentist in a manner that 8-6 is prohibited by a licensing law of this state under which the 8-7 dentist is licensed. 8-8 (b) A dental referral plan organization may contract with a 8-9 person for the performance on its behalf of functions such as 8-10 marketing, enrollment, and administration. A person who renders 8-11 administrative services on behalf of an organization is not 8-12 considered an "administrator" for purposes of Article 21.07-6, 8-13 Insurance Code, and its subsequent amendments. 8-14 (c) In addition to the powers provided by this Act, a dental 8-15 referral plan organization has all powers given to a corporation, 8-16 partnership, or association under the entity's organizational 8-17 documents that do not conflict with this Act or other applicable 8-18 law. 8-19 SECTION 9. SCHEDULE OF DENTAL CARE SERVICE FEES. (a) A 8-20 member of a dental referral plan organization who resides in this 8-21 state is entitled to receive a schedule of dental care service fees 8-22 that lists the predetermined fees for the dental care services 8-23 available from the participating dentists. 8-24 (b) A schedule of dental care service fees may not contain a 8-25 provision or statement that is unjust, unfair, inequitable, 8-26 misleading, or deceptive or that encourages misrepresentation. 8-27 (c) At a minimum, a schedule of dental care service fees 9-1 shall contain: 9-2 (1) a clear and complete statement of the dental care 9-3 services that are available from the participating dentists and any 9-4 limitation or exclusion on the services available, including any 9-5 payment features; and 9-6 (2) a clear and complete statement that: 9-7 (A) the dental referral plan does not constitute 9-8 dental insurance and is not a health maintenance organization 9-9 contract; and 9-10 (B) the dental referral plan does not reimburse 9-11 the dentists or indemnify its members for the cost of dental care 9-12 services received by the members. 9-13 (d) 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 Act or a rule adopted by the 9-16 commissioner under this Act. A dental referral plan organization 9-17 may not issue a disapproved schedule. The commissioner shall 9-18 notify the applicant of the disapproval of a schedule and specify 9-19 the reason for the disapproval. The commissioner is considered to 9-20 have approved a schedule unless the commissioner disapproves the 9-21 schedule not later than the 30th day after the date the schedule is 9-22 filed. However, the commissioner may by written notice postpone 9-23 action on the schedule for an additional 30 days if necessary. 9-24 (e) The commissioner may require the dental referral plan 9-25 organization to submit any relevant information the commissioner 9-26 considers necessary in considering a filing made under this 9-27 section. 10-1 SECTION 10. COMPLAINT RESOLUTION PROCEDURE. (a) A dental 10-2 referral plan organization shall establish and maintain a complaint 10-3 resolution system to provide reasonable procedures for the 10-4 resolution of written complaints initiated by members that relate 10-5 to the dental referral plan. 10-6 (b) The commissioner may examine the complaint resolution 10-7 system. 10-8 SECTION 11. PROTECTION AGAINST INSOLVENCY. (a) A dental 10-9 referral plan organization to which a certificate of authority is 10-10 issued shall maintain a minimum surplus, net of accrued 10-11 liabilities, of not less than $100,000. The minimum surplus may 10-12 consist only of cash, bonds of the United States, bonds of this 10-13 state, or a combination of those items. If a dental referral plan 10-14 organization fails to comply with the surplus requirement of this 10-15 section, the commissioner shall take appropriate action to assure 10-16 that the continued operation of the dental referral plan 10-17 organization is not hazardous to its members. The commissioner may 10-18 suspend, revoke, or fail to renew a certificate of authority for 10-19 failure to comply with this section. 10-20 (b) A dental referral plan organization shall post with the 10-21 state treasury a surety bond in the amount of $100,000 on a form 10-22 approved by the commissioner to secure the debts and obligations of 10-23 the organization to its members. 10-24 SECTION 12. PROHIBITED PRACTICES. (a) A dental referral 10-25 plan organization or a representative of an organization may not 10-26 cause or knowingly permit the use of: 10-27 (1) advertising that is untrue or is misleading; 11-1 (2) a solicitation that is untrue or misleading; or 11-2 (3) a schedule issued to members that is deceptive. 11-3 (b) The Deceptive Trade Practices-Consumer Protection Act 11-4 (Subchapter E, Chapter 17, Business & Commerce Code) and its 11-5 subsequent amendments applies to: 11-6 (1) a dental referral plan organization; 11-7 (2) the schedule of dental care service fees issued by 11-8 a dental referral plan organization; and 11-9 (3) the sale of a dental referral plan by a 11-10 representative of a dental referral plan organization. 11-11 SECTION 13. SUSPENSION, REVOCATION, OR NONRENEWAL OF 11-12 CERTIFICATE OF AUTHORITY. (a) The commissioner may suspend or 11-13 revoke a certificate of authority issued to a dental referral plan 11-14 organization under this Act if the commissioner finds that: 11-15 (1) the dental referral plan organization is operating 11-16 significantly in contravention of its basic organizational 11-17 documents or its dental referral plan, or in a manner contrary to 11-18 that described in and reasonably inferred from any other 11-19 information submitted under Section 4 of this Act; 11-20 (2) the dental referral plan organization has issued 11-21 or used a schedule of dental care service fees that does not comply 11-22 with Section 9 of this Act; 11-23 (3) the dental referral plan organization cannot meet 11-24 its obligations to its members or prospective members; 11-25 (4) the dental referral plan organization has failed 11-26 to implement or maintain the complaint resolution system required 11-27 by Section 10 of this Act in a manner that allows for the 12-1 reasonable resolution of valid complaints; 12-2 (5) the dental referral plan organization has 12-3 advertised or marketed its dental referral plan in an untrue, 12-4 misrepresentative, misleading, deceptive, or unfair manner; 12-5 (6) the continued operation of the dental referral 12-6 plan organization would be hazardous to its members; or 12-7 (7) the dental referral plan organization has 12-8 otherwise failed to comply substantially with this Act or with a 12-9 rule adopted under this Act. 12-10 (b) A dental referral plan organization may not, during the 12-11 time a certificate of authority is suspended, enroll additional 12-12 members or engage in advertising or solicitation. 12-13 (c) A dental referral plan organization whose certificate of 12-14 authority is revoked or not renewed shall proceed to wind up its 12-15 affairs immediately after the effective date of the order of 12-16 revocation or the expiration date of its previous certificate of 12-17 authority. The organization may not: 12-18 (1) conduct further business except as essential to 12-19 the orderly conclusion of the organization's affairs; or 12-20 (2) engage in further advertising or solicitation. 12-21 (d) The commissioner may, by written order, permit further 12-22 operation of the organization as the commissioner may find is in 12-23 the best interest of the members of the organization. 12-24 SECTION 14. RULES AND REGULATIONS. The commissioner may 12-25 adopt reasonable rules as are necessary and proper to carry out 12-26 this Act. 12-27 SECTION 15. APPEALS. (a) A person who is affected by a 13-1 rule, ruling, or decision of the commissioner is entitled to have 13-2 the rule, ruling, or decision reviewed by the commission in 13-3 accordance with the procedures prescribed by Article 9100, Revised 13-4 Statutes, and its subsequent amendments. The hearings requirements 13-5 for a contested case prescribed by the Administrative Procedure and 13-6 Texas Register Act (Article 6252-13a, Vernon's Texas Civil 13-7 Statutes) and its subsequent amendments apply to an appeal of a 13-8 rule, ruling, or decision under this Act. 13-9 (b) A person may appeal a commission decision following the 13-10 review under Subsection (a) of this section by filing a petition 13-11 setting forth the particular objection to the rule, ruling, or 13-12 decision in a district court of Travis County naming the commission 13-13 as a defendant. The action has precedence on the docket over all 13-14 other causes of a different nature. The appeal must be filed not 13-15 later than the 20th day after the date the commission enters an 13-16 order under Subsection (a) of this section. The decision of the 13-17 commission may not be stayed except on application to the district 13-18 court and after notice to the commission. The proceeding on appeal 13-19 is by trial de novo. Either party to the appeal may appeal to the 13-20 appellate court having jurisdiction of the cause and the appeal 13-21 shall at once be returnable to the appellate court having 13-22 jurisdiction of the cause. The appeal has precedence in the 13-23 appellate court over all pending causes of a different nature. 13-24 SECTION 16. STATUTORY CONSTRUCTION IN RELATION TO OTHER 13-25 LAWS. (a) A solicitation of a member by a representative of a 13-26 dental referral plan organization that has a certificate of 13-27 authority does not violate a provision of law relating to 14-1 solicitation or advertising by a dentist. 14-2 (b) This Act does not permit a dental referral plan 14-3 organization to practice dentistry as defined by the laws of this 14-4 state. A dental referral plan organization is not exempt from 14-5 those laws. 14-6 (c) The provision of factually accurate information 14-7 regarding dental care services, charges, and names and locations of 14-8 participating dentists by the dental referral plan organization or 14-9 its representatives to a potential member is not a violation of a 14-10 law relating to solicitation or advertising by a dentist. The 14-11 information with respect to a participating dentist is not 14-12 considered contrary to or in conflict with a law or regulation in 14-13 the practice of dentistry. 14-14 SECTION 17. PUBLIC RECORD. An application, filing, or 14-15 report required under this Act is a public document, except that a 14-16 report of an examination conducted by the department of a dental 14-17 referral plan organization is considered a confidential document. 14-18 That document may be released if, in the opinion of the 14-19 commissioner, release is in the public interest. 14-20 SECTION 18. INJUNCTIONS. The commissioner may bring suit in 14-21 a district court of Travis County against a dental referral plan 14-22 organization or other person that appears to be violating or has 14-23 violated this Act or a rule issued under this Act. The 14-24 commissioner may obtain injunctive and other relief as the court 14-25 may consider appropriate. 14-26 SECTION 19. FEES. (a) A dental referral plan organization 14-27 subject to this Act shall pay to the commissioner the following 15-1 fees: 15-2 (1) for filing the original application for 15-3 certificate of authority, a fee in an amount not to exceed $2,500 15-4 as determined by the commission; and 15-5 (2) for annual renewal of the certificate of authority 15-6 under this Act and for filing the annual report, a fee in an amount 15-7 not to exceed $500 as determined by the commission. 15-8 (b) The commission shall, within the limits prescribed by 15-9 this section, set the fees to be charged under this section. 15-10 (c) The commissioner shall deposit fees collected under this 15-11 section in the state treasury to the credit of the department's 15-12 operating fund. 15-13 SECTION 20. EFFECTIVE DATE; TRANSITION. (a) This Act takes 15-14 effect September 1, 1993. 15-15 (b) A dental referral plan organization must file an 15-16 application for an initial certificate of authority not later than 15-17 December 1, 1993. 15-18 (c) An applicant may continue to operate until the 15-19 commissioner of licensing and regulation acts on the application. 15-20 The applicant is considered for the purposes of this Act to have a 15-21 valid certificate while the application is pending. 15-22 (d) If the commissioner denies an application for a 15-23 certificate of authority, the dental referral plan organization 15-24 shall proceed to wind up its affairs in accordance with Section 13 15-25 of this Act. 15-26 SECTION 21. EMERGENCY. The importance of this legislation 15-27 and the crowded condition of the calendars in both houses create an 16-1 emergency and an imperative public necessity that the 16-2 constitutional rule requiring bills to be read on three several 16-3 days in each house be suspended, and this rule is hereby suspended.