By Wentworth S.B. No. 379 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.