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.