75R12659 DLF-F By Gray, Smith H.B. No. 2700 Substitute the following for H.B. No. 2700: By Hilbert C.S.H.B. No. 2700 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the administrative review of class action lawsuits 1-3 involving insurers or related entities. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Article 1.10, Insurance Code, is amended by 1-6 adding Section 21 to read as follows: 1-7 21. ADMINISTRATION OF CLASS ACTION PROCEEDINGS. (a) A 1-8 plaintiff, on commencement of a lawsuit filed in a court of 1-9 competent jurisdiction of this state that is brought against an 1-10 insurer or other holder of a certificate of authority issued by the 1-11 department and that seeks procedural treatment as a class action, 1-12 shall notify the commissioner by certified mail, return receipt 1-13 requested, mailed not later than the 14th day after the date on 1-14 which the cause of action commences. The notice must include all 1-15 pertinent information concerning the lawsuit, including the court 1-16 and cause number, the identity of each party, the wrongdoing or 1-17 harm alleged, and the damages sought. Failure to give the notice 1-18 required by this subsection abates the lawsuit until the court 1-19 determines that proper notice has been given under this subsection. 1-20 Notice shall be considered proper if a copy of the original 1-21 pleadings are served on the commissioner or the commissioner's duly 1-22 appointed representative. 1-23 (b) The commissioner shall review each lawsuit filed in this 1-24 state as a class action proceeding with respect to which the 2-1 commissioner receives notice under this section and in which an 2-2 insurer or other holder of a certificate of authority issued by the 2-3 department is a party defendant. Pending this review by the 2-4 commissioner, and as provided by Subsection (c) of this section, a 2-5 pending cause of action shall be abated on the motion of the 2-6 commissioner for a period not to exceed 75 days if the motion to 2-7 abate is filed not later than the 30th day after the date notice is 2-8 received by the commissioner under Subsection (a) of this section. 2-9 (c) If, during the abatement period provided by Subsection 2-10 (b) of this section, the commissioner issues an order involving one 2-11 or more insurers or certificate holders that the court determines 2-12 results in full restitution to an affected class or subclass of 2-13 insureds, the class action, or an appropriate portion of the class 2-14 action, shall be dismissed for that affected class or subclass of 2-15 insureds as regards those insurers or certificate holders. That 2-16 dismissal is without prejudice to the refiling of an individual 2-17 lawsuit or claim concerning the same subject matter against those 2-18 insurers or certificate holders for any additional damages allowed 2-19 by law. 2-20 (d) If the commissioner issues an order that the court 2-21 determines results in full restitution to the affected insureds, 2-22 the court shall award as attorney's fees on behalf of the class to 2-23 be paid by the applicable insurers in an amount not less than 15 2-24 percent or more than 25 percent of the amount paid in restitution. 2-25 An award of attorney's fees under this subsection is in addition to 2-26 the amount ordered to be paid as restitution. 2-27 SECTION 2. This Act applies only to a lawsuit that is 3-1 commenced on or after the effective date of this Act. A lawsuit 3-2 that is commenced before the effective date of this Act is governed 3-3 by the law as it existed immediately before the effective date of 3-4 this Act, and that law is continued in effect for that purpose. 3-5 SECTION 3. This Act takes effect September 1, 1997. 3-6 SECTION 4. The importance of this legislation and the 3-7 crowded condition of the calendars in both houses create an 3-8 emergency and an imperative public necessity that the 3-9 constitutional rule requiring bills to be read on three several 3-10 days in each house be suspended, and this rule is hereby suspended.