74R10426 MWV-F
By Berlanga, et al. H.B. No. 1194
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the establishment, certification, organization, and
1-3 regulation of dental provider organizations and dental provider
1-4 plans.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-7 amended by adding Article 21.53C to read as follows:
1-8 Art. 21.53C. DENTAL PROVIDER ORGANIZATIONS
1-9 Sec. 1. SHORT TITLE. This article may be cited as the Texas
1-10 Dental Provider Organization Act.
1-11 Sec. 2. DEFINITIONS. In this article:
1-12 (1) "Basic dental care services" means dental care
1-13 services that a member might reasonably require to maintain good
1-14 dental health, including, as a minimum, diagnostic, preventative,
1-15 and restorative services.
1-16 (2) "Dental care" means those services specifically
1-17 defined as practicing dentistry under the laws of this state.
1-18 (3) "Dental care service" means a service incident to
1-19 the furnishing of dental care.
1-20 (4) "Dental provider organization" means a person that
1-21 arranges for or provides a dental provider plan to the person's
1-22 members for a fee or other consideration.
1-23 (5) "Dental provider plan" means a plan under which a
1-24 person undertakes to arrange for the availability of dental care
2-1 services from one or more participating dentists on a
2-2 fee-for-service basis and according to predetermined fees or fees
2-3 that are discounted from the participating dentists' usual and
2-4 customary fees. The term does not include a plan or program that
2-5 consists of arranging for, or the provision of, dental care
2-6 services on a prepaid basis through insurance or otherwise, or the
2-7 indemnification against or reimbursement for the cost of dental
2-8 care services.
2-9 (6) "Dentist" means a person licensed to practice
2-10 dentistry in this state.
2-11 (7) "Generally accepted accounting principles" means
2-12 accounting principles and procedures for a general business
2-13 corporation organized under the Texas Business Corporation Act but
2-14 does not include the accounting requirements under this code for an
2-15 insurer.
2-16 (8) "Member" means an individual who is enrolled in a
2-17 dental provider plan and therefore is eligible to seek dental care
2-18 services from a participating dentist according to predetermined or
2-19 discounted fees.
2-20 (9) "Person" means an individual, partnership,
2-21 association, organization, trust, corporation, or other entity.
2-22 Sec. 3. REQUIREMENT OF CERTIFICATE OF AUTHORITY. (a) A
2-23 person may apply to the commissioner for and obtain a certificate
2-24 of authority to establish and operate a dental provider
2-25 organization and a dental provider plan in accordance with this
2-26 article.
2-27 (b) A person may not establish or operate a dental provider
3-1 organization or dental provider plan in this state, or sell or
3-2 offer to sell or solicit offers to purchase or receive advance or
3-3 periodic consideration in conjunction with a dental provider plan,
3-4 unless the person holds a valid certificate of authority under this
3-5 article.
3-6 (c) A foreign corporation registered to do business in this
3-7 state as a foreign corporation under the Texas Business Corporation
3-8 Act may obtain a certificate of authority in accordance with this
3-9 article and other applicable state statutes.
3-10 Sec. 4. INITIAL CERTIFICATE; APPLICATION. (a) An applicant
3-11 for an initial certificate of authority must submit an application
3-12 on a form prescribed by the commissioner. The application must:
3-13 (1) be accompanied by the nonrefundable application
3-14 fee prescribed by Section 19 of this article;
3-15 (2) be verified by the applicant or by an officer or
3-16 other authorized representative of the applicant; and
3-17 (3) include:
3-18 (A) a copy of the applicant's basic
3-19 organizational document, if any, including the articles of
3-20 incorporation, articles of association, partnership agreement, or
3-21 trust agreement, as applicable, any documents evidencing assumed
3-22 names used, other applicable documents, and all amendments;
3-23 (B) a copy of the bylaws, rules, or similar
3-24 documents, if any, regulating the conduct of the applicant's
3-25 internal affairs;
3-26 (C) a list of the names, addresses, and official
3-27 positions of the persons who are to be responsible for the conduct
4-1 of the applicant's affairs, including each member of the board of
4-2 directors, board of trustees, executive committee, or other
4-3 governing body or committee, the principal officers if a
4-4 corporation, and the partners or members if a partnership or
4-5 association;
4-6 (D) a sample copy of the form of a contract made
4-7 or to be made between a dentist, other provider, marketing
4-8 representative, or person listed in Paragraph (C) of this
4-9 subdivision and the applicant;
4-10 (E) each schedule of dental care service fees to
4-11 be issued by the applicant under Section 9 of this article;
4-12 (F) a current audited financial statement that
4-13 includes:
4-14 (i) a balance sheet;
4-15 (ii) a statement of income and retained
4-16 earnings; and
4-17 (iii) a statement of cash flow;
4-18 (G) a statement reasonably describing the
4-19 geographic or metropolitan area, or both if applicable, to be
4-20 served by the applicant;
4-21 (H) a description of the procedures to be used
4-22 by the applicant under Section 10 of this article in resolving a
4-23 complaint from a member or participating dentist;
4-24 (I) a copy of the dental provider organization's
4-25 surety bond as required by Section 11(c) of this article; and
4-26 (J) other information as the commissioner may
4-27 require to make the determinations required by this article.
5-1 (b) The commissioner shall review an application when filed.
5-2 The commissioner shall promptly notify the applicant of any
5-3 deficiencies in the application and shall allow the applicant 60
5-4 days to correct the deficiencies. The commissioner shall delay
5-5 final action on the application to allow the applicant to correct
5-6 the deficiencies.
5-7 (c) If possible and unless final action is delayed to allow
5-8 the applicant to correct deficiencies in the application, the
5-9 commissioner shall issue the certificate or deny the application
5-10 not later than the 60th day after the date the commissioner
5-11 receives the application. However, the applicant may request and
5-12 the commissioner may grant a delay if necessary.
5-13 (d) The commissioner shall issue the certificate if the
5-14 commissioner is satisfied that:
5-15 (1) each item in the application appears satisfactory;
5-16 (2) each person responsible for the conduct of the
5-17 applicant's affairs is competent, trustworthy, and of good
5-18 reputation;
5-19 (3) the dental provider plan constitutes an
5-20 appropriate mechanism that effectively provides or arranges for the
5-21 availability of basic dental care services on a fee-for-service
5-22 basis at predetermined or discounted fees;
5-23 (4) the dental provider organization is fully
5-24 responsible and may reasonably be expected to meet its obligations
5-25 to members and prospective members; and
5-26 (5) the proposed method of operation, as shown by the
5-27 information submitted under this section or as determined by
6-1 independent investigation by the commissioner, is not contrary to
6-2 state law.
6-3 (e) In making the determination under Subsection (d)(4) of
6-4 this section, the commissioner shall consider:
6-5 (1) the dental provider organization's arrangement for
6-6 availability of dental care services on a fee-for-service basis at
6-7 predetermined or discounted fees, including the number of
6-8 participating dentists as compared with the projected number of
6-9 members, and its contractual relationships with its participating
6-10 dentists;
6-11 (2) the schedule of dental care service fees; and
6-12 (3) the organization's financial soundness and the
6-13 adequacy of its working capital.
6-14 (f) If after reviewing the application and giving the
6-15 applicant a reasonable opportunity to correct any deficiencies the
6-16 commissioner is of the opinion that the dental provider
6-17 organization's proposed plan of operation does not meet the
6-18 requirements of this section, the commissioner shall deny the
6-19 application. The commissioner shall notify the applicant of the
6-20 denial and shall specify the reasons for the denial.
6-21 Sec. 5. RENEWAL. (a) A certificate of authority expires
6-22 annually on April 1.
6-23 (b) An applicant must submit an application for renewal on a
6-24 form prescribed by the commissioner. The application must:
6-25 (1) be accompanied by the nonrefundable renewal fee
6-26 prescribed by Section 19 of this article; and
6-27 (2) include any modifications or amendments of
7-1 information required under Section 4(a) of this article as
7-2 necessary to reflect any changes since the issuance of the
7-3 preceding certificate.
7-4 (c) The commissioner is considered to have approved a
7-5 modification or amendment unless the commissioner specifically
7-6 disapproves of the change not later than the 30th day after the
7-7 date the commissioner receives the information. However, the
7-8 commissioner may postpone action on the amendment or modification
7-9 for an additional 30 days if necessary.
7-10 (d) A dental provider organization that files an application
7-11 for renewal under this section before the date the certificate
7-12 expires may continue to operate while the application is pending.
7-13 (e) Sections 4(c)-(f) of this article apply to an
7-14 application for renewal.
7-15 Sec. 6. ANNUAL REPORT. (a) A dental provider organization
7-16 shall file with an application for certificate of authority renewal
7-17 a report covering the preceding calendar year.
7-18 (b) The annual report shall include an audited financial
7-19 statement of the dental provider organization for the preceding
7-20 year that is attested to by an independent certified public
7-21 accountant. The financial statement must include a balance sheet,
7-22 statement of income and retained earnings, and statement of cash
7-23 flow.
7-24 Sec. 7. NOTIFICATION OF CHANGE. Any change in the ownership
7-25 or control of a dental provider organization is subject to the
7-26 prior approval of the commissioner under rules adopted by the
7-27 commissioner.
8-1 Sec. 8. POWERS OF DENTAL PROVIDER ORGANIZATION. (a) A
8-2 dental provider organization may arrange for the availability of
8-3 dental care services on a fee-for-service basis according to
8-4 predetermined or discounted fees or both predetermined and
8-5 discounted fees with dentists or groups of dentists who have
8-6 independent contracts with the organization. A dental provider
8-7 organization may not:
8-8 (1) pay consideration to a dentist in a manner that
8-9 would constitute payment or prepayment for dental care services
8-10 rendered to a member; or
8-11 (2) employ or contract with a dentist in a manner that
8-12 is prohibited by a licensing law of this state under which the
8-13 dentist is licensed.
8-14 (b) A dental provider organization may contract with a
8-15 person for the performance on its behalf of functions such as
8-16 marketing, enrollment, and administration. A person who renders
8-17 administrative services on behalf of a dental provider organization
8-18 is not considered an "administrator" for purposes of Article
8-19 21.07-6 of this code.
8-20 (c) In addition to the powers provided by this article, a
8-21 dental provider organization has all powers given to a corporation,
8-22 partnership, or association under the entity's organizational
8-23 documents that do not conflict with this article or other
8-24 applicable law.
8-25 Sec. 9. SCHEDULE OF DENTAL CARE SERVICE FEES AND LIST OF
8-26 PARTICIPATING DENTISTS. (a) A dental provider organization shall
8-27 provide each member of a dental provider plan who resides in this
9-1 state:
9-2 (1) a schedule of dental care service fees that lists
9-3 the predetermined or discounted fees or both, as applicable, for
9-4 the dental care services available from the participating dentists;
9-5 and
9-6 (2) a list of the participating dentists in the
9-7 member's geographic or metropolitan area.
9-8 (b) A schedule of dental care service fees may not contain a
9-9 provision or statement that is unjust, unfair, inequitable,
9-10 misleading, or deceptive or that encourages misrepresentation.
9-11 (c) At a minimum, a schedule of dental care service fees
9-12 must contain:
9-13 (1) a clear and complete statement of the dental care
9-14 services that are available from participating dentists and any
9-15 limitation or exclusion on the services available, including any
9-16 payment features; and
9-17 (2) a clear and complete statement that:
9-18 (A) the dental provider plan does not constitute
9-19 dental insurance and is not a health maintenance organization
9-20 contract; and
9-21 (B) the dental provider organization does not
9-22 reimburse the dentists or indemnify its members for the cost of
9-23 dental care services received by the members.
9-24 (d) A dental provider organization shall file with the
9-25 commissioner a schedule of dental care service fees to be used in
9-26 this state before issuance, delivery, or use of the schedule.
9-27 After filing the schedule with the commissioner, the dental
10-1 provider organization may immediately issue, deliver, and use the
10-2 schedule if the filing is accompanied by a certification on behalf
10-3 of the filing dental provider organization that is signed by an
10-4 attorney licensed in this state to practice law, an actuary
10-5 familiar with the requirements of this article and the applicable
10-6 rules and regulations adopted under this article, or the chief
10-7 executive officer of the dental provider organization. The
10-8 certification must affirm that the certification is on behalf of
10-9 the dental provider organization, that the dental provider
10-10 organization is bound by the certification, that the person
10-11 certifying has reviewed the filing, and that, based on the person's
10-12 best knowledge, information, and belief, the filed schedule of
10-13 dental care service fees complies with this article and the rules
10-14 that are applicable to the schedule of dental care service fees
10-15 being filed. The schedule of dental care service fees filed with
10-16 the required certification may be used by the dental provider
10-17 organization until it has been affirmatively disapproved by the
10-18 written order of the commissioner. If the schedule of dental care
10-19 service fees is affirmatively disapproved by the commissioner, the
10-20 dental provider organization, on receiving written notice of the
10-21 disapproval, shall immediately cease issuing, delivering, and using
10-22 the schedule.
10-23 (e) The commissioner may disapprove any schedule that the
10-24 commissioner determines violates or does not comply with this
10-25 article or a rule adopted by the commissioner under this article.
10-26 The commissioner shall notify the dental provider organization of
10-27 the disapproval of a schedule and specify the reason for the
11-1 disapproval.
11-2 (f) If a schedule of dental care service fees is disapproved
11-3 under Subsection (d) or (e) of this section, the commissioner may,
11-4 at the commissioner's discretion, order the dental provider
11-5 organization to issue a corrected schedule of dental care service
11-6 fees to replace the one previously issued, delivered, or used, or
11-7 to amend and correct the schedule by endorsement or rider. If a
11-8 schedule of dental care service fees is filed under this section
11-9 and is subsequently disapproved by the commissioner, the use of the
11-10 schedule before the time it is disapproved is not a basis for
11-11 disciplinary action against the dental provider organization by the
11-12 commissioner, unless the disapproval is based on the failure of the
11-13 schedule of dental care service fees to comply with the
11-14 requirements of Subsection (c) of this section.
11-15 (g) The commissioner may require the dental provider
11-16 organization to submit any relevant information the commissioner
11-17 considers necessary in considering a filing made under this
11-18 section.
11-19 Sec. 10. COMPLAINT RESOLUTION PROCEDURE. (a) A dental
11-20 provider organization shall establish and maintain a complaint
11-21 resolution system to provide reasonable procedures for the
11-22 resolution of written complaints initiated by members that relate
11-23 to the dental provider organization or the dental provider plan.
11-24 (b) The commissioner may examine the complaint resolution
11-25 system and recommend improvements.
11-26 Sec. 11. PROTECTION AGAINST INSOLVENCY. (a) A dental
11-27 provider organization to which a certificate of authority is issued
12-1 shall maintain a minimum surplus of not less than $100,000, valued
12-2 following generally accepted accounting principles.
12-3 (b) If a dental provider organization fails to comply with
12-4 the surplus requirement of this section, the commissioner shall
12-5 take appropriate action to assure that the continued operation of
12-6 the dental provider organization is not hazardous to its members.
12-7 (c) A dental provider organization shall post with the state
12-8 treasury a surety bond in the amount of $100,000 to secure the
12-9 debts and obligations of the organization to its members.
12-10 (d) The commissioner may suspend, revoke, or refuse to renew
12-11 a certificate of authority for failure to comply with this section.
12-12 Sec. 12. PROHIBITED PRACTICES; MARKETING AND ADVERTISING.
12-13 (a) A dental provider organization or a representative of an
12-14 organization may not cause or knowingly permit the use of:
12-15 (1) advertising that is untrue or misleading;
12-16 (2) a solicitation that is untrue or misleading; or
12-17 (3) a schedule issued to members that is deceptive.
12-18 (b) Article 21.21 of this code and the Deceptive Trade
12-19 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
12-20 Business & Commerce Code) apply to:
12-21 (1) a dental provider organization;
12-22 (2) the schedule of dental care service fees issued by
12-23 a dental provider organization; and
12-24 (3) the sale of a dental provider plan by a
12-25 representative of a dental provider organization.
12-26 (c) A marketing representative of a dental provider
12-27 organization may not use marketing or advertising materials
13-1 regarding the dental provider organization or dental provider plan
13-2 unless the marketing or advertising materials have been approved by
13-3 the dental provider organization. A marketing representative is
13-4 subject to this article. Marketing or advertising materials
13-5 regarding the dental provider organization must include a statement
13-6 that:
13-7 (1) the dental provider plan does not constitute
13-8 dental insurance and is not a health maintenance organization
13-9 contract; and
13-10 (2) the dental provider organization does not
13-11 reimburse the dentists or indemnify its members for the cost of
13-12 dental care services received by the members.
13-13 Sec. 13. SUSPENSION, REVOCATION, OR NONRENEWAL OF
13-14 CERTIFICATE OF AUTHORITY. (a) The commissioner may suspend,
13-15 revoke, or refuse to renew a certificate of authority issued to a
13-16 dental provider organization under this article if the commissioner
13-17 finds that:
13-18 (1) the dental provider organization is operating
13-19 significantly in contravention of its basic organizational
13-20 documents or its dental provider plan or in a manner contrary to
13-21 that described in and reasonably inferred from any other
13-22 information submitted under Section 4 of this article;
13-23 (2) the dental provider organization has issued or
13-24 used a schedule of dental care service fees that does not comply
13-25 with Section 9 of this article;
13-26 (3) the dental provider organization cannot meet its
13-27 obligations to its members or prospective members;
14-1 (4) the dental provider organization has failed to
14-2 implement or maintain the complaint resolution system required by
14-3 Section 10 of this article in a manner that allows for the
14-4 reasonable resolution of valid complaints;
14-5 (5) the dental provider organization has advertised or
14-6 marketed its dental provider plan in an untrue, misrepresentative,
14-7 misleading, deceptive, or unfair manner, in a manner that fails to
14-8 disclose that the dental provider plan does not constitute dental
14-9 insurance and is not a health maintenance organization contract, or
14-10 in a manner that otherwise does not comply with Section 12 of this
14-11 article;
14-12 (6) the continued operation of the dental provider
14-13 organization would be hazardous to its members; or
14-14 (7) the dental provider organization has otherwise
14-15 failed to comply substantially with this article or with a rule
14-16 adopted under this article.
14-17 (b) A dental provider organization may not, during the time
14-18 a certificate of authority is suspended, enroll additional members
14-19 or engage in advertising or solicitation.
14-20 (c) A dental provider organization whose certificate of
14-21 authority is revoked or not renewed shall proceed to wind up its
14-22 affairs immediately after the effective date of the order of
14-23 revocation or the expiration date of its previous certificate of
14-24 authority. The organization may not:
14-25 (1) conduct further business except as essential to
14-26 the orderly conclusion of the organization's affairs; or
14-27 (2) engage in further advertising or solicitation.
15-1 (d) The commissioner may, by written order, permit further
15-2 operation of the organization as the commissioner may find is in
15-3 the best interest of the members of the organization.
15-4 Sec. 14. RULES. The commissioner may adopt reasonable rules
15-5 as necessary and proper to implement this article.
15-6 Sec. 15. APPEALS. A person who is affected by a rule,
15-7 ruling, or decision of the commissioner, including disapproval of a
15-8 schedule of dental care service fees, under this article may appeal
15-9 the rule, ruling, or decision in accordance with Article 1.04 of
15-10 this code. The hearings requirements for a contested case
15-11 prescribed by Chapter 2001, Government Code, apply to an appeal of
15-12 a rule, ruling, or decision under this article.
15-13 Sec. 16. STATUTORY CONSTRUCTION IN RELATION TO OTHER LAWS.
15-14 (a) A solicitation of a member by a representative of a dental
15-15 provider organization that has a certificate of authority does not
15-16 violate a provision of law relating to solicitation or advertising
15-17 by a dentist.
15-18 (b) This article does not permit a dental provider
15-19 organization to practice dentistry as defined by the laws of this
15-20 state. A dental provider organization is not exempt from those
15-21 laws.
15-22 (c) The provision of factually accurate information
15-23 regarding dental care services, charges, and names and locations of
15-24 participating dentists by a dental provider organization or its
15-25 representatives to a potential member is not a violation of a law
15-26 relating to solicitation or advertising by a dentist. The
15-27 information with respect to a participating dentist is not
16-1 considered contrary to or in conflict with a law or regulation in
16-2 the practice of dentistry.
16-3 (d) Unless an insurance law specifically applies to a dental
16-4 provider organization or a dental provider plan, and except as
16-5 provided by this article, dental provider organizations and dental
16-6 provider plans are governed by this article and are exempt from all
16-7 other provisions of the insurance laws of this state.
16-8 (e) A dental provider organization holding a valid
16-9 certificate of authority is a "qualified carrier" as that term is
16-10 defined in the Texas Employees Uniform Group Insurance Benefits Act
16-11 (Article 3.50-2, Vernon's Texas Insurance Code).
16-12 (f) A dental provider plan is not a "health insurance
16-13 policy" or an "employee benefit plan" as those terms are defined in
16-14 this code.
16-15 (g) A dental provider organization is subject to Section 7,
16-16 Article 1.10, and Article 1.10A of this code.
16-17 Sec. 17. PUBLIC RECORD. An application, filing, or report
16-18 required under this article is a public document, except that a
16-19 report of an examination conducted by the department of a dental
16-20 provider organization is considered a confidential document. That
16-21 document may be released if, in the opinion of the commissioner,
16-22 release is in the public interest.
16-23 Sec. 18. INJUNCTIONS. The commissioner may bring suit in a
16-24 district court of Travis County against a dental provider
16-25 organization or other person that appears to be violating or has
16-26 violated this article or a rule issued under this article. The
16-27 commissioner may obtain injunctive and other relief as the court
17-1 may consider appropriate.
17-2 Sec. 19. FEES. (a) A dental provider organization subject
17-3 to this article shall pay to the commissioner the following fees:
17-4 (1) for filing the initial application for certificate
17-5 of authority, a fee in an amount not to exceed $4,000;
17-6 (2) for annual renewal of the certificate of authority
17-7 under this article, a fee in an amount not to exceed $3,000;
17-8 (3) for filing the annual report as required under
17-9 this article, a fee in an amount not to exceed $500; and
17-10 (4) for filing each schedule of dental care service
17-11 fees as required under this article, a fee in an amount not to
17-12 exceed $100.
17-13 (b) The commissioner shall, within the limits prescribed by
17-14 this section, set the fees to be charged under this section.
17-15 (c) The commissioner shall deposit fees collected under this
17-16 section in the state treasury.
17-17 SECTION 2. (a) This Act takes effect September 1, 1995.
17-18 (b) A dental provider organization existing and operating on
17-19 the effective date of this Act must file an application for an
17-20 initial certificate of authority not later than December 1, 1995.
17-21 (c) An applicant may continue to operate until the
17-22 commissioner of insurance acts on the application. The applicant
17-23 is considered for the purposes of this Act to have a valid
17-24 certificate while the application is pending.
17-25 (d) If the commissioner of insurance denies an application
17-26 for a certificate of authority, the dental provider organization
17-27 shall proceed to wind up its affairs in accordance with Section 13,
18-1 Article 21.53C, Insurance Code, as added by this Act.
18-2 SECTION 3. The importance of this legislation and the
18-3 crowded condition of the calendars in both houses create an
18-4 emergency and an imperative public necessity that the
18-5 constitutional rule requiring bills to be read on three several
18-6 days in each house be suspended, and this rule is hereby suspended.