Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Place H.B. No. 3347
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to actions against certain insurers for wrongful failure
1-3 to settle a health care liability claim.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The Medical Liability Insurance Improvement Act
1-6 of Texas (Article 4590i, Vernon's Texas Civil Statutes) is amended
1-7 by adding Subchapter Q to read as follows:
1-8 SUBCHAPTER Q. ACTIONS AGAINST INSURERS FOR WRONGFUL FAILURE TO
1-9 SETTLE A HEALTH CARE LIABILITY CLAIM
1-10 Sec. 17.01. DEFINITIONS. In this subchapter:
1-11 (1) "Insurer" means any insurer who issues to a
1-12 physician or health care provider a policy that provides liability
1-13 insurance coverage for a health care liability claim or other
1-14 medical professional liability coverage. The term includes:
1-15 (A) the Texas Medical Liability Insurance
1-16 Underwriting Association established under Article 21.49-3,
1-17 Insurance Code;
1-18 (B) a self-insured trust established under
1-19 Article 21.49-4, Insurance Code;
1-20 (C) an institution of higher education that
1-21 provides health care liability or medical professional liability
1-22 coverage under Chapter 59, Education Code; and
1-23 (D) a medical professional liability fund
1-24 created under Chapter 59.02, Education Code.
2-1 (2) "Wrongful failure to settle," as applied to a
2-2 health care liability claim, means:
2-3 (A) a failure, however characterized, by an
2-4 insurer to exercise that degree of care and diligence that an
2-5 ordinarily prudent person would exercise in the person's own
2-6 business in responding, or participating in responding, to an offer
2-7 to settle the health care liability claim;
2-8 (B) a bad faith breach, however characterized,
2-9 of the insurer's duty to a physician or health care provider of
2-10 good faith and fair dealing in responding, or participating in
2-11 responding, to an offer to settle the health care liability claim;
2-12 (C) a violation, however characterized, of the
2-13 Deceptive Trade Practices-Consumer Protection Act (Subchapter E,
2-14 Chapter 17, Business & Commerce Code) relating to responding, or
2-15 participating in responding, to an offer to settle the health care
2-16 liability claim;
2-17 (D) a violation, however characterized, of
2-18 Article 21.21, Insurance Code, or any rule adopted under the
2-19 Insurance Code, or another Insurance law of this state, relating to
2-20 responding, or participating in responding, to an offer to settle
2-21 the health care liability claim; or
2-22 (E) any other failure to settle the claim that
2-23 is alleged to have resulted from a breach or violation of another
2-24 legal standard or theory, under a statutory provision or otherwise,
2-25 relating to responding, or participating in responding, to an offer
2-26 to settle the health care liability claim.
2-27 Sec. 17.02. APPLICABILITY. This subchapter applies to any
2-28 cause of action, however characterized, against an insurer for
2-29 damages to a physician or health care provider arising from the
2-30 insurer's wrongful failure to settle a health care liability claim
3-1 against the physician or health care provider, if the wrongful
3-2 failure to settle the claim results in a judgment against the
3-3 physician or health care provider on the claim in an amount in
3-4 excess of the liability insurance coverage available to the
3-5 physician or health care provider for the claim.
3-6 Sec. 17.03. PREREQUISITES TO INSURER LIABILITY. (a) An
3-7 insurer is not liable for damages to a physician or health care
3-8 provider arising from the insurer's wrongful failure to settle a
3-9 health care liability claim against the physician or health care
3-10 provider unless, in addition to or as a part of the elements
3-11 required by other applicable law, each of the following is
3-12 established:
3-13 (1) coverage was available under the insurer's policy
3-14 for the health care liability claim with respect to which it is
3-15 alleged that there was a wrongful failure to settle on the part of
3-16 the insurer;
3-17 (2) the person asserting the health care liability
3-18 claim made an unconditional offer in writing to release the
3-19 physician or health care provider from all liability for the claim
3-20 in exchange for a settlement amount, and the settlement amount, or
3-21 the portion of the settlement amount that was to have been paid by
3-22 the insurer, was within the limits of the coverage available for
3-23 the claim under the insurer's policy to the physician or health
3-24 care provider;
3-25 (3) the settlement offer described in Subdivision (2)
3-26 of this subsection provided that the offer would remain open for
3-27 acceptance for a period of time that complies with the periods
3-28 established by Subsection (b) of this section; and
3-29 (4) a final judgment was entered against the physician
3-30 or health care provider on the health care liability claim for an
4-1 amount in excess of the limits of the liability insurance coverage
4-2 available to the physician or health care provider for the claim.
4-3 (b) To satisfy the requirement of Subsection (a)(3) of this
4-4 section, the settlement offer must provide that the offer would
4-5 remain open for acceptance:
4-6 (1) if the offer is made more than 180 days before the
4-7 date of the commencement of a trial of an action filed on the
4-8 health care liability claim to which the offer related, until the
4-9 181st day after the date of the offer; or
4-10 (2) if the offer is made on or after the 180th day
4-11 before the commencement of trial, for a period of time that is:
4-12 (A) agreed to by all interested parties,
4-13 including the person who made the offer and the insurer; or
4-14 (B) determined, on motion and hearing, by the
4-15 court in which action on the claim was pending.
4-16 Sec. 17.04. STANDING TO SUE. (a) Except as provided in
4-17 Subsection (b) of this section, only the insured physician or
4-18 health care provider may sue an insurer for damages arising from a
4-19 wrongful failure to settle a health care liability claim.
4-20 (b) The insured physician or health care provider may assign
4-21 to any person a cause of action against an insurer for damages to
4-22 the physician or health care provider arising from an insurer's
4-23 wrongful failure to settle a health care liability claim.
4-24 Sec. 17.05. NO EFFECT ON LIABILITY LIMITS. The damages that
4-25 are or may be recovered in an action against an insurer for damages
4-26 arising from the insurer's wrongful failure to settle a health care
4-27 liability claim may not operate to increase any limit of liability
4-28 that applies to the health care liability claim under Subchapter K
4-29 of this Act or any other law.
4-30 Sec. 17.06. REFUSAL OF INSURED TO SETTLE. In an action
5-1 against an insurer for wrongful failure to settle a health care
5-2 liability claim, an offer to settle the health care liability claim
5-3 cannot be used to satisfy the offer requirement in Section
5-4 17.03(a)(2) of this Act if:
5-5 (1) the insurer's policy requires that the insured
5-6 physician or health care provider consent to any settlement under
5-7 the policy, and the physician or health care provider refuses to
5-8 consent to the offer; or
5-9 (2) the physician or health care provider requests in
5-10 writing that the insurer reject any settlement offer of more than a
5-11 specified amount or of a specified kind, the offer if of more than
5-12 the specified amount or is of the specified kind, and the insurer
5-13 rejects the offer on the basis of the request.
5-14 Sec. 17.07. LIMITATIONS. The statute of limitations that
5-15 applies to a cause of action against an insurer to which this
5-16 subchapter applies begins running on the date that the judgment on
5-17 the health care liability claim involved in the action, including
5-18 any appeal from the judgment, becomes final.
5-19 Sec. 17.08. OFFER OF INDEMNITY. An insurer is not liable
5-20 for damages for a wrongful failure to settle a health care
5-21 liability claim if, before the date on which the period of time for
5-22 appealing from a judgment on the claim that satisfies the
5-23 requirement of Section 17.03(a)(4) of this Act expires and before
5-24 any assignment that satisfies the requirement of Section 17.04(b)
5-25 of this Act, the insurer offers in writing a complete indemnity to
5-26 the physician or health care provider for:
5-27 (1) the judgment of the claim; and
5-28 (2) reasonable attorney's fees, expert witness fees,
5-29 deposition and other expenses, and court costs that have been
5-30 incurred by the physician or health care provider as a result of
6-1 the insurer's wrongful failure to settle the claim.
6-2 Sec. 17.09. CONFLICT OF LAWS. In an action to which this
6-3 subchapter applies, the provisions of this subchapter prevail over
6-4 all other laws to the extent of the conflict.
6-5 SECTION 2. The importance of this legislation and the
6-6 crowded condition of the calendars in both houses create an
6-7 emergency and an imperative public necessity that the
6-8 constitutional rule requiring bills to be read on three several
6-9 days in each house be suspended, and this rule is hereby suspended,
6-10 and that this Act take effect and be in force from and after its
6-11 passage, and it is so enacted.