1-1 By: Siebert, Eilana, Brimer H.B. No. 3697
1-2 (Senate Sponsor - Sibley)
1-3 (In the Senate - Received from the House May 6, 1999;
1-4 May 7, 1999, read first time and referred to Committee on Economic
1-5 Development; May 14, 1999, reported adversely, with favorable
1-6 Committee Substitute by the following vote: Yeas 4, Nays 0;
1-7 May 14, 1999, sent to printer.)
1-8 COMMITTEE SUBSTITUTE FOR H.B. No. 3697 By: Sibley
1-9 A BILL TO BE ENTITLED
1-10 AN ACT
1-11 relating to the operation of the Texas Workers' Compensation
1-12 Insurance Fund and the disposition of certain surpluses of that
1-13 fund.
1-14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-15 SECTION 1. Section 9(c), Article 5.76-3, Insurance Code, is
1-16 amended to read as follows:
1-17 (c) Notwithstanding any other provision of this code or any
1-18 other insurance law of this state [article], the fund may establish
1-19 multitiered premium systems to price [provide] workers'
1-20 compensation insurance policies to insureds in [who would not
1-21 otherwise meet] the fund's competitive programs, as well as to
1-22 insureds to whom policies are offered by the fund under Article
1-23 5.76-4 of this code [underwriting standards]. Those multitiered
1-24 systems shall be filed in accordance with Article 5.55 of this
1-25 code. The systems may provide for higher or lower premium payments
1-26 by insureds based on the fund's evaluation of the underwriting
1-27 characteristics of the individual risk and the appropriate premium
1-28 to be charged for the policy coverages [who present higher than
1-29 normal risks within a class].
1-30 SECTION 2. Section 12, Article 5.76-3, Insurance Code, is
1-31 amended to read as follows:
1-32 Sec. 12. PAYMENT OF TAXES AND FEES; GUARANTY ASSOCIATION.
1-33 (a) The [Except as provided in Subsection (b) of this section,
1-34 the] fund shall pay premium taxes, maintenance taxes, and the
1-35 maintenance tax surcharge established under Article 5.76-5 of this
1-36 code in the same manner as an insurance carrier authorized by the
1-37 Texas Department of Insurance to write workers' compensation
1-38 insurance in this state.
1-39 (b) [The fund is granted a tax credit equal to two percent
1-40 of the gross workers' compensation premiums written by the fund
1-41 during the period for which taxes are assessed. The credit may be
1-42 applied only against the taxes and surcharge established in
1-43 Subsection (a) of this section and shall be applied against the
1-44 taxes and surcharge in the following order:]
1-45 [(1) maintenance tax surcharge;]
1-46 [(2) maintenance taxes assessed to support the Texas
1-47 Department of Insurance;]
1-48 [(3) maintenance tax assessed to support the
1-49 commission; and]
1-50 [(4) premium taxes.]
1-51 [(c)] The fund shall pay [all other] taxes and fees or any
1-52 payments due in lieu of taxes in the same manner as an insurance
1-53 carrier authorized and admitted by the Texas Department of
1-54 Insurance to do insurance business in this state under a
1-55 certificate of authority that includes authorization to write
1-56 workers' compensation insurance.
1-57 (c) [(d)] The fund is [may not be] a member of and is [nor
1-58 be] protected by the Texas Property and Casualty Insurance Guaranty
1-59 Association. The fund [and] is [not] subject to assessment under
1-60 the Texas Property and Casualty Insurance Guaranty Act (Article
1-61 21.28-C, Insurance Code).
1-62 SECTION 3. Article 5.76-5, Insurance Code, is amended by
1-63 adding Section 10A to read as follows:
1-64 Sec. 10A. REIMBURSEMENT OF MAINTENANCE TAX SURCHARGE.
2-1 (a) The comptroller and the department shall cooperate in the
2-2 preparation of a list, by year, of the insurance companies and
2-3 certified self-insurers who paid the maintenance tax surcharge
2-4 assessed under Section 10 of this article for calendar years
2-5 1991-1996. The list must include the amount by year of the
2-6 maintenance tax surcharge paid by each insurance company and by
2-7 each certified self-insurer. The fund paid the maintenance tax
2-8 surcharge only for calendar years 1993 and 1994 and shall be
2-9 included in the list prepared under this subsection only for those
2-10 years. The comptroller and the department shall provide the lists
2-11 compiled under this subsection to the fund not later than the 60th
2-12 day after the effective date of this section. For the purposes of
2-13 this section, a reference to an insurance company includes the
2-14 fund.
2-15 (b) Notwithstanding Sections 111.104 and 111.107, Tax Code,
2-16 not later than the 45th day after the date on which the fund
2-17 receives the lists, the fund shall issue separate checks, in the
2-18 amount determined under Subsection (a) of this section, to each
2-19 insurance company and certified self-insurer for each year in which
2-20 the maintenance tax surcharge was paid. The fund shall make the
2-21 payments from the surplus of the fund.
2-22 (c) The maintenance tax surcharge is paid on March 1 of each
2-23 year, based on the premium writings of the prior calendar year.
2-24 The calendar years for which the maintenance tax surcharge was paid
2-25 and the corresponding recoupment periods are as follows:
2-26 (1) calendar year 1991--recoupment period June 1,
2-27 1992, through May 31, 1993;
2-28 (2) calendar year 1992--recoupment period June 1,
2-29 1993, through May 31, 1994;
2-30 (3) calendar year 1993--recoupment period June 1,
2-31 1994, through May 31, 1995;
2-32 (4) calendar year 1994--recoupment period June 1,
2-33 1995, through May 31, 1996;
2-34 (5) calendar year 1995--recoupment period June 1,
2-35 1996, through May 31, 1997;
2-36 (6) calendar year 1996--recoupment period June 1,
2-37 1997, through May 31, 1998.
2-38 (d) Each policyholder not insured by the fund is entitled to
2-39 receive a proportionate share of the amount of the maintenance tax
2-40 surcharge paid by the insurance company providing the
2-41 policyholder's workers' compensation insurance coverage with a
2-42 policy effective date during each 12-month recoupment period
2-43 beginning June 1, 1992, and ending May 31, 1998. Only those
2-44 policyholders with coverage provided by the fund with policy
2-45 effective dates during the recoupment period beginning June 1,
2-46 1994, and ending May 31, 1995, and the recoupment period beginning
2-47 June 1, 1995, and ending May 31, 1996, are entitled to receive a
2-48 refund of the proportionate share of the maintenance tax surcharge
2-49 from the fund. Only those policyholders with coverage provided
2-50 through the Texas workers' compensation insurance facility with
2-51 policy effective dates during the recoupment period beginning June
2-52 1, 1992, and ending May 31, 1993, and the recoupment period
2-53 beginning June 1, 1993, and ending May 31, 1994, are entitled to
2-54 receive a refund of the proportionate share of the maintenance tax
2-55 surcharge. The share shall be determined as follows:
2-56 (1) the insurance company shall determine the total
2-57 gross premium, as defined by the comptroller on the effective date
2-58 of this section, of all policyholders with coverage written during
2-59 each applicable recoupment period who are entitled to receive a
2-60 refund as determined under this subsection;
2-61 (2) the insurance company shall divide the total gross
2-62 premium for each applicable recoupment year into the amount of
2-63 maintenance tax surcharge paid based on the prior calendar year's
2-64 premium to determine the percentage factor to be applied to each
2-65 policyholder's premium; and
2-66 (3) the percentage factor determined under Subdivision
2-67 (2) of this subsection shall be applied to the policyholder's gross
2-68 premium for each applicable recoupment period to establish the
2-69 amount of maintenance tax surcharge to be refunded to each
3-1 individual policyholder.
3-2 (e) Except as provided by Subsection (f) of this section,
3-3 for each policy written during the applicable recoupment period,
3-4 each insurance company shall issue a refund check to the
3-5 policyholder for the amount of the refund of the maintenance tax
3-6 surcharge, or, if a policyholder has a balance due for premiums
3-7 earned during any recoupment period, the insurance company may
3-8 apply the refund as a credit against the amount owed. All refunds
3-9 or credits under this section must be made or applied not later
3-10 than September 1, 2000.
3-11 (f) An insurance company is not required to issue a refund
3-12 to a policyholder if the total amount of that policyholder's refund
3-13 is less than $25.
3-14 (g) Each insurance company shall make a diligent effort to
3-15 locate each policyholder due a refund under this section.
3-16 (h) Not later than January 1, 2001, each insurance company
3-17 shall file with the department a report that covers each applicable
3-18 recoupment period. The report must include:
3-19 (1) the name of each policyholder receiving a refund;
3-20 (2) the name of each policyholder to whom Subsection
3-21 (f) of this section applies;
3-22 (3) the amount of the refund sent to the policyholder;
3-23 (4) the date the refund was sent;
3-24 (5) the name, last known mailing address, federal
3-25 employer identification number, and refund amount for each
3-26 policyholder who could not be located; and
3-27 (6) the name, address, and telephone number of a
3-28 person at the insurance company whom a policyholder may contact to
3-29 provide a current address to be used for mailing the refund.
3-30 (i) If an insurance company is unable to locate a
3-31 policyholder to whom the insurance company is required to make a
3-32 refund after making a diligent effort to do so, the insurance
3-33 company shall notify the department in the manner prescribed by the
3-34 department.
3-35 (j) The department shall furnish a report to the fund not
3-36 later than March 1, 2001, to be used for publication of notices to
3-37 be placed in at least one newspaper of general circulation in each
3-38 county with a population of at least 100,000, according to the most
3-39 recent federal decennial census. The fund shall publish the
3-40 notices not later than April 1, 2001, and shall pay all costs
3-41 associated with the publication of the notices from the surplus of
3-42 the fund. Each notice must have a statement describing the reason
3-43 for the publication of the notice and must include the following
3-44 information:
3-45 (1) the name of the applicable insurance company;
3-46 (2) the name, address, and telephone number of a
3-47 person at the insurance company whom a policyholder may contact
3-48 regarding a refund;
3-49 (3) the name of each policyholder entitled to a
3-50 refund; and
3-51 (4) the municipality of the last known mailing address
3-52 of the policyholder.
3-53 (k) To receive a refund under this section, an eligible
3-54 policyholder must provide the policyholder's current mailing
3-55 address to the appropriate insurance company not later than the
3-56 later of:
3-57 (1) the 180th day after the publication date of the
3-58 notice; or
3-59 (2) October 1, 2001.
3-60 (l) The insurance company shall remit the appropriate refund
3-61 to an eligible policyholder not later than the 45th day after the
3-62 date the insurance company receives the policyholder's address as
3-63 required by Subsection (k) of this section. All refunds must be
3-64 remitted not later than November 15, 2001.
3-65 (m) Not later than December 31, 2001, each insurance company
3-66 shall file a report with the department that includes:
3-67 (1) the name of each policyholder receiving a refund;
3-68 (2) the amount of the refund sent to the policyholder;
3-69 (3) the date the refund was sent; and
4-1 (4) the name, last known mailing address, and amount
4-2 of refund owed to each policyholder who could not be located.
4-3 (n) An insurance company that cannot locate a policyholder
4-4 eligible for a refund through the procedures established under this
4-5 section shall, not later than December 31, 2001, return the amount
4-6 of the remaining maintenance tax surcharge to the fund for deposit
4-7 in the fund's surplus.
4-8 (o) Notwithstanding any other law of this state, all rights
4-9 to a refund under this section expire on December 31, 2001.
4-10 (p) In making refunds required by this section, an insurance
4-11 company may not be required to refund to policyholders an amount
4-12 greater, in the aggregate, than that received from the fund.
4-13 (q) Each report filed with the department under this section
4-14 by an insurance company that includes the identification of a
4-15 policyholder by name is confidential, and the department shall
4-16 maintain the confidentiality of the report and the information
4-17 contained in the report except as otherwise provided by this
4-18 section. A report subject to this subsection made by an insurance
4-19 company is not subject to disclosure under Chapter 552, Government
4-20 Code.
4-21 (r) The commissioner shall adopt rules as necessary to
4-22 implement this section.
4-23 (s) This section expires September 1, 2002.
4-24 SECTION 4. Subchapter G, Chapter 5, Insurance Code, is
4-25 amended by adding Article 5.76-6 to read as follows:
4-26 Art. 5.76-6. INTERIM STUDIES. (a) The Texas Workers'
4-27 Compensation Insurance Fund shall enter into a joint venture with
4-28 the Research and Oversight Council on Workers' Compensation by
4-29 providing data for interim studies as provided by this article.
4-30 Funding shall come from the surplus of the Texas Workers'
4-31 Compensation Insurance Fund for the interim studies to improve
4-32 worker safety in this state and reduce the cost and improve the
4-33 quality of health care delivered to injured workers.
4-34 (b) The studies shall include examinations of:
4-35 (1) methods to improve worker safety and facilitate
4-36 return to productive employment following an injury;
4-37 (2) the quality and cost-effectiveness of the current
4-38 workers' compensation health care delivery system, as compared to:
4-39 (A) other health care delivery systems used in
4-40 this state; and
4-41 (B) workers' compensation health care delivery
4-42 systems used in other states; and
4-43 (3) medical provider treatment patterns and insurance
4-44 carrier utilization review practices in the workers' compensation
4-45 system of this state.
4-46 (c) The council shall submit requests for proposals for
4-47 contracts with private vendors to perform the studies required
4-48 under this article. The comptroller shall assist the council in
4-49 bidding, evaluating, and securing the contracts.
4-50 (d) The Texas Workers' Compensation Commission shall assist
4-51 the council by providing, on request by the council, computer data
4-52 and other information as necessary to conduct the studies.
4-53 (e) The council may enter into contracts, memoranda of
4-54 understanding, and interagency agreements as necessary to implement
4-55 this article.
4-56 (f) The council shall report the results of the interim
4-57 studies and recommendations for proposed legislation to the 77th
4-58 Legislature not later than February 1, 2001. The council shall
4-59 provide written copies of the report to the governor, the
4-60 lieutenant governor, and the speaker of the house of
4-61 representatives.
4-62 (g) This article expires March 1, 2001.
4-63 SECTION 5. Section 3, Article 21.28-C, Insurance Code, is
4-64 amended to read as follows:
4-65 Sec. 3. SCOPE. (a) This Act applies to all kinds of direct
4-66 insurance, and except as provided in Section 12 of this Act, is not
4-67 applicable to the following:
4-68 (1) life, annuity, health, or disability insurance;
4-69 (2) mortgage guaranty, financial guaranty, or other
5-1 forms of insurance offering protection against investment risks;
5-2 (3) fidelity or surety bonds, or any other bonding
5-3 obligations;
5-4 (4) credit insurance, vendors' single-interest
5-5 insurance, collateral protection insurance, or any similar
5-6 insurance protecting the interests of a creditor arising out of a
5-7 creditor-debtor transaction;
5-8 (5) insurance of warranties or service contracts;
5-9 (6) title insurance;
5-10 (7) ocean marine insurance;
5-11 (8) any transaction or combination of transactions
5-12 between a person, including an affiliate of such a person, and an
5-13 insurer, including an affiliate of such an insurer, that involves
5-14 the transfer of investment or credit risk unaccompanied by the
5-15 transfer of insurance risk; or
5-16 (9) any insurance provided by or guaranteed by
5-17 government.
5-18 (b) This Act applies to insurance written through the Texas
5-19 Workers' Compensation Insurance Fund only as provided by this
5-20 subsection. The application of this article to the Texas Workers'
5-21 Compensation Insurance Fund is on a prospective basis on and after
5-22 January 1, 2000. That fund is only liable for assessments for a
5-23 claim with a date of injury that occurs on or after January 1,
5-24 2000. The association, with respect to an insolvency of the fund,
5-25 is only liable for a claim with a date of injury that occurs on or
5-26 after January 1, 2000.
5-27 SECTION 6. Section 12(c), Article 5.76-3, Insurance Code, as
5-28 amended by this Act, applies only to assessments made by the Texas
5-29 Property and Casualty Insurance Guaranty Association beginning on
5-30 January 1, 2000. The Texas Workers' Compensation Insurance Fund is
5-31 not liable for any assessment or part of an assessment made by the
5-32 Texas Property and Casualty Insurance Guaranty Association before
5-33 that date.
5-34 SECTION 7. The importance of this legislation and the
5-35 crowded condition of the calendars in both houses create an
5-36 emergency and an imperative public necessity that the
5-37 constitutional rule requiring bills to be read on three several
5-38 days in each house be suspended, and this rule is hereby suspended,
5-39 and that this Act take effect and be in force from and after its
5-40 passage, and it is so enacted.
5-41 * * * * *