IMF H.B. 1338 75(R)BILL ANALYSIS


STATE AFFAIRS
H.B. 1338
By: Junell
4-27-97
Committee Report (Substituted)



BACKGROUND 

In 1972, the General Appropriations Act included a provision that
prohibited the expenditure of appropriated funds for the purchase of
liability insurance to cover tort claims arising under the Tort Claims Act
of 1969.  In 1993, Section 53 of the General Appropriations Act was
amended to allow state agencies to purchase directors' and officers'
liability insurance,  However, the Attorney General opined that this
section was limited to policies designed to cover suits arising under the
Torts Claims Act.  In 1995, the Legislature attempted to broaden the scope
of Section 53 by renaming it "Purchase of Insurance."  Some ambiguity
remained and although the Comptroller has agreed to allow the renewal of
existing directors' and officers' insurance policies, the Attorney General
has limited this authority until the Legislature has had an opportunity to
enact a general law authorizing state agencies to purchase the policies
covering claims other than those arising under the Tort Claims Act. 

PURPOSE

As proposed, H.B. 1338 allows a state agency to purchase directors' and
officers' liability insurance policies covering commission or board
members and executive staff for claims arising outside of the Tort Claims
Act. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 14 of the Civil Practices and Remedies Code by
adding Section 104.009 as follows: 

Section 104.009(a) allows a state agency, institution, or department to
purchase directors's and officer's liability insurance. 

Section 104.009(b) requires that an insurance policy procured under this
section must have a deductible in an amount equal to the limits of
liability established under Section 104.003. 

Section 104.009(c) provides that purchase of an insurance policy under
this section does not waive the right to immunity, defense, or
jurisdictional bar. 

SECTION 2.  Amends Section 104.003(b) of the Civil Practices and Remedies
Code with a conforming change. 

SECTION 3.  Emergency clause.  Effective date:  upon passage.

COMPARISON OF ORIGINAL TO SUBSTITUTE

SECTION 1:  Subsection (a) clarifies that the statute allows the purchase
of policies covering not  only tort liability, but also for other conduct
which is customarily covered by these types of policies. 

Subsection (b) conforms the statute with the current practice of providing
a policy with two deductibles, one applicable to the liability of the
state agency, and another optional deductible applicable to the
individual's liability. 

SECTION 2:  Subsection (b) makes conforming changes.  The language
clarifies that the state is not liable to the extend the damages are
recoverable under and are in excess of the deductible limits of the
insurance contract.