1-1     By:  Brimer (Senate Sponsor - Armbrister)              H.B. No. 976

 1-2           (In the Senate - Received from the House April 21, 1997;

 1-3     April 22, 1997, read first time and referred to Committee on

 1-4     Economic Development; May 12, 1997, reported favorably, as amended,

 1-5     by the following vote:  Yeas 9, Nays 0; May 12, 1997, sent to

 1-6     printer.)

 1-7     COMMITTEE AMENDMENT NO. 1                                 By:  Cain

 1-8     Amend House Bill 976 as follows:

 1-9           In SECTION 1 of the bill, amending the Texas Property and

1-10     Casualty Insurance Guaranty Act (Article 21.28-C, Insurance Code),

1-11     in proposed Section 26, by striking subsection (l) and inserting

1-12     the following in lieu thereof:

1-13           (l)  The association may invest Texas workers' compensation

1-14     insurance facility account funds in the types of investments

1-15     authorized by law for an insurer authorized to write workers'

1-16     compensation insurance coverage in this state.  The association

1-17     shall develop an investment policy for the Texas workers'

1-18     compensation insurance facility account and shall submit that

1-19     policy to the comptroller for review and approval.

1-20                            A BILL TO BE ENTITLED

1-21                                   AN ACT

1-22     relating to the abolition of the Texas Workers' Compensation

1-23     Insurance Facility and the transfer of the assets and liabilities

1-24     of that facility.

1-25           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-26           SECTION 1.  The Texas Property and Casualty Insurance

1-27     Guaranty Act (Article 21.28-C, Insurance Code) is amended by adding

1-28     Section 26 to read as follows:

1-29           Sec. 26.  TRANSFER OF FACILITY TO ASSOCIATION.  (a)  The

1-30     purpose of this section is to:

1-31                 (1)  provide a means for the transfer of control of the

1-32     assets, liabilities, and obligations of the Texas workers'

1-33     compensation insurance facility to the Texas Property and Casualty

1-34     Insurance Guaranty Association; and

1-35                 (2)  ensure that the association has full authority to

1-36     enforce the rights of the facility without limitation, except as

1-37     expressly provided by this section.

1-38           (b)  In addition to the definitions under Section 5 of this

1-39     Act, in this section:

1-40                 (1)  "Comptroller" means the Texas comptroller of

1-41     public accounts.

1-42                 (2)  "Facility" means the Texas workers' compensation

1-43     insurance facility.

1-44                 (3)  "Fund" means the Texas Workers' Compensation

1-45     Insurance Fund.

1-46                 (4)  "Insurer" means an insurance company licensed to

1-47     do business in this state.

1-48                 (5)  "Texas workers' compensation insurance facility

1-49     account" means the account maintained by the association for the

1-50     assets of the facility.

1-51           (c)  The association shall take control of the facility's

1-52     assets, liabilities, and obligations and may administer all of the

1-53     remaining aspects of the facility's operation.  The association has

1-54     full authority to enforce the contract or statutory rights of the

1-55     facility under any servicing company agreements. This section may

1-56     not be construed to be an assignment of the facility's rights or

1-57     obligations under those agreements.

1-58           (d)  The association shall maintain the Texas workers'

1-59     compensation insurance facility account separately from the

1-60     association's accounts described by Section 6 of this Act.  Each

1-61     claim, expense, or other liability related to the assets,

1-62     liabilities, and obligations of the facility shall be paid from,

1-63     and all collections and receipts shall be deposited into, the Texas

1-64     workers' compensation insurance facility account. Funds in the

 2-1     Texas workers' compensation insurance facility account shall be

 2-2     maintained outside the state treasury.

 2-3           (e)  Not later than June 1 of each year, the association

 2-4     shall report its operating results for the Texas workers'

 2-5     compensation insurance facility account to the commissioner on a

 2-6     calendar year premium and an accident year loss basis.

 2-7           (f)  For a claim in which the compensable injury occurred

 2-8     before January 1, 1992, the association shall compute at least

 2-9     annually its results for incurred losses in the Texas workers'

2-10     compensation insurance facility account, including incurred but not

2-11     reported losses, by accident year.  If there is a deficit or

2-12     surplus from the operation of the Texas workers' compensation

2-13     insurance facility account for those claims, the amount of the

2-14     deficit or surplus shall be assessed or rebated to the member

2-15     insurers licensed in this state who were members of the facility

2-16     during the calendar year.  Each member insurer shall pay a

2-17     proportionate share of the total assessment or receive a

2-18     proportionate share of the total rebate based on that insurer's

2-19     portion of the total voluntary workers' compensation insurance

2-20     writings during the calendar year. The fund is not liable for any

2-21     deficit incurred on a policy with an effective date before January

2-22     1, 1992.

2-23           (g)  For claims with an accident date on or after January 1,

2-24     1992, the association shall compute at least annually its results

2-25     for incurred losses in the Texas workers' compensation insurance

2-26     facility account, including incurred but not reported losses, by

2-27     accident year.  If there is a deficit or surplus from operation of

2-28     the Texas workers' compensation insurance facility account for

2-29     those claims, the amount of the deficit or surplus shall be

2-30     assessed or rebated to the member insurers licensed in this state

2-31     who were members of the facility during the calendar year and to

2-32     the fund.  Each member insurer and the fund shall pay a

2-33     proportionate share of the total assessment or receive a

2-34     proportionate share of the total rebate based on its portion of the

2-35     total voluntary workers' compensation insurance writings during the

2-36     calendar year.

2-37           (h)  The association may provide for the redistribution of

2-38     all or part of an assessment that would otherwise be levied on a

2-39     member insurer under Subsection (f) or (g) of this section if the

2-40     member insurer is unable to pay the full assessment because the

2-41     member insurer is in liquidation at the time of the assessment.

2-42           (i)  The association may authorize the deferment of the

2-43     payment of an assessment made under Subsection (f) or (g) of this

2-44     section.  A deferment may be allowed only if the cash flow of the

2-45     Texas workers' compensation insurance facility account is adequate

2-46     to meet all needs.

2-47           (j)  If a member insurer or the fund elects to defer any

2-48     portion of an assessment as provided by this section, the entire

2-49     unpaid portion of the assessment and any accrued interest must be

2-50     shown as a liability on each financial and annual statement of that

2-51     insurer.

2-52           (k)  A member insurer may not be allowed a credit against any

2-53     tax levied by this state as a result of an assessment paid under

2-54     this section.

2-55           (l)  The association may invest Texas workers' compensation

2-56     insurance facility account funds only in investments authorized for

2-57     the investment of state funds as provided by Chapter 404,

2-58     Government Code.  The association shall develop an investment

2-59     policy for the Texas workers' compensation insurance facility

2-60     account and shall submit that policy to the comptroller for review

2-61     and approval.

2-62           (m)  The association shall submit to the commissioner for

2-63     approval a plan of operation to ensure the fair, reasonable, and

2-64     equitable administration of the Texas workers' compensation

2-65     insurance facility account not later than October 1, 1997.  The

2-66     commissioner shall approve or disapprove the association's plan of

2-67     operation of the Texas workers' compensation insurance facility

2-68     account not later than the 60th day after the date on which the

2-69     association submits the plan to the commissioner.

 3-1           (n)  If the commissioner does not approve the plan of

 3-2     operation, the association shall submit to the commissioner an

 3-3     amended plan of operation with any amendments necessary or suitable

 3-4     to ensure the fair, reasonable, and equitable administration of the

 3-5     Texas workers' compensation insurance facility account.  The plan

 3-6     of operation and any amendments take effect on approval in writing

 3-7     by the commissioner.  If the association fails to submit suitable

 3-8     amendments to the plan, the commissioner, after notice and hearing,

 3-9     shall adopt reasonable rules as necessary or advisable to implement

3-10     this section.  Those rules shall continue in force until modified

3-11     by the commissioner or superseded by a plan submitted by the

3-12     association and approved by the commissioner.

3-13           (o)  In addition to all immunities and protections otherwise

3-14     provided by this article, the association succeeds to all rights,

3-15     defenses, immunities, and liabilities of the facility in each cause

3-16     of action or other proceeding pending by or against the facility on

3-17     September 1, 1997, or filed after that date.  The immunity

3-18     provisions of Sections 2.05(h) and 2.12, Article 5.76-2 of this

3-19     code, as those provisions existed before their repeal, continue to

3-20     apply to each act or omission that occurs before, on, or after

3-21     September 1, 1997, and that is performed by the persons or entities

3-22     covered by those provisions.

3-23           (p)  If any party institutes or continues an action against

3-24     the facility, the governing committee of the facility, the

3-25     executive director of the facility, a member insurer solely in that

3-26     insurer's capacity as a member insurer, or an agent, servant,

3-27     attorney, consultant, or employee of the facility, whether or not

3-28     serving in that capacity on September 1, 1997, in connection with

3-29     or arising from either the facility's operations or  the

3-30     transactions contemplated by this section, the association shall

3-31     defend, indemnify, and hold harmless that person or entity from

3-32     liability for any act or omission of that person or entity in

3-33     connection with, or arising from the performance of, the person's

3-34     or entity's powers and duties on behalf of the facility.  A cause

3-35     of action or other proceeding described by this subsection shall

3-36     continue to be governed by and conducted under this section and

3-37     Article 5.76-2 of this code, as that article existed before its

3-38     repeal, and the applicable bylaws, rules, and regulations of the

3-39     facility, and those provisions are continued in effect for the

3-40     purposes of this section.

3-41           (q)  The association may enter into negotiations for the

3-42     privatization to a single insurer of all the assets, liabilities,

3-43     and obligations maintained in the Texas workers' compensation

3-44     insurance facility account.  If the association determines that

3-45     privatization under this subsection is in the best interest of this

3-46     state, the association shall obtain the written approval of the

3-47     commissioner before entering into a privatization agreement to

3-48     consummate the applicable transaction.

3-49           (r)  Any net proceeds from the privatization of the Texas

3-50     workers' compensation insurance facility account shall be rebated

3-51     in accordance with Subsection (g) of this section.

3-52           (s)  If an insurer that assumes the assets, liabilities, and

3-53     obligations maintained in the Texas workers' compensation insurance

3-54     facility account under a privatization agreement approved under

3-55     Subsection (q) of this section becomes an impaired insurer after

3-56     that privatization agreement takes effect, any remaining facility

3-57     claims shall be covered claims under this article.

3-58           (t)  If a conflict exists between this section and any other

3-59     statute relating to the facility or the association, this section

3-60     controls.

3-61           SECTION 2.  Except as otherwise provided by this Act, the

3-62     following laws are repealed on the effective date of this Act:

3-63                 (1)  Article 5.76-2, Insurance Code; and

3-64                 (2)  Section 18.24(b), Chapter 12, Acts of the 72nd

3-65     Legislature, 2nd Called Session, 1991, as amended by Section 8,

3-66     Chapter 885, Acts of the 73rd Legislature, Regular Session, 1993.

3-67           SECTION 3.  If any provision of this Act or the application

3-68     of this Act to any person or entity or circumstance is held invalid

3-69     by a court of competent jurisdiction, that invalidity does not

 4-1     affect other provisions or applications of this Act that can be

 4-2     given effect without the invalid provision or application, and to

 4-3     this end the provisions of this Act are declared to be severable.

 4-4           SECTION 4.  The repeal of Article 5.76-2, Insurance Code,

 4-5     under Section 2 of this Act does not affect rights and liabilities

 4-6     accruing under that article before the effective date of this Act,

 4-7     and that article is continued in effect for that purpose and for

 4-8     the purposes expressly provided by Section 26, Texas Property and

 4-9     Casualty Insurance Guaranty Act (Article 21.28-C, Insurance Code),

4-10     as added by this Act.

4-11           SECTION 5.  The importance of this legislation and the

4-12     crowded condition of the calendars in both houses create an

4-13     emergency and an imperative public necessity that the

4-14     constitutional rule requiring bills to be read on three several

4-15     days in each house be suspended, and this rule is hereby suspended,

4-16     and that this Act take effect and be in force from and after its

4-17     passage, and it is so enacted.

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