By Dunnam                                             H.B. No. 3490
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to audits of billing of insurance defense counsel.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is
 1-5     amended by adding Article 21.56C to read as follows:
 1-6           Art. 21.56C.  AUDIT OF BILLING BY DEFENSE COUNSEL.  (a)
 1-7     Except as provided by Subsection (b) of this article, an insurer
 1-8     that is obligated to provide a defense for an insured under a
 1-9     casualty insurance policy may not:
1-10                 (1)  require the insured's attorney to submit to a
1-11     third-party auditor a billing statement that specifies in detail to
1-12     the services performed by the attorney for the insured; or
1-13                 (2)  submit to a third-party auditor a billing
1-14     statement  described by Subdivision (1) of this subsection.
1-15           (b)  An insurer may take the action described by Subsection
1-16     (a)(1) or (2) of this article with the prior written consent of the
1-17     insured, obtained after full disclosure to the insured.
1-18           (c)  The  commissioner,  in consultation with the State Bar
1-19     of Texas, shall adopt rules to implement this article. The rules
1-20     must  specify the disclosure required to be made under Subsection
1-21     (b) of this article.
 2-1           SECTION 2.  This Act takes effect September 1, 1999.
 2-2           SECTION 3.  The importance of this legislation and the
 2-3     crowded condition of the calendars in both houses create an
 2-4     emergency and an imperative public necessity that the
 2-5     constitutional rule requiring bills to be read on three several
 2-6     days in each house be suspended, and this rule is hereby suspended,
 2-7     and that this Act take effect and be in force from and after its
 2-8     passage, and it is so enacted.