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  -------------------------------------------------------------------