By Hilbert                                            H.B. No. 3159

         75R2832 MCK-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to cancellation of certain contracts under the Health Spa

 1-3     Act.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 12(f), Health Spa Act (Article 5221l,

 1-6     Vernon's Texas Civil Statutes), is amended to read as follows:

 1-7           (f)  Each contract shall state in at least 10-point type that

 1-8     is boldfaced, capitalized, underlined, or otherwise set out from

 1-9     surrounding written material so as to be conspicuous:

1-10                 (1)  "NOTICE TO PURCHASER:  DO NOT SIGN THIS CONTRACT

1-11     UNTIL YOU READ IT OR IF IT CONTAINS BLANK SPACES."

1-12                 (2)  "IF YOU DECIDE YOU DO NOT WISH TO REMAIN A MEMBER

1-13     OF THIS HEALTH SPA, YOU MAY CANCEL THIS CONTRACT BY MAILING TO THE

1-14     HEALTH SPA BY MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DAY YOU

1-15     SIGN THIS CONTRACT A NOTICE STATING YOUR DESIRE TO CANCEL THIS

1-16     CONTRACT.  THE WRITTEN NOTICE MUST BE MAILED BY CERTIFIED MAIL TO

1-17     THE FOLLOWING ADDRESS:

1-18           (Address of the health spa home office)."

1-19                 (3)  "IF THE HEALTH SPA GOES OUT OF BUSINESS AND DOES

1-20     NOT PROVIDE FACILITIES WITHIN 10 MILES OF THE FACILITY IN WHICH YOU

1-21     ARE ENROLLED OR IF THE HEALTH SPA MOVES MORE THAN 10 MILES FROM THE

1-22     FACILITY IN WHICH YOU ARE ENROLLED, YOU MAY CANCEL THIS CONTRACT BY

1-23     MAILING A NOTICE TO THE HEALTH SPA STATING YOUR DESIRE TO CANCEL

1-24     THIS CONTRACT, ACCOMPANIED BY PROOF OF PAYMENT ON THE CONTRACT.

 2-1     THE WRITTEN NOTICE MUST BE MAILED BY CERTIFIED MAIL TO THE

 2-2     FOLLOWING ADDRESS:

 2-3           (Address of the health spa home office)."

 2-4     "YOU MAY ALSO BE ENTITLED TO FILE A CLAIM FOR A REFUND OF YOUR

 2-5     UNUSED MEMBERSHIP FEES AGAINST THE BOND OR OTHER SECURITY POSTED BY

 2-6     THE HEALTH SPA WITH THE TEXAS SECRETARY OF STATE.  TO MAKE A CLAIM

 2-7     AGAINST THE SECURITY SEND A COPY OF YOUR CONTRACT TOGETHER WITH

 2-8     PROOF OF PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY OF

 2-9     STATE.  THE WRITTEN NOTICE MUST BE MAILED BY CERTIFIED MAIL TO THE

2-10     FOLLOWING ADDRESS:

2-11                      OFFICE OF THE SECRETARY OF STATE

2-12                         STATUTORY DOCUMENTS SECTION

2-13                               P.O. BOX 12887

2-14                         AUSTIN, TEXAS 78711-2887." 

2-15                 (4)  "IF YOU DIE OR BECOME TOTALLY AND PERMANENTLY

2-16     DISABLED AFTER THE DATE THIS CONTRACT TAKES EFFECT, YOU OR YOUR

2-17     ESTATE MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF

2-18     YOUR UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH SPA

2-19     STATING YOUR DESIRE TO CANCEL THIS CONTRACT.  THE HEALTH SPA MAY

2-20     REQUIRE PROOF OF DISABILITY OR DEATH.  THE WRITTEN NOTICE MUST BE

2-21     MAILED BY CERTIFIED MAIL TO THE FOLLOWING ADDRESS:

2-22           (Address of the health spa home office)."

2-23                 (5)  "IF YOUR DOCTOR DETERMINES THAT YOU ARE ILL OR

2-24     INJURED TO THE EXTENT THAT IN YOUR DOCTOR'S OPINION YOU ARE UNABLE

2-25     TO USE THE FACILITIES AFTER THE DATE THIS CONTRACT TAKES EFFECT,

2-26     YOU MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF YOUR

2-27     UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH SPA STATING

 3-1     YOUR DESIRE TO CANCEL THIS CONTRACT.  THE HEALTH SPA MAY REQUIRE

 3-2     PROOF OF ILLNESS OR INJURY.  THE WRITTEN NOTICE MUST BE MAILED BY

 3-3     CERTIFIED MAIL TO THE FOLLOWING ADDRESS:

 3-4           (Address of the health spa home office)."

 3-5           SECTION 2.  Section 13, Health Spa Act (Article 5221l,

 3-6     Vernon's Texas Civil Statutes), is amended to read as follows:

 3-7           Sec. 13.  CANCELLATION OF CONTRACTS.  (a) A member may cancel

 3-8     a contract before the fourth business day after the date on which

 3-9     the contract is signed by notifying the health spa registrant of

3-10     the cancellation in writing.  Written notification is considered

3-11     given if the notification is mailed by certified mail to the home

3-12     office of the health spa registrant and postmarked not later than

3-13     midnight of the third business day.  The health spa registrant

3-14     shall refund all money paid to the purchaser exercising the right

3-15     to cancel.

3-16           (b)  A member may cancel a contract on written notice by

3-17     certified mail to the home office of the health spa registrant if

3-18     the health spa registrant goes out of business and fails to provide

3-19     facilities within 10 miles or moves its facilities more than 10

3-20     miles from the location in which the member is enrolled.  A member

3-21     may cancel a contract in the same manner if the health spa

3-22     registrant fails to provide advertised services.

3-23           (c)  A member may cancel a contract if the member's doctor

3-24     determines that the member is injured or ill to the extent that in

3-25     the doctor's opinion the member is unable to use the health spa

3-26     registrant's facilities to the benefit of the member.

3-27           (d)  A purchaser of a membership may cancel a contract if the

 4-1     member dies or becomes totally and permanently disabled after the

 4-2     date on which the contract takes effect.  The health spa registrant

 4-3     may require a purchaser or the purchaser's estate to provide

 4-4     reasonable proof of total and permanent disability or death.

 4-5           (e) [(d)]  If a purchaser or an estate elects to cancel a

 4-6     membership contract pursuant to Subsection (b), [or] (c), or (d) of

 4-7     this section the health spa registrant shall refund to the

 4-8     purchaser or the purchaser's estate any unearned sums paid under

 4-9     the contract. "Unearned sums" shall be calculated by multiplying

4-10     the gross monthly payment by the total of months remaining on a

4-11     contract at the time of cancellation minus any payments not made.

4-12     For the purposes of this section:

4-13                 (1)  The gross monthly payment shall be calculated by

4-14     determining the total of payments, including down payments and

4-15     initiation fees required by the contract, divided by the total

4-16     number of months in the term of the contract.

4-17                 (2)  The date of cancellation and the date of the

4-18     contract expiration shall be rounded to the nearest full month.

4-19     The total months remaining on the contract shall be calculated by

4-20     subtracting the date of cancellation from the expiration date of

4-21     the contract.  The result shall be expressed in whole months.

4-22           (f) [(e)]  A health spa registrant shall make a refund

4-23     required under this section before the 31st day after the date the

4-24     health spa  registrant receives the notice of cancellation

4-25     accompanied by proof of payment.  The receipt given to the

4-26     purchaser by the health spa at the time the purchaser made a

4-27     payment under the contract constitutes proof of payment.

 5-1           SECTION 3.  This Act takes effect September 1, 1997.

 5-2           SECTION 4.  The importance of this legislation and the

 5-3     crowded condition of the calendars in both houses create an

 5-4     emergency and an imperative public necessity that the

 5-5     constitutional rule requiring bills to be read on three several

 5-6     days in each house be suspended, and this rule is hereby suspended.