1-1 By: Brimer (Senate Sponsor - Fraser) H.B. No. 1203
1-2 (In the Senate - Received from the House May 11, 2001;
1-3 May 11, 2001, read first time and referred to Committee on State
1-4 Affairs; May 11, 2001, reported favorably by the following vote:
1-5 Yeas 6, Nays 0; May 11, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the purchase of certain insurance coverage by state
1-9 agencies and to workers' compensation insurance benefits provided
1-10 by certain state agencies.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 ARTICLE 1. PURCHASE OF INSURANCE COVERAGE
1-13 SECTION 1.01. Section 412.001(4), Labor Code, is amended to
1-14 read as follows:
1-15 (4) "State agency" means:
1-16 (A) a board, commission, department, office, or
1-17 other agency in the executive, judicial, or legislative branch of
1-18 state government that has five or more employees, was created by
1-19 the constitution or a statute of this state, and has authority not
1-20 limited to a specific geographical portion of the state; and
1-21 (B) an institution of higher education as
1-22 defined by Section 61.003, Education Code.
1-23 SECTION 1.02. Subchapter B, Chapter 412, Labor Code, is
1-24 amended by amending Section 412.011 and adding Section 412.0111 to
1-25 read as follows:
1-26 Sec. 412.011. POWERS AND DUTIES OF OFFICE. (a) The State
1-27 Office of Risk Management shall [is created to] administer
1-28 insurance services obtained by state agencies, including the
1-29 government employees workers' compensation insurance program and
1-30 the state risk management programs.
1-31 (b) The office shall:
1-32 (1) operate as a full-service risk manager and
1-33 insurance manager for state agencies as provided by Subsections (c)
1-34 and (d);
1-35 (2) maintain and review records of property, casualty,
1-36 or liability insurance coverages purchased by or for a state
1-37 agency;
1-38 (3) administer guidelines adopted by the board for a
1-39 comprehensive risk management program applicable to all state
1-40 agencies to reduce property and liability losses, including
1-41 workers' compensation losses;
1-42 (4) [(2)] review, verify, monitor, and approve risk
1-43 management programs adopted by state agencies;
1-44 (5) [(3)] assist a state agency that has not
1-45 implemented an effective risk management program to implement a
1-46 comprehensive program that meets the guidelines established by the
1-47 board; and
1-48 (6) [(4)] administer the workers' compensation
1-49 insurance program for state employees established under Chapter
1-50 501.
1-51 (c) The office shall:
1-52 (1) perform risk management for each state agency
1-53 subject to Chapter 412; and
1-54 (2) purchase insurance coverage for a state agency
1-55 subject to Chapter 501 under any line of insurance other than
1-56 health or life insurance, including liability insurance authorized
1-57 under Chapter 612, Government Code.
1-58 (d) The office may perform risk management for a state
1-59 agency that is not subject to Chapter 501. In administering
1-60 insurance services for such a state agency, the office and the
1-61 state agency are subject to Section 412.0112.
1-62 (e) The board by rule shall develop an implementation
1-63 schedule for the purchase under this section of insurance for state
1-64 agencies by the office. The board shall phase in, by line of
2-1 insurance, the requirement that a state agency purchase coverage
2-2 only through the office.
2-3 (f) A state agency subject to Chapter 501 may not purchase
2-4 property, casualty, or liability insurance coverage without the
2-5 approval of the board.
2-6 Sec. 412.0111. AFFILIATION WITH OFFICE OF ATTORNEY GENERAL.
2-7 The office is administratively attached to the office of the
2-8 attorney general and the office of the attorney general shall
2-9 provide the facilities for the office, but the office shall be
2-10 independent of the office of the attorney general's direction.
2-11 SECTION 1.03. Subchapter B, Chapter 412, Labor Code, is
2-12 amended by adding Section 412.0112 to read as follows:
2-13 Sec. 412.0112. PURCHASE OF INSURANCE COVERAGE BY STATE
2-14 AGENCIES NOT SUBJECT TO CHAPTER 501. (a) This section applies to:
2-15 (1) an institution or agency subject to Chapter 502;
2-16 (2) an institution or agency subject to Chapter 503;
2-17 and
2-18 (3) a state agency subject to Chapter 505.
2-19 (b) An entity to which this section applies must give the
2-20 office 30 days' notice in writing of the entity's intent to
2-21 purchase insurance coverage in a line of insurance described by
2-22 Section 412.011(c).
2-23 (c) The office shall submit bids to the entity for the
2-24 purchase of the insurance coverage through the office. The entity
2-25 is not required to purchase the coverage through the office, but
2-26 must report the purchase to the office as provided by Section
2-27 412.051.
2-28 SECTION 1.04. Subchapter B, Chapter 412, Labor Code, is
2-29 amended by amending Section 412.012 and adding Sections 412.0121,
2-30 412.0122, and 412.0123 to read as follows:
2-31 Sec. 412.012. FUNDING. [(a)] The office shall be
2-32 administered through money appropriated by the legislature and
2-33 through:
2-34 (1) interagency contracts for purchase of insurance
2-35 coverage and the operation of the risk management program; and
2-36 (2) the allocation program for the financing of state
2-37 workers' compensation benefits.
2-38 Sec. 412.0121. INTERAGENCY CONTRACTS. (a) [(b) Interagency
2-39 Contracts. (1)] Each state agency shall enter into an interagency
2-40 contract with the office under Chapter 771, Government Code, to pay
2-41 the costs incurred by the office in administering this chapter for
2-42 the benefit of that state agency.
2-43 (b) Costs payable under the contract include the cost of:
2-44 (1) [(A)] services of office employees;
2-45 (2) [(B)] materials; and
2-46 (3) [(C)] equipment, including computer hardware and
2-47 software.
2-48 (c) [(2)] The amount of the costs to be paid by a state
2-49 agency under the interagency contract is based on:
2-50 (1) [(A)] the number of employees of the agency
2-51 compared with the total number of employees of all state agencies
2-52 to which this chapter applies;
2-53 (2) [(B)] the dollar value of the agency's property
2-54 and asset and liability exposure compared to that of all state
2-55 agencies to which this chapter applies; and
2-56 (3) [(C)] the number and aggregate cost of claims and
2-57 losses incurred by the state agency compared to those incurred by
2-58 all state agencies to which this chapter applies.
2-59 (d) The board may by rule establish the formula for
2-60 allocating the cost of this chapter in an interagency contract in a
2-61 manner that gives consideration to the factors in Subsection (c)
2-62 and any other factors it deems relevant, including an agency's risk
2-63 management expenditures, unique risks, and established programs.
2-64 Sec. 412.0122. STATE SELF-INSURING FOR WORKERS'
2-65 COMPENSATION. (a) [(c)] The state is self-insuring with respect
2-66 to an employee's compensable injury.
2-67 (b) The legislature shall appropriate the amount designated
2-68 by the appropriation structure for the payment of state workers'
2-69 compensation claims costs to the office. This section does not
3-1 affect the reimbursement of claims costs by funds other than
3-2 general revenue funds, as provided by the General Appropriations
3-3 Act.
3-4 Sec. 412.0123. DEPOSIT OF WORKERS' COMPENSATION SUBROGATION
3-5 RECOVERIES. (a) [(d) State Workers' Compensation Account. (1)]
3-6 All money recovered by the director from a third party through
3-7 subrogation shall be deposited into the state workers' compensation
3-8 account in general revenue.
3-9 (b) [(2)] Funds deposited under this section may be used for
3-10 the payment of workers' compensation [and other] benefits to state
3-11 employees.
3-12 SECTION 1.05. Section 412.021(a), Labor Code, is amended to
3-13 read as follows:
3-14 (a) The office is governed by the risk management board.
3-15 Members of the board must have demonstrated experience in the
3-16 fields [field] of:
3-17 (1) insurance and insurance regulation;
3-18 (2) workers' compensation; and
3-19 (3) risk management administration.
3-20 SECTION 1.06. Section 412.022(b), Labor Code, is amended to
3-21 read as follows:
3-22 (b) A training program established under this section must
3-23 provide information to the member regarding:
3-24 (1) the enabling legislation that created the board;
3-25 (2) the program operated by the board;
3-26 (3) the role and functions of the board;
3-27 (4) the rules of the board, with an emphasis on the
3-28 rules that relate to disciplinary and investigatory authority;
3-29 (5) the current budget for the board;
3-30 (6) the results of the most recent formal audit of the
3-31 board;
3-32 (7) the requirements of:
3-33 (A) the open meetings law, Chapter 551,
3-34 Government Code;
3-35 (B) the public information [open records] law,
3-36 Chapter 552, Government Code; and
3-37 (C) the administrative procedure law, Chapter
3-38 2001, Government Code;
3-39 (8) the requirements of the conflict of interest laws
3-40 and other laws relating to public officials; and
3-41 (9) any applicable ethics policies adopted by the
3-42 board or the Texas Ethics Commission.
3-43 SECTION 1.07. Section 412.041, Labor Code, is amended to read
3-44 as follows:
3-45 Sec. 412.041. DIRECTOR DUTIES[; RESPONSIBILITIES]. (a) The
3-46 director serves as the state risk manager.
3-47 (b) The director shall supervise the development and
3-48 administration of systems to:
3-49 (1) identify the property and liability losses,
3-50 including workers' compensation losses, of each state agency;
3-51 (2) identify the administrative costs of risk
3-52 management incurred by each state agency;
3-53 (3) identify and evaluate the exposure of each state
3-54 agency to claims for property and liability losses, including
3-55 workers' compensation; and
3-56 (4) reduce the property and liability losses,
3-57 including workers' compensation, incurred by each state agency.
3-58 (c) In addition to other duties provided by this chapter, by
3-59 Chapter 501, and by the board, the director shall:
3-60 (1) keep full and accurate minutes of the transactions
3-61 and proceedings of the board;
3-62 (2) be the custodian of the files and records of the
3-63 board;
3-64 (3) prepare and recommend to the board plans and
3-65 procedures necessary to implement the purposes and objectives of
3-66 this chapter and Chapter 501, including rules and proposals for
3-67 administrative procedures consistent with this chapter and Chapter
3-68 501;
3-69 (4) hire staff as necessary to accomplish the
4-1 objectives of the board and may delegate powers and duties to
4-2 members of that staff as necessary;
4-3 (5) be responsible for the investigation of complaints
4-4 and for the presentation of formal complaints;
4-5 (6) attend all meetings of the board as a nonvoting
4-6 participant; and
4-7 (7) handle the correspondence of the board and obtain,
4-8 assemble, or prepare the reports and information that the board may
4-9 direct or authorize.
4-10 (d) If necessary to the administration of this chapter and
4-11 Chapter 501, the director, with the approval of the board, may
4-12 secure and provide for services that are necessary and may employ
4-13 and compensate within available appropriations professional
4-14 consultants, technical assistants, and employees on a full-time or
4-15 part-time basis.
4-16 (e) The director also serves as the administrator of the
4-17 government employees workers' compensation insurance program.
4-18 (f) In administering and enforcing Chapter 501 as regards a
4-19 compensable injury with a date of injury before September 1, 1995,
4-20 the director shall act in the capacity of employer and insurer. In
4-21 administering and enforcing Chapter 501 as regards a compensable
4-22 injury with a date of injury on or after September 1, 1995, the
4-23 director shall act in the capacity of insurer. [(effective for
4-24 dates of injury before September 1, 1995.)]
4-25 (g) [(1)] The director shall act as an adversary before the
4-26 commission and courts and present the legal defenses and positions
4-27 of the state as an employer and insurer, as appropriate.
4-28 (h) [(2)] For the purposes of Subsection (f) [this
4-29 subsection] and Chapter 501, the director is entitled to the legal
4-30 counsel of the attorney general.
4-31 (i) In administering Chapter 501 the [(3) The] director is
4-32 subject to the rules, orders, and decisions of the commission in
4-33 the same manner as a private employer, insurer, or association.
4-34 (j) [(g) In administering and enforcing Chapter 501, the
4-35 director shall act in the capacity of insurer. (effective for
4-36 dates of injury on or after September 1, 1995.)]
4-37 [(1) The director shall act as an adversary before the
4-38 commission and courts and present the legal defenses and positions
4-39 of the state as an insurer.]
4-40 [(2) For purposes of this subsection and Chapter 501,
4-41 the director is entitled to legal counsel of the attorney general.]
4-42 [(3) The director is subject to the rules, orders, and
4-43 decisions of the commission in the same manner as an insurer or
4-44 association.]
4-45 [(h)] The director shall:
4-46 (1) prepare for adoption by the board procedural rules
4-47 and prescribe forms necessary for the effective administration of
4-48 this chapter and Chapter 501 [(effective for dates of injury before
4-49 September 1, 1995)]; and
4-50 (2) prepare for adoption by the board and enforce
4-51 reasonable rules for the prevention of accidents and injuries[;]
4-52 [(3) prepare for adoption by the board procedural
4-53 rules and prescribe forms necessary for the effective
4-54 administration of this chapter and Chapter 501]. [(effective for
4-55 dates of injury on or after September 1, 1995.)]
4-56 (k) [(i)] The director shall hold hearings on all proposed
4-57 rules and provide reasonable opportunity for the officers of state
4-58 agencies to testify at hearings on all proposed rules under this
4-59 chapter and Chapter 501.
4-60 (l) [(j)] The director shall furnish copies of all rules to:
4-61 (1) the commission;
4-62 (2) the commissioner of the Texas Department of
4-63 Insurance; and
4-64 (3) [to] the administrative heads of all state
4-65 agencies affected by this chapter and Chapter 501.
4-66 SECTION 1.08. Sections 412.042(a) and (b), Labor Code, are
4-67 amended to read as follows:
4-68 (a) The director shall report to the legislature at the
4-69 beginning of each regular session regarding the services provided
5-1 by the office to a state agency subject to Chapter 501.
5-2 [(b)] The report required under this subsection [section]
5-3 shall be dated January 1 of the year in which the regular session
5-4 is held and must include:
5-5 (1) a summary of administrative expenses;
5-6 (2) a statement:
5-7 (A) showing the amount of the money appropriated
5-8 by the preceding legislature that remains unexpended on the date of
5-9 the report; and
5-10 (B) estimating the amount of that balance
5-11 necessary to administer Chapter 501 for the remainder of that
5-12 fiscal year; and
5-13 (3) [(C)] an estimate, based on experience factors, of
5-14 the amount of money that will be required to administer Chapter 501
5-15 and pay for the compensation and services provided under Chapter
5-16 501 during the next succeeding biennium.
5-17 (b) In addition to the report required under Subsection (a),
5-18 the director shall report to the legislature not later than
5-19 February 1 of each odd-numbered year regarding insurance coverage
5-20 purchased for state agencies, premium dollars spent to obtain that
5-21 coverage, and losses incurred under that coverage. The report must
5-22 include:
5-23 (1) a description of the services offered by the
5-24 office to state agencies that are not subject to Chapter 501; and
5-25 (2) a statement identifying any insurance coverage
5-26 purchased by such a state agency that was not obtained through a
5-27 bid for that purchase offered by the office.
5-28 SECTION 1.09. Section 412.051, Labor Code, is amended to read
5-29 as follows:
5-30 Sec. 412.051. DUTIES OF STATE AGENCIES; INSURANCE REPORTING
5-31 REQUIREMENTS. (a) Each state agency [subject to this chapter]
5-32 shall actively manage the risks of that agency by:
5-33 (1) developing, implementing, and maintaining programs
5-34 designed to assist employees who sustain compensable injuries to
5-35 return to work; and
5-36 (2) cooperating with the office and the Texas
5-37 Department of Insurance in the purchase of property, casualty, and
5-38 liability lines of insurance coverage.
5-39 (b) In addition to the report required under Section
5-40 412.053, each state agency that intends to purchase property,
5-41 casualty, or liability insurance coverage in a manner other than
5-42 through the services provided by the office shall report the
5-43 intended purchase to the office in the manner prescribed by the
5-44 office. The state agency shall report the intended purchase not
5-45 later than the 30th day before the date on which the purchase of
5-46 the coverage is scheduled to occur. The office may require a state
5-47 agency to submit copies of insurance forms, policies, and other
5-48 relevant information.
5-49 SECTION 1.10. Section 412.053(b), Labor Code, is amended to
5-50 read as follows:
5-51 (b) The information shall be reported not later than the
5-52 60th day before the last day [on or before 60 days after the close]
5-53 of each fiscal year.
5-54 SECTION 1.11. Subchapter E, Chapter 21, Insurance Code, is
5-55 amended by adding Article 21.49-15A to read as follows:
5-56 Art. 21.49-15A. INSURER REPORT TO STATE OFFICE OF RISK
5-57 MANAGEMENT
5-58 Sec. 1. DEFINITIONS. In this article:
5-59 (1) "Insurer" means an insurance company,
5-60 inter-insurance exchange, mutual or reciprocal association, county
5-61 mutual insurance company, Lloyd's plan, or other entity that is
5-62 authorized by the Texas Department of Insurance to engage in the
5-63 business of insurance in this state.
5-64 (2) "Office" means the State Office of Risk
5-65 Management.
5-66 (3) "State agency" has the meaning assigned by Section
5-67 412.001, Labor Code.
5-68 Sec. 2. REPORTING REQUIREMENTS. (a) Each insurer that
5-69 enters into an insurance policy or other contract or agreement with
6-1 a state agency for the purchase of property, casualty, or liability
6-2 insurance coverage by the state agency, including a policy,
6-3 contract, or agreement subject to competitive bidding requirements,
6-4 shall report the intended sale to the office in the manner
6-5 prescribed by that office.
6-6 (b) The insurer shall report the intended sale not later
6-7 than the 30th day before the date the sale of the insurance
6-8 coverage is scheduled to occur.
6-9 (c) The office may require an insurer to submit copies of
6-10 insurance forms, policies, and other relevant information.
6-11 (d) The office shall adopt rules as necessary to implement
6-12 this article. In adopting those rules, the office shall consult
6-13 with the commissioner.
6-14 (e) Failure by an insurer to comply with the reporting
6-15 requirements adopted under this article constitutes grounds for the
6-16 imposition of sanctions against that insurer under Chapter 82.
6-17 SECTION 1.12. Section 412.052, Labor Code, is repealed.
6-18 SECTION 1.13. A person serving as a member of the risk
6-19 management board on the effective date of this Act is entitled to
6-20 serve until the expiration of the term for which the member was
6-21 appointed. On the expiration of that term, the governor shall
6-22 appoint a member who meets the qualifications established by
6-23 Section 412.021, Labor Code, as amended by this Act.
6-24 ARTICLE 2. EFFECT OF USE OF LEAVE ON INCOME BENEFITS
6-25 SECTION 2.01. Subchapter C, Chapter 505, Labor Code, is
6-26 amended by adding Section 505.060 to read as follows:
6-27 Sec. 505.060. EFFECT OF SICK LEAVE; ANNUAL LEAVE. (a) An
6-28 employee may elect to use accrued sick leave before receiving
6-29 income benefits. If an employee elects to use sick leave, the
6-30 employee is not entitled to income benefits under this chapter
6-31 until the employee has exhausted the employee's accrued sick leave.
6-32 (b) An employee may elect to use all or any number of weeks
6-33 of accrued annual leave after the employee's accrued sick leave is
6-34 exhausted. If an employee elects to use annual leave, the employee
6-35 is not entitled to income benefits under this chapter until the
6-36 elected number of weeks of leave have been exhausted.
6-37 ARTICLE 3. TRANSITION; EFFECTIVE DATE
6-38 SECTION 3.01. (a) Except as provided by Subsections (b),
6-39 (c), and (d) of this section, this Act takes effect September 1,
6-40 2001.
6-41 (b) Not later than December 1, 2001, the risk management
6-42 board shall adopt rules to implement:
6-43 (1) the changes in law made by the amendments made by
6-44 this Act to Chapter 412, Labor Code; and
6-45 (2) Article 21.49-15A, Insurance Code, as added by
6-46 this Act.
6-47 (c) An insurer is not required to comply with the reporting
6-48 requirements adopted under Article 21.49-15A, Insurance Code, as
6-49 added by this Act, until January 1, 2002. Article 21.49-15A,
6-50 Insurance Code, as added by this Act, applies only to an insurance
6-51 policy, contract, or agreement delivered, issued for delivery, or
6-52 renewed on or after January 1, 2002. A policy, contract, or
6-53 agreement delivered, issued for delivery, or renewed before January
6-54 1, 2002, is governed by the law as it existed immediately before
6-55 the effective date of this Act, and that law is continued in effect
6-56 for that purpose.
6-57 (d) Section 505.060, Labor Code, as added by this Act,
6-58 applies only to a claim for workers' compensation benefits based on
6-59 a compensable injury that occurs on or after the effective date of
6-60 this Act. A claim based on a compensable injury that occurs before
6-61 that date is governed by the law in effect on the date the
6-62 compensable injury occurred, and the former law is continued in
6-63 effect for that purpose.
6-64 * * * * *