1-1 By: Brimer (Senate Sponsor - Fraser) H.B. No. 542
1-2 (In the Senate - Received from the House April 21, 1999;
1-3 April 22, 1999, read first time and referred to Committee on
1-4 Economic Development; May 14, 1999, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 6, Nays
1-6 0; May 14, 1999, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 542 By: Fraser
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the board of directors of the Texas Workers'
1-11 Compensation Insurance Fund and to the operation of certain
1-12 programs of that fund.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Section 3, Article 5.76-3, Insurance Code, is
1-15 amended to read as follows:
1-16 Sec. 3. BOARD OF DIRECTORS. (a) The fund is governed by a
1-17 board of directors composed of nine members, all of whom shall be
1-18 citizens of this state. The members shall be appointed by the
1-19 governor with the advice and consent of the senate, and vacancies
1-20 shall be filled in the same manner.
1-21 (b) The members of the board of directors serve staggered
1-22 six-year terms, with the terms of three members expiring February 1
1-23 of each odd-numbered year. A member of the board whose term has
1-24 expired shall continue to serve until the member's replacement is
1-25 appointed by the governor.
1-26 [(b) Except as provided by Subsection (c) of this section,
1-27 to be eligible for appointment as a member of the board a person
1-28 must be a policyholder of the fund or an officer or employee of a
1-29 policyholder and must maintain that status during the period of
1-30 service on the board. Failure to maintain that status disqualifies
1-31 the board member and creates a vacancy on the board.]
1-32 (c) [The initial appointees to the board must be employers
1-33 in this state.]
1-34 [(d)] In making appointments to the board, the governor
1-35 shall attempt to reflect the social, geographic, and economic
1-36 diversity of the state. To ensure balanced representation, the
1-37 governor may consider the geographic location of a prospective
1-38 appointee's domicile and the prospective appointee's experience in
1-39 business and insurance matters and shall consider those factors in
1-40 appointing members to fill vacancies on the board. Appointments to
1-41 the board shall be made without regard to the race, color,
1-42 disability, sex, religion, age, or national origin of the
1-43 appointees.
1-44 (d) [(e)] A person may not serve as a member of the board if
1-45 the person, an individual related to the person within the second
1-46 degree by consanguinity or affinity, or an individual residing in
1-47 the same household with the person:
1-48 (1) is required to be registered or licensed under
1-49 this code;
1-50 (2) is employed by or acts as a consultant to a person
1-51 required to be registered or licensed under this code;
1-52 (3) owns, controls, has a financial interest in, or
1-53 participates in the management of an organization required to be
1-54 registered or licensed under this code;
1-55 (4) receives a substantial tangible benefit from the
1-56 fund or the Texas Department of Insurance; or
1-57 (5) is an officer, employee, or consultant of an
1-58 association in the field of insurance.
1-59 (e) [(f)] It is a ground for removal from the board if a
1-60 member:
1-61 (1) does not have at the time of appointment the
1-62 qualifications required by [Subsection (b) of] this section;
1-63 (2) does not maintain during service on the board the
1-64 qualifications required by [Subsection (b) of] this section;
2-1 (3) cannot because of illness or disability discharge
2-2 the member's duties for a substantial part of the term for which
2-3 the member is appointed; or
2-4 (4) is absent from more than half of the regularly
2-5 scheduled board meetings that the member is eligible to attend
2-6 during a calendar year.
2-7 (f) [(g)] The validity of an action of the board is not
2-8 affected by the fact that it is taken when a ground for removal of
2-9 a board member exists.
2-10 (g) [(h)] If the president has knowledge that a potential
2-11 ground for removal exists, the president shall notify the chairman
2-12 of the board of the potential ground. The chairman shall then
2-13 notify the governor and the attorney general that a potential
2-14 ground for removal exists. If the potential ground for removal
2-15 involves the chairman, the president shall notify the next highest
2-16 officer of the board, who shall notify the governor and the
2-17 attorney general that a potential ground for removal exists.
2-18 (h) [(i)] Subsection (d) [(e)] of this section does not
2-19 prohibit a person who is only a consumer of insurance or insurance
2-20 products from serving as a member of the board.
2-21 (i) [(j)] A person who is ineligible to serve on the board
2-22 under Subsection (d) [(e)] of this section may not serve as a
2-23 member of the board for one year after the date on which the
2-24 condition that makes the person ineligible ends.
2-25 (j) [(k)] Each member shall receive actual and necessary
2-26 travel expenses and expenses incurred in the performance of the
2-27 member's duties as a member.
2-28 (k) [(l)] The governor shall designate a member of the board
2-29 as the chairman of the board to serve in that capacity at the
2-30 pleasure of the governor. The members of the board shall elect
2-31 annually from their number a vice-chairman and a secretary.
2-32 (l) [(m)] The board shall hold meetings at least once each
2-33 calendar quarter and at other times at the call of the chairman and
2-34 at times established by board rule. Special meetings may be called
2-35 by any two members of the board on two days notice.
2-36 (m) [(n)] A majority of the board members constitutes a
2-37 quorum.
2-38 (n) [(o)] The board shall maintain the principal office of
2-39 the fund in Austin, Texas.
2-40 (o) [(p)] For cost control purposes and as is determined to
2-41 be cost-effective, as many functions as possible shall be performed
2-42 by the fund.
2-43 (p) [(q)] A person may not serve as a member of the board or
2-44 act as the general counsel to the board or the fund if the person
2-45 is required to register as a lobbyist under Chapter 305, Government
2-46 Code, because of the person's activities for compensation on behalf
2-47 of any person or entity other than the fund.
2-48 (q) [(r)] The board shall develop and implement policies
2-49 that clearly separate the policymaking responsibilities of the
2-50 board and the management responsibilities of the president and the
2-51 staff of the fund.
2-52 SECTION 2. Section 9(c), Article 5.76-3, Insurance Code, is
2-53 amended to read as follows:
2-54 (c) Notwithstanding any other provision of this code or any
2-55 other insurance law of this state [article], the fund may establish
2-56 multitiered [premium] systems to price [provide] workers'
2-57 compensation insurance policies to insureds in its competitive
2-58 programs as well as to insureds whose policies are offered pursuant
2-59 to Article 5.76-4 of this code [who would not otherwise meet the
2-60 fund's underwriting standards]. Those multitiered systems shall be
2-61 filed in accordance with Article 5.55 of this code. The systems
2-62 may provide for higher or lower premium payments by insureds based
2-63 on the fund's evaluation of the underwriting characteristics of the
2-64 individual risk and the appropriate premium to be charged for the
2-65 policy coverages [insureds who present higher than normal risks
2-66 within a class].
2-67 SECTION 3. The importance of this legislation and the
2-68 crowded condition of the calendars in both houses create an
2-69 emergency and an imperative public necessity that the
3-1 constitutional rule requiring bills to be read on three several
3-2 days in each house be suspended, and this rule is hereby suspended,
3-3 and that this Act take effect and be in force from and after its
3-4 passage, and it is so enacted.
3-5 * * * * *