By Berlanga H.B. No. 1194
74R1794 MWV-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the establishment, certification, organization, and
1-3 regulation of dental preferred provider organizations and dental
1-4 preferred provider 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 PREFERRED PROVIDER ORGANIZATIONS
1-9 Sec. 1. SHORT TITLE. This article may be cited as the Texas
1-10 Dental Preferred Provider Organization Act.
1-11 Sec. 2. DEFINITIONS. In this article:
1-12 (1) "Dental care" means those services specifically
1-13 defined as practicing dentistry under the laws of this state.
1-14 (2) "Dental care service" means a service incident to
1-15 the furnishing of dental care.
1-16 (3) "Dental preferred provider plan" means a plan
1-17 under which a person undertakes to arrange for the availability of
1-18 dental care services from one or more participating dentists on a
1-19 fee-for-service basis and according to predetermined fees or fees
1-20 that are discounted from the participating dentists' usual and
1-21 customary fees. The term does not include a plan or program that
1-22 consists of arranging for, or the provision of, dental care
1-23 services on a pre-paid basis through insurance or otherwise, or the
1-24 indemnification against or reimbursement for the cost of dental
2-1 care services.
2-2 (4) "Dental preferred provider organization" means a
2-3 person that arranges for or provides a dental preferred provider
2-4 plan to the person's members for a fee or other consideration.
2-5 (5) "Dentist" means a person licensed to practice
2-6 dentistry in this state.
2-7 (6) "Member" means an individual who is enrolled in a
2-8 dental preferred provider plan and therefore is eligible to seek
2-9 dental care services from a participating dentist according to
2-10 predetermined fees.
2-11 (7) "Person" means an individual, partnership,
2-12 association, organization, trust, or corporation or other entity.
2-13 Sec. 3. REQUIREMENT OF CERTIFICATE OF AUTHORITY. (a) A
2-14 person may apply to the commissioner for and obtain a certificate
2-15 of authority to establish and operate a dental preferred provider
2-16 organization and a dental preferred provider plan in accordance
2-17 with this article.
2-18 (b) A person may not establish or operate a dental preferred
2-19 provider organization or dental preferred provider plan in this
2-20 state, or sell or offer to sell or solicit offers to purchase or
2-21 receive advance or periodic consideration in conjunction with a
2-22 dental preferred provider plan, unless the person holds a valid
2-23 certificate of authority under this article.
2-24 (c) A foreign corporation registered to do business in this
2-25 state as a foreign corporation under the Texas Business Corporation
2-26 Act may obtain a certificate of authority in accordance with this
2-27 article and other applicable state statutes.
3-1 Sec. 4. INITIAL CERTIFICATE; APPLICATION. (a) An applicant
3-2 for an initial certificate of authority must submit an application
3-3 on a form prescribed by the commissioner. The application must:
3-4 (1) be accompanied by the nonrefundable application
3-5 fee prescribed by Section 19 of this article;
3-6 (2) be verified by the applicant or by an officer or
3-7 other authorized representative of the applicant; and
3-8 (3) include:
3-9 (A) a copy of the applicant's basic
3-10 organizational document, if any, including the articles of
3-11 incorporation, articles of association, partnership agreement, or
3-12 trust agreement, as applicable, any documents evidencing assumed
3-13 names used, other applicable documents, and all amendments;
3-14 (B) a copy of the bylaws, rules, or similar
3-15 documents, if any, regulating the conduct of the applicant's
3-16 internal affairs;
3-17 (C) a list of the names, addresses, and official
3-18 positions of the persons who are to be responsible for the conduct
3-19 of the applicant's affairs, including each member of the board of
3-20 directors, board of trustees, executive committee, or other
3-21 governing body or committee, the principal officers if a
3-22 corporation, and the partners or members if a partnership or
3-23 association;
3-24 (D) a sample copy of the form of a contract made
3-25 or to be made between a dentist, other preferred provider, or
3-26 person listed in Paragraph (C) of this subdivision and the
3-27 applicant;
4-1 (E) a sample copy of the form of the schedule of
4-2 dental care service fees to be issued by the applicant under
4-3 Section 9 of this article;
4-4 (F) a current audited financial statement that
4-5 includes:
4-6 (i) a balance sheet;
4-7 (ii) a statement of income and retained
4-8 earnings; and
4-9 (iii) a statement of cash flow;
4-10 (G) a statement reasonably describing the
4-11 geographic or metropolitan area, or both if applicable, to be
4-12 served by the applicant;
4-13 (H) a description of the procedures to be used
4-14 by the applicant under Section 10 of this article in resolving a
4-15 complaint from a member or participating dentist;
4-16 (I) a copy of the dental preferred provider
4-17 organization's surety bond as required by Section 11(c) of this
4-18 article; and
4-19 (J) other information as the commissioner may
4-20 require to make the determinations required by this article.
4-21 (b) The commissioner shall review an application when filed.
4-22 The commissioner shall promptly notify the applicant of any
4-23 deficiencies in the application and shall give the applicant an
4-24 adequate opportunity to correct the deficiencies. The commissioner
4-25 may delay final action on the application to give the applicant an
4-26 opportunity to correct the deficiencies.
4-27 (c) If possible, the commissioner shall issue the
5-1 certificate or deny the application not later than the 60th day
5-2 after the date the commissioner receives the application. However,
5-3 the applicant may request and the commissioner may grant a delay if
5-4 necessary.
5-5 (d) The commissioner shall issue the certificate if the
5-6 commissioner is satisfied that:
5-7 (1) each item in the application appears satisfactory;
5-8 (2) each person responsible for the conduct of the
5-9 applicant's affairs is competent, trustworthy, and of good
5-10 reputation;
5-11 (3) the dental preferred provider plan constitutes an
5-12 appropriate mechanism that effectively provides or arranges for the
5-13 availability of dental care services on a fee-for-service basis at
5-14 predetermined rates;
5-15 (4) the dental preferred provider organization is
5-16 fully responsible and may reasonably be expected to meet its
5-17 obligations to members and prospective members; and
5-18 (5) the proposed method of operation, as shown by the
5-19 information submitted under this section, or as determined by
5-20 independent investigation by the commissioner, is not contrary to
5-21 state law.
5-22 (e) In making the determination under Subsection (d)(4) of
5-23 this section, the commissioner shall consider:
5-24 (1) the dental preferred provider organization's
5-25 arrangement for availability of dental care services on a
5-26 fee-for-service basis at predetermined rates, including the number
5-27 of participating dentists as compared with the projected number of
6-1 members, and its contractual relationships with its participating
6-2 dentists;
6-3 (2) the schedule of dental care service fees; and
6-4 (3) the organization's financial soundness and the
6-5 adequacy of its working capital.
6-6 (f) If after reviewing the application and giving the
6-7 applicant a reasonable opportunity to correct any deficiencies, the
6-8 commissioner is of the opinion that the dental preferred provider
6-9 organization's proposed plan of operation does not meet the
6-10 requirements of this section, the commissioner shall deny the
6-11 application. The commissioner shall notify the applicant of the
6-12 denial and shall specify the reasons for the denial.
6-13 Sec. 5. RENEWAL. (a) A certificate of authority expires
6-14 annually on April 1.
6-15 (b) An applicant must submit an application for renewal on a
6-16 form prescribed by the commissioner. The application must:
6-17 (1) be accompanied by the nonrefundable renewal fee
6-18 prescribed by Section 19 of this article; and
6-19 (2) include any modifications or amendments of
6-20 information required under Section 4(a) of this article as
6-21 necessary to reflect any changes since the issuance of the
6-22 preceding certificate.
6-23 (c) The commissioner is considered to have approved a
6-24 modification or amendment unless the commissioner specifically
6-25 disapproves of the change not later than the 30th day after the
6-26 date the commissioner receives the information. However, the
6-27 commissioner may postpone action on the amendment or modification
7-1 for an additional 30 days if necessary.
7-2 (d) A dental preferred provider organization that files an
7-3 application for renewal under this section may continue to operate
7-4 while the application is pending.
7-5 (e) Sections 4(c)-(f) of this article apply to an
7-6 application for renewal.
7-7 Sec. 6. ANNUAL REPORT. (a) A dental preferred provider
7-8 organization shall file with an application for certificate of
7-9 authority renewal a report covering the preceding calendar year.
7-10 (b) The annual report shall include an audited financial
7-11 statement of the dental preferred provider organization for the
7-12 preceding year that is attested to by an independent certified
7-13 public accountant. The financial statement must include a balance
7-14 sheet, statement of income and retained earnings, and statement of
7-15 cash flow.
7-16 Sec. 7. NOTIFICATION OF CHANGE. If a change in the
7-17 ownership or control of a dental preferred provider organization
7-18 occurs, the organization shall file with the commissioner
7-19 information relating to the change not later than the 15th day of
7-20 the first month that begins after the month in which the change of
7-21 ownership or control occurs.
7-22 Sec. 8. POWERS OF DENTAL PREFERRED PROVIDER ORGANIZATION.
7-23 (a) A dental preferred provider organization may arrange for the
7-24 availability of dental care services on a fee-for-service basis
7-25 according to predetermined rates with dentists or groups of
7-26 dentists who have independent contracts with the organization. A
7-27 dental preferred provider organization may not:
8-1 (1) pay consideration to a dentist in a manner that
8-2 would constitute payment or prepayment for dental care services
8-3 rendered to a member; or
8-4 (2) employ or contract with a dentist in a manner that
8-5 is prohibited by a licensing law of this state under which the
8-6 dentist is licensed.
8-7 (b) A dental preferred provider organization may contract
8-8 with a person for the performance on its behalf of functions such
8-9 as marketing, enrollment, and administration. A person who renders
8-10 administrative services on behalf of a dental preferred provider
8-11 organization is not considered an "administrator" for purposes of
8-12 Article 21.07-6, Insurance Code.
8-13 (c) In addition to the powers provided by this article, a
8-14 dental preferred provider organization has all powers given to a
8-15 corporation, partnership, or association under the entity's
8-16 organizational documents that do not conflict with this article or
8-17 other applicable law.
8-18 Sec. 9. SCHEDULE OF DENTAL CARE SERVICE FEES. (a) A member
8-19 of a dental preferred provider plan who resides in this state is
8-20 entitled to receive a schedule of dental care service fees that
8-21 lists the predetermined fees for the dental care services available
8-22 from the participating dentists.
8-23 (b) A schedule of dental care service fees may not contain a
8-24 provision or statement that is unjust, unfair, inequitable,
8-25 misleading, or deceptive or that encourages misrepresentation.
8-26 (c) At a minimum, a schedule of dental care service fees
8-27 must contain:
9-1 (1) a clear and complete statement of the dental care
9-2 services that are available from participating dentists and any
9-3 limitation or exclusion on the services available, including any
9-4 payment features; and
9-5 (2) a clear and complete statement that:
9-6 (A) the dental preferred provider plan does not
9-7 constitute dental insurance and is not a health maintenance
9-8 organization contract; and
9-9 (B) the dental preferred provider organization
9-10 does not reimburse the dentists or indemnify its members for the
9-11 cost of dental care services received by the members.
9-12 (d) The commissioner, after notice and hearing, may
9-13 disapprove any schedule that the commissioner determines violates
9-14 or does not comply with this article or a rule adopted by the
9-15 commissioner under this article. A dental preferred provider
9-16 organization may not issue a disapproved schedule. The
9-17 commissioner shall notify the applicant of the disapproval of a
9-18 schedule and specify the reason for the disapproval. The
9-19 commissioner is considered to have approved a schedule unless the
9-20 commissioner disapproves the schedule not later than the 30th day
9-21 after the date the schedule is filed. However, the commissioner
9-22 may by written notice postpone action on the schedule for an
9-23 additional 30 days if necessary.
9-24 (e) The commissioner may require the dental preferred
9-25 provider organization to submit any relevant information the
9-26 commissioner considers necessary in considering a filing made under
9-27 this section.
10-1 Sec. 10. COMPLAINT RESOLUTION PROCEDURE. (a) A dental
10-2 preferred provider organization shall establish and maintain a
10-3 complaint resolution system to provide reasonable procedures for
10-4 the resolution of written complaints initiated by members that
10-5 relate to the dental preferred provider organization or the dental
10-6 preferred provider plan.
10-7 (b) The commissioner may examine the complaint resolution
10-8 system and recommend improvements.
10-9 Sec. 11. PROTECTION AGAINST INSOLVENCY. (a) A dental
10-10 preferred provider organization to which a certificate of authority
10-11 is issued shall maintain a minimum surplus, net of accrued
10-12 liabilities, of not less than $100,000. The minimum surplus may
10-13 consist only of:
10-14 (1) cash;
10-15 (2) bonds of the United States;
10-16 (3) bonds of this state; or
10-17 (4) a combination of the items listed under
10-18 Subdivisions (1)-(3) of this subsection.
10-19 (b) If a dental preferred provider organization fails to
10-20 comply with the surplus requirement of this section, the
10-21 commissioner shall take appropriate action to assure that the
10-22 continued operation of the dental preferred provider organization
10-23 is not hazardous to its members.
10-24 (c) A dental preferred provider organization shall post with
10-25 the state treasury a surety bond in the amount of $100,000 on a
10-26 form approved by the commissioner to secure the debts and
10-27 obligations of the organization to its members.
11-1 (d) The commissioner may suspend, revoke, or fail to renew a
11-2 certificate of authority for failure to comply with this section.
11-3 Sec. 12. PROHIBITED PRACTICES. (a) A dental preferred
11-4 provider organization or a representative of an organization may
11-5 not cause or knowingly permit the use of:
11-6 (1) advertising that is untrue or misleading;
11-7 (2) a solicitation that is untrue or misleading; or
11-8 (3) a schedule issued to members that is deceptive.
11-9 (b) The Deceptive Trade Practices-Consumer Protection Act
11-10 (Subchapter E, Chapter 17, Business & Commerce Code) applies to:
11-11 (1) a dental preferred provider organization;
11-12 (2) the schedule of dental care service fees issued by
11-13 a dental preferred provider organization; and
11-14 (3) the sale of a dental preferred provider plan by a
11-15 representative of a dental preferred provider organization.
11-16 Sec. 13. SUSPENSION, REVOCATION, OR NONRENEWAL OF
11-17 CERTIFICATE OF AUTHORITY. (a) The commissioner may suspend or
11-18 revoke a certificate of authority issued to a dental preferred
11-19 provider organization under this article if the commissioner finds
11-20 that:
11-21 (1) the dental preferred provider organization is
11-22 operating significantly in contravention of its basic
11-23 organizational documents or its dental preferred provider plan, or
11-24 in a manner contrary to that described in and reasonably inferred
11-25 from any other information submitted under Section 4 of this
11-26 article;
11-27 (2) the dental preferred provider organization has
12-1 issued or used a schedule of dental care service fees that does not
12-2 comply with Section 9 of this article;
12-3 (3) the dental preferred provider organization cannot
12-4 meet its obligations to its members or prospective members;
12-5 (4) the dental preferred provider organization has
12-6 failed to implement or maintain the complaint resolution system
12-7 required by Section 10 of this article in a manner that allows for
12-8 the reasonable resolution of valid complaints;
12-9 (5) the dental preferred provider organization has
12-10 advertised or marketed its dental preferred provider plan in an
12-11 untrue, misrepresentative, misleading, deceptive, or unfair manner;
12-12 (6) the continued operation of the dental preferred
12-13 provider organization would be hazardous to its members; or
12-14 (7) the dental preferred provider organization has
12-15 otherwise failed to comply substantially with this article or with
12-16 a rule adopted under this article.
12-17 (b) A dental preferred provider organization may not, during
12-18 the time a certificate of authority is suspended, enroll additional
12-19 members or engage in advertising or solicitation.
12-20 (c) A dental preferred provider organization whose
12-21 certificate of authority is revoked or not renewed shall proceed to
12-22 wind up its affairs immediately after the effective date of the
12-23 order of revocation or the expiration date of its previous
12-24 certificate of authority. The organization may not:
12-25 (1) conduct further business except as essential to
12-26 the orderly conclusion of the organization's affairs; or
12-27 (2) engage in further advertising or solicitation.
13-1 (d) The commissioner may, by written order, permit further
13-2 operation of the organization as the commissioner may find is in
13-3 the best interest of the members of the organization.
13-4 Sec. 14. RULES. The commissioner may adopt reasonable rules
13-5 as necessary and proper to implement this article.
13-6 Sec. 15. APPEALS. A person who is affected by a rule,
13-7 ruling, or decision of the commissioner under this article may
13-8 appeal the rule, ruling, or decision in accordance with Article
13-9 1.04 of this code. The hearings requirements for a contested case
13-10 prescribed by Chapter 2001, Government Code, apply to an appeal of
13-11 a rule, ruling, or decision under this article.
13-12 Sec. 16. STATUTORY CONSTRUCTION IN RELATION TO OTHER LAWS.
13-13 (a) A solicitation of a member by a representative of a dental
13-14 preferred provider organization that has a certificate of authority
13-15 does not violate a provision of law relating to solicitation or
13-16 advertising by a dentist.
13-17 (b) This article does not permit a dental preferred provider
13-18 organization to practice dentistry as defined by the laws of this
13-19 state. A dental preferred provider organization is not exempt from
13-20 those laws.
13-21 (c) The provision of factually accurate information
13-22 regarding dental care services, charges, and names and locations of
13-23 participating dentists by the dental preferred provider
13-24 organization or its representatives to a potential member is not a
13-25 violation of a law relating to solicitation or advertising by a
13-26 dentist. The information with respect to a participating dentist
13-27 is not considered contrary to or in conflict with a law or
14-1 regulation in the practice of dentistry.
14-2 (d) Unless an insurance law specifically applies to a dental
14-3 preferred provider organization or a dental preferred provider
14-4 plan, and except as provided by this article, dental preferred
14-5 provider organizations and dental preferred provider plans are
14-6 governed by this article and are exempt from all other provisions
14-7 of the insurance laws of this state.
14-8 Sec. 17. PUBLIC RECORD. An application, filing, or report
14-9 required under this article is a public document, except that a
14-10 report of an examination conducted by the department of a dental
14-11 preferred provider organization is considered a confidential
14-12 document. That document may be released if, in the opinion of the
14-13 commissioner, release is in the public interest.
14-14 Sec. 18. INJUNCTIONS. The commissioner may bring suit in a
14-15 district court of Travis County against a dental preferred provider
14-16 organization or other person that appears to be violating or has
14-17 violated this article or a rule issued under this article. The
14-18 commissioner may obtain injunctive and other relief as the court
14-19 may consider appropriate.
14-20 Sec. 19. FEES. (a) A dental preferred provider
14-21 organization subject to this article shall pay to the commissioner
14-22 the following fees:
14-23 (1) for filing the original application for
14-24 certificate of authority, a fee in an amount not to exceed $2,500;
14-25 (2) for annual renewal of the certificate of authority
14-26 under this article, a fee in an amount not to exceed $2,500;
14-27 (3) for filing the annual report as required under
15-1 this article, a fee in an amount not to exceed $500; and
15-2 (4) for filing each schedule of dental care service
15-3 fees as required under this article, a fee in an amount not to
15-4 exceed $100.
15-5 (b) The commissioner shall, within the limits prescribed by
15-6 this section, set the fees to be charged under this section.
15-7 (c) The commissioner shall deposit fees collected under this
15-8 section in the state treasury to the credit of the Texas Department
15-9 of Insurance operating fund account.
15-10 SECTION 2. (a) This Act takes effect September 1, 1995.
15-11 (b) A dental preferred provider organization existing and
15-12 operating on the effective date of this Act must file an
15-13 application for an initial certificate of authority not later than
15-14 December 1, 1995.
15-15 (c) An applicant may continue to operate until the
15-16 commissioner of insurance acts on the application. The applicant
15-17 is considered for the purposes of this Act to have a valid
15-18 certificate while the application is pending.
15-19 (d) If the commissioner of insurance denies an application
15-20 for a certificate of authority, the dental preferred provider
15-21 organization shall proceed to wind up its affairs in accordance
15-22 with Section 13, Article 21.53C, Insurance Code, as added by this
15-23 Act.
15-24 SECTION 3. The importance of this legislation and the
15-25 crowded condition of the calendars in both houses create an
15-26 emergency and an imperative public necessity that the
15-27 constitutional rule requiring bills to be read on three several
16-1 days in each house be suspended, and this rule is hereby suspended.