77R11305 E
By Brimer H.B. No. 1203
Substitute the following for H.B. No. 1203:
By Brimer C.S.H.B. No. 1203
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the purchase of certain insurance coverage by state
1-3 agencies and to workers' compensation insurance benefits provided
1-4 by certain state agencies.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. PURCHASE OF INSURANCE COVERAGE
1-7 SECTION 1.01. Section 412.001(4), Labor Code, is amended to
1-8 read as follows:
1-9 (4) "State agency" means:
1-10 (A) a board, commission, department, office, or
1-11 other agency in the executive, judicial, or legislative branch of
1-12 state government that has five or more employees, was created by
1-13 the constitution or a statute of this state, and has authority not
1-14 limited to a specific geographical portion of the state; and
1-15 (B) an institution of higher education as
1-16 defined by Section 61.003, Education Code.
1-17 SECTION 1.02. Subchapter B, Chapter 412, Labor Code, is
1-18 amended by amending Section 412.011 and adding Section 412.0111 to
1-19 read as follows:
1-20 Sec. 412.011. POWERS AND DUTIES OF OFFICE. (a) The State
1-21 Office of Risk Management shall [is created to] administer
1-22 insurance services obtained by state agencies, including the
1-23 government employees workers' compensation insurance program and
1-24 the state risk management programs.
2-1 (b) The office shall:
2-2 (1) operate as a full-service risk manager and
2-3 insurance manager for state agencies as provided by Subsections (c)
2-4 and (d);
2-5 (2) maintain and review records of property, casualty,
2-6 or liability insurance coverages purchased by or for a state
2-7 agency;
2-8 (3) administer guidelines adopted by the board for a
2-9 comprehensive risk management program applicable to all state
2-10 agencies to reduce property and liability losses, including
2-11 workers' compensation losses;
2-12 (4) [(2)] review, verify, monitor, and approve risk
2-13 management programs adopted by state agencies;
2-14 (5) [(3)] assist a state agency that has not
2-15 implemented an effective risk management program to implement a
2-16 comprehensive program that meets the guidelines established by the
2-17 board; and
2-18 (6) [(4)] administer the workers' compensation
2-19 insurance program for state employees established under Chapter
2-20 501.
2-21 (c) The office shall:
2-22 (1) perform risk management for each state agency
2-23 subject to Chapter 412; and
2-24 (2) purchase insurance coverage for a state agency
2-25 subject to Chapter 501 under any line of insurance other than
2-26 health or life insurance, including liability insurance authorized
2-27 under Chapter 612, Government Code.
3-1 (d) The office may perform risk management for a state
3-2 agency that is not subject to Chapter 501. In administering
3-3 insurance services for such a state agency, the office and the
3-4 state agency are subject to Section 412.0112.
3-5 (e) The board by rule shall develop an implementation
3-6 schedule for the purchase under this section of insurance for state
3-7 agencies by the office. The board shall phase in, by line of
3-8 insurance, the requirement that a state agency purchase coverage
3-9 only through the office.
3-10 (f) A state agency subject to Chapter 501 may not purchase
3-11 property, casualty, or liability insurance coverage without the
3-12 approval of the board.
3-13 Sec. 412.0111. AFFILIATION WITH OFFICE OF ATTORNEY GENERAL.
3-14 The office is administratively attached to the office of the
3-15 attorney general and the office of the attorney general shall
3-16 provide the facilities for the office, but the office shall be
3-17 independent of the office of the attorney general's direction.
3-18 SECTION 1.03. Subchapter B, Chapter 412, Labor Code, is
3-19 amended by adding Section 412.0112 to read as follows:
3-20 Sec. 412.0112. PURCHASE OF INSURANCE COVERAGE BY STATE
3-21 AGENCIES NOT SUBJECT TO CHAPTER 501. (a) This section applies to:
3-22 (1) an institution or agency subject to Chapter 502;
3-23 (2) an institution or agency subject to Chapter 503;
3-24 and
3-25 (3) a state agency subject to Chapter 505.
3-26 (b) An entity to which this section applies must give the
3-27 office 30 days' notice in writing of the entity's intent to
4-1 purchase insurance coverage in a line of insurance described by
4-2 Section 412.011(c).
4-3 (c) The office shall submit bids to the entity for the
4-4 purchase of the insurance coverage through the office. The entity
4-5 is not required to purchase the coverage through the office, but
4-6 must report the purchase to the office as provided by Section
4-7 412.051.
4-8 SECTION 1.04. Subchapter B, Chapter 412, Labor Code, is
4-9 amended by amending Section 412.012 and adding Sections 412.0121,
4-10 412.0122, and 412.0123 to read as follows:
4-11 Sec. 412.012. FUNDING. [(a)] The office shall be
4-12 administered through money appropriated by the legislature and
4-13 through:
4-14 (1) interagency contracts for purchase of insurance
4-15 coverage and the operation of the risk management program; and
4-16 (2) the allocation program for the financing of state
4-17 workers' compensation benefits.
4-18 Sec. 412.0121. INTERAGENCY CONTRACTS. (a) [(b) Interagency
4-19 Contracts. (1)] Each state agency shall enter into an interagency
4-20 contract with the office under Chapter 771, Government Code, to pay
4-21 the costs incurred by the office in administering this chapter for
4-22 the benefit of that state agency.
4-23 (b) Costs payable under the contract include the cost of:
4-24 (1) [(A)] services of office employees;
4-25 (2) [(B)] materials; and
4-26 (3) [(C)] equipment, including computer hardware and
4-27 software.
5-1 (c) [(2)] The amount of the costs to be paid by a state
5-2 agency under the interagency contract is based on:
5-3 (1) [(A)] the number of employees of the agency
5-4 compared with the total number of employees of all state agencies
5-5 to which this chapter applies;
5-6 (2) [(B)] the dollar value of the agency's property
5-7 and asset and liability exposure compared to that of all state
5-8 agencies to which this chapter applies; and
5-9 (3) [(C)] the number and aggregate cost of claims and
5-10 losses incurred by the state agency compared to those incurred by
5-11 all state agencies to which this chapter applies.
5-12 (d) The board may by rule establish the formula for
5-13 allocating the cost of this chapter in an interagency contract in a
5-14 manner that gives consideration to the factors in Subsection (c)
5-15 and any other factors it deems relevant, including an agency's risk
5-16 management expenditures, unique risks, and established programs.
5-17 Sec. 412.0122. STATE SELF-INSURING FOR WORKERS'
5-18 COMPENSATION. (a) [(c)] The state is self-insuring with respect
5-19 to an employee's compensable injury.
5-20 (b) The legislature shall appropriate the amount designated
5-21 by the appropriation structure for the payment of state workers'
5-22 compensation claims costs to the office. This section does not
5-23 affect the reimbursement of claims costs by funds other than
5-24 general revenue funds, as provided by the General Appropriations
5-25 Act.
5-26 Sec. 412.0123. DEPOSIT OF WORKERS' COMPENSATION SUBROGATION
5-27 RECOVERIES. (a) [(d) State Workers' Compensation Account. (1)]
6-1 All money recovered by the director from a third party through
6-2 subrogation shall be deposited into the state workers' compensation
6-3 account in general revenue.
6-4 (b) [(2)] Funds deposited under this section may be used for
6-5 the payment of workers' compensation [and other] benefits to state
6-6 employees.
6-7 SECTION 1.05. Section 412.021(a), Labor Code, is amended to
6-8 read as follows:
6-9 (a) The office is governed by the risk management board.
6-10 Members of the board must have demonstrated experience in the
6-11 fields [field] of:
6-12 (1) insurance and insurance regulation;
6-13 (2) workers' compensation; and
6-14 (3) risk management administration.
6-15 SECTION 1.06. Section 412.022(b), Labor Code, is amended to
6-16 read as follows:
6-17 (b) A training program established under this section must
6-18 provide information to the member regarding:
6-19 (1) the enabling legislation that created the board;
6-20 (2) the program operated by the board;
6-21 (3) the role and functions of the board;
6-22 (4) the rules of the board, with an emphasis on the
6-23 rules that relate to disciplinary and investigatory authority;
6-24 (5) the current budget for the board;
6-25 (6) the results of the most recent formal audit of the
6-26 board;
6-27 (7) the requirements of:
7-1 (A) the open meetings law, Chapter 551,
7-2 Government Code;
7-3 (B) the public information [open records] law,
7-4 Chapter 552, Government Code; and
7-5 (C) the administrative procedure law, Chapter
7-6 2001, Government Code;
7-7 (8) the requirements of the conflict of interest laws
7-8 and other laws relating to public officials; and
7-9 (9) any applicable ethics policies adopted by the
7-10 board or the Texas Ethics Commission.
7-11 SECTION 1.07. Section 412.041, Labor Code, is amended to read
7-12 as follows:
7-13 Sec. 412.041. DIRECTOR DUTIES[; RESPONSIBILITIES]. (a) The
7-14 director serves as the state risk manager.
7-15 (b) The director shall supervise the development and
7-16 administration of systems to:
7-17 (1) identify the property and liability losses,
7-18 including workers' compensation losses, of each state agency;
7-19 (2) identify the administrative costs of risk
7-20 management incurred by each state agency;
7-21 (3) identify and evaluate the exposure of each state
7-22 agency to claims for property and liability losses, including
7-23 workers' compensation; and
7-24 (4) reduce the property and liability losses,
7-25 including workers' compensation, incurred by each state agency.
7-26 (c) In addition to other duties provided by this chapter, by
7-27 Chapter 501, and by the board, the director shall:
8-1 (1) keep full and accurate minutes of the transactions
8-2 and proceedings of the board;
8-3 (2) be the custodian of the files and records of the
8-4 board;
8-5 (3) prepare and recommend to the board plans and
8-6 procedures necessary to implement the purposes and objectives of
8-7 this chapter and Chapter 501, including rules and proposals for
8-8 administrative procedures consistent with this chapter and Chapter
8-9 501;
8-10 (4) hire staff as necessary to accomplish the
8-11 objectives of the board and may delegate powers and duties to
8-12 members of that staff as necessary;
8-13 (5) be responsible for the investigation of complaints
8-14 and for the presentation of formal complaints;
8-15 (6) attend all meetings of the board as a nonvoting
8-16 participant; and
8-17 (7) handle the correspondence of the board and obtain,
8-18 assemble, or prepare the reports and information that the board may
8-19 direct or authorize.
8-20 (d) If necessary to the administration of this chapter and
8-21 Chapter 501, the director, with the approval of the board, may
8-22 secure and provide for services that are necessary and may employ
8-23 and compensate within available appropriations professional
8-24 consultants, technical assistants, and employees on a full-time or
8-25 part-time basis.
8-26 (e) The director also serves as the administrator of the
8-27 government employees workers' compensation insurance program.
9-1 (f) In administering and enforcing Chapter 501 as regards a
9-2 compensable injury with a date of injury before September 1, 1995,
9-3 the director shall act in the capacity of employer and insurer. In
9-4 administering and enforcing Chapter 501 as regards a compensable
9-5 injury with a date of injury on or after September 1, 1995, the
9-6 director shall act in the capacity of insurer. [(effective for
9-7 dates of injury before September 1, 1995.)]
9-8 (g) [(1)] The director shall act as an adversary before the
9-9 commission and courts and present the legal defenses and positions
9-10 of the state as an employer and insurer, as appropriate.
9-11 (h) [(2)] For the purposes of Subsection (f) [this
9-12 subsection] and Chapter 501, the director is entitled to the legal
9-13 counsel of the attorney general.
9-14 (i) In administering Chapter 501 the [(3) The] director is
9-15 subject to the rules, orders, and decisions of the commission in
9-16 the same manner as a private employer, insurer, or association.
9-17 (j) [(g) In administering and enforcing Chapter 501, the
9-18 director shall act in the capacity of insurer. (effective for
9-19 dates of injury on or after September 1, 1995.)]
9-20 [(1) The director shall act as an adversary before the
9-21 commission and courts and present the legal defenses and positions
9-22 of the state as an insurer.]
9-23 [(2) For purposes of this subsection and Chapter 501,
9-24 the director is entitled to legal counsel of the attorney general.]
9-25 [(3) The director is subject to the rules, orders, and
9-26 decisions of the commission in the same manner as an insurer or
9-27 association.]
10-1 [(h)] The director shall:
10-2 (1) prepare for adoption by the board procedural rules
10-3 and prescribe forms necessary for the effective administration of
10-4 this chapter and Chapter 501 [(effective for dates of injury before
10-5 September 1, 1995)]; and
10-6 (2) prepare for adoption by the board and enforce
10-7 reasonable rules for the prevention of accidents and injuries[;]
10-8 [(3) prepare for adoption by the board procedural
10-9 rules and prescribe forms necessary for the effective
10-10 administration of this chapter and Chapter 501]. [(effective for
10-11 dates of injury on or after September 1, 1995.)]
10-12 (k) [(i)] The director shall hold hearings on all proposed
10-13 rules and provide reasonable opportunity for the officers of state
10-14 agencies to testify at hearings on all proposed rules under this
10-15 chapter and Chapter 501.
10-16 (l) [(j)] The director shall furnish copies of all rules to:
10-17 (1) the commission;
10-18 (2) the commissioner of the Texas Department of
10-19 Insurance; and
10-20 (3) [to] the administrative heads of all state
10-21 agencies affected by this chapter and Chapter 501.
10-22 SECTION 1.08. Sections 412.042(a) and (b), Labor Code, are
10-23 amended to read as follows:
10-24 (a) The director shall report to the legislature at the
10-25 beginning of each regular session regarding the services provided
10-26 by the office to a state agency subject to Chapter 501.
10-27 [(b)] The report required under this subsection [section]
11-1 shall be dated January 1 of the year in which the regular session
11-2 is held and must include:
11-3 (1) a summary of administrative expenses;
11-4 (2) a statement:
11-5 (A) showing the amount of the money appropriated
11-6 by the preceding legislature that remains unexpended on the date of
11-7 the report; and
11-8 (B) estimating the amount of that balance
11-9 necessary to administer Chapter 501 for the remainder of that
11-10 fiscal year; and
11-11 (3) [(C)] an estimate, based on experience factors, of
11-12 the amount of money that will be required to administer Chapter 501
11-13 and pay for the compensation and services provided under Chapter
11-14 501 during the next succeeding biennium.
11-15 (b) In addition to the report required under Subsection (a),
11-16 the director shall report to the legislature not later than
11-17 February 1 of each odd-numbered year regarding insurance coverage
11-18 purchased for state agencies, premium dollars spent to obtain that
11-19 coverage, and losses incurred under that coverage. The report must
11-20 include:
11-21 (1) a description of the services offered by the
11-22 office to state agencies that are not subject to Chapter 501; and
11-23 (2) a statement identifying any insurance coverage
11-24 purchased by such a state agency that was not obtained through a
11-25 bid for that purchase offered by the office.
11-26 SECTION 1.09. Section 412.051, Labor Code, is amended to read
11-27 as follows:
12-1 Sec. 412.051. DUTIES OF STATE AGENCIES; INSURANCE REPORTING
12-2 REQUIREMENTS. (a) Each state agency [subject to this chapter]
12-3 shall actively manage the risks of that agency by:
12-4 (1) developing, implementing, and maintaining programs
12-5 designed to assist employees who sustain compensable injuries to
12-6 return to work; and
12-7 (2) cooperating with the office and the Texas
12-8 Department of Insurance in the purchase of property, casualty, and
12-9 liability lines of insurance coverage.
12-10 (b) In addition to the report required under Section
12-11 412.053, each state agency that intends to purchase property,
12-12 casualty, or liability insurance coverage in a manner other than
12-13 through the services provided by the office shall report the
12-14 intended purchase to the office in the manner prescribed by the
12-15 office. The state agency shall report the intended purchase not
12-16 later than the 30th day before the date on which the purchase of
12-17 the coverage is scheduled to occur. The office may require a state
12-18 agency to submit copies of insurance forms, policies, and other
12-19 relevant information.
12-20 SECTION 1.10. Section 412.053(b), Labor Code, is amended to
12-21 read as follows:
12-22 (b) The information shall be reported not later than the
12-23 60th day before the last day [on or before 60 days after the close]
12-24 of each fiscal year.
12-25 SECTION 1.11. Subchapter E, Chapter 21, Insurance Code, is
12-26 amended by adding Article 21.49-15A to read as follows:
12-27 Art. 21.49-15A. INSURER REPORT TO STATE OFFICE OF RISK
13-1 MANAGEMENT
13-2 Sec. 1. DEFINITIONS. In this article:
13-3 (1) "Insurer" means an insurance company,
13-4 inter-insurance exchange, mutual or reciprocal association, county
13-5 mutual insurance company, Lloyd's plan, or other entity that is
13-6 authorized by the Texas Department of Insurance to engage in the
13-7 business of insurance in this state.
13-8 (2) "Office" means the State Office of Risk
13-9 Management.
13-10 (3) "State agency" has the meaning assigned by Section
13-11 412.001, Labor Code.
13-12 Sec. 2. REPORTING REQUIREMENTS. (a) Each insurer that
13-13 enters into an insurance policy or other contract or agreement with
13-14 a state agency for the purchase of property, casualty, or liability
13-15 insurance coverage by the state agency, including a policy,
13-16 contract, or agreement subject to competitive bidding requirements,
13-17 shall report the intended sale to the office in the manner
13-18 prescribed by that office.
13-19 (b) The insurer shall report the intended sale not later
13-20 than the 30th day before the date the sale of the insurance
13-21 coverage is scheduled to occur.
13-22 (c) The office may require an insurer to submit copies of
13-23 insurance forms, policies, and other relevant information.
13-24 (d) The office shall adopt rules as necessary to implement
13-25 this article. In adopting those rules, the office shall consult
13-26 with the commissioner.
13-27 (e) Failure by an insurer to comply with the reporting
14-1 requirements adopted under this article constitutes grounds for the
14-2 imposition of sanctions against that insurer under Chapter 82.
14-3 SECTION 1.12. Section 412.052, Labor Code, is repealed.
14-4 SECTION 1.13. A person serving as a member of the risk
14-5 management board on the effective date of this Act is entitled to
14-6 serve until the expiration of the term for which the member was
14-7 appointed. On the expiration of that term, the governor shall
14-8 appoint a member who meets the qualifications established by
14-9 Section 412.021, Labor Code, as amended by this Act.
14-10 ARTICLE 2. EFFECT OF USE OF LEAVE ON INCOME BENEFITS
14-11 SECTION 2.01. Subchapter C, Chapter 505, Labor Code, is
14-12 amended by adding Section 505.060 to read as follows:
14-13 Sec. 505.060. EFFECT OF SICK LEAVE; ANNUAL LEAVE. (a) An
14-14 employee may elect to use accrued sick leave before receiving
14-15 income benefits. If an employee elects to use sick leave, the
14-16 employee is not entitled to income benefits under this chapter
14-17 until the employee has exhausted the employee's accrued sick leave.
14-18 (b) An employee may elect to use all or any number of weeks
14-19 of accrued annual leave after the employee's accrued sick leave is
14-20 exhausted. If an employee elects to use annual leave, the employee
14-21 is not entitled to income benefits under this chapter until the
14-22 elected number of weeks of leave have been exhausted.
14-23 ARTICLE 3. TRANSITION; EFFECTIVE DATE
14-24 SECTION 3.01. (a) Except as provided by Subsections (b),
14-25 (c), and (d) of this section, this Act takes effect September 1,
14-26 2001.
14-27 (b) Not later than December 1, 2001, the risk management
15-1 board shall adopt rules to implement:
15-2 (1) the changes in law made by the amendments made by
15-3 this Act to Chapter 412, Labor Code; and
15-4 (2) Article 21.49-15A, Insurance Code, as added by
15-5 this Act.
15-6 (c) An insurer is not required to comply with the reporting
15-7 requirements adopted under Article 21.49-15A, Insurance Code, as
15-8 added by this Act, until January 1, 2002. Article 21.49-15A,
15-9 Insurance Code, as added by this Act, applies only to an insurance
15-10 policy, contract, or agreement delivered, issued for delivery, or
15-11 renewed on or after January 1, 2002. A policy, contract, or
15-12 agreement delivered, issued for delivery, or renewed before January
15-13 1, 2002, is governed by the law as it existed immediately before
15-14 the effective date of this Act, and that law is continued in effect
15-15 for that purpose.
15-16 (d) Section 505.060, Labor Code, as added by this Act,
15-17 applies only to a claim for workers' compensation benefits based on
15-18 a compensable injury that occurs on or after the effective date of
15-19 this Act. A claim based on a compensable injury that occurs before
15-20 that date is governed by the law in effect on the date the
15-21 compensable injury occurred, and the former law is continued in
15-22 effect for that purpose.