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.