By Burnam                                             H.B. No. 1613
         76R6181 DB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the repair of a motor vehicle under an insurance
 1-3     policy.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Article 5.07-1, Insurance Code, is amended to
 1-6     read as follows:
 1-7           Art. 5.07-1.  REPAIR OF MOTOR VEHICLES;  DISCLOSURE OF
 1-8     CONSUMER INFORMATION.  (a)  Except as provided by rules duly
 1-9     adopted by the commissioner, under an auto insurance policy that is
1-10     delivered, issued for delivery, or renewed in this state a person
1-11     subject to this article [an insurer] may not, directly or
1-12     indirectly, limit its coverage under a policy covering damage to a
1-13     motor vehicle or limit its liability for a third-party claimant's
1-14     property repairs:
1-15                 (1)  by recommending or requiring:
1-16                       (A)  a particular [by specifying the] brand,
1-17     type, kind, age, vendor, supplier, or condition of the parts or
1-18     products that may be used to repair the motor vehicle; or
1-19                       (B)  a particular quantity of products and
1-20     materials that may be used to repair the motor vehicle; or
1-21                 (2)  by limiting the beneficiary of the policy from
1-22     selecting a repair person or facility to repair damage to the motor
1-23     vehicle covered  under the policy.
1-24           (b)  In connection with the repair of damage to a motor
 2-1     vehicle covered under an auto insurance policy, a person subject to
 2-2     this article [an insurer, an employee of an insurer, an agent of an
 2-3     insurer, a solicitor of insurance for an insurer, an insurance
 2-4     adjuster, or an entity that employs an insurance adjuster] may not:
 2-5                 (1)  solicit or accept a referral fee, [or] gratuity,
 2-6     or other form of compensation in exchange for referring a
 2-7     beneficiary or third-party claimant to a repair person or facility
 2-8     to repair the damage;
 2-9                 (2)  communicate [state or suggest, either orally or in
2-10     writing,] to a beneficiary that, for the damage repair or parts
2-11     replacement to be covered by the policy, a beneficiary is required
2-12     to use, or that the person recommends or prefers that the
2-13     beneficiary use:
2-14                       (A)  a specific repair person or facility; or
2-15                       (B)  a specific repair person or facility
2-16     identified on a [preferred] list of repair persons and facilities
2-17     maintained by or compiled by a person subject to this article [an
2-18     insurer must be used by a beneficiary in order for the damage
2-19     repair or parts replacement to be covered by the policy]; [or]
2-20                 (3)  restrict a beneficiary's or third-party claimant's
2-21     right to choose a repair person or facility:
2-22                       (A)  by requiring the beneficiary or third-party
2-23     claimant to travel an unreasonable distance to repair the damage;
2-24     or
2-25                       (B)  by threatening to remove the beneficiary's
2-26     or claimant's motor vehicle from a repair person or facility
2-27     selected by the beneficiary or claimant for any reason; or
 3-1                 (4)  communicate to a beneficiary or a third-party
 3-2     claimant that:
 3-3                       (A)  repair work is guaranteed by a person other
 3-4     than the person or facility that performs the damage repairs; or
 3-5                       (B)  alternative direct billed transportation
 3-6     coverage is allowed following the filing of a claim only if the
 3-7     damaged motor vehicle is repaired by a repair person or facility
 3-8     selected by the insurer or an agent of the insurer.
 3-9           (c)  [A contract between an insurer and a repair person or
3-10     facility, including an agreement under which the repair person or
3-11     facility agrees to extend discounts for parts or labor to the
3-12     insurer in exchange for referrals by the insurer, may not result in
3-13     a reduction of coverage under the insured's auto insurance policy.]
3-14           [(d)]  A person subject to this article [An insurer] may not
3-15     prohibit a repair person or facility from providing a beneficiary
3-16     or third-party claimant with any information relative to the damage
3-17     repairs of the beneficiary or the claimant [that states the
3-18     description, manufacturer, or source of the parts used and the
3-19     amounts charged to the insurer for the parts and related labor].
3-20           (d) [(e)]  At the time the vehicle is presented to a person
3-21     subject to this article [an insurer or an insurance adjuster or
3-22     other person in connection with a claim for damage repair], the
3-23     [insurer or insurance adjuster or other] person shall provide to
3-24     the beneficiary or  third-party claimant notice of the provisions
3-25     of this article.  The commissioner shall adopt a rule establishing
3-26     the method or methods insurers shall use to comply with the notice
3-27     provisions in this subsection.
 4-1           (e) [(f)]  Any beneficiary, third-party claimant, consumer
 4-2     group, representative of a consumer, [or] repair person, or
 4-3     facility may submit a written, documented complaint to the
 4-4     department with respect to an alleged violation of this article.
 4-5           (f) [(g)]  In the settlement of liability claims by a third
 4-6     party against an insured for property damage claimed by the third
 4-7     party, a person subject to this article [an insurer] may not
 4-8     communicate to a third-party claimant that, in order for repairs to
 4-9     be covered, the claimant is required to use, or that a person
4-10     subject to this article recommends or prefers that the claimant
4-11     use:
4-12                 (1)  a specific [require the third-party claimant to
4-13     have repairs made by a particular] repair person or facility; [or]
4-14                 (2)  a specific repair person or facility identified on
4-15     a list of repair persons and facilities maintained by or compiled
4-16     by a person subject to this article;
4-17                 (3)  [to use] a particular brand, type, kind, age,
4-18     vendor, supplier, or condition of parts or products; or
4-19                 (4)  a particular quantity of products and materials.
4-20           [(h)  The commissioner may exercise the rule-making authority
4-21     under Article 21.21-2 of this code with respect to any fraudulent
4-22     activity of any party to an agreement described by Subsection (c)
4-23     of this article.]
4-24           (g) [(i)]  Any rules adopted by the commissioner to implement
4-25     this article shall include, but not be limited to, requirements
4-26     that:
4-27                 (1)  any limitation described in Subsection (a) of this
 5-1     section is clearly and prominently displayed on the face of the
 5-2     policy or certificate in lieu of a policy; and
 5-3                 (2)  the insured give written consent to such a
 5-4     limitation, following both oral and written notification of any
 5-5     limitation at the time the policy is purchased.
 5-6           (h)  A person subject to this article who uses or references
 5-7     survey  data to directly or indirectly influence persons engaged in
 5-8     collision repair, policy holders, or third-party claimants with
 5-9     respect to charges for labor, parts, or other items used in the
5-10     repair of collision damage shall:
5-11                 (1)  ensure that the survey data was obtained by
5-12     statistically sound survey and research methods;
5-13                 (2)  publish a report that:
5-14                       (A)  contains the complete and factual criteria
5-15     used for the survey; and
5-16                       (B)  divides the results of the survey by each
5-17     market surveyed; and
5-18                 (3)  provide a copy of the report to the commissioner
5-19     and  each person surveyed.
5-20           (i)  This article applies to:
5-21                 (1)  an insurer;
5-22                 (2)  an insurance holding company;
5-23                 (3)  an investment vehicle to which an insurer belongs;
5-24                 (4)  an affiliate corporation of an insurer;
5-25                 (5)  a person described by Subdivisions (1) through (4)
5-26     of this subsection who owns, controls, or has a significant
5-27     interest in the business of a person who is engaged in the
 6-1     collision repair of motor vehicles;
 6-2                 (6)  an employee or agent of a person described by
 6-3     Subdivisions (1) through (4) of this subsection;
 6-4                 (7)  a solicitor of insurance for a person described by
 6-5     Subdivisions (1) through (4) of this subsection;
 6-6                 (8)  a person who is directly or indirectly controlled
 6-7     by a person described by Subdivisions (1) through (4) of this
 6-8     subsection, either contractually or by other means;
 6-9                 (9)  an insurance adjuster or a person who employs an
6-10     insurance adjuster; or
6-11                 (10)  an appraiser.
6-12           (j)  A person commits an unfair and deceptive act or practice
6-13     in the business of insurance if the person violates Subsection (b)
6-14     of this article and is subject to each penalty or other sanction
6-15     provided by Article 21.21 of this code for that violation.
6-16           (k)  In this article:
6-17                 (1)  "Communicate" means to infer, imply, or state a
6-18     proposition or idea, either directly or indirectly, orally or in
6-19     writing.
6-20                 (2)  "Survey data" means data that:
6-21                       (A)  results from a survey, evaluation, or other
6-22     determination of market pricing for:
6-23                             (i)  labor, parts, or other items relating
6-24     to collision repair of a motor vehicle;
6-25                             (ii)  the quality or quantity of parts or
6-26     materials used for collision repair of a motor vehicle; or
6-27                             (iii)  the rates charged for collision
 7-1     repair of a motor vehicle; and
 7-2                       (B)  is used to determine or to influence,
 7-3     directly or indirectly, prevailing market pricing or practice in
 7-4     specific markets.
 7-5           SECTION 2.  This Act takes effect September 1, 1999.
 7-6           SECTION 3.  The importance of this legislation and the
 7-7     crowded condition of the calendars in both houses create an
 7-8     emergency and an imperative public necessity that the
 7-9     constitutional rule requiring bills to be read on three several
7-10     days in each house be suspended, and this rule is hereby suspended.