1-1 By: Counts, Brimer, Junell H.B. No. 2858
1-2 (Senate Sponsor - Harris of Dallas)
1-3 (In the Senate - Received from the House May 7, 1993;
1-4 May 10, 1993, read first time and referred to Committee on Economic
1-5 Development; May 24, 1993, reported favorably by the following
1-6 vote: Yeas 9, Nays 0; May 24, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 A BILL TO BE ENTITLED
1-21 AN ACT
1-22 relating to the issuance of workers' compensation insurance
1-23 coverage by and the operations of the Texas workers' compensation
1-24 insurance facility and the Texas Workers' Compensation Insurance
1-25 Fund.
1-26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-27 SECTION 1. Section 2.05, Article 5.76-2, Insurance Code, is
1-28 amended by adding Subsection (m) to read as follows:
1-29 (m) In addition to other rights of the facility under this
1-30 article, the facility has the legal rights of a private person in
1-31 this state and the power to sue in its own name. No procedure
1-32 established under this article is a prerequisite to the exercise of
1-33 the power by the facility to sue.
1-34 SECTION 2. Section 2.08(b), Article 5.76-2, Insurance Code,
1-35 is amended to read as follows:
1-36 (b) The board shall set a hearing for an <hear the> appeal
1-37 from an act or decision of the facility not later than the 30th day
1-38 after the day the request for hearing is made. The board shall
1-39 notify the facility and the appellant in writing of the time and
1-40 place of the hearing not later than the 10th day before the date of
1-41 the hearing. Not later than the 30th day after the last day of the
1-42 hearing, the board shall affirm, reverse, or modify <its previous
1-43 action on> the act of the facility that is the subject of the
1-44 appeal <appealed> to the board.
1-45 SECTION 3. Section 4.08, Article 5.76-2, Insurance Code, is
1-46 amended to read as follows:
1-47 Sec. 4.08. Servicing Companies. (a) The executive director
1-48 of the facility may solicit proposals for servicing contracts from
1-49 members and other entities to act as servicing companies. Each
1-50 solicitation must be published in the Texas Register. The
1-51 executive director shall evaluate each proposal and negotiate
1-52 contracts, and the governing committee shall award servicing
1-53 contracts, to an appropriate number of members or entities whose
1-54 proposals conform to the required specifications and whose final
1-55 negotiated contractual terms, in the judgment of the governing
1-56 committee, are most advantageous to the facility. In determining
1-57 which contractual terms are most advantageous to the facility, in
1-58 addition to price, the governing committee shall consider the
1-59 required specifications and the proposers' ability to provide the
1-60 services described in Subsection (c) of this section. The facility
1-61 may also consider:
1-62 (1) any economies of scale to be achieved by limiting
1-63 the number of servicing companies;
1-64 (2) the number and scope of any conditions attached to
1-65 the proposal;
1-66 (3) whether the proposer can execute the contract and
1-67 provide the required services promptly, or within the time
1-68 required, without delay or interference;
2-1 (4) the character, responsibility, integrity,
2-2 reputation, and experience of the proposer;
2-3 (5) the quality of performance of previous contracts
2-4 or services; and
2-5 (6) the sufficiency of the financial resources and
2-6 ability of the proposer to perform the contract and provide the
2-7 services <The board shall establish standards, qualifications,
2-8 requirements, and all other particulars regarding servicing
2-9 companies necessary to service the fund adequately. The board
2-10 shall establish practices, policies, and procedures for the
2-11 selection of servicing companies on a competitive basis. The board
2-12 shall solicit proposals for an appropriate number of servicing
2-13 contracts, as determined by the board, from members and other
2-14 eligible entities to act as servicing companies. Proposals shall
2-15 be publicly opened by the board. The board shall evaluate each
2-16 proposal and award a servicing contract to the appropriate number
2-17 of members or entities whose proposals conform with the
2-18 solicitation and, in the judgment of the board, are most
2-19 advantageous to the fund; provided that the board gives full
2-20 consideration to economies of scale to be achieved by limiting the
2-21 number of servicing companies. The board shall consider the fee
2-22 bid by each member or entity, as well as other factors, in making
2-23 the contract awards. Each servicing company selected shall receive
2-24 the fee that it bid>.
2-25 (b) The governing committee may reject any and all proposals
2-26 from entities desiring to become servicing companies and may
2-27 solicit proposals, negotiate terms, and award new servicing company
2-28 contracts in accordance with this section. A servicing company
2-29 contract awarded by the governing committee is subject to approval
2-30 by the board and does not take effect until the approval is
2-31 granted. The proposal, negotiation, and contracting process is not
2-32 subject to the State Purchasing and General Services Act (Article
2-33 601b, Vernon's Texas Civil Statutes). All final contracts are
2-34 public records for purposes of the open records act, Chapter 424,
2-35 Acts of the 63rd Legislature, Regular Session, 1973 (Article
2-36 6252-17a, Vernon's Texas Civil Statutes).
2-37 (c) Any entity desiring to be a servicing company shall
2-38 submit a proposal to the facility <board> pursuant to the
2-39 solicitation process described by Subsections (a) and (b)
2-40 <Subsection (a)> of this section. Among the other requirements
2-41 specified by the facility <board>, the proposal shall provide
2-42 satisfactory evidence that the proposer <such applicant> possesses
2-43 the demonstrated records of competence, financial stability, and
2-44 resources sufficient to assure the facility <board> that it is able
2-45 to provide all services required by the facility <board>, including
2-46 the following:
2-47 (1) investigating, reporting, and paying claims;
2-48 (2) complying with requirements of the Texas Workers'
2-49 Compensation Commission;
2-50 (3) conducting safety inspections and presenting loss
2-51 prevention programs or courses of instruction at the insured's
2-52 office or work location;
2-53 (4) inspecting risks for classification purposes;
2-54 (5) promptly issuing policies, endorsements, and
2-55 certificates of insurance;
2-56 (6) making and preparing final payroll audits;
2-57 (7) preparing for litigation, litigating, and
2-58 conducting legal support required under the policy contract;
2-59 (8) preparation and timely submission of all
2-60 appropriate financial and statistical reports; and
2-61 (9) all other services required for servicing workers'
2-62 compensation policies in all particulars throughout this state.
2-63 (d) <(c)> An entity that is not a member but that desires to
2-64 be a servicing company shall submit a proposal to the facility
2-65 <board> to be a servicing company pursuant to the solicitation
2-66 process described under <prescribed by> Subsections (a), <and> (b),
2-67 and (c) of this section. An entity that is not an insurer is not
2-68 required to hold a license under this code to perform the functions
2-69 of a servicing company. If an unlicensed entity is selected by the
2-70 facility <board> to be a servicing carrier, the facility <board>
3-1 may require a fidelity bond, surety bond, and/or other financial
3-2 security of such an entity. An entity appointed under this
3-3 subsection shall be subject to the provisions of Articles 21.21 and
3-4 21.21-2 of this code.
3-5 <(d) The performance of servicing companies shall be subject
3-6 to the continuing jurisdiction of the board.>
3-7 <(e) The board shall develop a fair and nondiscriminatory
3-8 plan for assignments to servicing companies.>
3-9 <(f) The board shall promulgate and adopt rules to implement
3-10 this section. Such rules shall be distributed to all member
3-11 companies, and to other entities upon request.>
3-12 SECTION 4. Section 2, Article 5.76-3, Insurance Code, is
3-13 amended by amending Subsection (c) and by adding Subsection (e) to
3-14 read as follows:
3-15 (c) A decision by the fund to deny, cancel, or refuse to
3-16 renew a policy or risk insured under Article 5.76-4 of this code is
3-17 appealable to the board not later than the 30th day after the date
3-18 on which the affected party received actual notice that the act
3-19 occurred or that the decision was made. The board shall hear the
3-20 appeal not later than the 30th day after the date on which the
3-21 request for hearing is made and shall notify the fund and the
3-22 appellant in writing of the time and place of the hearing not later
3-23 than the 10th day before the date of the hearing. Not later than
3-24 the 30th day after the last day of the hearing, the board shall
3-25 affirm, reverse, or modify the act appealed to the board. A
3-26 hearing under this subsection does not suspend the operation of any
3-27 act, ruling, decision, or order of the fund, unless the board
3-28 specifically so orders. A decision of the board under this
3-29 subsection is subject to review by the commissioner of insurance in
3-30 the manner provided by the Administrative Procedure and Texas
3-31 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes). A
3-32 person aggrieved by the decision of the commissioner may appeal
3-33 that decision to the district court. Judicial review under this
3-34 subsection is governed by the substantial evidence rule.
3-35 (e) In addition to other rights of the fund under this
3-36 article, the fund has the legal rights of a private person in this
3-37 state and the power to sue in its own name. No procedure
3-38 established under this article is a prerequisite to the exercise of
3-39 the power by the fund to sue.
3-40 SECTION 5. Section 7(b), Article 5.76-3, Insurance Code, is
3-41 amended to read as follows:
3-42 (b) The fund shall adopt such rules as required to provide
3-43 for the financing of all or part of the premiums by the fund or a
3-44 person licensed under Chapter 24 of this code. Those rules shall
3-45 require that the fund receive a minimum initial premium sufficient
3-46 to cover the administrative costs of issuing and booking the policy
3-47 in the event of cancellation. Those rules shall not unfairly
3-48 discriminate against applicants based upon the amount of premium to
3-49 be paid by the applicant for workers' compensation coverage.
3-50 Notwithstanding the foregoing, the premium financing rules adopted
3-51 by the fund may provide that premium financing shall not be offered
3-52 to any applicant who appears to present an unacceptable credit
3-53 risk.
3-54 SECTION 6. Sections 13(d) and (f), Article 5.76-3, Insurance
3-55 Code, are amended to read as follows:
3-56 (d) Money in the fund shall be invested, subject to a policy
3-57 approved by the state treasurer, in the types of investments
3-58 authorized by law for an insurer authorized to write workers'
3-59 compensation insurance coverage in this state <investment of state
3-60 funds as provided by Chapter 404, Government Code>.
3-61 (f) The fund must maintain a ratio of net written premiums
3-62 on policies written after reinsurance to surplus of not more than:
3-63 (1) 3.3 to one, for the period beginning on September
3-64 1, 1993 and extending through August 31, 1996;
3-65 (2) 3.2 to one, for the period beginning on September
3-66 1, 1996 and extending through August 31, 1997;
3-67 (3) 3.1 to one, for the period beginning on September
3-68 1, 1997 and extending through August 31, 1998; and
3-69 (4) 3.0 to one on and after September 1, 1998 <three
3-70 to one>.
4-1 SECTION 7. Article 5.76-4, Insurance Code, is amended by
4-2 adding Subsection (f) to read as follows:
4-3 (f) The fund and the Texas workers' compensation insurance
4-4 facility may exchange information relating to actual or suspected
4-5 fraud by any applicant, policyholder, claimant, agent, or insurer
4-6 with respect to workers' compensation insurance policies issued by,
4-7 or applications for coverage submitted to, the facility or the
4-8 fund. That information may be kept confidential and is not subject
4-9 to disclosure under the open records act, Chapter 424, Acts of the
4-10 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's
4-11 Texas Civil Statutes).
4-12 SECTION 8. Section 18.24(b), Chapter 12, Acts of the 72nd
4-13 Legislature, 2nd Called Session, 1991, is amended to read as
4-14 follows:
4-15 (b) The Texas workers' compensation insurance facility shall
4-16 contract with the Texas Workers' Compensation Insurance Fund to
4-17 assume all claim liabilities and assets of the facility no later
4-18 than January 1, 1999. The contract must transfer assets sufficient
4-19 to pay all claim liabilities assumed by the fund on policies issued
4-20 on or before December 31, 1993. In the event the facility's assets
4-21 are insufficient to pay the assumed claim liabilities as the
4-22 liabilities come due, the contract shall require the facility to
4-23 make a final assessment to its members and the fund in accordance
4-24 with Section 4.04, Article 5.76-2, Insurance Code.
4-25 SECTION 9. The change made by this Act to Section 7(b),
4-26 Article 5.76-3, Insurance Code, applies only to an insurance policy
4-27 that is delivered, issued for delivery, or renewed on or after
4-28 January 1, 1994. A policy that is delivered, issued for delivery,
4-29 or renewed before January 1, 1994, is governed by the law as it
4-30 existed immediately before the effective date of this Act, and that
4-31 law is continued in effect for that purpose.
4-32 SECTION 10. This Act takes effect September 1, 1993, except
4-33 that Section 7 of this Act takes effect January 1, 1994.
4-34 SECTION 11. The importance of this legislation and the
4-35 crowded condition of the calendars in both houses create an
4-36 emergency and an imperative public necessity that the
4-37 constitutional rule requiring bills to be read on three several
4-38 days in each house be suspended, and this rule is hereby suspended.
4-39 * * * * *
4-40 Austin,
4-41 Texas
4-42 May 24, 1993
4-43 Hon. Bob Bullock
4-44 President of the Senate
4-45 Sir:
4-46 We, your Committee on Economic Development to which was referred
4-47 H.B. No. 2858, have had the same under consideration, and I am
4-48 instructed to report it back to the Senate with the recommendation
4-49 that it do pass and be printed.
4-50 Parker,
4-51 Chairman
4-52 * * * * *
4-53 WITNESSES
4-54 FOR AGAINST ON
4-55 ___________________________________________________________________
4-56 Name: Russell R. Oliver x
4-57 Representing: Tx Workers Comp Ins. Facility
4-58 City: Austin
4-59 -------------------------------------------------------------------
4-60 Name: Gene Fondren x
4-61 Representing: Tx Workers Comp. Ins. Facility
4-62 City: Austin
4-63 -------------------------------------------------------------------
4-64 Name: Ted Roberts x
4-65 Representing: Tx Assn. of Business
4-66 City: Austin
4-67 -------------------------------------------------------------------