H.B. No. 2858
1-1 AN ACT
1-2 relating to the issuance of workers' compensation insurance
1-3 coverage by and the operations of the Texas workers' compensation
1-4 insurance facility and the Texas Workers' Compensation Insurance
1-5 Fund.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 2.05, Article 5.76-2, Insurance Code, is
1-8 amended by adding Subsection (m) to read as follows:
1-9 (m) In addition to other rights of the facility under this
1-10 article, the facility has the legal rights of a private person in
1-11 this state and the power to sue in its own name. No procedure
1-12 established under this article is a prerequisite to the exercise of
1-13 the power by the facility to sue.
1-14 SECTION 2. Section 2.08(b), Article 5.76-2, Insurance Code,
1-15 is amended to read as follows:
1-16 (b) The board shall set a hearing for an <hear the> appeal
1-17 from an act or decision of the facility not later than the 30th day
1-18 after the day the request for hearing is made. The board shall
1-19 notify the facility and the appellant in writing of the time and
1-20 place of the hearing not later than the 10th day before the date of
1-21 the hearing. Not later than the 30th day after the last day of the
1-22 hearing, the board shall affirm, reverse, or modify <its previous
1-23 action on> the act of the facility that is the subject of the
1-24 appeal <appealed> to the board.
2-1 SECTION 3. Section 4.08, Article 5.76-2, Insurance Code, is
2-2 amended to read as follows:
2-3 Sec. 4.08. Servicing Companies. (a) The executive director
2-4 of the facility may solicit proposals for servicing contracts from
2-5 members and other entities to act as servicing companies. Each
2-6 solicitation must be published in the Texas Register. The
2-7 executive director shall evaluate each proposal and negotiate
2-8 contracts, and the governing committee shall award servicing
2-9 contracts, to an appropriate number of members or entities whose
2-10 proposals conform to the required specifications and whose final
2-11 negotiated contractual terms, in the judgment of the governing
2-12 committee, are most advantageous to the facility. In determining
2-13 which contractual terms are most advantageous to the facility, in
2-14 addition to price, the governing committee shall consider the
2-15 required specifications and the proposers' ability to provide the
2-16 services described in Subsection (c) of this section. The facility
2-17 may also consider:
2-18 (1) any economies of scale to be achieved by limiting
2-19 the number of servicing companies;
2-20 (2) the number and scope of any conditions attached to
2-21 the proposal;
2-22 (3) whether the proposer can execute the contract and
2-23 provide the required services promptly, or within the time
2-24 required, without delay or interference;
2-25 (4) the character, responsibility, integrity,
2-26 reputation, and experience of the proposer;
2-27 (5) the quality of performance of previous contracts
3-1 or services; and
3-2 (6) the sufficiency of the financial resources and
3-3 ability of the proposer to perform the contract and provide the
3-4 services <The board shall establish standards, qualifications,
3-5 requirements, and all other particulars regarding servicing
3-6 companies necessary to service the fund adequately. The board
3-7 shall establish practices, policies, and procedures for the
3-8 selection of servicing companies on a competitive basis. The board
3-9 shall solicit proposals for an appropriate number of servicing
3-10 contracts, as determined by the board, from members and other
3-11 eligible entities to act as servicing companies. Proposals shall
3-12 be publicly opened by the board. The board shall evaluate each
3-13 proposal and award a servicing contract to the appropriate number
3-14 of members or entities whose proposals conform with the
3-15 solicitation and, in the judgment of the board, are most
3-16 advantageous to the fund; provided that the board gives full
3-17 consideration to economies of scale to be achieved by limiting the
3-18 number of servicing companies. The board shall consider the fee
3-19 bid by each member or entity, as well as other factors, in making
3-20 the contract awards. Each servicing company selected shall receive
3-21 the fee that it bid>.
3-22 (b) The governing committee may reject any and all proposals
3-23 from entities desiring to become servicing companies and may
3-24 solicit proposals, negotiate terms, and award new servicing company
3-25 contracts in accordance with this section. A servicing company
3-26 contract awarded by the governing committee is subject to approval
3-27 by the board and does not take effect until the approval is
4-1 granted. The proposal, negotiation, and contracting process is not
4-2 subject to the State Purchasing and General Services Act (Article
4-3 601b, Vernon's Texas Civil Statutes). All final contracts are
4-4 public records for purposes of the open records act, Chapter 424,
4-5 Acts of the 63rd Legislature, Regular Session, 1973 (Article
4-6 6252-17a, Vernon's Texas Civil Statutes).
4-7 (c) Any entity desiring to be a servicing company shall
4-8 submit a proposal to the facility <board> pursuant to the
4-9 solicitation process described by Subsections (a) and (b)
4-10 <Subsection (a)> of this section. Among the other requirements
4-11 specified by the facility <board>, the proposal shall provide
4-12 satisfactory evidence that the proposer <such applicant> possesses
4-13 the demonstrated records of competence, financial stability, and
4-14 resources sufficient to assure the facility <board> that it is able
4-15 to provide all services required by the facility <board>, including
4-16 the following:
4-17 (1) investigating, reporting, and paying claims;
4-18 (2) complying with requirements of the Texas Workers'
4-19 Compensation Commission;
4-20 (3) conducting safety inspections and presenting loss
4-21 prevention programs or courses of instruction at the insured's
4-22 office or work location;
4-23 (4) inspecting risks for classification purposes;
4-24 (5) promptly issuing policies, endorsements, and
4-25 certificates of insurance;
4-26 (6) making and preparing final payroll audits;
4-27 (7) preparing for litigation, litigating, and
5-1 conducting legal support required under the policy contract;
5-2 (8) preparation and timely submission of all
5-3 appropriate financial and statistical reports; and
5-4 (9) all other services required for servicing workers'
5-5 compensation policies in all particulars throughout this state.
5-6 (d) <(c)> An entity that is not a member but that desires to
5-7 be a servicing company shall submit a proposal to the facility
5-8 <board> to be a servicing company pursuant to the solicitation
5-9 process described under <prescribed by> Subsections (a), <and> (b),
5-10 and (c) of this section. An entity that is not an insurer is not
5-11 required to hold a license under this code to perform the functions
5-12 of a servicing company. If an unlicensed entity is selected by the
5-13 facility <board> to be a servicing carrier, the facility <board>
5-14 may require a fidelity bond, surety bond, and/or other financial
5-15 security of such an entity. An entity appointed under this
5-16 subsection shall be subject to the provisions of Articles 21.21 and
5-17 21.21-2 of this code.
5-18 <(d) The performance of servicing companies shall be subject
5-19 to the continuing jurisdiction of the board.>
5-20 <(e) The board shall develop a fair and nondiscriminatory
5-21 plan for assignments to servicing companies.>
5-22 <(f) The board shall promulgate and adopt rules to implement
5-23 this section. Such rules shall be distributed to all member
5-24 companies, and to other entities upon request.>
5-25 SECTION 4. Section 2, Article 5.76-3, Insurance Code, is
5-26 amended by amending Subsection (c) and by adding Subsection (e) to
5-27 read as follows:
6-1 (c) A decision by the fund to deny, cancel, or refuse to
6-2 renew a policy or risk insured under Article 5.76-4 of this code is
6-3 appealable to the board not later than the 30th day after the date
6-4 on which the affected party received actual notice that the act
6-5 occurred or that the decision was made. The board shall hear the
6-6 appeal not later than the 30th day after the date on which the
6-7 request for hearing is made and shall notify the fund and the
6-8 appellant in writing of the time and place of the hearing not later
6-9 than the 10th day before the date of the hearing. Not later than
6-10 the 30th day after the last day of the hearing, the board shall
6-11 affirm, reverse, or modify the act appealed to the board. A
6-12 hearing under this subsection does not suspend the operation of any
6-13 act, ruling, decision, or order of the fund, unless the board
6-14 specifically so orders. A decision of the board under this
6-15 subsection is subject to review by the commissioner of insurance in
6-16 the manner provided by the Administrative Procedure and Texas
6-17 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes). A
6-18 person aggrieved by the decision of the commissioner may appeal
6-19 that decision to the district court. Judicial review under this
6-20 subsection is governed by the substantial evidence rule.
6-21 (e) In addition to other rights of the fund under this
6-22 article, the fund has the legal rights of a private person in this
6-23 state and the power to sue in its own name. No procedure
6-24 established under this article is a prerequisite to the exercise of
6-25 the power by the fund to sue.
6-26 SECTION 5. Section 7(b), Article 5.76-3, Insurance Code, is
6-27 amended to read as follows:
7-1 (b) The fund shall adopt such rules as required to provide
7-2 for the financing of all or part of the premiums by the fund or a
7-3 person licensed under Chapter 24 of this code. Those rules shall
7-4 require that the fund receive a minimum initial premium sufficient
7-5 to cover the administrative costs of issuing and booking the policy
7-6 in the event of cancellation. Those rules shall not unfairly
7-7 discriminate against applicants based upon the amount of premium to
7-8 be paid by the applicant for workers' compensation coverage.
7-9 Notwithstanding the foregoing, the premium financing rules adopted
7-10 by the fund may provide that premium financing shall not be offered
7-11 to any applicant who appears to present an unacceptable credit
7-12 risk.
7-13 SECTION 6. Sections 13(d) and (f), Article 5.76-3, Insurance
7-14 Code, are amended to read as follows:
7-15 (d) Money in the fund shall be invested, subject to a policy
7-16 approved by the state treasurer, in the types of investments
7-17 authorized by law for an insurer authorized to write workers'
7-18 compensation insurance coverage in this state <investment of state
7-19 funds as provided by Chapter 404, Government Code>.
7-20 (f) The fund must maintain a ratio of net written premiums
7-21 on policies written after reinsurance to surplus of not more than:
7-22 (1) 3.3 to one, for the period beginning on September
7-23 1, 1993 and extending through August 31, 1996;
7-24 (2) 3.2 to one, for the period beginning on September
7-25 1, 1996 and extending through August 31, 1997;
7-26 (3) 3.1 to one, for the period beginning on September
7-27 1, 1997 and extending through August 31, 1998; and
8-1 (4) 3.0 to one on and after September 1, 1998 <three
8-2 to one>.
8-3 SECTION 7. Article 5.76-4, Insurance Code, is amended by
8-4 adding Subsection (f) to read as follows:
8-5 (f) The fund and the Texas workers' compensation insurance
8-6 facility may exchange information relating to actual or suspected
8-7 fraud by any applicant, policyholder, claimant, agent, or insurer
8-8 with respect to workers' compensation insurance policies issued by,
8-9 or applications for coverage submitted to, the facility or the
8-10 fund. That information may be kept confidential and is not subject
8-11 to disclosure under the open records act, Chapter 424, Acts of the
8-12 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's
8-13 Texas Civil Statutes).
8-14 SECTION 8. Section 18.24(b), Chapter 12, Acts of the 72nd
8-15 Legislature, 2nd Called Session, 1991, is amended to read as
8-16 follows:
8-17 (b) The Texas workers' compensation insurance facility shall
8-18 contract with the Texas Workers' Compensation Insurance Fund to
8-19 assume all claim liabilities and assets of the facility no later
8-20 than January 1, 1999. The contract must transfer assets sufficient
8-21 to pay all claim liabilities assumed by the fund on policies issued
8-22 on or before December 31, 1993. In the event the facility's assets
8-23 are insufficient to pay the assumed claim liabilities as the
8-24 liabilities come due, the contract shall require the facility to
8-25 make a final assessment to its members and the fund in accordance
8-26 with Section 4.04, Article 5.76-2, Insurance Code.
8-27 SECTION 9. The change made by this Act to Section 7(b),
9-1 Article 5.76-3, Insurance Code, applies only to an insurance policy
9-2 that is delivered, issued for delivery, or renewed on or after
9-3 January 1, 1994. A policy that is delivered, issued for delivery,
9-4 or renewed before January 1, 1994, is governed by the law as it
9-5 existed immediately before the effective date of this Act, and that
9-6 law is continued in effect for that purpose.
9-7 SECTION 10. This Act takes effect September 1, 1993, except
9-8 that Section 7 of this Act takes effect January 1, 1994.
9-9 SECTION 11. The importance of this legislation and the
9-10 crowded condition of the calendars in both houses create an
9-11 emergency and an imperative public necessity that the
9-12 constitutional rule requiring bills to be read on three several
9-13 days in each house be suspended, and this rule is hereby suspended.