By Telford                                            H.B. No. 1189
         77R3388 PB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to group benefits for active employees and retirees of
 1-3     school districts.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5                 ARTICLE 1. MANDATORY GROUP BENEFITS PROGRAM
 1-6                         FOR ACTIVE SCHOOL EMPLOYEES
 1-7           SECTION 1.01. Title 1, Insurance Code, is amended by adding
 1-8     Chapter 3A to read as follows:
 1-9      CHAPTER 3A.  TEXAS ACTIVE SCHOOL EMPLOYEES GROUP BENEFITS PROGRAM
1-10                      SUBCHAPTER A.  GENERAL PROVISIONS
1-11           Art. 3A.001.  SHORT TITLE. This chapter may be cited as the
1-12     Texas Active School Employees Group Health Benefits Act.
1-13           Art. 3A.002.  DEFINITIONS.  In this chapter:
1-14                 (1)  "Administering firm" means any firm designated by
1-15     the board to administer any coverages, services, benefits, or
1-16     requirements under this chapter and the board's rules adopted under
1-17     this chapter.
1-18                 (2)  "Basic plan" means the plan of group benefits
1-19     adopted by the board and selected by a school district in which
1-20     each full-time employee of the school district participates
1-21     automatically unless participation is specifically waived.
1-22                 (3)  "Board"  means the Texas Active School Employees
1-23     Group Benefits Board.
1-24                 (4)  "Cafeteria plan" means a plan as defined and
 2-1     authorized by Section 125, Internal Revenue Code of 1986.
 2-2                 (5)  "Dependent" means:
 2-3                       (A)  a spouse of an employee;
 2-4                       (B)  an employee's or a deceased employee's
 2-5     unmarried child who is younger than 25 years of age, including:
 2-6                             (i)  an adopted child;
 2-7                             (ii)  a foster child, stepchild, or other
 2-8     child who is in a regular parent-child relationship; and
 2-9                             (iii)  a recognized natural child; and
2-10                       (C)  an employee's recognized natural child,
2-11     adopted child, foster child, stepchild, or other child who is in a
2-12     regular parent-child relationship and who lives with or whose care
2-13     is provided by the employee or surviving spouse on a regular basis,
2-14     regardless of the child's age, if the child is mentally retarded or
2-15     physically incapacitated to such an extent as to be dependent on
2-16     the employee or surviving spouse for care or support, as determined
2-17     by the board, or in the case of a deceased employee, a recognized
2-18     natural child, adopted child, foster child, stepchild, or other
2-19     child who was in a regular parent-child relationship and who lived
2-20     with or whose care was provided by the deceased employee on a
2-21     regular basis, regardless of the child's age, if the child is
2-22     mentally retarded or physically incapacitated to such an extent as
2-23     to have been dependent on the deceased employee or surviving spouse
2-24     for care or support, as determined by the board.
2-25                 (6)  "Employee" means a participating member of the
2-26     Teacher Retirement System of Texas who is employed by a school
2-27     district and who is not covered by a group insurance program under
 3-1     the Texas Employees Uniform Group Insurance Benefits Act (Article
 3-2     3.50-2, Vernon's Texas Insurance Code) or the Texas State College
 3-3     and University Employees Uniform Insurance Benefits Act (Article
 3-4     3.50-3, Vernon's Texas Insurance Code).  The term does not include
 3-5     an individual performing personal services for a school district as
 3-6     an independent contractor.
 3-7                 (7)  "Fund" means the Texas active school employees
 3-8     uniform group benefits trust fund.
 3-9                 (8)  "Group program"  means the Texas active school
3-10     employees group benefits program authorized by this chapter.
3-11                 (9)  "Health benefits plan" means any group policy or
3-12     contract, medical, dental, or hospital service agreement,
3-13     membership or subscription contract, salary continuation plan,
3-14     health maintenance organization agreement, or preferred provider
3-15     arrangement, or any similar group arrangement or any combination of
3-16     those policies, plans, contracts, agreements, or arrangements, that
3-17     provides, pays for, or reimburses expenses for health care
3-18     services.
3-19                 (10)  "Participating school district" means a public
3-20     school district that has elected under Article 3A.101  of this
3-21     chapter to participate in the group program and has not
3-22     discontinued participation under Article 3A.106 of this chapter.
3-23                 (11)  "Surviving dependent child" means the dependent
3-24     child of a deceased employee who has survived the deceased employee
3-25     and the deceased employee's spouse if the deceased employee had 10
3-26     or more years of service credit in the Teacher Retirement System of
3-27     Texas.
 4-1                 (12)  "Surviving spouse" means the surviving spouse of
 4-2     a deceased employee who had 10 or more years of service credit in
 4-3     the Teacher Retirement System of Texas.
 4-4               (Articles 3A.003-3A.050 reserved for expansion
 4-5                SUBCHAPTER B.  TEXAS ACTIVE SCHOOL EMPLOYEES
 4-6                            GROUP BENEFITS BOARD
 4-7           Art. 3A.051.  BOARD; MEMBERSHIP. (a)  The Texas Active School
 4-8     Employees Group Benefits Board is established.
 4-9           (b)  The board is composed of nine members appointed by the
4-10     governor with the advice and consent of the senate. Two members
4-11     shall be members of school boards.  Two members shall be
4-12     superintendents of school districts.  Three members shall be
4-13     teachers who are active employees of school districts.  One member
4-14     shall be a member of the auxiliary personnel of a school district.
4-15     One member shall be a person who is not employed by a school
4-16     district who has demonstrated experience in the administration of
4-17     group health benefit plans.
4-18           (c)  Appointments to the board shall be made without regard
4-19     to the race, color, disability, sex, religion, age, or national
4-20     origin of the appointee.
4-21           Art. 3A.052.  TERMS; VACANCY. (a)  Members of the board are
4-22     appointed for staggered six-year terms, with the terms of three
4-23     members expiring February 1 of each odd-numbered year.
4-24           (b)  If a vacancy occurs on the board, the governor shall
4-25     appoint a replacement to fill the unexpired term.
4-26           Art. 3A.053.  COMPENSATION; REIMBURSEMENT. A board member is
4-27     entitled to compensation and reimbursement of the traveling
 5-1     expenses incurred by the member while conducting the business of
 5-2     the board, as provided in the General Appropriations Act.
 5-3           Art. 3A.054.  BOARD POWERS AND DUTIES. (a)  The board shall
 5-4     administer and enforce this chapter.  The board shall:
 5-5                 (1)  implement and administer a program of group health
 5-6     benefits coverage for active  employees of school districts as
 5-7     provided by this chapter;
 5-8                 (2)  adopt, as part of the group program, rules and
 5-9     guidelines for a comprehensive health benefits plan applicable to
5-10     all school districts of this state;
5-11                 (3)  analyze group benefits plans marketed to the board
5-12     to provide coverage for active employees of school districts;
5-13                 (4)  provide information to participating school
5-14     districts and their employees regarding the group program; and
5-15                 (5)  assist participating school districts in resolving
5-16     problems regarding implementation of the group program.
5-17           (b)  The board shall adopt rules as necessary to administer
5-18     this chapter.
5-19           (c)  The board may hire and compensate employees.
5-20           (d)  The board may, on a competitive bid basis, contract with
5-21     a qualified, experienced firm of group insurance specialists or an
5-22     administering firm that will act for the board in the capacity of
5-23     independent administrators and managers of the group program. The
5-24     independent administrator selected by the board shall assist the
5-25     board to ensure the proper administration of this chapter and the
5-26     coverages, services, and benefits provided for or authorized by
5-27     this chapter and shall be paid by the board.
 6-1           (e)  The board may enter into interagency contracts and
 6-2     memoranda of understanding with any agency of the state, including
 6-3     the Employees Retirement System of Texas and the Teacher Retirement
 6-4     System of Texas, for assistance in implementing the group program.
 6-5           (f)  The board has the powers with regard to the group
 6-6     program that the Employees Retirement System of Texas has in
 6-7     administering the Texas Employees Uniform Group Insurance Benefits
 6-8     Act (Article 3.50-2, Vernon's Texas Insurance Code), including the
 6-9     power to adjudicate claims and expel participants from the program
6-10     for cause.
6-11           (g)  The board shall pay the administrative costs incurred in
6-12     implementing the group program and shall impose a uniform fee on
6-13     participating school districts in an amount reasonable and
6-14     necessary to pay those costs.
6-15           Art. 3A.055.  ANNUAL REPORTS. (a)  The board shall file
6-16     annually with the governor and the presiding officer of each house
6-17     of the legislature a complete and detailed written report
6-18     accounting for all funds received and disbursed by the board during
6-19     the preceding fiscal year.  The report required under this
6-20     subsection must be in the form and reported in the time provided by
6-21     the General Appropriations Act.
6-22           (b)  The board shall file annually with the governor and the
6-23     presiding officer of each house of the legislature a complete and
6-24     detailed written report regarding the activities of the board in
6-25     implementing this chapter.  The board shall submit copies of the
6-26     report required under this subsection to:
6-27                 (1)  the commissioner;
 7-1                 (2)  the Employees Retirement System of Texas; and
 7-2                 (3)  the Teacher Retirement System of Texas.
 7-3               (Articles 3A.056-3A.100 reserved for expansion
 7-4                        SUBCHAPTER C.  GROUP PROGRAM
 7-5           Art. 3A.101.  PARTICIPATION IN PROGRAM. (a)  Beginning August
 7-6     1, 2002, a public school district may elect to participate in the
 7-7     group program unless the district is participating in the group
 7-8     insurance program under the Texas Employees Uniform Group Insurance
 7-9     Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code).
7-10           (b)  A school district that elects to participate in the
7-11     group program may not provide a competing group health benefits
7-12     program for employees, including a program under Section 22.004,
7-13     Education Code.
7-14           (c)  A school district that elects to participate in the
7-15     group program is required to participate for a minimum of two
7-16     years. The beginning of a district's participation in the program
7-17     must coincide with the beginning of a school year in an
7-18     odd-numbered year.
7-19           (d)  The board by rule may establish a biennial deadline for
7-20     notification of the board of an election to begin participation.
7-21           (e)  A participating school district may discontinue
7-22     participation only as provided by Article 3A.106 of this chapter.
7-23           Art. 3A.102.  PARTICIPATION BY EMPLOYEES. (a)  Each full-time
7-24     employee of a participating school district is automatically
7-25     covered by the basic plan for employees selected by the school
7-26     district, unless the employee specifically waives coverage or
7-27     unless the employee is expelled from the group program.  For
 8-1     purposes of this subsection, "full-time employee" has the meaning
 8-2     defined by board rule.
 8-3           (b)  A part-time employee of a participating school district
 8-4     is eligible to participate in the group program only as provided by
 8-5     board rule. A participating school district shall notify its
 8-6     part-time employees of their eligibility to participate in the
 8-7     program.
 8-8           Art. 3A.103.  GROUP BENEFITS. (a)  The board shall adopt
 8-9     plans of group benefits for employees of school districts and their
8-10     dependents.  The plans of group benefits must include one or more
8-11     basic plans of group health benefits that may be selected by a
8-12     school district for all district employees.  At least one of the
8-13     basic plans of group health benefits shall be comparable in scope
8-14     and, to the greatest extent possible, in cost to the health benefit
8-15     plan coverages provided under the Texas Employees Uniform Group
8-16     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
8-17     Code).  A district must select the same basic plan of group health
8-18     benefits for all district employees.
8-19           (b)  The plans of group benefits may also include group life
8-20     coverages, accidental death and dismemberment coverages, coverages
8-21     against short-term or long-term loss of salary, and other benefits
8-22     considered advisable by the board.  Comparable plans of each type
8-23     of benefit adopted must be offered to employees of all school
8-24     districts.
8-25           (c)  The board by rule may define optional coverage that may
8-26     be selected by individual school district employees, which must
8-27     include coverage for dependents.
 9-1           (d)  The board may provide a cafeteria plan for employees of
 9-2     school districts.
 9-3           (e)  The board may determine that plans of group benefits
 9-4     shall be provided directly from the Texas active school employees
 9-5     uniform group benefits trust fund rather than through the purchase
 9-6     of coverage.  Any self-funded plan of group benefits is exempt from
 9-7     any other provision of this code unless the law specifically
 9-8     applies to the plan or this chapter.
 9-9           Art. 3A.104.  PAYMENT OF CONTRIBUTIONS. (a)    The state
9-10     shall pay 100 percent of the cost of employee-only coverage under
9-11     the least expensive basic plan of group health benefits adopted
9-12     under Article 3A.103(a) of this chapter for each active employee
9-13     participating in the group program.
9-14           (b)  A participating school district that selects a basic
9-15     plan that is more expensive than the plan described by Subsection
9-16     (a) of this article shall pay on behalf of its employees the full
9-17     cost of employee-only coverage in that plan that exceeds the amount
9-18     of the state contribution under Subsection (a)  of this article.
9-19           Art. 3A.105.  PAYMENT OF CONTRIBUTIONS FOR OPTIONAL COVERAGE.
9-20     A participating employee shall pay all of the cost of optional
9-21     coverage selected by the employee, including dependent coverage.
9-22           Art. 3A.106.  DISCONTINUANCE OF PARTICIPATION. (a)  A school
9-23     district participating in the group program may elect to
9-24     discontinue participation by notifying the board in the manner
9-25     prescribed by the board and obtaining the board's determination
9-26     that the district is committed to offering an alternate basic plan
9-27     of group health benefits that meets the requirements of Section
 10-1    22.004, Education Code, at no cost to its participating employees.
 10-2          (b)  Participation in the group program ends immediately
 10-3    before the beginning of the first school year that begins in an
 10-4    odd-numbered year after the date the board makes the determination
 10-5    required by Subsection (a) of this article.
 10-6              (Articles 3A.107-3A.150 reserved for expansion
 10-7                            SUBCHAPTER D.  FUND
 10-8          Art. 3A.151.  FUND.  Contributions collected under Articles
 10-9    3A.104 and 3A.105 of this chapter and any amounts appropriated by
10-10    the legislature for contingency reserves or administrative expenses
10-11    shall be deposited in the Texas active school employees uniform
10-12    group benefits trust fund. The fund is a trust fund with the
10-13    comptroller.
10-14          Art. 3A.152.  USE OF FUND. (a)  The board may use amounts in
10-15    the fund only to provide group benefits under this chapter and to
10-16    pay the expenses of administering the group program.
10-17          (b)  The board may invest assets of the fund in the manner
10-18    provided by Section 67(a)(3), Article XVI, Texas Constitution.
10-19                     ARTICLE 2.  CONFORMING AMENDMENTS
10-20          SECTION 2.01. Section 1, Article 3.50-4, Insurance Code, is
10-21    amended to read as follows:
10-22          Sec. 1.  SHORT TITLE. This article may be cited as the Texas
10-23    Public School Retired Employees Group Insurance Act.
10-24          SECTION 2.02. Sections 2(3), (4), (11), and (13), Article
10-25    3.50-4, Insurance Code, are amended to read as follows:
10-26                (3)  "Dependent" means:
10-27                      (A)  a spouse of a retiree [or active member];
 11-1                      (B)  a retiree's[, an active member's,] or a
 11-2    deceased active member's unmarried child who is younger than 25
 11-3    years of age including:
 11-4                            (i)  an adopted child;
 11-5                            (ii)  a foster child, a stepchild, or other
 11-6    child who is in a regular parent-child relationship; and
 11-7                            (iii)  a recognized natural child; and
 11-8                      (C)  a retiree's [or active member's] recognized
 11-9    natural child, adopted child, foster child, stepchild, or other
11-10    child who is in a regular parent-child relationship and who lives
11-11    with or whose care is provided by the retiree[, active member,] or
11-12    surviving spouse on a regular basis, regardless of the child's age,
11-13    if the child is mentally retarded or physically incapacitated to
11-14    such an extent as to be dependent on the retiree[, active member,]
11-15    or surviving spouse for care or support, as determined by the
11-16    trustee, or in the case of a deceased active member, a recognized
11-17    natural child, adopted child, foster child, stepchild, or other
11-18    child who was in a regular parent-child relationship and who lived
11-19    with or whose care was provided by the deceased active member on a
11-20    regular basis, regardless of the child's age, if the child is
11-21    mentally retarded or physically incapacitated to such an extent as
11-22    to have been dependent on the deceased active member or surviving
11-23    spouse for care or support, as determined by the trustee.
11-24                (4)  "Fund" means the Texas public school retired
11-25    employees group insurance fund.
11-26                (11)  "Surviving spouse" means[:]
11-27                      [(A)]  the surviving spouse of a deceased
 12-1    retiree[;]
 12-2                      [(B)  the surviving spouse of a deceased active
 12-3    member of the Teacher Retirement System of Texas:]
 12-4                            [(i)  for whom contributions have been made
 12-5    to the Texas Public School Retired Employees Group Insurance
 12-6    Program at the last place of employment of the deceased active
 12-7    member in public education in this state;]
 12-8                            [(ii)  who had 10 or more years of service
 12-9    credit in the Teacher Retirement System of Texas; and]
12-10                            [(iii)  who died on or after September 1,
12-11    1986].
12-12                (13)  "Surviving dependent child" means[:]
12-13                      [(A)]  the dependent child of a deceased retiree
12-14    who has survived the deceased retiree and the deceased retiree's
12-15    spouse[; or]
12-16                      [(B)  the dependent child of a deceased active
12-17    member of the Teacher Retirement System of Texas who has survived
12-18    the deceased active member and the deceased member's spouse if the
12-19    deceased active member:]
12-20                            [(i)  had contributions to the Texas Public
12-21    School Retired Employees Group Insurance Program at his last place
12-22    of employment within public education;]
12-23                            [(ii)  had 10 or more years of service
12-24    credit in the Teacher Retirement System of Texas; and]
12-25                            [(iii)  died on or after September 1,
12-26    1986].
12-27          SECTION 2.03. Section 3(a), Article 3.50-4, Insurance Code,
 13-1    is amended to read as follows:
 13-2          (a)  The Texas Public School Retired Employees Group
 13-3    Insurance Program is established to provide for an insurance plan
 13-4    or plans under this article.
 13-5          SECTION 2.04. Section 5(a), Article 3.50-4, Insurance Code,
 13-6    is amended to read as follows:
 13-7          (a)  The trustee may adopt rules, plans, procedures, and
 13-8    orders reasonably necessary to implement this article, including:
 13-9                (1)  establishment of minimum benefit and financing
13-10    standards for group insurance coverage to be provided to all
13-11    retirees, [active employees,] dependents, surviving spouses, and
13-12    surviving dependent children;
13-13                (2)  establishment of basic and optional group coverage
13-14    to be provided to retirees, [active employees,] dependents,
13-15    surviving spouses, and surviving dependent children;
13-16                (3)  establishment of the procedures for contributions
13-17    and deductions;
13-18                (4)  establishment of periods for enrollment and
13-19    selection of optional coverage and procedures for enrolling and
13-20    exercising options under the plan;
13-21                (5)  determination of methods and procedures for claims
13-22    administration;
13-23                (6)  study of the operation of all insurance coverage
13-24    provided under this article;
13-25                (7)  administration of the fund;
13-26                (8)  adoption of a timetable for the development of
13-27    minimum benefit and financial standards for group insurance
 14-1    coverage, establishment of group insurance plans, and the taking of
 14-2    bids for and awarding of contracts for insurance plans; and
 14-3                (9)  contracting with an independent and experienced
 14-4    group insurance consultant or actuary, who does not receive
 14-5    insurance commissions from any insurance company, for advice and
 14-6    counsel in implementing and administering this program.
 14-7          SECTION 2.05. Section 8(e), Article 3.50-4, Insurance Code,
 14-8    is amended to read as follows:
 14-9          (e)  The trustee may contract for and make available to all
14-10    retirees, dependents, surviving spouses, and surviving dependent
14-11    children optional group health benefit plans in addition to the
14-12    basic plans.  The optional coverage may include a smaller
14-13    deductible, lower coinsurance, or additional categories of benefits
14-14    permitted under Subsection (b) of this section to provide
14-15    additional levels of coverages and benefits.  The trustee may
14-16    utilize a portion of the funds received for the Texas Public School
14-17    Retired Employees Group Insurance Program to offset some portion of
14-18    costs paid by the retiree for optional coverage if such utilization
14-19    does not reduce the period the program is projected to remain
14-20    financially solvent by more than one year in a biennium.  Any
14-21    additional contributions for these optional plans shall be paid for
14-22    by the retiree, surviving spouse, or surviving dependent children.
14-23          SECTION 2.06. Section 9, Article 3.50-4, Insurance Code, is
14-24    amended to read as follows:
14-25          Sec. 9.  BENEFIT CERTIFICATES. At such times, or upon such
14-26    events, as designated by the trustee, each insurance carrier shall
14-27    issue to each retiree, [active employee,] surviving spouse, or
 15-1    surviving dependent child insured under this article a certificate
 15-2    of insurance that:
 15-3                (1)  states the benefits to which the person is
 15-4    entitled;
 15-5                (2)  states to whom the benefits are payable;
 15-6                (3)  states to whom the claims must be submitted; and
 15-7                (4)  summarizes the provisions of the policy
 15-8    principally affecting the person.
 15-9          SECTION 2.07. Section 12, Article 3.50-4, Insurance Code, is
15-10    amended to read as follows:
15-11          Sec. 12.  DEATH CLAIMS:  BENEFICIARIES. The amount of group
15-12    life insurance and group accidental death and dismemberment
15-13    insurance covering a retiree, [active employee,] surviving spouse,
15-14    dependent, or surviving dependent child at the date of death shall
15-15    be paid, on the establishment of a valid claim, only:
15-16                (1)  to the beneficiary or beneficiaries designated by
15-17    the person in a signed and witnessed written document received
15-18    before death in the trustee's office; or
15-19                (2)  if no beneficiary is properly designated or in
15-20    existence, to persons in accordance with the trustee's death
15-21    benefit provisions in Subsection (b), Section 824.103, Government
15-22    Code.
15-23          SECTION 2.08. Section 13, Article 3.50-4, Insurance Code, is
15-24    amended to read as follows:
15-25          Sec. 13.  AUTOMATIC COVERAGE. A retiree [or active employee]
15-26    who applies during an enrollment period may not be denied any of
15-27    the group insurance basic coverage provided under this article
 16-1    unless the person has been found under Section 18A of this article
 16-2    to have defrauded or attempted to defraud the Texas Public School
 16-3    Retired Employees Group Insurance Program.
 16-4          SECTION 2.09. Section 15, Article 3.50-4, Insurance Code, is
 16-5    amended to read as follows:
 16-6          Sec. 15.  TEXAS PUBLIC SCHOOL RETIRED EMPLOYEES GROUP
 16-7    INSURANCE FUND. (a)  The Texas public school retired employees
 16-8    group insurance fund is created.  The comptroller is the custodian
 16-9    of the fund, and the trustee shall administer the fund.  All
16-10    contributions from active employees, retirees, and the state,
16-11    contributions for optional coverages, investment income,
16-12    appropriations for implementation of this program, and other money
16-13    required or authorized to be paid into the fund shall be paid into
16-14    the fund.  From the fund shall be paid, without state fiscal year
16-15    limitation, the appropriate premiums to the carrier or carriers
16-16    providing group coverage under the plan or plans under this
16-17    article, claims for benefits under the group coverage, and the
16-18    amounts expended by the trustee for administration of the program.
16-19    The appropriate portion of the contributions to the fund to provide
16-20    for incurred but unreported claim reserves and contingency
16-21    reserves, as determined by the trustee, shall be retained in the
16-22    fund.
16-23          (b)  The trustee shall transfer the amounts deducted from
16-24    annuities for contributions into the fund.
16-25          (c)  Expenses for the development and administration of the
16-26    program shall be spent as provided by a budget adopted by the
16-27    trustee.
 17-1          (d)  The trustee may invest and reinvest the money in the
 17-2    fund as provided by Subchapter D, Chapter 825, Government Code, for
 17-3    assets of the Teacher Retirement System of Texas.
 17-4          SECTION 2.10. Section 18A, Article 3.50-4, Insurance Code, is
 17-5    amended to read as follows:
 17-6          Sec. 18A.  EXPULSION FROM PROGRAM FOR FRAUD. (a)  After
 17-7    notice and hearing as provided by this section, the trustee may
 17-8    expel from participation in the Texas Public School Retired
 17-9    Employees Group Insurance Program any retiree, [active employee,]
17-10    surviving spouse, dependent, or surviving dependent child who
17-11    submits a fraudulent claim under, or has defrauded or attempted to
17-12    defraud, any health benefits plan offered under the program.
17-13          (b)  On its motion or on the receipt of a complaint, the
17-14    trustee may call and hold a hearing to determine whether a person
17-15    has submitted a fraudulent claim under, or has defrauded or
17-16    attempted to defraud, any health benefits plan offered under the
17-17    Texas Public School Retired Employees Group Insurance Program.
17-18          (c)  A proceeding under this section is a contested case
17-19    under Chapter 2001, Government Code [the Administrative Procedure
17-20    and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
17-21    Statutes)].
17-22          (d)  If the trustee, at the conclusion of the hearing, issues
17-23    a decision that finds that the accused submitted a fraudulent claim
17-24    or has defrauded or attempted to defraud any health benefits plan
17-25    offered under the Texas Public School Retired Employees Group
17-26    Insurance Program, the trustee shall expel the person from
17-27    participation in the program.
 18-1          (e)  The substantial evidence rule shall be used on any
 18-2    appeal of a decision of the trustee under this section.
 18-3          (f)  A person expelled from the Texas Public School Retired
 18-4    Employees Group Insurance Program may not be insured by any health
 18-5    insurance plan offered by the program for a period, to be
 18-6    determined by the trustee, of up to five years from the date the
 18-7    expulsion takes effect.
 18-8          SECTION 2.11. Section 18B(a), Article 3.50-4, Insurance Code,
 18-9    is amended to read as follows:
18-10          (a)  Section 825.507, Government Code, concerning the
18-11    confidentiality of information in records that are in the custody
18-12    of the Teacher Retirement System of Texas, applies to information
18-13    in records that are in the custody of the retirement system
18-14    regarding retirees, active employees, annuitants, or beneficiaries
18-15    under the Texas Public School Retired Employees Group Insurance
18-16    Program.
18-17          SECTION 2.12. Sections 18C(c), (d), and (i), Article 3.50-4,
18-18    Insurance Code, are amended to read as follows:
18-19          (c)  The trustee, the Texas public school retired employees
18-20    group insurance program, the Texas public school retired employees
18-21    group insurance fund, and the board of trustees, officers, advisory
18-22    committee members, and employees of the trustee are not liable for
18-23    damages arising from the acts or omissions of health care providers
18-24    who are participating health care providers in the coordinated care
18-25    network established by the trustee.  Those health care providers
18-26    are independent contractors and are responsible for their own acts
18-27    and omissions.
 19-1          (d)  The trustee, the Texas public school retired employees
 19-2    group insurance program, the Texas public school retired employees
 19-3    group insurance fund, or a member of a credentialing committee, or
 19-4    the board of trustees, officers, advisory committee members, or
 19-5    employees of the trustee are not liable for damages arising from
 19-6    any act, statement, determination, recommendation made, or act
 19-7    reported, without malice, in the course of the evaluation of the
 19-8    qualifications of health care providers or of the patient care
 19-9    rendered by those providers.
19-10          (i)  A credentialing committee, a person participating in a
19-11    credentialing review, a health care provider, the trustee, the
19-12    Texas public school retired employees group insurance program, or
19-13    the board of trustees, officers, advisory committee members, or
19-14    employees of the trustee that are named as defendants in any civil
19-15    action filed as a result of participation in the credentialing
19-16    process may use otherwise confidential information obtained for
19-17    legitimate internal business and professional purposes, including
19-18    use in their own defense.  Use of information under this subsection
19-19    does not constitute a waiver of the confidential and privileged
19-20    nature of the information.
19-21          SECTION 2.13. Section 22.004, Education Code, is amended to
19-22    read as follows:
19-23          Sec. 22.004.  GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a)
19-24    Each district may participate in the group benefits program
19-25    provided under Chapter 3A, Insurance Code.
19-26          (b)  A district that does not elect to participate in the
19-27    program described by Subsection (a) shall make available to its
 20-1    employees group health coverage provided by a risk pool established
 20-2    by one or more school districts under Chapter 172, Local Government
 20-3    Code, or under a policy of insurance or group contract issued by an
 20-4    insurer, a company subject to Chapter 20, Insurance Code, or a
 20-5    health maintenance organization under the Texas Health Maintenance
 20-6    Organization Act (Chapter 20A, Vernon's Texas Insurance Code).  The
 20-7    coverage must meet the substantive coverage requirements of Article
 20-8    3.51-6, Insurance Code, and any other law applicable to group
 20-9    health insurance policies or contracts issued in this state.  The
20-10    coverage must include major medical treatment but may exclude
20-11    experimental procedures.  In this subsection, "major medical
20-12    treatment" means a medical, surgical, or diagnostic procedure for
20-13    illness or injury. The coverage may include managed care or
20-14    preventive care and must be comparable to the basic health coverage
20-15    provided under the Texas Employees Uniform Group Insurance Benefits
20-16    Act (Article 3.50-2, Vernon's Texas Insurance Code).  The board of
20-17    trustees of the Teacher Retirement System of Texas shall adopt
20-18    rules to determine whether a school district's group health
20-19    coverage is comparable to the basic health coverage specified by
20-20    this subsection.  The rules must provide for consideration of the
20-21    following factors concerning the district's coverage in determining
20-22    whether the district's coverage is comparable to the basic health
20-23    coverage specified by this subsection:
20-24                (1)  the deductible amount for service provided inside
20-25    and outside of the network;
20-26                (2)  the coinsurance percentages for service provided
20-27    inside and outside of the network;
 21-1                (3)  the maximum amount of coinsurance payments a
 21-2    covered person is required to pay;
 21-3                (4)  the amount of the copayment for an office visit;
 21-4                (5)  the schedule of benefits and the scope of
 21-5    coverage;
 21-6                (6)  the lifetime maximum benefit amount; and
 21-7                (7)  verification that the coverage is issued by a
 21-8    provider licensed to do business in this state by the Texas
 21-9    Department of Insurance or is provided by a risk pool authorized
21-10    under Chapter 172, Local Government Code, or that a district is
21-11    capable of covering the assumed liabilities in the case of coverage
21-12    provided through district self-insurance.
21-13          (c) [(b)]  The cost of the coverage provided under the
21-14    program described by Subsection (a) shall be paid by the state, the
21-15    district, and the employees in the manner provided by Chapter 3A,
21-16    Insurance Code.  The cost of coverage provided under a plan adopted
21-17    under Subsection (b) shall [may] be shared by the employees and the
21-18    district without contribution by the state.
21-19          (d) [(c)]  Each district shall report the district's
21-20    compliance with this section [subsection] to the executive director
21-21    of the Teacher Retirement System of Texas not later than March 1 of
21-22    each even-numbered year in the manner required by the board of
21-23    trustees of the Teacher Retirement System of Texas.  For a district
21-24    that does not elect to participate in the program described by
21-25    Subsection (a), the [The] report must be based on the district
21-26    group health coverage plan in effect during the current plan year
21-27    and must include:
 22-1                (1)  appropriate documentation of:
 22-2                      (A)  the district's contract for group health
 22-3    coverage with a provider licensed to do business in this state by
 22-4    the Texas Department of Insurance or a risk pool authorized under
 22-5    Chapter 172, Local Government Code; or
 22-6                      (B)  a resolution of the board of trustees of the
 22-7    district authorizing a self-insurance plan for district employees
 22-8    and of the district's review of district ability to cover the
 22-9    liability assumed;
22-10                (2)  the schedule of benefits;
22-11                (3)  the premium rate sheet, including the amount paid
22-12    by the district and employee;
22-13                (4)  the number of employees covered by the [each]
22-14    health coverage plan offered by the district; and
22-15                (5)  any other information considered appropriate by
22-16    the executive director of the Teacher Retirement System of Texas.
22-17          (e)  For each district that does not elect to participate in
22-18    the program described by Subsection (a), and based [(d)  Based] on
22-19    the criteria prescribed by Subsection (b) [(a)], the executive
22-20    director of the Teacher Retirement System of Texas shall certify
22-21    whether a district's coverage is comparable to the basic health
22-22    coverage provided under the Texas Employees Uniform Group Insurance
22-23    Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code).  If
22-24    the executive director of the Teacher Retirement System of Texas
22-25    determines that the group health coverage offered by a district is
22-26    not comparable, the executive director shall report that
22-27    information to the district and to the Legislative Budget Board.
 23-1    The executive director shall submit a report to the legislature not
 23-2    later than September 1 of each even-numbered year describing the
 23-3    status of each district's group health coverage program based on
 23-4    the information contained in the report required by Subsection (d)
 23-5    [(c)] and the certification required by this subsection.
 23-6          (f) [(e)]  A school district that does not elect to
 23-7    participate in the program described by Subsection (a) may not
 23-8    contract with an insurer, a company subject to Chapter 20,
 23-9    Insurance Code, or a health maintenance organization to issue a
23-10    policy or contract under this section, or with any person to assist
23-11    the school district in obtaining or managing the policy or contract
23-12    unless, before the contract is entered into, the insurer, company,
23-13    organization, or person provides the district with an audited
23-14    financial statement showing the financial condition of the insurer,
23-15    company, organization, or person.
23-16          (g) [(f)]  An insurer, a company subject to Chapter 20,
23-17    Insurance Code, or a health maintenance organization that issues a
23-18    policy or contract under this section and any person that assists
23-19    the school district in obtaining or managing the policy or contract
23-20    for compensation shall provide an annual audited financial
23-21    statement to the school district showing the financial condition of
23-22    the insurer, company, organization, or person.
23-23          (h) [(g)]  An audited financial statement provided under this
23-24    section must be made in accordance with rules adopted by the
23-25    commissioner of insurance or state auditor, as applicable.
23-26                     ARTICLE 3.  REPEALER; TRANSITION
23-27          SECTION 3.01. Effective September 1, 2002, Section 7A,
 24-1    Article 3.50-4, Insurance Code, is repealed.
 24-2          SECTION 3.02. (a)  During the 2001-2002 school year, the
 24-3    Texas Active School Employees Group Benefits Board shall develop
 24-4    the group program to be implemented and administered under Chapter
 24-5    3A, Insurance Code, as added by this Act.  The board may employ
 24-6    persons as necessary to implement this subsection.
 24-7          (b)  Coverage under the group program authorized by Chapter
 24-8    3A, Insurance Code, as added by this Act, shall begin with the
 24-9    2002-2003 school year, but not later than September 1, 2002.
24-10          (c)  A school district that elects to participate in the
24-11    group program for the 2002-2003 school year may elect to
24-12    discontinue participation only in accordance with Article 3A.106,
24-13    Insurance Code, as added by this Act.
24-14          SECTION 3.03. (a)  The Teacher Retirement System of Texas
24-15    shall, not later than September 1, 2002, transfer from the program
24-16    established under Article 3.50-4, Insurance Code, all assets and
24-17    liabilities provided under that program regarding active employees,
24-18    and all records relating to coverage of active employees under the
24-19    program, to the Texas Active School Employees Group Benefits Board
24-20    for the statewide group program established under Chapter 3A,
24-21    Insurance Code, as added by this Act.
24-22          (b)  The comptroller shall, not later than September 1, 2002,
24-23    transfer from the fund established under Section 15, Article
24-24    3.50-4, Insurance Code, all assets and liabilities of that fund
24-25    relating to coverage for active employees to the fund established
24-26    under Subchapter D, Chapter 3A, Insurance Code, as added by this
24-27    Act.
 25-1          SECTION 3.04. In making initial appointments to the Texas
 25-2    Active School Employees Group Benefits Board, the governor shall
 25-3    appoint three members for terms expiring February 1, 2003, three
 25-4    members for terms expiring February 1, 2005, and three members for
 25-5    terms expiring February 1, 2007.
 25-6          SECTION 3.05. (a)  This Act takes effect September 1, 2001,
 25-7    except that Article 2 of this Act takes effect September 1, 2002.
 25-8          (b)  The Texas Active School Employees Group Benefits Board
 25-9    shall adopt rules as necessary to implement Section 3.02 of this
25-10    Act not later than December 31, 2001.