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.