1-1 AN ACT
1-2 relating to the privacy of certain information provided by
1-3 consumers to insurers and other related entities; providing a civil
1-4 penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Title 1, Insurance Code, is amended by adding
1-7 Chapter 28A to read as follows:
1-8 CHAPTER 28A. PRIVACY
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Art. 28A.01. DEFINITIONS. In this chapter:
1-11 (1) "Affiliate" means any company that controls, is
1-12 controlled by, or is under common control with another company; and
1-13 the term "control," including the terms "controls," "controlled
1-14 by," and "under common control," has the meaning assigned that term
1-15 by Section 2(d), Article 21.49-1, of this code.
1-16 (2) "Authorization" has the meaning assigned by
1-17 Section 82.001 of this code.
1-18 (3) "Covered entity" means an individual or entity who
1-19 receives an authorization from the department. The term includes
1-20 any individual or entity described by Section 82.002 of this code.
1-21 (4) "Nonaffiliated third party" means an entity that
1-22 is not an affiliate of, or related to by common ownership or
1-23 affiliated by corporate control with, the covered entity. The term
1-24 does not include a joint employee of the entity.
1-25 Art. 28A.02. COMPLIANCE WITH FEDERAL LAW REQUIRED. (a) A
2-1 covered entity shall comply with 15 U.S.C. Sections 6802 and 6803,
2-2 as amended, in the same manner as a financial institution under
2-3 those sections.
2-4 (b) An entity that is a nonaffiliated third party in
2-5 relation to a covered entity shall comply with 15 U.S.C. Section
2-6 6802(c), as amended.
2-7 Art. 28A.03. EXCEPTION. Article 28A.02(a) of this code does
2-8 not apply to a covered entity to the extent that the entity is
2-9 acting solely as the insurance agent, employee, or other authorized
2-10 representative for another covered entity.
2-11 Art. 28A.04. HEALTH INFORMATION. This chapter does not
2-12 affect the authority of the department or another state agency to
2-13 adopt stricter rules governing the treatment of health information
2-14 by a covered entity, if another law gives the department or agency
2-15 that authority, including any laws or rules of this state related
2-16 to the privacy of individually identifiable health information
2-17 under the federal Health Insurance Portability and Accountability
2-18 Act of 1996 (42 U.S.C. Section 1320d et seq.), as amended.
2-19 (Articles 28A.05-28A.50 reserved for expansion
2-20 SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES
2-21 Art. 28A.51. RULEMAKING AUTHORITY. (a) The commissioner
2-22 shall adopt rules to implement this chapter.
2-23 (b) The commissioner shall adopt any other rules necessary
2-24 to carry out 15 U.S.C. Subchapter I, Chapter 94 (15 U.S.C. Section
2-25 6801 et seq.), as amended, to make this state eligible to override
2-26 federal regulations, as described by 15 U.S.C. Section 6805(c), as
3-1 amended.
3-2 (c) In adopting rules under this chapter, the commissioner
3-3 shall attempt to keep state privacy requirements consistent with
3-4 federal regulations adopted under 15 U.S.C. Subchapter I, Chapter
3-5 94 (15 U.S.C. Section 6801 et seq.), as amended.
3-6 Art. 28A.52. STANDARDS. The department shall implement
3-7 standards as required by 15 U.S.C. Section 6805(b), as amended.
3-8 (Articles 28A.53-28A.100 reserved for expansion
3-9 SUBCHAPTER C. ENFORCEMENT
3-10 Art. 28A.101. DUTY TO ENFORCE. The department shall enforce
3-11 15 U.S.C. Sections 6801-6805, as amended, to the extent required by
3-12 15 U.S.C. Section 6805, as amended, and this chapter.
3-13 Art. 28A.102. INJUNCTIVE RELIEF; CIVIL PENALTY. (a) The
3-14 attorney general, after conferring with the commissioner, may
3-15 institute an action for injunctive or declaratory relief to
3-16 restrain a violation of this chapter.
3-17 (b) In addition to the injunctive relief provided by
3-18 Subsection (a) of this article, the attorney general, after
3-19 conferring with the commissioner, may institute an action for civil
3-20 penalties against a covered entity or a nonaffiliated third party
3-21 for a violation of this chapter. A civil penalty assessed under
3-22 this article may not exceed $3,000 for each violation.
3-23 (c) If the court in which an action under Subsection (b) of
3-24 this article is pending finds that the violations have occurred
3-25 with a frequency as to constitute a pattern or practice, the court
3-26 may assess a civil penalty not to exceed $250,000.
4-1 (d) If the attorney general substantially prevails in an
4-2 action for injunctive relief or a civil penalty under this article,
4-3 the attorney general may recover reasonable attorney's fees, costs,
4-4 and expenses incurred obtaining the relief or penalty, including
4-5 court costs and witness fees.
4-6 SECTION 2. Not later than 30 days after the effective date
4-7 of this Act, the commissioner of insurance shall adopt the rules
4-8 required by Article 28A.51, Insurance Code, as added by this Act.
4-9 The commissioner may adopt these initial rules on an emergency
4-10 basis.
4-11 SECTION 3. This Act takes effect immediately if it receives
4-12 a vote of two-thirds of all the members elected to each house, as
4-13 provided by Section 39, Article III, Texas Constitution. If this
4-14 Act does not receive the vote necessary for immediate effect, this
4-15 Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 712 passed the Senate on
March 15, 2001, by the following vote: Yeas 30, Nays 0, one
present not voting; and that the Senate concurred in House
amendments on May 26, 2001, by the following vote: Yeas 30,
Nays 0, one present not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 712 passed the House, with
amendments, on May 23, 2001, by the following vote: Yeas 136,
Nays 0, one present not voting.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor