By: Madla S.B. No. 875
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.