By Counts                                             H.B. No. 2784
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the authority of the Texas Workers' Compensation
    1-3  Insurance Facility to contract for servicing companies.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 4.08, Article 5.76-2, Insurance Code, is
    1-6  amended to read as follows:
    1-7        (a)  The executive director shall prepare a solicitation for
    1-8  proposals from members and other entities to act as servicing
    1-9  companies.  The solicitation must be approved by the board and
   1-10  published in the Texas Register.  The executive director shall
   1-11  evaluate each proposal and may negotiate contracts with the
   1-12  proposers.  The governing committee shall award servicing contracts
   1-13  to an appropriate number of proposers whose proposals conform to
   1-14  the solicitation and whose final negotiated contractual terms, in
   1-15  the judgment of the governing committee, are most advantageous to
   1-16  the facility.  In determining which contractual terms are most
   1-17  advantageous to the facility, in addition to price, the governing
   1-18  committee shall consider the required specifications and the
   1-19  members' or entities' ability to provide the services described in
   1-20  subsection (b) of this section.  The facility also may consider
   1-21  economies of scale to be achieved by limiting the number of
   1-22  servicing companies and the following:
   1-23              (1)  the number and scope of any conditions attached to
    2-1  the proposal;
    2-2              (2)  whether the proposer can perform the contract and
    2-3  provide the required services promptly, or within the time
    2-4  required, without delay or interference;
    2-5              (3)  the character, responsibility, integrity,
    2-6  reputation, and experience of the proposer;
    2-7              (4)  the quality of performance of previous contracts
    2-8  or services; and
    2-9              (5)  the sufficiency of the financial resources and
   2-10  ability of the proposer to perform the contract or provide the
   2-11  services.
   2-12        The governing committee may reject any or all proposals from
   2-13  proposers, and may solicit proposals, negotiate terms and award new
   2-14  servicing company contracts in accordance with this section.  Any
   2-15  servicing company contracts awarded by the governing committee
   2-16  shall be subject to approval by the board and are not effective
   2-17  until such approval is granted.  The proposal, negotiation and
   2-18  contracting process is not subject to the State Purchasing and
   2-19  General Services Act (Article 601b, Vernon's Texas Civil Statutes).
   2-20  All contracts are public records for purposes of the Open Records
   2-21  Act (Article 6252-17a, Vernon's Texas Civil Statutes).  <The board
   2-22  shall establish standards, qualifications, requirements, and all
   2-23  other particulars regarding servicing companies necessary to
   2-24  service the fund adequately.  The board shall establish practices,
   2-25  policies, and procedures for the selection of servicing companies
    3-1  on a competitive basis.  The board shall solicit proposals for an
    3-2  appropriate number of servicing contracts, as determined by the
    3-3  board, from members and other eligible entities to act as servicing
    3-4  companies.  Proposals shall be publicly opened by the board.  The
    3-5  board shall evaluate each proposal and award a servicing contract
    3-6  to the appropriate number of member or entities whose proposals
    3-7  conform with the solicitation and, in the judgment of the board,
    3-8  are most advantageous to the fund; provided that the board gives
    3-9  full consideration to economies of scale to be achieved by limiting
   3-10  the number of servicing companies.  The board shall consider the
   3-11  fee bid by each member for entity, as well as other factors, in
   3-12  making the contract awards.  Each servicing company selected shall
   3-13  receive the fee that it bid.>
   3-14        (b)  Any entity desiring to be a servicing company shall
   3-15  submit a proposal to the facility <board> pursuant to the
   3-16  solicitation process described by Subsection (a) of this section.
   3-17  Among the other requirements specified by the facility <board>, the
   3-18  proposal shall provide satisfactory evidence that such proposer
   3-19  <applicant> possesses the demonstrated records of competence,
   3-20  financial stability, and resource sufficient to assure the facility
   3-21  <board> that it is able to provide all services required by the
   3-22  facility <board>, including the following:
   3-23              (1)  investigating, reporting, and paying claims;
   3-24              (2)  complying with requirements of the Texas Workers'
   3-25  Compensation Commission;
    4-1              (3)  conducting safety inspections and presenting loss
    4-2  prevention programs or courses of instruction at the insured's
    4-3  office or work locations;
    4-4              (4)  inspecting risks for classification purposes;
    4-5              (5)  promptly issuing policies, endorsements, and
    4-6  certificates of insurance;
    4-7              (6)  making and preparing final payroll audits;
    4-8              (7)  preparing for litigation, litigating, and
    4-9  conducting legal support required under the policy contract;
   4-10              (8)  preparation and timely submission of all
   4-11  appropriate financial and statistical reports; and
   4-12              (9)  all other services required for servicing workers'
   4-13  compensation policies in all particulars throughout this state.
   4-14        (c)  An entity that is not a member but that desires to be a
   4-15  servicing company shall submit a proposal to the facility <board>
   4-16  to be a servicing company pursuant to the solicitation process
   4-17  described in <prescribed by> subsection <Subsections> (a) and (b)
   4-18  of this section.  An entity that is not an insurer is not required
   4-19  to hold a license under this code to perform the functions of a
   4-20  servicing company. If an unlicensed entity is selected by the
   4-21  facility <board> to be a servicing company <carrier>, the facility
   4-22  <board> may require a fidelity bond, surety bond, and/or other
   4-23  financial security of such an entity.  An entity appointed under
   4-24  this subsection shall be subject to the provisions of Articles
   4-25  21.21 and 21.21-2 of this code.
    5-1        (d)  <The performance of servicing companies shall be subject
    5-2  to the continuing jurisdiction of the board.>
    5-3        <(e)  The board shall develop a fair and nondiscriminatory
    5-4  plan for assignments to servicing companies.>
    5-5  <(f)>  The board shall promulgate and adopt rules  governing the
    5-6  solicitation and contracting process to be followed by the facility
    5-7  <to implement this section.   Such rules shall be distributed to
    5-8  all member companies, and to other entities upon request>.
    5-9        SECTION 2.  This Act takes effect September 1, 1993.
   5-10        SECTION 3.  The importance of this legislation and the
   5-11  crowded condition of the calendars in both houses create an
   5-12  emergency and an imperative public necessity that the
   5-13  constitutional rule requiring bills to be read on three several
   5-14  days in each house be suspended, and this rule is hereby suspended.