By Brimer                                             H.B. No. 3458
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     Relating to the conversion and operation of the Texas Workers'
 1-3     Compensation Insurance Fund to a domestic mutual insurance company
 1-4     and the operation of the company after the conversion.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Art. 5.76-3, Insurance Code, is amended to read
 1-7     as follows:
 1-8         Texas Mutual Insurance Company [Texas Workers' Compensation
 1-9                               Insurance Fund]
1-10                                 Definitions
1-11           Sec. 1.  In this article:
1-12                 (1)  "Board" means the board of directors of the Texas
1-13     Mutual Insurance Company [fund].
1-14                 (2)  "Commission" means the Texas Workers' Compensation
1-15     Commission.
1-16                 (3)  "Fund" means the Texas Workers' Compensation
1-17     Insurance Fund.
1-18                 (4)  "Company", means the Texas Mutual Insurance
1-19     Company
1-20                 (5) [(4)]  "Workers' compensation insurance" means the
1-21     insurance for any risk under:
1-22                       (A)  Subtitle A, Title 5, Labor Code (the Texas
1-23     Workers' Compensation Act);
 2-1                       (B)  the Longshore and Harbor Workers'
 2-2     Compensation Act (33 U.S.C. Section 901);
 2-3                       (C)  the Federal Mine Safety and Health Act of
 2-4     1977 (33 U.S.C. Section 801 et seq.); [or]
 2-5                       (D)  the Defense Base Act (42 USC Sections
 2-6     1651-1654);
 2-7                       (E)  the Federal Employers' Liability Act (45 USC
 2-8     Sections 51-60);
 2-9                       0(F)  the Nonappropriated Fund Instrumentalities
2-10     Act (5 USC Sections 8171-8173);
2-11                       (G)  the Outer Continental Shelf Lands Act (43
2-12     USC Sections 1331-1356);
2-13                       (H)  the Merchant Marine Act of 1920 (46 USC
2-14     Section 688); or
2-15                       (I) [(D)]  Chapter 504, Labor Code.
2-16                             Creation; operation
2-17           Sec. 2. (a)  On the effective date of this act, the Fund is
2-18     converted to the Texas Mutual Insurance Company. [The Texas
2-19     Workers' Compensation Insurance Fund] The company is organized and
2-20     operated as a domestic mutual insurance company in accordance with
2-21     Chapter 15, Insurance Code, and is not a state agency.  The
2-22     commissioner of insurance shall issue a certificate of authority to
2-23     the company to write workers' compensation insurance as provided in
2-24     15, Insurance Code, on or before the effective date of this act
2-25     [created as a corporate body with the powers provided by this
2-26     subchapter and with all general corporate powers incident to its
 3-1     operation as a corporate body].  The company [fund] shall:
 3-2                 (1)  serve as a competitive force in the marketplace;
 3-3                 (2)  guarantee the availability of workers'
 3-4     compensation insurance in this state; and
 3-5                 (3)  serve as an insurer of last resort as provided
 3-6     under Article 5.76-4 of this code.
 3-7           (b)  Except as otherwise provided by this subsection, the
 3-8     company [fund] is subject to the open meetings law, Chapter 551,
 3-9     Government Code, and the open records law, Chapter 552, Government
3-10     Code. The board may hold closed meetings to consider and refuse to
3-11     release information relating to claims, rates, the fund's
3-12     underwriting guidelines, and other information that would give
3-13     advantage to competitors or bidders.
3-14           (c)  A decision by the company [fund] to deny, cancel, or
3-15     refuse to renew a policy or risk insured under Article 5.76-4 of
3-16     this code is appealable to the board not later than the 30th day
3-17     after the date on which the affected party received actual notice
3-18     that the act occurred or that the decision was made.  The company
3-19     [board] shall hear the appeal not later than the 30th day after the
3-20     date on which the request for hearing is made and shall notify [the
3-21     fund and] the appellant in writing of the time and place of the
3-22     hearing not later than the 10th day before the date of the hearing.
3-23     Not later than the 30th day after the last day of the hearing, the
3-24     board shall affirm, reverse, or modify the act appealed to the
3-25     board.  A hearing under this subsection does not suspend the
3-26     operation of any act, ruling, decision, or order of the company
 4-1     [fund], unless the board specifically so orders.
 4-2           (d)  A decision of the board under this section is subject to
 4-3     review by the commissioner of insurance in the manner provided by
 4-4     the administrative procedure law, Chapter 2001, Government Code.
 4-5     The commissioner's review of a decision by the board does not
 4-6     suspend the operation of any act, ruling, decision, or order of the
 4-7     company [fund] unless the commissioner specifically so orders on a
 4-8     showing by an aggrieved party of:
 4-9                 (1)  immediate, irreparable injury, loss, or damage;
4-10     and
4-11                 (2)  probable success on the merits.
4-12           (e)  A person aggrieved by the decision of the commissioner
4-13     may appeal that decision to the district court.  Judicial review
4-14     under this section is governed by the substantial evidence rule.
4-15           [(f)  The fund is subject to Chapter 325, Government Code
4-16     (Texas Sunset Act). Unless continued in effect as provided by that
4-17     chapter, the fund is abolished September 1, 2007.]
4-18           (f) [(g)]  In addition to other rights of the company [fund]
4-19     under this article, the company [fund] has the legal rights of a
4-20     private person in this state and the power to sue in its own name.
4-21     No procedure established under this article is a prerequisite to
4-22     the exercise of the power by the company [fund] to sue.
4-23           (g) [(h)]  The company [fund] shall prepare annually a
4-24     complete and detailed written report accounting for all funds
4-25     received and disbursed by the company [fund] during the preceding
4-26     fiscal year. [The annual report must meet the reporting
 5-1     requirements applicable to financial reporting provided by the
 5-2     General Appropriations Act.]
 5-3           (h)  The company cannot be dissolved except by statutory
 5-4     action of the legislature.
 5-5                             Board of Directors
 5-6           Sec. 3. (a)  The company [fund] is governed by a board of
 5-7     directors composed of nine members.  The members of the Fund's
 5-8     board of directors who are serving on the effective date of this
 5-9     act shall serve as the company's board of directors until the
5-10     company's policyholders elect a new board of directors.  The board
5-11     members elected by the company's policyholders shall serve
5-12     staggered six-year terms.  Five of the nine board members elected
5-13     by the policyholders shall be approved by the governor, all of whom
5-14     shall be citizens of this state.  [The members shall be appointed
5-15     by the governor with the advice and consent of the senate, and
5-16     vacancies shall be filled in the same manner.]
5-17           (b)  The members of the board of directors serve staggered
5-18     six-year terms, with the terms of three members expiring
5-19     July [February] 1 of each odd-numbered year.  A member of the board
5-20     whose term has expired shall continue to serve until the member's
5-21     replacement is elected [appointed by the governor].
5-22           (c)  Nine directors initially elected by the company's
5-23     policyholders shall determine their initial terms by lot.  Any
5-24     vacancies on the board of directors shall be filled as provided in
5-25     the company's by-laws.  [In making appointments to the board, the
5-26     governor shall attempt to reflect the social, geographic, and
 6-1     economic diversity of the state.  To ensure balanced
 6-2     representation, the governor may consider the geographic location
 6-3     of a prospective appointee's domicile and the prospective
 6-4     appointee's experience in business and insurance matters and shall
 6-5     consider those factors in appointing members to fill vacancies on
 6-6     the board.  Appointments to the board shall be made without regard
 6-7     to the race, color, disability, sex, religion, age, or national
 6-8     origin of the appointees.]
 6-9           (d)  A person may not serve as a member of the board if the
6-10     person, an individual related to the person within the second
6-11     degree by consanguinity or affinity, or an individual residing in
6-12     the same household with the person:
6-13                 (1)  is registered or licensed under this code or that
6-14     is required to be registered or licensed under this code;
6-15                 (2)  is employed by or acts as a consultant to a person
6-16     registered or licensed under this code or that is required to be
6-17     registered or licensed under this code;
6-18                 (3)  owns, controls, has a financial interest in, or
6-19     participates in the management of an organization is registered or
6-20     licensed under this code or that is required to be registered or
6-21     licensed under this code;
6-22                 (4)  receives a substantial tangible benefit from the
6-23     company [fund] or the Texas Department of Insurance; or
6-24                 (5)  is an officer, employee, or consultant of an
6-25     association in the field of insurance.
6-26           (e)  It is a ground for removal from the board if a member:
 7-1                 (1)  does not have at the time of appointment the
 7-2     qualifications required by this section;
 7-3                 (2)  does not maintain during service on the board the
 7-4     qualifications required by this section;
 7-5                 (3)  cannot because of illness or disability discharge
 7-6     the member's duties for a substantial part of the term for which
 7-7     the member is appointed; or
 7-8                 (4)  is absent from more than half of the regularly
 7-9     scheduled board meetings that the member is eligible to attend
7-10     during a calendar year.
7-11           (f)  The validity of an action of the board is not affected
7-12     by the fact that it is taken when a ground for removal of a board
7-13     member exists.
7-14           (g)  If the president has knowledge that a potential ground
7-15     for removal exists, the president shall notify the chairman of the
7-16     board of the potential ground.  [The chairman shall then notify the
7-17     governor and the attorney general that a potential ground for
7-18     removal exists.]  If the potential ground for removal involves the
7-19     chairman, the president shall notify the next highest officer of
7-20     the board.  The board will act on the issue as provided in the
7-21     company's by-laws. [, who shall notify the governor and the
7-22     attorney general that a potential ground for removal exists.]
7-23           (h)  Subsection (d)  of this section does not prohibit a
7-24     person who is only a consumer of insurance or insurance products
7-25     from serving as a member of the board.
7-26           (i)  A person who is ineligible to serve on the board under
 8-1     Subsection (d) of this section may not serve as a member of the
 8-2     board for one year after the date on which the condition that makes
 8-3     the person ineligible ends.
 8-4           (j)  Each member shall receive board fees commensurate with
 8-5     industry standards and actual and necessary travel expenses and
 8-6     expenses incurred in the performance of the member's duties as a
 8-7     member.
 8-8           (k)  [The governor shall designate a member of the board as
 8-9     the chairman of the board to serve in that capacity at the pleasure
8-10     of the governor.]  The [members of the] board of directors shall
8-11     elect annually a chairman and any other officers it deems necessary
8-12     for the performance of its duties.  Board committees and
8-13     subcommittees may also be formed. [from their number a
8-14     vice-chairman and a secretary.]
8-15           (l)  The board shall hold meetings at least once each
8-16     calendar quarter and at other times at the call of the chairman and
8-17     at times established in the by-laws [by board rule].  Special
8-18     meetings may be called by any two members of the board on two days
8-19     notice.
8-20           (m)  Five [A majority of the] board members constitute[s] a
8-21     quorum.
8-22           (n)  The board shall maintain the principal office of the
8-23     company [fund] in Travis County [Austin], Texas.
8-24           [(o)  For cost control purposes and as is determined to be
8-25     cost-effective, as many functions as possible shall be performed by
8-26     the fund.]
 9-1           [(p)  A person may not serve as a member of the board or act
 9-2     as the general counsel to the board or the fund if the person is
 9-3     required to register as a lobbyist under Chapter 305, Government
 9-4     Code, because of the person's activities for compensation on behalf
 9-5     of any person or entity other than the fund.]
 9-6           [(q)  The board shall develop and implement policies that
 9-7     clearly separate the policymaking responsibilities of the board and
 9-8     the management responsibilities of the president and the staff of
 9-9     the fund.]
9-10                     [Training program for board member]
9-11           [Sec. 3A. (a)  Before a member of the board may assume the
9-12     member's duties, the member must complete the training program
9-13     established under this section.]
9-14           [(b)  A training program established under this section shall
9-15     provide information to the member regarding:]
9-16                 [(1)  the enabling legislation that created the fund
9-17     and the board;]
9-18                 [(2)  the programs operated by the fund;]
9-19                 [(3)  the role and functions of the fund;]
9-20                 [(4)  the current budget for the fund;]
9-21                 [(5)  the results of the most recent independent audit
9-22     of the fund;]
9-23                 [(6)  the requirements of:]
9-24                       [(A)  the open meetings law, Chapter 551,
9-25     Government Code; and]
9-26                       [(B)  the open records law, Chapter 552,
 10-1    Government Code;]
 10-2                [(7)  the requirements of the conflict of interest laws
 10-3    and other laws relating to members of the board; and]
 10-4                [(8)  any applicable ethics policies adopted by the
 10-5    fund or the Texas Ethics Commission.]
 10-6              Authority and purpose of the board of directors
 10-7          Sec. 4. (a)  According to this article the board is vested
 10-8    with full power, authority and jurisdiction over the company.  The
 10-9    board may perform all acts necessary or convenient in the
10-10    administration of the company or in connection with the insurance
10-11    business to be carried on by the company.  In this regard, the
10-12    board is empowered to function in all aspects as a governing body
10-13    of a domestic mutual insurance company.  The board shall:
10-14                (1)  provide for the [acceptance of applications and
10-15    delivery or issuance for] delivery in this state of workers'
10-16    compensation insurance and for the transaction of workers'
10-17    compensation insurance business to the same extent as any other
10-18    insurance carrier transacting workers' compensation insurance
10-19    business in this state;
10-20                (2)  hire a president who shall serve at the pleasure
10-21    of the board.  The president shall receive compensation as
10-22    established by the board and must have proven successful experience
10-23    as an executive at the general management level in the insurance
10-24    business [enter into and approve contracts;]
10-25                (3)  propose rates for workers' compensation insurance
10-26    issued by the company [fund];
 11-1                [(4)  appoint and supervise the activities of the
 11-2    president of the fund and other officers and employees;]
 11-3                [(5)  adopt necessary bylaws and rules for the
 11-4    operation of the fund;]
 11-5                [(6)  delegate specific responsibilities to the
 11-6    president of the fund;]
 11-7                [(7)  develop a general plan of operation, in
 11-8    accordance with Section 5 of this article, to assure the orderly
 11-9    management and operation of the fund;] and
11-10                (3) [(8)]  exercise any other authority necessary to
11-11    conduct a workers' compensation insurance business [for the fund].
11-12          (b)  The company [fund] may not have affiliates, interlocking
11-13    boards of directors, spinoffs, or subsidiaries that write lines of
11-14    insurance other than workers' compensation insurance.
11-15          (c)  The board shall appoint an internal auditor [in
11-16    compliance with Chapter 2102, Government Code].  The internal
11-17    auditor serves at the pleasure of the board.
11-18          [(d)  If the fund obtains legal services through the use of
11-19    outside counsel, the attorney general shall annually review the use
11-20    of outside counsel by the fund to ensure that:]
11-21                [(1)  the use of outside counsel does not result in a
11-22    conflict of interest; and]
11-23                [(2)  the persons used as outside counsel comply with
11-24    state and federal policies regarding the treatment of persons who
11-25    are members of minority groups.]
11-26          [(e)]  The company [board] shall provide requested
 12-1    information to appropriate legislative committees in the manner
 12-2    requested by those committees.
 12-3                            [Plan of operation]
 12-4          [Sec. 5. (a)  The initial board of directors shall prepare
 12-5    and adopt a plan of operation that is consistent with this article.
 12-6    The plan must provide for the:]
 12-7                [(1)  economic, fair, and nondiscriminatory
 12-8    administration of the fund and its duties;]
 12-9                [(2)  prompt and efficient provision of workers'
12-10    compensation insurance;]
12-11                [(3)  establishment of necessary facilities;]
12-12                [(4)  management of the fund;]
12-13                [(5)  reasonable and objective underwriting standards;
12-14    and]
12-15                [(6)  obtainment of reinsurance.]
12-16          [(b)  The initial plan of operation is subject to approval by
12-17    the State Board of Insurance.]
12-18          [(c)  With consent of the State Board of Insurance, the board
12-19    may amend the plan of operation to provide for operation of the
12-20    fund in a manner consistent with this article.]
12-21                  [President and chief executive officer]
12-22    [Sec. 6. (a)  The board shall appoint a person to serve as
12-23    president and chief executive officer who serves at the pleasure of
12-24    the board.  The board shall appoint other officers as necessary to
12-25    manage the fund prudently.]
12-26          [(b)  To be eligible for appointment as president, an
 13-1    individual must have had at least 10 years of administrative or
 13-2    professional experience and training and experience in the field of
 13-3    insurance.]
 13-4          [(c)  The president shall manage and conduct the affairs of
 13-5    the fund under the general supervision of the board and shall
 13-6    perform duties as provided by this article and as directed by the
 13-7    board.]
 13-8          [(d)  In addition to any other duties provided by this
 13-9    article or by the board, the president shall:]
13-10                [(1)  hire employees as necessary to conduct the
13-11    business and carry out the provisions of this article or to perform
13-12    the duties imposed on the president by this article;]
13-13                [(2)  receive and approve applications for workers'
13-14    compensation insurance and issue policies to applicants who are
13-15    eligible for workers' compensation insurance provided by the fund;]
13-16                [(3)  negotiate contracts on behalf of the fund;]
13-17                [(4)  issue renewals of workers' compensation insurance
13-18    for those who qualify for renewal;]
13-19                [(5)  process and pay valid claims according to the
13-20    rules of the board and the appropriate workers' compensation
13-21    insurance laws;]
13-22                [(6)  collect premiums for workers' compensation
13-23    insurance issued or renewed by the fund; and]
13-24                [(7)  collect and compile statistical information
13-25    relating to the fund and provide this information to the board.]
13-26          [(e)  In addition to any other authority provided by this
 14-1    article or by the board, the president shall have full power and
 14-2    authority, in the name of the fund, to:]
 14-3                [(1)  sue and be sued in all of the courts of the state
 14-4    in all actions arising out of any act, deed, matter, or things
 14-5    made, omitted, entered into, done, or suffered in connection with
 14-6    the fund and its administration, management, or conduct of its
 14-7    business and affairs;]
 14-8                [(2)  delegate to any officer of the fund, subject to
 14-9    any conditions prescribed by the president, any of the powers,
14-10    functions, or duties conferred or imposed on the president under
14-11    this article in connection with the fund, its administration,
14-12    management, and conduct of business or related affairs; an officer
14-13    to whom such a delegation is made may exercise the delegated powers
14-14    with the same force and effect as the president, subject to
14-15    approval by the president;]
14-16                [(3)  inspect and audit employers who apply to the fund
14-17    for issuance of workers' compensation insurance or who seek renewal
14-18    of that insurance;]
14-19                [(4)  purchase reinsurance from insurance carriers
14-20    admitted or accredited to reinsure risks in this state;]
14-21                [(5)  cancel or refuse to renew workers' compensation
14-22    insurance if a risk does not comply with a board-approved plan or
14-23    any provision of this article;]
14-24                [(6)  with the approval of the board, enter into
14-25    contracts on behalf of the fund;]
14-26                [(7)  draft guidelines for approval of the board
 15-1    relating to the settlement of claims against the fund; and]
 15-2                [(8)  perform any other acts authorized by the board to
 15-3    carry out this article and the rules of the board.]
 15-4          [(f)  The president shall develop a career ladder program
 15-5    that addresses opportunities for mobility and advancement for
 15-6    employees within the fund.  The program shall require internal
 15-7    posting of all positions concurrently with any public posting.]
 15-8          [(g)  The president shall develop a system of annual
 15-9    performance evaluations that are based on documented employee
15-10    performance.  All merit pay for fund employees must be based on the
15-11    system established under this subsection.]
15-12          [(h)  The president shall prepare and maintain a written
15-13    policy statement to assure implementation of a program of equal
15-14    employment opportunity under which all personnel transactions are
15-15    made without regard to race, color, disability, sex, religion, age,
15-16    or national origin.  The policy statement must include:]
15-17                [(1)  personnel policies, including policies relating
15-18    to recruitment, evaluation, selection, appointment, training, and
15-19    promotion of personnel that are in compliance with the requirements
15-20    of Chapter 21, Labor Code;]
15-21                [(2)  a comprehensive analysis of the fund workforce
15-22    that meets federal and state guidelines;]
15-23                [(3)  procedures by which a determination can be made
15-24    about the extent of underuse in the fund workforce of all persons
15-25    for whom federal or state guidelines encourage a more equitable
15-26    balance; and]
 16-1                [(4)  reasonable methods to appropriately address those
 16-2    areas of underuse.]
 16-3          [(i)  A policy statement prepared under Subsection (h) of
 16-4    this section must:]
 16-5                [(1)  cover an annual period;]
 16-6                [(2)  be updated annually;]
 16-7                [(3)  be reviewed annually by the Commission on Human
 16-8    Rights for compliance with Subsection (h)(1); and]
 16-9                [(4)  be filed with the governor's office.]
16-10          [(j)  The governor's office shall deliver a biennial report
16-11    to the legislature based on the information received under
16-12    Subsection (i) of this section.  The report may be made separately
16-13    or as a part of other biennial reports made to the legislature.]
16-14          [(k)  The president shall provide to members of the board and
16-15    to fund employees, as often as necessary, information regarding
16-16    their qualification for office or employment under this article and
16-17    their responsibilities under applicable laws relating to standards
16-18    of conduct for board members or employees.]
16-19          [(l)  In hiring employees for the fund under this article,
16-20    the president shall ensure that the fund complies with the minority
16-21    hiring practices guidelines adopted for state agencies and
16-22    institutions by the General Appropriations Act.]
16-23                               Applications
16-24          Sec. 7. (a)  Applications to the company [fund] shall be
16-25    submitted on forms prescribed by the company [board] and shall be
16-26    made:
 17-1                (1)  directly by the applicant; or
 17-2                (2)  on behalf of the applicant by a local recording
 17-3    agent.
 17-4          (b)  [The fund shall adopt such rules as required to provide
 17-5    for the financing of all or part of the premiums by the fund or a
 17-6    person licensed under Chapter 24 of this code.  Those rules shall
 17-7    require that the fund receive a minimum initial premium sufficient
 17-8    to cover the administrative costs of issuing and booking the policy
 17-9    in the event of cancellation.  Those rules shall not unfairly
17-10    discriminate against applicants based upon the amount of premium to
17-11    be paid by the applicant for workers' compensation coverage.
17-12    Notwithstanding the foregoing, the premium financing rules adopted
17-13    by the fund may provide that premium financing shall not be offered
17-14    to any applicant who appears to present an unacceptable credit
17-15    risk.]
17-16          [(c)  If the premium is financed by the fund as provided by
17-17    Subsection (b) of this section, the payment deferred earns interest
17-18    payable to the fund at a rate annually determined by the board.]
17-19          [(d)]  If an applicant is identified by the company as a
17-20    credit risk, the company [fund] may refuse to write insurance
17-21    coverage if the applicant does not:
17-22                (1)  pay the total estimated premium and related
17-23    charges before the policy is issued; or
17-24                (2)  provide security for payment of the total
17-25    estimated premium and related charges before the policy is issued.
17-26          (c) [(e)]  If the policy is written through a licensed agent,
 18-1    the company [fund] shall pay the agent a reasonable commission.
 18-2    [The commission shall be paid at the time of the initial deposit,
 18-3    based on the annual estimated premium, and shall be adjusted at the
 18-4    final audit.]
 18-5          (d) [(f)]  Notwithstanding any other provision of this code
 18-6    or another insurance law of this state, the company [fund] is not
 18-7    required to appoint a local recording agent to act as an agent for
 18-8    the company [fund].  An agent transacting business with the company
 18-9    [fund] does so as an agent for the applicant and not as an agent
18-10    for the company [fund], unless there is an express written
18-11    agreement between the company and the agent that the agent acts on
18-12    behalf of the company.
18-13          (e) [(g)]  Information submitted to the company [fund] by a
18-14    licensed agent on behalf of an employer, including a policy
18-15    expiration date, is the work product of that agent, and the company
18-16    [fund] may not use that information in any marketing or direct
18-17    sales activity.  Except as required or permitted by the open
18-18    records law, Chapter 552, Government Code, the company [fund] may
18-19    not provide information obtained from a licensed agent to any other
18-20    licensed agent.  This subsection does not prevent an employer from
18-21    designating another licensed agent or the company [fund] as the
18-22    agent of record and does not prevent the company [fund] from using
18-23    the information submitted to the company [fund] under this
18-24    subsection for the purpose of underwriting or fraud investigation.
18-25    [The fund shall adopt reasonable guidelines in the plan of
18-26    operation to implement this subsection.]
 19-1                                 Liability
 19-2          Sec. 8. Neither a member of the board nor the president or
 19-3    any officer or employee of the company [fund] is personally liable
 19-4    in the person's private capacity for any act performed or for any
 19-5    contract or other obligation entered into or undertaken in an
 19-6    official capacity in good faith and without intent to defraud, in
 19-7    connection with the administration, management, or conduct of the
 19-8    company [fund], its business, or other related affairs.
 19-9                                   Rates
19-10          Sec. 9. (a)  Except as otherwise provided by this subsection,
19-11    the board shall have full power and authority to propose rates to
19-12    be charged by the company [fund] for insurance.  The board shall
19-13    engage the services of an independent actuary who is a member in
19-14    good standing with the Casualty Actuarial Society or the American
19-15    Academy of Actuaries to develop and recommend actuarially sound
19-16    rates. The company [fund] is subject to the requirements of Article
19-17    5.55 of this code and shall include the recommendations of its
19-18    independent actuary as part of its filing under that article.
19-19          (b)  Rates shall be set in amounts sufficient, when invested,
19-20    to:
19-21                (1)  carry all claims to maturity;
19-22                (2)  meet the reasonable expenses of conducting the
19-23    business of the company [fund]; and
19-24                (3)  maintain a reasonable surplus.
19-25          (c)  Notwithstanding any other provision of this code or any
19-26    other insurance law of this state, the company [fund] may establish
 20-1    multitiered premium systems to price workers' compensation
 20-2    insurance policies to insureds in the company's [fund] competitive
 20-3    programs, as well as to insureds to whom policies are offered by
 20-4    the company [fund] under Article 5.76-4 of this code. Those
 20-5    multitiered systems shall be filed in accordance with Article 5.55
 20-6    of this code.  The systems may provide for higher or lower premium
 20-7    payments by insureds based on the company's [fund] evaluation of
 20-8    the underwriting characteristics of the individual risk and the
 20-9    appropriate premium to be charged for the policy coverages.
20-10                            Accident prevention
20-11          Sec. 10. (a)  The company [fund] may make and enforce
20-12    requirements [rules] for the prevention of injuries to employees of
20-13    its policyholders or applicants for insurance under this article.
20-14    For this purpose, representatives of the company [fund],
20-15    representatives of the commission, or representatives of the Texas
20-16    Department of Insurance on reasonable notice shall be granted free
20-17    access to the premises of each policyholder or applicant during
20-18    regular working hours.
20-19          (b)  Failure or refusal by any such policyholder or applicant
20-20    to comply with any requirement [rule] prescribed by the company
20-21    [fund] for the prevention of injuries, or failure or refusal to
20-22    make full disclosure of all information pertinent to the insuring
20-23    or servicing of the policyholder or applicant, constitutes
20-24    sufficient grounds for the company [fund] to cancel a policy or
20-25    deny an application for insurance.
20-26          (c)  A policyholder in the company [fund] who is insured
 21-1    under Article 5.76-4 of this code shall obtain a safety
 21-2    consultation if the policyholder:
 21-3                (1)  has a Texas experience modifier greater than 1.25;
 21-4                (2)  has a national experience modifier greater than
 21-5    1.25 and estimated premium allocable to Texas of $2,500 or more; or
 21-6                (3)  does not have an experience modifier but has had a
 21-7    loss ratio greater than 0.70 in at least two of the three most
 21-8    recent policy years for which information is available.
 21-9          (d)  A policyholder in the company [fund] who is insured
21-10    under Article 5.76-4 of this code shall obtain a safety
21-11    consultation as required by the company [fund] if the policyholder:
21-12                (1)  has been in business for less than three years;
21-13    and
21-14                (2)  meets criteria for a safety consultation
21-15    established by the company [fund], which may include the number and
21-16    classification of employees, the policyholder's industry, and the
21-17    policyholder's previous workers' compensation experience in this
21-18    state or another jurisdiction.
21-19          (e)  The policyholder shall obtain the safety consultation
21-20    not later than the 30th day after the effective date of the policy
21-21    and shall obtain the safety consultation from the health and safety
21-22    division of the commission, the company [fund], or another
21-23    professional source approved for that purpose by the health and
21-24    safety division.  The safety consultant shall file a written report
21-25    with the commission and the policyholder setting out any hazardous
21-26    conditions or practices identified by the safety consultation.
 22-1          (f)  The policyholder and the consultant shall develop a
 22-2    specific accident prevention plan that addresses the hazards
 22-3    identified by the consultant.  The safety consultant may approve an
 22-4    existing accident prevention plan.  The policyholder shall comply
 22-5    with the accident prevention plan.
 22-6          (g)  The health and safety division may investigate accidents
 22-7    occurring at the work sites of a policyholder for whom a plan has
 22-8    been developed under Subsection (f)  of this section, and the
 22-9    division may otherwise monitor the implementation of the accident
22-10    prevention plan as it finds necessary.
22-11          (h)  In accordance with rules adopted by the commission, not
22-12    earlier than 90 days or later than six months after the development
22-13    of an accident prevention plan under Subsection (f) of this
22-14    section, the health and safety division of the commission shall
22-15    conduct a follow-up inspection of the policyholder's premises.  The
22-16    commission may require the participation of the safety consultant
22-17    who performed the initial consultation and developed the safety
22-18    plan.  If the health and safety division of the commission
22-19    determines that the policyholder has complied with the terms of the
22-20    accident prevention plan or has implemented other accepted
22-21    corrective measures, the health and safety division shall so
22-22    certify.  If a policyholder fails or refuses to implement the
22-23    accident prevention plan or other suitable hazard abatement
22-24    measures, the policyholder may elect to cancel coverage not later
22-25    than the 30th day after the date of the division determination.  If
22-26    the policyholder does not elect to cancel, the company [fund] may
 23-1    cancel the coverage or the commission may assess an administrative
 23-2    penalty not to exceed $5,000.  Each day of noncompliance
 23-3    constitutes a separate violation.  Penalties collected under this
 23-4    section shall be deposited in the general revenue fund to the
 23-5    credit of the commission or reappropriated to the commission to
 23-6    offset the costs of implementing and administering this section.
 23-7          (i)  In assessing an administrative penalty, the commission
 23-8    may consider any matter that justice may require and shall
 23-9    consider:
23-10                (1)  the seriousness of the violation, including the
23-11    nature, circumstances, consequences, extent, and gravity of the
23-12    prohibited act;
23-13                (2)  the history and extent of previous administrative
23-14    violations;
23-15                (3)  the demonstrated good faith of the violator,
23-16    including actions taken to rectify the consequences of the
23-17    prohibited act;
23-18                (4)  any economic benefit resulting from the prohibited
23-19    act; and
23-20                (5)  the penalty necessary to deter future violations.
23-21          (j)  The procedures established under this section must be
23-22    followed each year the policyholder meets the qualifications
23-23    established under Subsection (c) of this section and is insured
23-24    through Article 5.76-4 of this code.
23-25          (k)  The commission shall charge the policyholder for the
23-26    reasonable cost of services provided under Subsections (e), (f),
 24-1    and (h) of this section.  The fees for those services shall be set
 24-2    at a cost-reimbursement level including a reasonable allocation of
 24-3    the commission's administrative costs.
 24-4          (l)  The compliance and practices division of the commission
 24-5    shall enforce compliance with this section through the
 24-6    administrative violation proceedings under Chapter 415, Labor Code.
 24-7                             Control of fraud
 24-8          Sec. 11. (a)  The company [fund] shall develop and implement
 24-9    a program to identify and investigate fraud and violations of this
24-10    code relating to workers' compensation insurance by an applicant,
24-11    policyholder, claimant, agent, insurer, health care provider, or
24-12    other person.  The company [fund] shall cooperate [contract] with
24-13    the commission to compile and maintain information necessary to
24-14    detect practices or patterns of conduct that violate this code
24-15    relating to the workers' compensation insurance or Subtitle A,
24-16    Title 5, Labor Code (the Texas Workers' Compensation Act).
24-17          (b)  The company [fund] may conduct investigations of cases
24-18    of suspected fraud and violations of this code relating to workers'
24-19    compensation insurance.  The company [fund] shall:
24-20                (1)  coordinate its investigations with those conducted
24-21    by the commission to avoid duplication of efforts; and
24-22                (2)  refer cases that are not resolved by the company
24-23    [fund] to the commission to:
24-24                      (A)  perform any further investigations that are
24-25    necessary under the circumstances;
24-26                      (B)  conduct administrative violation
 25-1    proceedings; and
 25-2                      (C)  assess and collect penalties and
 25-3    restitution.
 25-4          (c)  The company [fund] may enter into [interdepartmental]
 25-5    funding agreements with local prosecutors for the prosecution of
 25-6    offenses against the company [fund].
 25-7          (d)  Restitution collected under Subsection (b) of this
 25-8    section shall be paid [deposited] to the company [fund].
 25-9          (e)  Penalties collected under Subsection (b) of this section
25-10    shall be deposited in the general revenue fund to the credit of the
25-11    commission and shall be appropriated to the commission to offset
25-12    the costs of this program.
25-13          (f)  The board, company [fund], and employees of the company
25-14    [fund] are not liable in a civil action for any action made in good
25-15    faith in the execution of duties under this section including the
25-16    identification and referral of a person for investigation and
25-17    prosecution for a possible administrative violation or criminal
25-18    offense.
25-19                     Investigation files confidential
25-20          Sec. 11A. (a)  Information maintained in the investigation
25-21    files of the company [fund] is confidential and may not be
25-22    disclosed except:
25-23                (1)  in a criminal proceeding;
25-24                (2)  in a hearing conducted by the fund or the
25-25    commission;
25-26                (3)  on a judicial determination of good cause; or
 26-1                (4)  to a governmental agency, political subdivision,
 26-2    or regulatory body if the disclosure is necessary or proper for the
 26-3    enforcement of the laws of this or another state or of the United
 26-4    States.
 26-5          (b)  Company [fund] investigation files are not open records
 26-6    for purposes of the open records law, Chapter 552, Government Code.
 26-7          (c)  Information in an investigation file that is information
 26-8    in or derived from a claim file, or an employer injury report or
 26-9    occupational disease report, is governed by the confidentiality
26-10    provisions relating to that information.
26-11          (d)  For purposes of this section, "investigation file" means
26-12    any information compiled or maintained by the company [fund] with
26-13    respect to a company [fund] investigation authorized by law.
26-14              Payment of Taxes and Fees; Guaranty Association
26-15          Sec. 12. (a)  The company [fund] shall pay premium taxes,
26-16    maintenance taxes, and the maintenance tax surcharge established
26-17    under Article 5.76-5 of this code in the same manner as a domestic
26-18    mutual [an] insurance carrier authorized by the Texas Department of
26-19    Insurance to write workers' compensation insurance in this state.
26-20          (b)  The company [fund] shall pay taxes and fees or any
26-21    payments due in lieu of taxes in the same manner as a domestic
26-22    mutual [an] insurance carrier authorized and admitted by the Texas
26-23    Department of Insurance to do insurance business in this state
26-24    under a certificate of authority that includes authorization to
26-25    write workers' compensation insurance.
26-26          (c)  The company [fund] is a member of and is protected by
 27-1    the Texas Property and Casualty Insurance Guaranty Association.
 27-2    The company [fund] is subject to assessment under the Texas
 27-3    Property and Casualty Insurance Guaranty Act (Article 21.28-C,
 27-4    Insurance Code).
 27-5                         Financial administration
 27-6          Sec. 13. (a)  All revenues, monies and assets of the company
 27-7    belong solely to the company and are governed by the laws
 27-8    applicable to domestic mutual insurance companies.  The State of
 27-9    Texas has no claim to nor any interest in such revenues, monies and
27-10    assets and may not borrow, appropriate or direct payments from such
27-11    revenues, monies and assets for any purpose.
27-12          [Revenues of the fund consist of:]
27-13                [(1)  premiums paid by employers for workers'
27-14    compensation insurance from the fund;]
27-15                [(2)  investments and money earned from investments of
27-16    the fund;]
27-17                [(3)  money received from the issuance and sale of
27-18    bonds under Article 5.76-5 of this code; and]
27-19                [(4)  any other money received by the fund.]
27-20          [(b)  Administrative expenses of the fund shall be paid from
27-21    the fund at the direction of the board.]
27-22          [(c)  Money in the fund shall be paid from the fund, without
27-23    legislative appropriation, on vouchers approved by the board.  That
27-24    money shall be held exclusively for the purposes stated in this
27-25    article and may not be used or appropriated for any other purpose.]
27-26          [Text of subsec. (d) as amended by Acts 1997, 75th Leg., ch.
 28-1    334, Section 4]
 28-2          [(d)  Money in the fund shall be invested, subject to a
 28-3    policy approved by the comptroller, in the types of investments
 28-4    authorized by law for an insurer authorized to write workers'
 28-5    compensation insurance coverage in this state.]
 28-6          [Text of subsec. (d) as amended by Acts 1997, 75th Leg., ch.
 28-7    1311, Section 8]
 28-8          [(d)  Money in the fund shall be invested, subject to a
 28-9    policy developed by the board and approved by the commissioner, in
28-10    the types of investments authorized by law for an insurer
28-11    authorized to write workers' compensation insurance coverage in
28-12    this state.]
28-13          (b) [(e)]  The company [fund] shall establish and maintain
28-14    reserves for losses on an actuarially sound basis in accordance
28-15    with Article 5.61 of this code.
28-16          (c) [(f)]  The company [fund] must maintain a ratio of net
28-17    written premiums on policies written after reinsurance to surplus
28-18    of not more than 3.0 to one. [;]
28-19                [(1)  3.1 to one, for the period beginning on September
28-20    1, 1997 and extending through August 31, 1998; and]
28-21                [(2)  3.0 to one on and after September 1, 1998.]
28-22          [(g)  Not more than once in any calendar year, the board may
28-23    use up to 20 percent of any surplus that exceeds the ratio
28-24    specified in Subsection (f) of this section to assist in prepaying
28-25    or retiring before maturity the bonds issued pursuant to Article
28-26    5.76-5, Insurance Code.]
 29-1          (d) [(h)]  The company [fund] may pay cash dividends or allow
 29-2    a credit on renewal premium for [each] policyholders insured with
 29-3    the company [fund] other than a policyholder insured under Article
 29-4    5.76-4 of this code, in accordance with criteria approved by the
 29-5    board, which may account for the policyholder's safety record and
 29-6    performance.  A dividend or credit requires prior approval of the
 29-7    department.
 29-8          (e) [(i)]  The company [fund] shall file annual statements
 29-9    with the department and the commission in the same manner as
29-10    required of other workers' compensation insurance carriers, and the
29-11    commissioner shall include a report on the company's [fund]
29-12    condition in the commissioner's annual report under Article 1.25 of
29-13    this code.
29-14          [(j)  If the fund incurs a deficit for any reason, no other
29-15    insurer is liable for or subject to an assessment for that deficit.]
29-16          [(k)  (Blank).]
29-17          Text of subsec. (f) [(l)] effective until September 1, 2003
29-18          (f) [(l)]  Notwithstanding any other law, the company [fund]
29-19    may issue grants to the Texas Workers' Compensation Commission as
29-20    provided by Section 402.062, Labor Code.  The amount of the grant
29-21    is not to exceed $2.2 million for the four-year period of September
29-22    1, 1999, through September 1, 2003.  This subsection expires
29-23    September 1, 2003.
29-24                              Report to board
29-25          Sec. 14. The president shall make periodic reports to the
29-26    board with regard to the status of the company [fund] and its
 30-1    investments.
 30-2                               Policy forms
 30-3          Sec. 15. The company [fund] shall use the uniform policy and
 30-4    standard policy forms prescribed by the Texas Department of
 30-5    Insurance [State Board of Insurance] under Articles 5.56 and 5.57
 30-6    of this code.
 30-7                        Cancellation and nonrenewal
 30-8          Sec. 16. The company [fund] may cancel or refuse to renew
 30-9    coverage on a policyholder as provided by Section 406.008, Labor
30-10    Code.
30-11                       Annual report; other reports
30-12          Sec. 17. (a)  The board shall publish an independently
30-13    audited report analyzing the company's [fund] activities and fiscal
30-14    condition during the preceding fiscal year and shall file the
30-15    report with the Texas Department of Insurance.  The board shall
30-16    file the audited report with the Texas Department of Insurance for
30-17    submission simultaneously with its annual financial report.  [The
30-18    board's annual financial report shall be submitted by the Texas
30-19    Department of Insurance by the date provided for in the General
30-20    Appropriations Act.]
30-21          (b)  The company [fund] shall file with the Texas Department
30-22    of Insurance [State Board of Insurance] and the commission all
30-23    reports required of other workers' compensation insurers.
30-24           Additional audit requirements; internal audit report
30-25          Sec. 17A. (a)  [The state auditor shall periodically identify
30-26    issues related to the operational efficiency, effectiveness, and
 31-1    statutory compliance of the fund.  The fund shall include all
 31-2    issues identified by the state auditor in the fund's annual
 31-3    independent and internal audit plans.]
 31-4          [(b)]  Each person who conducts an independent audit or
 31-5    internal audit of the company [fund] shall send a copy of the audit
 31-6    report prepared by the person to the office of the state auditor.
 31-7    The state auditor shall summarize the audit reports presented under
 31-8    this subsection in an annual memorandum to the Legislative Audit
 31-9    Committee.
31-10          (b) [(c)]  The internal auditor appointed under Section 4 of
31-11    this article shall submit the internal audit report directly to the
31-12    board and shall provide a summary of the report to the governor,
31-13    lieutenant governor, and speaker of the house of representatives.
31-14    The internal auditor's summary report must include an analysis of
31-15    the use by the company [fund] of historically underutilized
31-16    businesses.  For purposes of this subsection, "historically
31-17    underutilized business" has the meaning assigned by Section 1.02,
31-18    State Purchasing and General Services Commission Act (Article 601b,
31-19    Vernon's Texas Civil Statutes).
31-20                       Examination of company [fund]
31-21          Sec. 18. (a)  The Texas Department of Insurance [State Board
31-22    of Insurance] shall conduct an examination of the company [fund] in
31-23    the manner and under the conditions provided by Articles 1.15
31-24    through 1.19 of this code for the examination of insurance
31-25    carriers.
31-26          (b)  The company [board] shall pay the costs of the
 32-1    examination [from the fund].
 32-2          (c)  The company [fund] is subject to all provisions of this
 32-3    code and to the jurisdiction of the commissioner of insurance and
 32-4    the Texas Department of Insurance [State Board of Insurance] in the
 32-5    same manner as private insurance carriers.
 32-6                   [Assistance from insurance department]
 32-7          [Sec. 19. On the request of the board, the Texas Department
 32-8    of Insurance shall provide technical assistance to the board and
 32-9    the president as reasonably necessary to implement this article.]
32-10                     Public information; accessibility
32-11          Sec. 19[A]. (a)  The company [fund] shall prepare information
32-12    of public interest describing the functions of the company [fund]
32-13    and the procedures by which complaints are filed with and resolved
32-14    by the company [fund].  The company [fund] shall make the
32-15    information available to the public and appropriate state agencies.
32-16          (b)  The board shall establish methods by which consumers and
32-17    service recipients are notified of the name, mailing address, and
32-18    telephone number of the company [fund] for the purpose of directing
32-19    complaints to the company [fund].  The board may provide for that
32-20    notification:
32-21                (1)  by a supplement or endorsement to a written
32-22    policy;
32-23                (2)  on a sign prominently displayed in the place of
32-24    business of each regional office of the company [fund]; or
32-25                (3)  in a bill for services provided by the company
32-26    [fund].
 33-1          (c)  The company [fund] shall comply with federal and state
 33-2    laws related to program and facility accessibility.  The president
 33-3    shall also prepare and maintain a written plan that describes how a
 33-4    person who does not speak English can be provided reasonable access
 33-5    to the company's [fund] programs and services.
 33-6          (d)  The board shall develop and implement policies that
 33-7    provide the public with a reasonable opportunity to appear before
 33-8    the board and to speak on any issue under the jurisdiction of the
 33-9    company [fund].
33-10                           Complaint resolution
33-11          Sec. 19A [B]. (a)  The company [fund] shall keep information
33-12    about each written complaint submitted to the company [fund].  The
33-13    information shall include:
33-14                (1)  the date the complaint is received;
33-15                (2)  the name of the complainant;
33-16                (3)  the subject matter of the complaint;
33-17                (4)  a record of all persons contacted in relation to
33-18    the complaint;
33-19                (5)  a summary of the results of the review or
33-20    investigation of the complaint; and
33-21                (6)  for complaints for which the company [fund] took
33-22    no action, an explanation of the reason the complaint was closed
33-23    without action.
33-24          (b)  For each written complaint that the company [fund] has
33-25    authority to resolve, the company [fund] shall provide to the
33-26    person filing the complaint and the persons or entities complained
 34-1    about the company's [fund's] policies and procedures pertaining to
 34-2    complaint investigation and resolution.  The company [fund], at
 34-3    least quarterly and until final disposition of the complaint, shall
 34-4    notify the person filing the complaint and the persons or entities
 34-5    complained about of the status of the complaint unless the notice
 34-6    would jeopardize an undercover investigation.
 34-7                              [Fund solvency]
 34-8          [Sec. 20. (a)  In addition to other regulatory authority
 34-9    granted the commissioner of insurance, if the commissioner finds
34-10    that the fund does not own assets at least equal to all liabilities
34-11    and required reserves, together with the minimum basic surplus
34-12    required under this article, or that the condition of the fund is
34-13    such that continuing operation of the fund is hazardous to the
34-14    public or to the policyholders of the fund, the commissioner shall:]
34-15                [(1)  notify the president and board of the finding;
34-16    and]
34-17                [(2)  furnish the fund with a written list of the
34-18    commissioner's recommendations to abate the problems.]
34-19          [(b)  If the fund fails to comply with the recommendations of
34-20    the commissioner not later than the 60th day after the date of the
34-21    recommendations, the commissioner shall notify the governor, the
34-22    lieutenant governor, and the speaker of the house of
34-23    representatives of the recommendations with which the fund is not
34-24    in compliance, together with solutions and estimations of all
34-25    fiscal implications.]
34-26                      Applicability of other statutes
 35-1          Sec. 20 [21]. (a)  The company [fund] is an insurance company
 35-2    for purposes of Subtitle A, Title 5, Labor Code (the Texas Workers'
 35-3    Compensation Act).
 35-4          (b)  All regulatory authority granted the commissioner of
 35-5    insurance relating to a [stock or] mutual insurance company is
 35-6    applicable to the company [fund].
 35-7          (c)  [Unless specifically defined as a state agency in a
 35-8    specific statute, t]The company [fund] is not a state agency.
 35-9                                   Trust
35-10          Sec. 21. The company shall establish a trust to ensure
35-11    sufficient monies are available to deal with all possible market
35-12    conditions.  Appropriate guidelines will be developed to determine
35-13    the amount of monies in the trust and procedures for withdrawal of
35-14    such monies.  All monies in the trust are subject to section 13 of
35-15    this article.
35-16          SECTION 2.  Article 5.76-4, Insurance Code, is amended to
35-17    read as follows:
35-18          Art.  5.76-4, Texas Mutual Insurance Company [Fund] as
35-19    Insurer of Last Resort.
35-20          (a)  The Texas Mutual Insurance Company [Texas Workers'
35-21    Compensation Insurance Fund] may not, except as otherwise provided
35-22    by this article and by Section 16, Article 5.76-3 of this code,
35-23    refuse to insure any risk that tenders the necessary premium and
35-24    any applicable accident prevention service fees.
35-25          (b)  If an applicant to the company [fund] would be rejected
35-26    for workers' compensation insurance under the company's [fund's]
 36-1    underwriting standards, the risk may not be rejected, but shall be
 36-2    insured at a higher premium as provided by the company's [fund's]
 36-3    rules.  The risk may be required to meet other conditions
 36-4    considered necessary to protect the company's [fund's] interests.
 36-5          (c)  The company [fund] shall develop statistical and other
 36-6    information as necessary to allow the company [fund] to distinguish
 36-7    between its writings in the voluntary market and its writings as
 36-8    the insurer of last resort.
 36-9          (d)  The company [fund] shall decline to insure any risk if
36-10    insuring that risk would cause the company [fund] to exceed the
36-11    premium-to-surplus ratios established by Article 5.76-3 of this
36-12    code or if the risk is not in good faith entitled to insurance
36-13    through the company [fund].  For purposes of this subsection only,
36-14    "good faith" means honesty in fact in any conduct or transaction.
36-15          (e)  The Texas Department of Insurance shall develop and
36-16    publish classification relativities specifically designed for the
36-17    risks insured under this article.
36-18          (f)  The company [fund] and the Texas workers' compensation
36-19    insurance facility may exchange information relating to actual or
36-20    suspected fraud by any applicant, policyholder, claimant, agent, or
36-21    insurer with respect to workers' compensation insurance policies
36-22    issued by, or applications for coverage submitted to, the facility
36-23    or the fund.  That information may be kept confidential and is not
36-24    subject to disclosure under the open records act, Chapter 424, Acts
36-25    of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a,
36-26    Vernon's Texas Civil Statutes).
 37-1          (g)  If the company [fund] suspects fraud or identifies
 37-2    conditions that may result in acts of fraud, the company [fund] may
 37-3    require an applicant for workers' compensation insurance coverage
 37-4    who is identified as a risk for purposes of Subsection (b) of this
 37-5    article to insure all business entities that are commonly owned or
 37-6    commonly controlled by the applicant.
 37-7          (h)  The company [fund] shall report the statistical and
 37-8    other information developed under Subsection (c) of this article on
 37-9    request to the Research and Oversight Council on Workers'
37-10    Compensation [Texas Workers' Compensation Research Center and the
37-11    legislative oversight committee on workers' compensation,] or to
37-12    any successor entity for research and oversight of the workers'
37-13    compensation system of this state.
37-14          SECTION 3.  TRANSITION.  (a)  The Texas Mutual Insurance
37-15    Company may exercise all the rights,  privileges, powers, and
37-16    authority of any other mutual corporation organized to transact
37-17    workers' compensation insurance business in this state, subject to
37-18    the requirements of this part.  On the effective date of this act:
37-19                (1)  the company is considered to be a continuation of
37-20    the fund; and
37-21                (2)  the company is vested with all property of the
37-22    fund.
37-23          (b)  The company may enforce all contract and statutory
37-24    rights of the fund.
37-25          (c)  Each debt, claim, and cause of action of the fund, and
37-26    all property rights, privileges, franchises, and other interests of
 38-1    the fund, remain the property of the company.
 38-2          (d)  The rights of all policyholders and creditors and the
 38-3    standing of all claims under the fund shall be preserved unimpaired
 38-4    under the company.
 38-5          (e)  Each debt, liability, and duty of the fund becomes a
 38-6    debt, liability, or duty of the company and may be enforced against
 38-7    the company as if it were incurred or contracted by the company.
 38-8          (f)  A cause of action or similar proceeding in which the
 38-9    fund was a party that is pending on the effective date of the
38-10    conversion:
38-11                (1)  is not affected by the conversion;
38-12                (2)  may be continued to be prosecuted by or against
38-13    the company; and
38-14                (3)  continues to be governed by and conducted under
38-15    Article 5.76-3 and Article 5.76-4, Insurance Code, as applicable,
38-16    as those articles existed before the effective date of this act,
38-17    and the applicable bylaws, rules, and regulations of the fund, as
38-18    amended by the company.
38-19          SECTION 4.  SEVERABILITY.  If any provision of the Act or its
38-20    application to any person or circumstance is held invalid, the
38-21    invalidity does not affect other provision or applications of this
38-22    Act that can be given effect without the provision  or application,
38-23    and to this end the provisions of this Act are declared to be
38-24    severable.
38-25          SECTION 5.  EFFECTIVE DATE.  This Act takes effect September
38-26    1, 2001.
 39-1          SECTION 6.  EMERGENCY.  The importance of this legislation
 39-2    and the crowded condition of the calendars in both houses create an
 39-3    emergency and an imperative public necessity that the
 39-4    constitutional rule requiring bills to be read on three several
 39-5    days in each house be suspended, and this rule is hereby suspended.