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.