By Brimer, et al. H.B. No. 976
Substitute the following for H.B. No. 976:
By Solomons C.S.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. TRANSFER TO THE TEXAS PROPERTY AND CASUALTY
1-7 INSURANCE GUARANTY ASSOCIATION. On September 1, 1997, the Texas
1-8 Property and Casualty Insurance Guaranty Association shall take
1-9 control of the operations and all of the assets, liabilities and
1-10 obligations of the Texas Workers' Compensation Insurance Facility.
1-11 SECTION 2. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY
1-12 ASSOCIATION POWERS AND DUTIES. (a) Article 21.28-C, Insurance
1-13 Code is amended by adding the following before Section 1:
1-14 Part 1. Texas Property and Casualty Insurance Guaranty
1-15 Association.
1-16 (b) Article 21.28-C, Insurance Code is amended by
1-17 renumbering Section 1 through Section 25 as Section 1.01 through
1-18 Section 1.25.
1-19 (Sections 1.26 through 1.99 reserved for expansion
1-20 SECTION 3. TEXAS WORKERS' COMPENSATION INSURANCE FACILITY
1-21 ACCOUNT. Article 21.28-C, Insurance Code is amended by adding the
1-22 following after Part 1:
1-23 Part 2. Texas Workers' Compensation Insurance Facility
1-24 Account
2-1 Section 2.01. PURPOSES. The purposes of Part 2 of this Act
2-2 are to provide the authority for the transfer of control of the
2-3 Texas Workers' Compensation Insurance Facility's assets,
2-4 liabilities, and obligations to the Texas Property and Casualty
2-5 Insurance Guaranty Association. Further, it is the purpose of Part
2-6 2 of this Act to ensure that the Texas Property and Casualty
2-7 Insurance Guaranty Association has full authority to enforce the
2-8 rights of the Facility without limitation, except as expressly
2-9 provided herein. Part 2 of this Act shall be liberally construed
2-10 to effect these purposes.
2-11 Section 2.02. DEFINITIONS. (a) In Part 2 of this Act:
2-12 (1) "Comptroller" means the Texas Comptroller of
2-13 Public Accounts.
2-14 (2) "Facility" means the Texas Workers' Compensation
2-15 Insurance Facility.
2-16 (3) "Fund" means the Texas Workers' Compensation
2-17 Insurance Fund.
2-18 (4) "Insurer" means an insurance company licensed to
2-19 do business in the State of Texas.
2-20 (5) "Texas Workers' Compensation Insurance Facility
2-21 Account" means the account maintained by the association for the
2-22 assets of the facility.
2-23 (b) Any other terms shall have the same meaning as defined
2-24 in Part 1, Article 21.28-C, Insurance Code.
2-25 Section 2.03. POWERS AND DUTIES OF THE ASSOCIATION RELATIVE
2-26 TO THE TEXAS WORKERS' COMPENSATION INSURANCE FACILITY ACCOUNT.
2-27 (a) The association shall have the authority to take control of
3-1 the facility's assets, liabilities and obligations and to
3-2 administer all remaining aspects of the facility's operation.
3-3 (b) The association shall maintain the Texas Workers'
3-4 Compensation Insurance Facility Account separate from the
3-5 association's accounts described in Section 1.06 of Article
3-6 21.28-C, Insurance Code.
3-7 (c) All claims, expenses and other liabilities related to
3-8 the assets, liabilities and obligations of the facility shall be
3-9 paid from and all collections and receipts shall be deposited into
3-10 the Texas Workers' Compensation Insurance Facility Account.
3-11 (d) Not later than June 1 of each year, the association
3-12 shall report its operating results for the Texas Workers'
3-13 Compensation Insurance Facility Account to the commissioner on a
3-14 calendar year premium and an accident year loss basis.
3-15 (e) For claims with an accident date before January 1, 1992,
3-16 the association shall calculate at least annually its results for
3-17 incurred losses in the Texas Workers' Compensation Insurance
3-18 Facility Account, including incurred but not reported losses, by
3-19 accident year. If there is a deficit or surplus from operation of
3-20 the Texas Workers' Compensation Insurance Facility Account for such
3-21 claims, the amount of the deficit or surplus shall be assessed or
3-22 rebated to the member insurers licensed in this state who were
3-23 members of the facility during the calendar year. Each member
3-24 insurer shall pay a proportion of the total assessment or receive a
3-25 proportion of the total rebate based on its proportion of the total
3-26 voluntary workers' compensation insurance writings during the
3-27 calendar year. The association may provide for the redistribution
4-1 of all or part of an assessment that would otherwise be levied on a
4-2 member insurer if the member insurer is unable to pay the full
4-3 assessment because the member insurer is in liquidation at the time
4-4 of the assessment. The fund is not liable for any deficits
4-5 incurred on policies with an effective date before January 1, 1992.
4-6 (f) For claims with an accident date on or after January 1,
4-7 1992, the association shall calculate at least annually its results
4-8 for incurred losses in the Texas Workers' Compensation Insurance
4-9 Facility Account, including incurred but not reported losses, by
4-10 accident year. If there is a deficit or surplus from operation of
4-11 the Texas Workers' Compensation Insurance Facility Account for such
4-12 claims, the amount of the deficit or surplus shall be assessed or
4-13 rebated to the member insurers licensed in this state who were
4-14 members of the facility during the calendar year and to the fund.
4-15 Each member insurer and the fund shall pay a proportion of the
4-16 total assessment or receive a proportion of the total rebate based
4-17 on its proportion of the total voluntary workers' compensation
4-18 insurance writings during the calendar year. The association may
4-19 provide for the redistribution of all or part of an assessment that
4-20 would otherwise be levied on a member insurer if the member insurer
4-21 is unable to pay the full assessment because the member insurer is
4-22 in liquidation at the time of the assessment.
4-23 (g) The association may authorize the deferment of the
4-24 payment of an assessment made under Subsection (e) and (f) of this
4-25 section. Deferments may only be allowed if the cash flow of the
4-26 Texas Workers' Compensation Insurance Facility Account is adequate
4-27 to meet all needs.
5-1 (h) If a member insurer or the fund elects to defer any
5-2 portion of an assessment as provided herein, the entire unpaid,
5-3 assessed portion thereof and accrued interest, if any, must be
5-4 shown as a liability on all of its financial and annual statements.
5-5 (i) No member insurer shall be allowed a credit against any
5-6 tax levied by this state as a result of an assessment paid pursuant
5-7 to this section.
5-8 (j) Funds in the Texas Workers' Compensation Insurance
5-9 Facility Account are outside the state treasury.
5-10 (k) The association shall invest Texas Workers' Compensation
5-11 Insurance Facility Account funds only in investments authorized by
5-12 law for the investment of state funds as provided in Chapter 404,
5-13 Government Code. The association shall develop an investment
5-14 policy for the Texas Workers' Compensation Insurance Facility
5-15 Account and submit the policy to the comptroller for review and
5-16 approval.
5-17 Section 2.04. PLAN OF OPERATION. (a) The association shall
5-18 submit to the commissioner for approval a plan of operation to
5-19 ensure the fair, reasonable, and equitable administration of the
5-20 Texas Workers' Compensation Insurance Facility Account within 30
5-21 days after the effective date of this Act.
5-22 (b) The commissioner shall approve or disapprove the
5-23 association's plan of operation of the Texas Workers' Compensation
5-24 Insurance Facility Account within 60 days after its receipt from
5-25 the association.
5-26 (c) If the commissioner does not approve the plan of
5-27 operation, the association shall submit to the commissioner a plan
6-1 of operation and any amendments necessary or suitable to ensure the
6-2 fair, reasonable, and equitable administration of the Texas
6-3 Workers' Compensation Insurance Facility Account. The plan of
6-4 operation and any amendments take effect on approval in writing by
6-5 the commissioner.
6-6 (d) If the association fails to submit suitable amendments
6-7 to the plan, the commissioner, after notice and hearing, shall
6-8 adopt reasonable rules as necessary or advisable to implement Part
6-9 2, Article 21.28-C, Insurance Code. Those rules shall continue in
6-10 force until modified by the commissioner or superseded by a plan
6-11 submitted by the association and approved by the commissioner.
6-12 Section 2.05. IMMUNITY, INDEMNIFICATION, LITIGATION AND
6-13 RELATED MATTERS. (a) In addition to all immunities and
6-14 protections provided elsewhere in Article 21.28-C, Insurance Code,
6-15 the association shall succeed to all rights, defenses, immunities
6-16 and liabilities of the facility in all litigation and all other
6-17 proceedings and causes of action pending by or against the facility
6-18 on September 1, 1997, or filed thereafter.
6-19 (b) The immunity provisions of Article 5.76-2, Section
6-20 2.05(h) and Section 2.12, Insurance Code shall continue to apply to
6-21 all acts or omissions before, on or after September 1, 1997, by the
6-22 persons or entities covered therein.
6-23 (c) In the event that any party institutes or continues any
6-24 action against the facility, or its Governing Committee, Executive
6-25 Director, member insurers (solely in their capacity as member
6-26 insurers), staff, agents, servants, attorneys, consultants or
6-27 employees, whether or not serving as such as of September 1, 1997,
7-1 in connection with, or arising from (1) the facility's operations
7-2 or (2) the transactions contemplated by this Act, the association
7-3 shall defend, indemnify and hold harmless such persons or entity
7-4 from liability for any action or omission taken in connection with,
7-5 or arising from the performance of their powers and duties on
7-6 behalf of the facility.
7-7 (d) The litigation, proceedings and causes of action
7-8 described in this section shall continue to be governed by and
7-9 conducted under this section and Article 5.76-2, Texas Insurance
7-10 Code and the applicable Bylaws, Rules and Regulations of the
7-11 facility, which are continued in effect for the purposes of this
7-12 section.
7-13 (Sections 2.06 through 2.99 reserved for expansion
7-14 SECTION 4. PRIVATIZATION OF THE TEXAS WORKERS' COMPENSATION
7-15 INSURANCE FACILITY ACCOUNT. Article 21.28-C, Insurance Code is
7-16 amended by adding the following after Part 2:
7-17 Part 3. Privatization of the Texas Workers' Compensation
7-18 Insurance Facility Account
7-19 Section 3.01. The association may enter into negotiations
7-20 for the privatization of all the assets, liabilities, and
7-21 obligations maintained in the Texas Workers' Compensation Insurance
7-22 Facility Account to a single insurer.
7-23 Section 3.02. If the association determines that
7-24 privatization under Section 3.01 is in the best interest of the
7-25 State of Texas, it shall get the written approval of the
7-26 commissioner before consummating the transaction.
7-27 Section 3.03. Any net proceeds from the privatization of the
8-1 Texas Workers' Compensation Insurance Facility Account shall be
8-2 rebated in accordance with Section 2.03 of Article 21.28-C,
8-3 Insurance Code.
8-4 Section 3.04. In the event that after privatization, the
8-5 insurer becomes an impaired insurer, any remaining facility claims
8-6 shall be covered claims within the meaning of Article 21.28-C,
8-7 Insurance Code.
8-8 SECTION 5. NO ASSIGNMENT. The association shall have full
8-9 authority to enforce the contract rights or statutory rights of the
8-10 facility under any servicing company agreements and nothing in this
8-11 Act shall be construed to be an assignment of the facility's rights
8-12 or obligations pursuant to such agreements.
8-13 SECTION 6. SEVERABILITY CLAUSE. If any provision of this
8-14 Act or the application thereof to any person or entity or
8-15 circumstance is held invalid by any court of competent
8-16 jurisdiction, such invalidity shall not affect other provisions or
8-17 applications of the Act which can be given effect without the
8-18 invalid provision or application, and to this end the provisions of
8-19 this Act are declared to be severable.
8-20 SECTION 7. CONTROLLING LAW. If a conflict exists between
8-21 this Act and any other statutory provision relating to the facility
8-22 or the association, this Act shall control.
8-23 SECTION 8. REPEALER. The following laws are repealed:
8-24 (a) Article 5.76-2, Insurance Code.
8-25 (b) Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Section
8-26 18.24(b), as amended by Acts 1993, 73rd Leg., ch. 885, Section 8.
8-27 (c) Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Section
9-1 18.24(b).
9-2 SECTION 9. SAVINGS CLAUSE. The repeal of Article 5.76-2,
9-3 Insurance Code made by this Act does not affect rights and
9-4 liabilities accruing before the effective date of this Act.
9-5 Article 5.76-2, Insurance Code is continued in effect to govern
9-6 such rights and liabilities.
9-7 SECTION 10. This Act takes effect September 1, 1997.
9-8 SECTION 11. The importance of this legislation and the
9-9 crowded condition of the calendars in both houses create an
9-10 emergency and an imperative public necessity that the
9-11 constitutional rule requiring bills to be read on three several
9-12 days in each house be suspended, and this rule is hereby suspended,
9-13 and that this Act take effect and be in force from and after its
9-14 passage, and it is so enacted.