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.