1-1 AN ACT
1-2 relating to the operation of the Texas Workers' Compensation
1-3 Insurance Fund and the disposition of certain surpluses of that
1-4 fund.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 9(c), Article 5.76-3, Insurance Code, is
1-7 amended to read as follows:
1-8 (c) Notwithstanding any other provision of this code or any
1-9 other insurance law of this state [article], the fund may establish
1-10 multitiered premium systems to price [provide] workers'
1-11 compensation insurance policies to insureds in [who would not
1-12 otherwise meet] the fund's competitive programs, as well as to
1-13 insureds to whom policies are offered by the fund under Article
1-14 5.76-4 of this code [underwriting standards]. Those multitiered
1-15 systems shall be filed in accordance with Article 5.55 of this
1-16 code. The systems may provide for higher or lower premium payments
1-17 by insureds based on the fund's evaluation of the underwriting
1-18 characteristics of the individual risk and the appropriate premium
1-19 to be charged for the policy coverages [who present higher than
1-20 normal risks within a class].
1-21 SECTION 2. Section 12, Article 5.76-3, Insurance Code, is
1-22 amended to read as follows:
1-23 Sec. 12. PAYMENT OF TAXES AND FEES; GUARANTY ASSOCIATION.
1-24 (a) The [Except as provided in Subsection (b) of this section,
2-1 the] fund shall pay premium taxes, maintenance taxes, and the
2-2 maintenance tax surcharge established under Article 5.76-5 of this
2-3 code in the same manner as an insurance carrier authorized by the
2-4 Texas Department of Insurance to write workers' compensation
2-5 insurance in this state.
2-6 (b) [The fund is granted a tax credit equal to two percent
2-7 of the gross workers' compensation premiums written by the fund
2-8 during the period for which taxes are assessed. The credit may be
2-9 applied only against the taxes and surcharge established in
2-10 Subsection (a) of this section and shall be applied against the
2-11 taxes and surcharge in the following order:]
2-12 [(1) maintenance tax surcharge;]
2-13 [(2) maintenance taxes assessed to support the Texas
2-14 Department of Insurance;]
2-15 [(3) maintenance tax assessed to support the
2-16 commission; and]
2-17 [(4) premium taxes.]
2-18 [(c)] The fund shall pay [all other] taxes and fees or any
2-19 payments due in lieu of taxes in the same manner as an insurance
2-20 carrier authorized and admitted by the Texas Department of
2-21 Insurance to do insurance business in this state under a
2-22 certificate of authority that includes authorization to write
2-23 workers' compensation insurance.
2-24 (c) [(d)] The fund is [may not be] a member of and is [nor
2-25 be] protected by the Texas Property and Casualty Insurance Guaranty
2-26 Association. The fund [and] is [not] subject to assessment under
2-27 the Texas Property and Casualty Insurance Guaranty Act (Article
3-1 21.28-C, Insurance Code).
3-2 SECTION 3. Article 5.76-5, Insurance Code, is amended by
3-3 adding Section 10A to read as follows:
3-4 Sec. 10A. REIMBURSEMENT OF MAINTENANCE TAX SURCHARGE. (a)
3-5 The comptroller and the department shall cooperate in the
3-6 preparation of a list, by year, of the insurance companies and
3-7 certified self-insurers who paid the maintenance tax surcharge
3-8 assessed under Section 10 of this article for calendar years
3-9 1991-1996. The list must include the amount by year of the
3-10 maintenance tax surcharge paid by each insurance company and by
3-11 each certified self-insurer. The fund paid the maintenance tax
3-12 surcharge only for calendar years 1993 and 1994 and shall be
3-13 included in the list prepared under this subsection only for those
3-14 years. The comptroller and the department shall provide the lists
3-15 compiled under this subsection to the fund not later than the 60th
3-16 day after the effective date of this section. For the purposes of
3-17 this section, a reference to an insurance company includes the
3-18 fund.
3-19 (b) Notwithstanding Sections 111.104 and 111.107, Tax Code,
3-20 not later than the 45th day after the date on which the fund
3-21 receives the lists, the fund shall issue separate checks, in the
3-22 amount determined under Subsection (a) of this section, to each
3-23 insurance company and certified self-insurer for each year in which
3-24 the maintenance tax surcharge was paid. The fund shall make the
3-25 payments from the surplus of the fund.
3-26 (c) The maintenance tax surcharge is paid on March 1 of each
3-27 year, based on the premium writings of the prior calendar year.
4-1 The calendar years for which the maintenance tax surcharge was paid
4-2 and the corresponding recoupment periods are as follows:
4-3 (1) calendar year 1991--recoupment period June 1,
4-4 1992, through May 31, 1993;
4-5 (2) calendar year 1992--recoupment period June 1,
4-6 1993, through May 31, 1994;
4-7 (3) calendar year 1993--recoupment period June 1,
4-8 1994, through May 31, 1995;
4-9 (4) calendar year 1994--recoupment period June 1,
4-10 1995, through May 31, 1996;
4-11 (5) calendar year 1995--recoupment period June 1,
4-12 1996, through May 31, 1997;
4-13 (6) calendar year 1996--recoupment period June 1,
4-14 1997, through May 31, 1998.
4-15 (d) Each policyholder not insured by the fund is entitled to
4-16 receive a proportionate share of the amount of the maintenance tax
4-17 surcharge paid by the insurance company providing the
4-18 policyholder's workers' compensation insurance coverage with a
4-19 policy effective date during each 12-month recoupment period
4-20 beginning June 1, 1992, and ending May 31, 1998. Only those
4-21 policyholders with coverage provided by the fund with policy
4-22 effective dates during the recoupment period beginning June 1,
4-23 1994, and ending May 31, 1995, and the recoupment period beginning
4-24 June 1, 1995, and ending May 31, 1996, are entitled to receive a
4-25 refund of the proportionate share of the maintenance tax surcharge
4-26 from the fund. Only those policyholders with coverage provided
4-27 through the Texas workers' compensation insurance facility with
5-1 policy effective dates during the recoupment period beginning June
5-2 1, 1992, and ending May 31, 1993, and the recoupment period
5-3 beginning June 1, 1993, and ending May 31, 1994, are entitled to
5-4 receive a refund of the proportionate share of the maintenance tax
5-5 surcharge. The share shall be determined as follows:
5-6 (1) the insurance company shall determine the total
5-7 gross premium, as defined by the comptroller on the effective date
5-8 of this section, of all policyholders with coverage written during
5-9 each applicable recoupment period who are entitled to receive a
5-10 refund as determined under this subsection;
5-11 (2) the insurance company shall divide the total gross
5-12 premium for each applicable recoupment year into the amount of
5-13 maintenance tax surcharge paid based on the prior calendar year's
5-14 premium to determine the percentage factor to be applied to each
5-15 policyholder's premium; and
5-16 (3) the percentage factor determined under Subdivision
5-17 (2) of this subsection shall be applied to the policyholder's
5-18 gross premium for each applicable recoupment period to establish
5-19 the amount of maintenance tax surcharge to be refunded to each
5-20 individual policyholder.
5-21 (e) Except as provided by Subsection (f) of this section,
5-22 for each policy written during the applicable recoupment period,
5-23 each insurance company shall issue a refund check to the
5-24 policyholder for the amount of the refund of the maintenance tax
5-25 surcharge, or, if a policyholder has a balance due for premiums
5-26 earned during any recoupment period, the insurance company may
5-27 apply the refund as a credit against the amount owed. All refunds
6-1 or credits under this section must be made or applied not later
6-2 than September 1, 2000.
6-3 (f) An insurance company is not required to issue a refund
6-4 to a policyholder if the total amount of that policyholder's refund
6-5 is less than $25.
6-6 (g) Each insurance company shall make a diligent effort to
6-7 locate each policyholder due a refund under this section.
6-8 (h) Not later than January 1, 2001, each insurance company
6-9 shall file with the department a report that covers each applicable
6-10 recoupment period. The report must include:
6-11 (1) the name of each policyholder receiving a refund;
6-12 (2) the name of each policyholder to whom Subsection
6-13 (f) of this section applies;
6-14 (3) the amount of the refund sent to the policyholder;
6-15 (4) the date the refund was sent;
6-16 (5) the name, last known mailing address, federal
6-17 employer identification number, and refund amount for each
6-18 policyholder who could not be located; and
6-19 (6) the name, address, and telephone number of a
6-20 person at the insurance company whom a policyholder may contact to
6-21 provide a current address to be used for mailing the refund.
6-22 (i) If an insurance company is unable to locate a
6-23 policyholder to whom the insurance company is required to make a
6-24 refund after making a diligent effort to do so, the insurance
6-25 company shall notify the department in the manner prescribed by the
6-26 department.
6-27 (j) The department shall furnish a report to the fund not
7-1 later than March 1, 2001, to be used for publication of notices to
7-2 be placed in at least one newspaper of general circulation in each
7-3 county with a population of at least 100,000, according to the most
7-4 recent federal decennial census. The fund shall publish the notices
7-5 not later than April 1, 2001, and shall pay all costs associated
7-6 with the publication of the notices from the surplus of the fund.
7-7 Each notice must have a statement describing the reason for the
7-8 publication of the notice and must include the following
7-9 information:
7-10 (1) the name of the applicable insurance company;
7-11 (2) the name, address, and telephone number of a
7-12 person at the insurance company whom a policyholder may contact
7-13 regarding a refund;
7-14 (3) the name of each policyholder entitled to a
7-15 refund; and
7-16 (4) the municipality of the last known mailing address
7-17 of the policyholder.
7-18 (k) To receive a refund under this section, an eligible
7-19 policyholder must provide the policyholder's current mailing
7-20 address to the appropriate insurance company not later than the
7-21 later of:
7-22 (1) the 180th day after the publication date of the
7-23 notice; or
7-24 (2) October 1, 2001.
7-25 (l) The insurance company shall remit the appropriate refund
7-26 to an eligible policyholder not later than the 45th day after the
7-27 date the insurance company receives the policyholder's address as
8-1 required by Subsection (k) of this section. All refunds must be
8-2 remitted not later than November 15, 2001.
8-3 (m) Not later than December 31, 2001, each insurance company
8-4 shall file a report with the department that includes:
8-5 (1) the name of each policyholder receiving a refund;
8-6 (2) the amount of the refund sent to the policyholder;
8-7 (3) the date the refund was sent; and
8-8 (4) the name, last known mailing address, and amount
8-9 of refund owed to each policyholder who could not be located.
8-10 (n) An insurance company that cannot locate a policyholder
8-11 eligible for a refund through the procedures established under this
8-12 section shall, not later than December 31, 2001, return the amount
8-13 of the remaining maintenance tax surcharge to the fund for deposit
8-14 in the fund's surplus.
8-15 (o) Notwithstanding any other law of this state, all rights
8-16 to a refund under this section expire on December 31, 2001.
8-17 (p) In making refunds required by this section, an insurance
8-18 company may not be required to refund to policyholders an amount
8-19 greater, in the aggregate, than that received from the fund.
8-20 (q) Each report filed with the department under this section
8-21 by an insurance company that includes the identification of a
8-22 policyholder by name is confidential, and the department shall
8-23 maintain the confidentiality of the report and the information
8-24 contained in the report except as otherwise provided by this
8-25 section. A report subject to this subsection made by an insurance
8-26 company is not subject to disclosure under Chapter 552, Government
8-27 Code.
9-1 (r) The commissioner shall adopt rules as necessary to
9-2 implement this section.
9-3 (s) This section expires September 1, 2002.
9-4 SECTION 4. Subchapter G, Chapter 5, Insurance Code, is
9-5 amended by adding Article 5.76-6 to read as follows:
9-6 Art. 5.76-6. INTERIM STUDIES. (a) The Texas Workers'
9-7 Compensation Insurance Fund shall enter into a joint venture with
9-8 the Research and Oversight Council on Workers' Compensation by
9-9 providing data for interim studies as provided by this article.
9-10 Funding shall come from the surplus of the Texas Workers'
9-11 Compensation Insurance Fund for the interim studies to improve
9-12 worker safety in this state and reduce the cost and improve the
9-13 quality of health care delivered to injured workers.
9-14 (b) The studies shall include examinations of:
9-15 (1) methods to improve worker safety and facilitate
9-16 return to productive employment following an injury;
9-17 (2) the quality and cost-effectiveness of the current
9-18 workers' compensation health care delivery system, as compared to:
9-19 (A) other health care delivery systems used in
9-20 this state; and
9-21 (B) workers' compensation health care delivery
9-22 systems used in other states; and
9-23 (3) medical provider treatment patterns and insurance
9-24 carrier utilization review practices in the workers' compensation
9-25 system of this state.
9-26 (c) The council shall submit requests for proposals for
9-27 contracts with private vendors to perform the studies required
10-1 under this article. The comptroller shall assist the council in
10-2 bidding, evaluating, and securing the contracts.
10-3 (d) The Texas Workers' Compensation Commission shall assist
10-4 the council by providing, on request by the council, computer data
10-5 and other information as necessary to conduct the studies.
10-6 (e) The council may enter into contracts, memoranda of
10-7 understanding, and interagency agreements as necessary to implement
10-8 this article.
10-9 (f) The council shall report the results of the interim
10-10 studies and recommendations for proposed legislation to the 77th
10-11 Legislature not later than February 1, 2001. The council shall
10-12 provide written copies of the report to the governor, the
10-13 lieutenant governor, and the speaker of the house of
10-14 representatives.
10-15 (g) This article expires March 1, 2001.
10-16 SECTION 5. Section 3, Article 21.28-C, Insurance Code, is
10-17 amended to read as follows:
10-18 Sec. 3. SCOPE. (a) This Act applies to all kinds of direct
10-19 insurance, and except as provided in Section 12 of this Act, is not
10-20 applicable to the following:
10-21 (1) life, annuity, health, or disability insurance;
10-22 (2) mortgage guaranty, financial guaranty, or other
10-23 forms of insurance offering protection against investment risks;
10-24 (3) fidelity or surety bonds, or any other bonding
10-25 obligations;
10-26 (4) credit insurance, vendors' single-interest
10-27 insurance, collateral protection insurance, or any similar
11-1 insurance protecting the interests of a creditor arising out of a
11-2 creditor-debtor transaction;
11-3 (5) insurance of warranties or service contracts;
11-4 (6) title insurance;
11-5 (7) ocean marine insurance;
11-6 (8) any transaction or combination of transactions
11-7 between a person, including an affiliate of such a person, and an
11-8 insurer, including an affiliate of such an insurer, that involves
11-9 the transfer of investment or credit risk unaccompanied by the
11-10 transfer of insurance risk; or
11-11 (9) any insurance provided by or guaranteed by
11-12 government.
11-13 (b) This Act applies to insurance written through the Texas
11-14 Workers' Compensation Insurance Fund only as provided by this
11-15 subsection. The application of this article to the Texas Workers'
11-16 Compensation Insurance Fund is on a prospective basis on and after
11-17 January 1, 2000. That fund is only liable for assessments for a
11-18 claim with a date of injury that occurs on or after January 1,
11-19 2000. The association, with respect to an insolvency of the fund,
11-20 is only liable for a claim with a date of injury that occurs on or
11-21 after January 1, 2000.
11-22 SECTION 6. Section 5(10), Article 21.28-C, Insurance Code,
11-23 is amended to read as follows:
11-24 (10) "Member insurer" means any insurer [person] who:
11-25 (A) writes any kind of insurance to which this
11-26 Act applies under Section 3 of this Act, including the exchange of
11-27 reciprocal or inter-insurance contracts; and
12-1 (B) is licensed to transact insurance in this
12-2 state, including any stock, mutual, Lloyds insurer, reciprocal or
12-3 inter-insurance exchange, or county mutual insurance company.
12-4 SECTION 7. The importance of this legislation and the
12-5 crowded condition of the calendars in both houses create an
12-6 emergency and an imperative public necessity that the
12-7 constitutional rule requiring bills to be read on three several
12-8 days in each house be suspended, and this rule is hereby suspended,
12-9 and that this Act take effect and be in force from and after its
12-10 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3697 was passed by the House on May
5, 1999, by a non-record vote; that the House refused to concur in
Senate amendments to H.B. No. 3697 on May 22, 1999, and requested
the appointment of a conference committee to consider the
differences between the two houses; and that the House adopted the
conference committee report on H.B. No. 3697 on May 29, 1999, by
the following vote: Yeas 145, Nays 0, 1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3697 was passed by the Senate, with
amendments, on May 20, 1999, by the following vote: Yeas 28, Nays
0, 1 present, not voting; at the request of the House, the Senate
appointed a conference committee to consider the differences
between the two houses; and that the Senate adopted the conference
committee report on H.B. No. 3697 on May 30, 1999, by a viva-voce
vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor