1-1 By: Wentworth S.B. No. 1149
1-2 (In the Senate - Filed March 12, 1993; March 15, 1993, read
1-3 first time and referred to Committee on Economic Development;
1-4 May 19, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 3; May 19, 1993,
1-6 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 COMMITTEE SUBSTITUTE FOR S.B. No. 1149 By: Wentworth
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to group life, accident, and health insurance and workers'
1-24 compensation insurance; providing a penalty.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Subsection (a), Section 1, Article 3.51-6,
1-27 Insurance Code, is amended to read as follows:
1-28 (a) Group accident and health insurance is hereby defined to
1-29 be that form of accident, sickness, or accident and sickness
1-30 insurance covering groups of persons as provided in Subdivisions
1-31 (1) through (6) below:
1-32 (1) under a policy issued to an employer or trustees
1-33 of a fund established by an employer, who shall be deemed the
1-34 policyholder, insuring employees of such employer for the benefit
1-35 of persons other than the employer; except as hereinafter provided.
1-36 The term "employees" as used herein shall be deemed to include the
1-37 officers, managers, and employees of the employer, the individual
1-38 proprietor, or partner if the employer is an individual proprietor
1-39 or partnership, the officers, managers, and employees of subsidiary
1-40 or affiliated corporations, the individual proprietors, partners,
1-41 and employees of individuals and firms, if the business of the
1-42 employer and such individual or firm is under common control
1-43 through stock ownership, contract, or otherwise, and retired
1-44 employees. A policy issued to insure employees of a public body
1-45 may provide that the term "employees" shall include elected or
1-46 appointed officials. The policy may provide that the term
1-47 "employees" shall include the trustees or their employees, or both,
1-48 if their duties are principally connected with such trusteeship;
1-49 (2) under a policy issued to an association, including
1-50 but not limited to a labor union or organizations of such unions,
1-51 membership corporations organized or holding a certificate of
1-52 authority under the Texas Non-Profit Corporation Act, and
1-53 cooperatives and corporations subject to the supervision and
1-54 control of the Farm Credit Administration of the United States of
1-55 America, and which association shall have a constitution and
1-56 bylaws, which has been organized and has had an active existence
1-57 for at least two years, and which is maintained in good faith for
1-58 purposes other than that of obtaining insurance, to insure members,
1-59 employees, or employees of members (active and retired for the
1-60 benefit of persons other than the association or its officers or
1-61 trustees);
1-62 (3) under a policy issued to the trustees of a fund
1-63 established by two or more employers in the same or related
1-64 industry or by one or more labor unions or by one or more employers
1-65 and one or more labor unions or by an association as defined in (2)
1-66 above, which trustees shall be deemed the policyholder, to insure
1-67 employees of the employers or members of the unions or such
1-68 association, or employees or members of such association for the
2-1 benefit of persons other than the employers or the unions or such
2-2 association. The term "employees" as used herein may include the
2-3 officers, managers, and employees of the employer, retired
2-4 employees, and the individual proprietor or partners if the
2-5 employer is an individual proprietor or partnership. The policy
2-6 may provide that the term "employees" shall include the trustees or
2-7 their employees, or both, if their duties are principally connected
2-8 with such trusteeship;
2-9 (4) under a policy issued to any person or
2-10 organization to which a policy of group life insurance may be
2-11 issued or delivered in this state to insure any class or classes of
2-12 individuals that could be insured under such group life policy;
2-13 (5) under a policy issued by an insurer to a trustee
2-14 of a fund, which shall be deemed to be the policyholder, to insure
2-15 former employees, former members, their spouses, former spouses,
2-16 and their dependents, who were previously insured by such insurer
2-17 under a policy issued to any of the groups provided for in this
2-18 article;
2-19 (6) under a policy issued to cover any other group
2-20 subject to the following requirements:
2-21 (A) No such group health insurance policy shall
2-22 be delivered in this state unless the Commissioner of Insurance
2-23 finds that:
2-24 (i) the issuance of such group policy is
2-25 not contrary to the best interest of the public;
2-26 (ii) the issuance of the group policy
2-27 would result in economies of acquisition or administration; and
2-28 (iii) the benefits are reasonable in
2-29 relation to the premiums charged.
2-30 (B) No such group health insurance coverage may
2-31 be offered in this state by an insurer under a policy issued in
2-32 another state unless this state or another state having
2-33 requirements substantially similar to those contained in
2-34 Subparagraphs (i), (ii), and (iii) of Paragraph (A) of this
2-35 subdivision has made a determination that such requirements have
2-36 been met.
2-37 (C) The premium for the policy shall be paid
2-38 either from the policyholder's funds or from funds contributed by
2-39 the covered persons, or from both.
2-40 SECTION 2. Article 3.51-6, Insurance Code, is amended by
2-41 adding Section 2A to read as follows:
2-42 Sec. 2A. GROUP OR BLANKET ACCIDENT AND/OR HEALTH INSURANCE
2-43 USED TO FUND AN EMPLOYER'S DEDUCTIBLE UNDER A POLICY OF WORKERS'
2-44 COMPENSATION INSURANCE. (a) Group or blanket accident and health
2-45 insurance specifically purchased by an employer to fund a portion
2-46 of the deductible under a policy of workers' compensation insurance
2-47 is hereby defined to be that form of accident, sickness, or
2-48 accident and sickness insurance that provides benefits solely for
2-49 occupational accident and/or sickness and that is issued to the
2-50 employer for the benefit of the employer. Such policy may be
2-51 issued to benefit the employer only under the following conditions:
2-52 (1) the policyholder shall be the employer;
2-53 (2) the premium for the policy shall be paid solely by
2-54 the policyholder and no part of the premium shall in any way be
2-55 paid by the employees of the policyholder or employer;
2-56 (3) the benefits of the policy shall be payable on
2-57 proof by the employer that the workers' compensation carrier has
2-58 paid compensation benefits to or on behalf of an injured and/or ill
2-59 employee or employees under the workers' compensation policy within
2-60 or in excess of the deductible of the employer's workers'
2-61 compensation policy;
2-62 (4) benefits payable under the policy shall be payable
2-63 to the workers' compensation carrier or employer at the direction
2-64 of the employer, except as provided in Subdivision (5) of this
2-65 subsection;
2-66 (5) the policy shall provide for payment of any
2-67 benefits over and above the amount payable under the workers'
2-68 compensation insurance deductible to be paid to the employee or to
2-69 his designated beneficiary or beneficiaries or to his estate as
2-70 provided in Section 3 of this article;
3-1 (6) the fact that the employer has or has not
3-2 purchased a group or blanket accident and health policy to fund a
3-3 part of the workers' compensation policy deductible shall in no way
3-4 affect the right or ability of an employee to receive workers'
3-5 compensation benefits or in any way change the requirements of an
3-6 employee to receive or be entitled to workers' compensation
3-7 benefits as they become due;
3-8 (7) if a controversy arises regarding the liability of
3-9 a group or blanket accident and health insurer as the result of
3-10 payment of benefits by the workers' compensation carrier to or on
3-11 behalf of an employee, the employee shall not be required by any
3-12 party or other person or entity including a court to submit to any
3-13 type of medical, physical, or psychological examination or testing
3-14 nor shall the employee be required to provide any testimony or
3-15 evidence regarding the controversy; any violation of this
3-16 requirement by any parties or other persons or entities shall
3-17 subject them to liability for all reasonable damages occasioned by
3-18 their actions; it is the intent of this section that the employee
3-19 not be required to become involved in any way by any party, court,
3-20 or other person in controversies regarding the payment or
3-21 nonpayment of benefits by the group or blanket accident and health
3-22 insurer that will be used to fund the employer's workers'
3-23 compensation insurance deductible;
3-24 (8) the front of the policy form shall state the
3-25 following in at least 10-point bold type:
3-26 "IMPORTANT NOTICE TO THE PURCHASER OF THIS POLICY:
3-27 "(1) This policy contains limitations and exclusions
3-28 and may provide coverage different from the benefits payable under
3-29 the workers' compensation laws of this state and which is subject
3-30 to a deductible; therefore, this policy does not provide
3-31 dollar-for-dollar reimbursement of the employer's liability for
3-32 payment of all sums due under the deductible provision of the
3-33 workers' compensation insurance policy.
3-34 "(2) The employer is liable to the workers'
3-35 compensation insurance carrier for the payment of all sums due
3-36 under the deductible provision of the workers' compensation
3-37 insurance policy and not payable under this policy.
3-38 "(3) The premium for this policy shall be paid solely
3-39 by the policyholder and no part of the premium shall in any way be
3-40 paid by the employees of the policyholder or employer.
3-41 "(4) The employer or any other party to a dispute
3-42 regarding the liability of the group or blanket accident and health
3-43 insurance carrier under this policy may not require an employee to
3-44 whom or on whose behalf workers' compensation benefits were paid to
3-45 submit to further medical, physical, or psychological examination
3-46 or testing to resolve the dispute, nor to provide evidence or
3-47 testimony regarding a dispute under this policy."; and
3-48 (9) the policy must clearly in plain language
3-49 describe:
3-50 (A) the coverage and limitations in the policy;
3-51 and
3-52 (B) the difference between the coverage offered
3-53 by the policy and the benefits payable under the workers'
3-54 compensation laws of this state which are subject to the employers'
3-55 deductible pursuant to the workers' compensation insurance policy.
3-56 (b) The notice and disclosure required in Subsection (a) of
3-57 this section must be provided to the employer prior to purchase of
3-58 the group or blanket accident and health insurance policy under
3-59 this section.
3-60 (c) The insurer shall not be required to obtain an
3-61 individual application for such coverage from a person covered
3-62 under the policy or contract; however, disclosure of the terms of
3-63 the plan shall be provided to each employee.
3-64 (d) The insurer shall not be required to furnish a
3-65 certificate of coverage to each person insured under the employer's
3-66 policy or contract. Any affected employee shall be entitled to any
3-67 payment by the insurer under the group or blanket accident and
3-68 health insurance policy in excess of the deductible paid by the
3-69 employer under the workers' compensation policy of insurance. The
3-70 insurer making a payment in excess of the deductible paid by an
4-1 employer under a policy of workers' compensation insurance shall
4-2 notify the employee in writing of such payment and provide notice
4-3 to the employee of the procedure to receive such excess payment.
4-4 (e) The insurer may not limit coverage applicable to a
4-5 specific employee and may not exclude any employee from coverage
4-6 under a group or blanket accident and health policy used to fund an
4-7 employer's workers' compensation insurance deductible. The insurer
4-8 may not issue group or blanket accident and health coverage in a
4-9 discriminatory manner, and the group or blanket accident and health
4-10 policy used to fund the workers' compensation deductible must cover
4-11 all employees covered under the employer's workers' compensation
4-12 policy of insurance.
4-13 (f) To the extent that these provisions are more specific
4-14 than other provisions of this article, this section shall govern;
4-15 otherwise all other provisions of this article shall be applicable.
4-16 SECTION 3. Article 5.55C, Insurance Code, is amended to read
4-17 as follows:
4-18 Art. 5.55C. Optional Deductible Plans. (a) The Board shall
4-19 require each company or association that writes workers'
4-20 compensation insurance in this state to offer optional deductible
4-21 plans to <allow> policyholders <to self-insure for the deductible
4-22 amount>.
4-23 (b) Not later than January 1, 1992, the Board shall
4-24 promulgate at least three plans with varying deductible options.
4-25 In addition, the Board by rule shall permit an employer to enter
4-26 into an agreement with an insurer for a negotiated deductible in
4-27 excess of the largest promulgated deductible.
4-28 (c) The Board shall perform an actuarial analysis to
4-29 determine the amount of rate reduction applicable to policies under
4-30 this article as opposed to standard policies without a deductible.
4-31 In subsequent years, the Board shall determine the amount of rate
4-32 reduction according to rating procedures adopted by the Board. When
4-33 establishing procedures for the calculation of experience
4-34 modifiers, the Board may allow the exclusion of the claim amount
4-35 paid under the deductible by the employer.
4-36 (d) A deductible policy must provide that the company or
4-37 association will make all payments for benefits that are payable
4-38 from the deductible amount and that reimbursement by the
4-39 policyholder shall be made periodically, rather than at the time
4-40 claim costs are incurred. The State Board of Insurance shall
4-41 promulgate rules that provide for adequate security for
4-42 reimbursement of the amount paid by the company or association
4-43 which is payable from the deductible.
4-44 (e) The company or association shall service all claims that
4-45 arise during the policy period, including those claims payable, in
4-46 whole or in part, from the deductible amount.
4-47 (f) A person who is employed by a policyholder who
4-48 self-insures the deductible amount as provided under this article
4-49 may not be required to pay any of the deductible amount.
4-50 (g)(1) A person who is employed by a policyholder who
4-51 carries a <self-insures the> deductible <amount> as provided under
4-52 this article may not be harassed, discharged, or otherwise
4-53 discriminated against because the employee, in good faith:
4-54 (A) is considering initiating a workers'
4-55 compensation claim;
4-56 (B) has initiated a workers' compensation claim;
4-57 (C) has retained a representative to represent
4-58 the employee regarding a claim;
4-59 (D) has testified or is about to testify at an
4-60 administrative or judicial proceeding under the Texas Workers'
4-61 Compensation Act (Article 8308-1.01 et seq., Vernon's Texas Civil
4-62 Statutes <S.B. No. 1, Acts of the 71st Legislature, 2nd Called
4-63 Session, 1989>);
4-64 (E) has reported a hazardous working condition
4-65 or hazardous practice to the commission; or
4-66 (F) has taken any other action or is considering
4-67 taking any other action that may result in the policyholder being
4-68 required to pay a deductible amount through the self-insurance
4-69 plan.
4-70 (2) Liability for damages for violations of Paragraphs
5-1 (A), (B), (C), and (D) of Subdivision (1) of this subsection shall
5-2 be determined as provided in Chapter 115, Acts of the 62nd
5-3 Legislature, Regular Session, 1971 (Article 8307c, Vernon's Texas
5-4 Civil Statutes), and all other violations of this article shall be
5-5 determined exclusively pursuant to the Texas Workers' Compensation
5-6 Act (Article 8308-1.01 et seq., Vernon's Texas Civil Statutes <S.B.
5-7 No. 1, Acts of the 71st Legislature, 2nd Called Session, 1989>).
5-8 (h)(1) Nothing in this article or Article 3.51-6 of this
5-9 code shall curtail or limit any existing law or rule relative to
5-10 confidentiality of employees' medical records, medical treatment,
5-11 or medical history; provided, however, that with the express
5-12 written consent of an employee an entity issuing an insurance
5-13 policy solely to fund a portion of the deductible under a workers'
5-14 compensation insurance policy shall be given access to only that
5-15 information necessary to process and evaluate any claim presented
5-16 for payment pursuant to that policy. Any such information received
5-17 shall be treated as strictly confidential by the issuing entity.
5-18 (2) The penalties and remedies set out in Section
5-19 2.37, Texas Workers' Compensation Act (Article 8308-2.37, Vernon's
5-20 Texas Civil Statutes), shall apply to this section.
5-21 (3) In addition to the provisions of Subdivision (2)
5-22 of this subsection, any individual aggrieved by any failure to
5-23 maintain confidentiality shall have a private cause of action in
5-24 which compensatory and exemplary damages, as well as injunctive
5-25 relief, shall be recoverable.
5-26 (i) Any person who engages in conduct prohibited under this
5-27 article commits a Class A administrative violation under the Texas
5-28 Workers' Compensation Act (Article 8308-1.01 et seq., Vernon's
5-29 Texas Civil Statutes <S.B. No. 1, Acts of the 71st Legislature, 2nd
5-30 Called Session, 1989>).
5-31 SECTION 4. The importance of this legislation and the
5-32 crowded condition of the calendars in both houses create an
5-33 emergency and an imperative public necessity that the
5-34 constitutional rule requiring bills to be read on three several
5-35 days in each house be suspended, and this rule is hereby suspended.
5-36 * * * * *
5-37 Austin,
5-38 Texas
5-39 May 19, 1993
5-40 Hon. Bob Bullock
5-41 President of the Senate
5-42 Sir:
5-43 We, your Committee on Economic Development to which was referred
5-44 S.B. No. 1149, have had the same under consideration, and I am
5-45 instructed to report it back to the Senate with the recommendation
5-46 that it do not pass, but that the Committee Substitute adopted in
5-47 lieu thereof do pass and be printed.
5-48 Parker,
5-49 Chairman
5-50 * * * * *
5-51 WITNESSES
5-52 FOR AGAINST ON
5-53 ___________________________________________________________________
5-54 Name: Gayle Vickers x
5-55 Representing: Texas Bankers Assn.
5-56 City: Austin
5-57 -------------------------------------------------------------------
5-58 Name: Jim Gosdin x
5-59 Representing: Stewart Title
5-60 City: Houston
5-61 -------------------------------------------------------------------
5-62 Name: Randy M. Lee x
5-63 Representing: Stewart Title
5-64 City: Austin
5-65 -------------------------------------------------------------------
5-66 Name: Karen Neeley x
5-67 Representing: Ind. Bankers Assn. of Texas
5-68 City: Austin
5-69 -------------------------------------------------------------------
5-70 FOR AGAINST ON
6-1 ___________________________________________________________________
6-2 Name: Philip Rearick x
6-3 Representing: Special Insurance Services
6-4 City: Dallas
6-5 -------------------------------------------------------------------
6-6 Name: Hector DeLeon x
6-7 Representing: Special Insurance Services
6-8 City: Austin
6-9 -------------------------------------------------------------------
6-10 Name: Robert T. Heusinkveld x
6-11 Representing: Special Insurance Services
6-12 City: Dallas
6-13 -------------------------------------------------------------------
6-14 Name: Rick Freeman x
6-15 Representing: Self & TTLA
6-16 City: Austin
6-17 -------------------------------------------------------------------
6-18 Name: Robert W. Blevins x
6-19 Representing: TX Life Insurance Assn.
6-20 City: Austin
6-21 -------------------------------------------------------------------
6-22 Name: Cordell Hull x
6-23 Representing: Special Insurance Services
6-24 City: Austin
6-25 -------------------------------------------------------------------
6-26 Name: L. Dean Cobb x
6-27 Representing: Special Insurance Services
6-28 City: Austin
6-29 -------------------------------------------------------------------
6-30 Name: Emmett Sheppard x
6-31 Representing: United Labor Leg. Committee
6-32 City: Austin
6-33 -------------------------------------------------------------------
6-34 Name: Rhonda Myron x
6-35 Representing: Tex. Dept. of Insurance
6-36 City: Austin
6-37 -------------------------------------------------------------------