By Brimer H.B. No. 976
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the abolition of the Texas Workers' Compensation
1-3 Insurance Facility and the transfer of the assets and liabilities
1-4 of that facility.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Property and Casualty Insurance
1-7 Guaranty Act (Article 21.28-C, Insurance Code) is amended by adding
1-8 Section 26 to read as follows:
1-9 Sec. 26. TRANSFER OF FACILITY TO ASSOCIATION. (a) The
1-10 purpose of this section is to:
1-11 (1) provide a means for the transfer of control of the
1-12 assets, liabilities, and obligations of the Texas workers'
1-13 compensation insurance facility to the Texas Property and Casualty
1-14 Insurance Guaranty Association; and
1-15 (2) ensure that the association has full authority to
1-16 enforce the rights of the facility without limitation, except as
1-17 expressly provided by this section.
1-18 (b) In addition to the definitions under Section 5 of this
1-19 Act, in this section:
1-20 (1) "Comptroller" means the Texas comptroller of
1-21 public accounts.
1-22 (2) "Facility" means the Texas workers' compensation
1-23 insurance facility.
1-24 (3) "Fund" means the Texas Workers' Compensation
2-1 Insurance Fund.
2-2 (4) "Insurer" means an insurance company licensed to
2-3 do business in this state.
2-4 (5) "Texas workers' compensation insurance facility
2-5 account" means the account maintained by the association for the
2-6 assets of the facility.
2-7 (c) The association shall take control of the facility's
2-8 assets, liabilities, and obligations and may administer all of the
2-9 remaining aspects of the facility's operation. The association has
2-10 full authority to enforce the contract or statutory rights of the
2-11 facility under any servicing company agreements. This section may
2-12 not be construed to be an assignment of the facility's rights or
2-13 obligations under those agreements.
2-14 (d) The association shall maintain the Texas workers'
2-15 compensation insurance facility account separately from the
2-16 association's accounts described by Section 6 of this Act. Each
2-17 claim, expense, or other liability related to the assets,
2-18 liabilities, and obligations of the facility shall be paid from,
2-19 and all collections and receipts shall be deposited into, the Texas
2-20 workers' compensation insurance facility account. Funds in the
2-21 Texas workers' compensation insurance facility account shall be
2-22 maintained outside the state treasury.
2-23 (e) Not later than June 1 of each year, the association
2-24 shall report its operating results for the Texas workers'
2-25 compensation insurance facility account to the commissioner on a
2-26 calendar year premium and an accident year loss basis.
2-27 (f) For a claim in which the compensable injury occurred
3-1 before January 1, 1992, the association shall compute at least
3-2 annually its results for incurred losses in the Texas workers'
3-3 compensation insurance facility account, including incurred but not
3-4 reported losses, by accident year. If there is a deficit or
3-5 surplus from the operation of the Texas workers' compensation
3-6 insurance facility account for those claims, the amount of the
3-7 deficit or surplus shall be assessed or rebated to the member
3-8 insurers licensed in this state who were members of the facility
3-9 during the calendar year. Each member insurer shall pay a
3-10 proportionate share of the total assessment or receive a
3-11 proportionate share of the total rebate based on that insurer's
3-12 portion of the total voluntary workers' compensation insurance
3-13 writings during the calendar year. The fund is not liable for any
3-14 deficit incurred on a policy with an effective date before January
3-15 1, 1992.
3-16 (g) For claims with an accident date on or after January 1,
3-17 1992, the association shall compute at least annually its results
3-18 for incurred losses in the Texas workers' compensation insurance
3-19 facility account, including incurred but not reported losses, by
3-20 accident year. If there is a deficit or surplus from operation of
3-21 the Texas workers' compensation insurance facility account for
3-22 those claims, the amount of the deficit or surplus shall be
3-23 assessed or rebated to the member insurers licensed in this state
3-24 who were members of the facility during the calendar year and to
3-25 the fund. Each member insurer and the fund shall pay a
3-26 proportionate share of the total assessment or receive a
3-27 proportionate share of the total rebate based on its portion of the
4-1 total voluntary workers' compensation insurance writings during the
4-2 calendar year.
4-3 (h) The association may provide for the redistribution of
4-4 all or part of an assessment that would otherwise be levied on a
4-5 member insurer under Subsection (f) or (g) of this section if the
4-6 member insurer is unable to pay the full assessment because the
4-7 member insurer is in liquidation at the time of the assessment.
4-8 (i) The association may authorize the deferment of the
4-9 payment of an assessment made under Subsection (f) or (g) of this
4-10 section. A deferment may be allowed only if the cash flow of the
4-11 Texas workers' compensation insurance facility account is adequate
4-12 to meet all needs.
4-13 (j) If a member insurer or the fund elects to defer any
4-14 portion of an assessment as provided by this section, the entire
4-15 unpaid portion of the assessment and any accrued interest must be
4-16 shown as a liability on each financial and annual statement of that
4-17 insurer.
4-18 (k) A member insurer may not be allowed a credit against any
4-19 tax levied by this state as a result of an assessment paid under
4-20 this section.
4-21 (l) The association may invest Texas workers' compensation
4-22 insurance facility account funds only in investments authorized for
4-23 the investment of state funds as provided by Chapter 404,
4-24 Government Code. The association shall develop an investment
4-25 policy for the Texas workers' compensation insurance facility
4-26 account and shall submit that policy to the comptroller for review
4-27 and approval.
5-1 (m) The association shall submit to the commissioner for
5-2 approval a plan of operation to ensure the fair, reasonable, and
5-3 equitable administration of the Texas workers' compensation
5-4 insurance facility account not later than October 1, 1997. The
5-5 commissioner shall approve or disapprove the association's plan of
5-6 operation of the Texas workers' compensation insurance facility
5-7 account not later than the 60th day after the date on which the
5-8 association submits the plan to the commissioner.
5-9 (n) If the commissioner does not approve the plan of
5-10 operation, the association shall submit to the commissioner an
5-11 amended plan of operation with any amendments necessary or suitable
5-12 to ensure the fair, reasonable, and equitable administration of the
5-13 Texas workers' compensation insurance facility account. The plan
5-14 of operation and any amendments take effect on approval in writing
5-15 by the commissioner. If the association fails to submit suitable
5-16 amendments to the plan, the commissioner, after notice and hearing,
5-17 shall adopt reasonable rules as necessary or advisable to implement
5-18 this section. Those rules shall continue in force until modified
5-19 by the commissioner or superseded by a plan submitted by the
5-20 association and approved by the commissioner.
5-21 (o) In addition to all immunities and protections otherwise
5-22 provided by this article, the association succeeds to all rights,
5-23 defenses, immunities, and liabilities of the facility in each cause
5-24 of action or other proceeding pending by or against the facility on
5-25 September 1, 1997, or filed after that date. The immunity
5-26 provisions of Sections 2.05(h) and 2.12, Article 5.76-2 of this
5-27 code, as those provisions existed before their repeal, continue to
6-1 apply to each act or omission that occurs before, on, or after
6-2 September 1, 1997, and that is performed by the persons or entities
6-3 covered by those provisions.
6-4 (p) If any party institutes or continues an action against
6-5 the facility, the governing committee of the facility, the
6-6 executive director of the facility, a member insurer solely in that
6-7 insurer's capacity as a member insurer, or an agent, servant,
6-8 attorney, consultant, or employee of the facility, whether or not
6-9 serving in that capacity on September 1, 1997, in connection with
6-10 or arising from either the facility's operations or the
6-11 transactions contemplated by this section, the association shall
6-12 defend, indemnify, and hold harmless that person or entity from
6-13 liability for any act or omission of that person or entity in
6-14 connection with, or arising from the performance of, the person's
6-15 or entity's powers and duties on behalf of the facility. A cause
6-16 of action or other proceeding described by this subsection shall
6-17 continue to be governed by and conducted under this section and
6-18 Article 5.76-2 of this code, as that article existed before its
6-19 repeal, and the applicable bylaws, rules, and regulations of the
6-20 facility, and those provisions are continued in effect for the
6-21 purposes of this section.
6-22 (q) The association may enter into negotiations for the
6-23 privatization to a single insurer of all the assets, liabilities,
6-24 and obligations maintained in the Texas workers' compensation
6-25 insurance facility account. If the association determines that
6-26 privatization under this subsection is in the best interest of this
6-27 state, the association shall obtain the written approval of the
7-1 commissioner before entering into a privatization agreement to
7-2 consummate the applicable transaction.
7-3 (r) Any net proceeds from the privatization of the Texas
7-4 workers' compensation insurance facility account shall be rebated
7-5 in accordance with Subsection (g) of this section.
7-6 (s) If an insurer that assumes the assets, liabilities, and
7-7 obligations maintained in the Texas workers' compensation insurance
7-8 facility account under a privatization agreement approved under
7-9 Subsection (q) of this section becomes an impaired insurer after
7-10 that privatization agreement takes effect, any remaining facility
7-11 claims shall be covered claims under this article.
7-12 (t) If a conflict exists between this section and any other
7-13 statute relating to the facility or the association, this section
7-14 controls.
7-15 SECTION 2. Except as otherwise provided by this Act, the
7-16 following laws are repealed on the effective date of this Act:
7-17 (1) Article 5.76-2, Insurance Code; and
7-18 (2) Section 18.24(b), Chapter 12, Acts of the 72nd
7-19 Legislature, 2nd Called Session, 1991, as amended by Section 8,
7-20 Chapter 885, Acts of the 73rd Legislature, Regular Session, 1993.
7-21 SECTION 3. If any provision of this Act or the application
7-22 of this Act to any person or entity or circumstance is held invalid
7-23 by a court of competent jurisdiction, that invalidity does not
7-24 affect other provisions or applications of this Act that can be
7-25 given effect without the invalid provision or application, and to
7-26 this end the provisions of this Act are declared to be severable.
7-27 SECTION 4. The repeal of Article 5.76-2, Insurance Code,
8-1 under Section 2 of this Act does not affect rights and liabilities
8-2 accruing under that article before the effective date of this Act,
8-3 and that article is continued in effect for that purpose and for
8-4 the purposes expressly provided by Section 26, Texas Property and
8-5 Casualty Insurance Guaranty Act (Article 21.28-C, Insurance Code),
8-6 as added by this Act.
8-7 SECTION 5. The importance of this legislation and the
8-8 crowded condition of the calendars in both houses create an
8-9 emergency and an imperative public necessity that the
8-10 constitutional rule requiring bills to be read on three several
8-11 days in each house be suspended, and this rule is hereby suspended,
8-12 and that this Act take effect and be in force from and after its
8-13 passage, and it is so enacted.