By Van de Putte S.B. No. 1284
77R7656 AJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to payment by certain issuers of health benefit plans of
1-3 certain claims; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3A(a), Article 3.70-3C, Insurance Code,
1-6 as added by Chapter 1024, Acts of the 75th Legislature, Regular
1-7 Session, 1997, is amended to read as follows:
1-8 (a) In this section, "clean claim" means a claim described
1-9 by Section 2, Article 21.60, of this code [means a completed claim,
1-10 as determined under department rules, submitted by a preferred
1-11 provider for medical care or health care services under a health
1-12 insurance policy].
1-13 SECTION 2. Article 3.70-3C, Insurance Code, as added by
1-14 Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997,
1-15 is amended by adding Sections 3C and 3D to read as follows:
1-16 Sec. 3C. DISPUTE RESOLUTION. (a) An insurer may not
1-17 require the use of a dispute resolution procedure with a preferred
1-18 provider if the use of the procedure results in a violation of
1-19 Section 3A(c) or (e) of this article.
1-20 (b) The provisions of this section may not be waived or
1-21 nullified by contract.
1-22 Sec. 3D. AVAILABILITY OF CODING GUIDELINES. A preferred
1-23 provider contract between an insurer and a physician must provide
1-24 that:
2-1 (1) the physician may request a copy of the coding
2-2 guidelines, including any underlying bundling, recoding, or other
2-3 payments logic, and payment schedules applicable to the
2-4 compensation that the physician will receive under the contract for
2-5 services;
2-6 (2) the insurer shall provide the coding guidelines
2-7 and payment schedules not later than the 30th day after the date of
2-8 the request; and
2-9 (3) the insurer may not unilaterally make material
2-10 revisions, including retroactive revisions, to the coding
2-11 guidelines and payment schedules.
2-12 SECTION 3. Section 18B(a), Texas Health Maintenance
2-13 Organization Act (Article 20A.18B, Vernon's Texas Insurance Code),
2-14 is amended to read as follows:
2-15 (a) In this section, "clean claim" means a claim described
2-16 by Section 2, Article 21.60, Insurance Code [means a completed
2-17 claim, as determined under Texas Department of Insurance rules,
2-18 submitted by a physician or provider for medical care or health
2-19 care services under a health care plan].
2-20 SECTION 4. The Texas Health Maintenance Organization Act
2-21 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
2-22 Sections 18D and 18E to read as follows:
2-23 Sec. 18D. DISPUTE RESOLUTION. (a) A health maintenance
2-24 organization may not require the use of a dispute resolution
2-25 procedure with a physician or provider if the use of the procedure
2-26 results in a violation of Section 18B(c) or (e) of this Act.
2-27 (b) The provisions of this section may not be waived or
3-1 nullified by contract.
3-2 Sec. 18E. AVAILABILITY OF CODING GUIDELINES. A contract
3-3 between a health maintenance organization and a physician must
3-4 provide that:
3-5 (1) the physician may request a copy of the coding
3-6 guidelines, including any underlying bundling, recoding, or other
3-7 payments logic, and payment schedules applicable to the
3-8 compensation that the physician will receive under the contract for
3-9 services;
3-10 (2) the health maintenance organization shall provide
3-11 the coding guidelines and payment schedules not later than the 30th
3-12 day after the date of the request; and
3-13 (3) the health maintenance organization may not
3-14 unilaterally make material revisions, including retroactive
3-15 revisions, to the coding guidelines and payment schedules.
3-16 SECTION 5. Subchapter E, Chapter 21, Insurance Code, is
3-17 amended by adding Article 21.60 to read as follows:
3-18 Art. 21.60. PAYMENT OF CLAIMS AND VERIFICATION OF COVERAGE
3-19 UNDER CERTAIN HEALTH BENEFIT PLANS
3-20 Sec. 1. DEFINITIONS. In this article:
3-21 (1) "Institutional provider" has the meaning assigned
3-22 by Section 1, Article 3.70-3C, of this code, as added by Chapter
3-23 1024, Acts of the 75th Legislature, Regular Session, 1997.
3-24 (2) "Plan issuer" means:
3-25 (A) an insurer that issues a preferred provider
3-26 benefit plan under Article 3.70-3C of this code, as added by
3-27 Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997;
4-1 or
4-2 (B) a health maintenance organization operating
4-3 under the Texas Health Maintenance Organization Act (Chapter 20A,
4-4 Vernon's Texas Insurance Code).
4-5 (3) "Provider" means a physician or other health care
4-6 practitioner who furnishes health care services under a license,
4-7 certificate, registration, or other similar authority issued by
4-8 this state or another state, including:
4-9 (A) a preferred provider, as defined by Section
4-10 1, Article 3.70-3C, of this code, as added by Chapter 1024, Acts of
4-11 the 75th Legislature, Regular Session, 1997; or
4-12 (B) a physician or provider, as those terms are
4-13 defined by Section 2, Texas Health Maintenance Organization Act
4-14 (Article 20A.02, Vernon's Texas Insurance Code).
4-15 Sec. 2. DEFINITION OF CLEAN CLAIM. (a) Except as provided
4-16 by Subsection (b), (c), or (e) of this section, a claim by a
4-17 provider, other than an institutional provider, is a "clean claim"
4-18 if the claim is submitted using Health Care Financing
4-19 Administration Form 1500 or another Health Care Financing
4-20 Administration form adopted by the commissioner for the purposes of
4-21 this subsection that is submitted to a plan issuer for payment and
4-22 contains the following data elements entered into the appropriate
4-23 fields on the form:
4-24 (1) the enrollee's plan identification number;
4-25 (2) the patient's name;
4-26 (3) the patient's birth date and sex;
4-27 (4) the enrollee's name;
5-1 (5) the patient's address, including street or post
5-2 office box, city, and zip code;
5-3 (6) the patient's relationship to the enrollee;
5-4 (7) the enrollee's address, including street or post
5-5 office box, city, and zip code;
5-6 (8) whether the patient's condition is related to
5-7 employment or to an auto accident or other accident;
5-8 (9) the enrollee's policy or certificate number;
5-9 (10) the enrollee's birth date and sex;
5-10 (11) the name of the plan issuer;
5-11 (12) whether there is another health benefit plan
5-12 applicable to the claim;
5-13 (13) the patient's or authorized person's signature
5-14 authorizing the release of medical or other information related to
5-15 the claim or a notation that the signature is on file with the
5-16 provider;
5-17 (14) the enrollee's or authorized person's signature
5-18 authorizing payment of medical benefits or a notation that the
5-19 signature is on file with the provider;
5-20 (15) the date of the current illness, injury, or
5-21 pregnancy;
5-22 (16) the first date of the same or similar illness or,
5-23 if the provider does not know of a previous incidence of the same
5-24 or a similar illness, the same date as entered under Subdivision
5-25 (15) of this subsection;
5-26 (17) diagnosis codes for the nature of the illness or
5-27 injury;
6-1 (18) the dates of service;
6-2 (19) place of service codes;
6-3 (20) type of service codes;
6-4 (21) procedure and modifier codes, as provided by a
6-5 nationally recognized medical data code set adopted by the
6-6 commissioner by rule;
6-7 (22) diagnosis code by specific service as prescribed
6-8 by the commissioner by rule;
6-9 (23) the charge for each listed service;
6-10 (24) the number of days or units for each listed
6-11 service;
6-12 (25) the provider's federal tax identification number;
6-13 (26) the total charge;
6-14 (27) the signature of the provider or a notation that
6-15 the signature is on file with the plan issuer;
6-16 (28) the name and address of the facility where
6-17 services were rendered, if other than home or office; and
6-18 (29) the provider's billing name and address.
6-19 (b) If the provider indicates under Subsection (a)(12) of
6-20 this section that there is another health benefit plan applicable
6-21 to the claim, the physician must, in addition to providing the data
6-22 elements required under Subsection (a) of this section, enter the
6-23 following data elements into the appropriate fields on the form if
6-24 the provider knows the information required for those fields or if
6-25 the physician is submitting a claim to a secondary payor plan
6-26 issuer:
6-27 (1) the other enrollee's name;
7-1 (2) the other enrollee's policy or group number;
7-2 (3) the other enrollee's birth date and sex;
7-3 (4) the name of the other enrollee's employer or
7-4 school; and
7-5 (5) the name of the other plan issuer.
7-6 (c) A plan issuer may, by contract with a provider, define
7-7 "clean claim" to include:
7-8 (1) fewer data elements than those required under
7-9 Subsections (a) and (b) of this section; or
7-10 (2) a data element not required under Subsections (a)
7-11 and (b) of this section if there is a field on the required form
7-12 for entry of the data element.
7-13 (d) Except as provided by Subsection (e) of this section, a
7-14 claim by an institutional provider is a "clean claim" if the claim
7-15 is submitted using Health Care Financing Administration Form UB-92
7-16 or another Health Care Financing Administration form adopted by the
7-17 commissioner for the purposes of this subsection that is submitted
7-18 for payment with the following data elements entered into the
7-19 appropriate fields on the form:
7-20 (1) the provider's name, address, and telephone
7-21 number;
7-22 (2) the patient control number;
7-23 (3) the type of bill code;
7-24 (4) the provider's federal tax identification number;
7-25 (5) the beginning and ending dates of the period
7-26 covered by the claim;
7-27 (6) the patient's name;
8-1 (7) the patient's address;
8-2 (8) the patient's birth date;
8-3 (9) the patient's sex;
8-4 (10) the patient's marital status;
8-5 (11) the date of admission;
8-6 (12) the hour of admission;
8-7 (13) the type of admission (e.g., emergency, urgent,
8-8 elective, newborn);
8-9 (14) the source of admission code;
8-10 (15) the code for the patient's status at discharge;
8-11 (16) the value codes and amounts;
8-12 (17) the revenue code;
8-13 (18) the revenue description;
8-14 (19) the units of service;
8-15 (20) the total charge;
8-16 (21) the plan issuer's name;
8-17 (22) the enrollee's name;
8-18 (23) the patient's relationship to the subscriber;
8-19 (24) the patient's or subscriber's certificate number,
8-20 health claim number, or identification number, as applicable;
8-21 (25) the principal diagnosis code;
8-22 (26) the attending physician's identification number;
8-23 (27) the signature of the provider representative or
8-24 notation that the signature is on file with the plan issuer; and
8-25 (28) the date the claim is submitted.
8-26 (e) A health maintenance organization may require a claim to
8-27 contain any data element that is required in an electronic
9-1 transaction set needed to comply with federal law.
9-2 Sec. 3. REQUEST FOR CLARIFICATION OF CLAIM. (a) A plan
9-3 issuer may in good faith request in writing that a provider provide
9-4 in writing any information required to clarify information provided
9-5 as part of a clean claim. The request is not valid unless:
9-6 (1) the provider receives the notice not later than
9-7 the 20th calendar day after the date the plan provider receives the
9-8 claim; and
9-9 (2) the request describes with specificity the
9-10 information requested, provides a detailed description of the plan
9-11 issuer's reason for requesting the information, and relates only to
9-12 information that the insurer or health maintenance organization can
9-13 demonstrate is within the scope of the claim.
9-14 (b) If a provider who receives a valid request under
9-15 Subsection (a) of this section does not provide the requested
9-16 information on or before the 20th calendar day after the date the
9-17 request is received, the 45-day payment period under Section 3A,
9-18 Article 3.70-3C, of this code, as added by Chapter 1024, Acts of
9-19 the 75th Legislature, Regular Session, 1997, or Section 18B, Texas
9-20 Health Maintenance Organization Act (Article 20A.18B, Vernon's
9-21 Texas Insurance Code), as applicable, will be extended by a day for
9-22 each day after the 20th day that the requested information is not
9-23 received by the plan issuer.
9-24 Sec. 4. PREAUTHORIZATION OF MEDICAL AND HEALTH CARE SERVICES
9-25 AND PROCEDURES. (a) A plan issuer that preauthorizes medical or
9-26 health care services or procedures shall provide to each provider
9-27 who provides services or procedures to the plan's enrollees under a
10-1 contract between the provider and the plan issuer and to each
10-2 enrollee a complete list of the services and procedures requiring
10-3 preauthorization and the procedures required to obtain
10-4 preauthorization of a service or procedure.
10-5 (b) A plan issuer that receives a request for
10-6 preauthorization of a service or procedure for which
10-7 preauthorization is required shall review the request and issue a
10-8 determination of coverage within the time frames for utilization
10-9 review required by Section 5, Article 21.58A, of this code, or by
10-10 Section 3A, Article 3.70-3C, of this code, as added by Chapter
10-11 1024, Acts of the 75th Legislature, Regular Session, 1997, as
10-12 appropriate.
10-13 (c) A plan issuer may deny preauthorization of the service
10-14 or procedure if the plan issuer certifies in writing within the
10-15 time frames described by Subsection (b) of this section that the
10-16 person to whom the service or procedure is to be provided is not
10-17 entitled to coverage under the plan and the plan issuer was
10-18 notified not later than the 30th day after the date the person's
10-19 coverage under the plan was terminated.
10-20 Sec. 5. DENIAL OF PREAUTHORIZATION OR CLAIM BASED ON MEDICAL
10-21 NECESSITY OR APPROPRIATENESS OF CARE. (a) A plan issuer may not
10-22 deny a claim for payment for a medical or health care service or
10-23 procedure because the service or procedure is not medically
10-24 necessary or appropriate care unless the procedure or service is
10-25 required to be preauthorized.
10-26 (b) A plan issuer may deny a request for preauthorization of
10-27 a medical or health care service or procedure or a claim for
11-1 payment for a service or procedure if:
11-2 (1) the plan issuer proves by clear and convincing
11-3 evidence that the service or procedure was not medically necessary
11-4 or appropriate care;
11-5 (2) a physician licensed to practice medicine in this
11-6 state who practices in the same or similar practice area as the
11-7 provider making the request or claim provides a signed, written
11-8 statement setting out the clinical reasons for the denial; and
11-9 (3) the plan issuer provides to the provider and the
11-10 enrollee the denial and the documentation required by this
11-11 subsection under the time frames for utilization review required by
11-12 Section 5, Article 21.58A, of this code, or by Section 3A, Article
11-13 3.70-3C, of this code, as added by Chapter 1024, Acts of the 75th
11-14 Legislature, Regular Session, 1997, as appropriate.
11-15 Sec. 6. VERIFICATION OF COVERAGE. A plan issuer shall
11-16 provide access to verification of coverage and benefits 24 hours a
11-17 day, seven days a week, and shall verify coverage and benefits for
11-18 an enrollee to a provider who requests the information before
11-19 rendering a covered service or procedure. A plan provider may not
11-20 require a provider to request verification of coverage and benefits
11-21 as a condition of providing coverage. After coverage and benefits
11-22 have been verified, a plan issuer may not deny payment for services
11-23 rendered unless:
11-24 (1) written notice of an error in verification is
11-25 received by the provider before the treatment or service is
11-26 performed; or
11-27 (2) the claim is subject to Section 4(c) of this
12-1 article.
12-2 SECTION 6. Section 4, Article 21.21, Insurance Code, is
12-3 amended to read as follows:
12-4 Sec. 4. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
12-5 DECEPTIVE ACTS OR PRACTICES DEFINED. The following are hereby
12-6 defined as unfair methods of competition and unfair and deceptive
12-7 acts or practices in the business of insurance:
12-8 (1) Misrepresentations and False Advertising of Policy
12-9 Contracts. Making, issuing, circulating, or causing to be made,
12-10 issued or circulated, any estimate, illustration, circular or
12-11 statement misrepresenting the terms of any policy issued or to be
12-12 issued or the benefits or advantages promised thereby or the
12-13 dividends or share of the surplus to be received thereon, or making
12-14 any false or misleading statements as to the dividends or share of
12-15 surplus previously paid on similar policies, or making any
12-16 misleading representation or any misrepresentation as to the
12-17 financial condition of any insurer, or as to the legal reserve
12-18 system upon which any life insurer operates, or using any name or
12-19 title of any policy or class of policies misrepresenting the true
12-20 nature thereof, or making any misrepresentation to any policyholder
12-21 insured in any company for the purpose of inducing or tending to
12-22 induce such policyholder to lapse, forfeit, or surrender his
12-23 insurance;
12-24 (2) False Information and Advertising Generally.
12-25 Making, publishing, disseminating, circulating or placing before
12-26 the public, or causing, directly or indirectly, to be made,
12-27 published, disseminated, circulated, or placed before the public,
13-1 in a newspaper, magazine or other publication, or in the form of a
13-2 notice, circular, pamphlet, letter or poster, or over any radio or
13-3 television station, or in any other way, an advertisement,
13-4 announcement or statement containing any assertion, representation
13-5 or statement with respect to the business of insurance or with
13-6 respect to any person in the conduct of his insurance business,
13-7 which is untrue, deceptive or misleading;
13-8 (3) Defamation. Making, publishing, disseminating, or
13-9 circulating, directly or indirectly, or aiding, abetting or
13-10 encouraging the making, publishing, disseminating or circulating of
13-11 any oral or written statement or any pamphlet, circular, article or
13-12 literature which is false, or maliciously critical of or derogatory
13-13 to the financial condition of any insurer, and which is calculated
13-14 to injure any person engaged in the business of insurance;
13-15 (4) Boycott, Coercion and Intimidation. Entering into
13-16 any agreement to commit, or by any concerted action committing, any
13-17 act of boycott, coercion or intimidation resulting in or tending to
13-18 result in unreasonable restraint of, or monopoly in, the business
13-19 of insurance;
13-20 (5) False Financial Statements. (a) Filing with any
13-21 supervisory or other public official, or making, publishing,
13-22 disseminating, circulating or delivering to any person, or placing
13-23 before the public, or causing directly or indirectly, to be made,
13-24 published, disseminated, circulated, delivered to any person, or
13-25 placed before the public, any false statement of financial
13-26 condition of an insurer with intent to deceive;
13-27 (b) Making any false entry in any book, report
14-1 or statement of any insurer with intent to deceive any agent or
14-2 examiner lawfully appointed to examine into its condition or into
14-3 any of its affairs, or any public official to whom such insurer is
14-4 required by law to report, or who has authority by law to examine
14-5 into its condition or into any of its affairs, or, with like
14-6 intent, wilfully omitting to make a true entry of any material fact
14-7 pertaining to the business of such insurer in any book, report or
14-8 statement of such insurer;
14-9 (6) Stock Operations and Advisory Board Contracts.
14-10 Issuing or delivering or permitting agents, officers or employees
14-11 to issue or deliver, company stock or other capital stock, or
14-12 benefit certificates or shares in any corporation, or securities or
14-13 any special or advisory board contracts or other contracts of any
14-14 kind promising returns and profits as an inducement to insurance.
14-15 Provided, however, that nothing in this subsection shall be
14-16 construed as prohibiting the issuing or delivery of participating
14-17 insurance policies otherwise authorized by law.
14-18 (7) Unfair Discrimination. [(a)] Making or
14-19 permitting any unfair discrimination between individuals of the
14-20 same class and equal expectation of life in the rates charged for
14-21 any contract of life insurance or of life annuity or in the
14-22 dividends or other benefits payable thereon, or in any other of the
14-23 terms and conditions of such contract;
14-24 (8) Rebates. (a) Except as otherwise expressly
14-25 provided by law, knowingly permitting or offering to make or making
14-26 any contract of life insurance, life annuity or accident and health
14-27 insurance, or agreement as to such contract other than as plainly
15-1 expressed in the contract issued thereon, or paying or allowing, or
15-2 giving or offering to pay, allow, or give, directly or indirectly,
15-3 as inducement to such insurance, or annuity, any rebate of premiums
15-4 payable on the contract, or any special favor or advantage in the
15-5 dividends or other benefits thereon, or any valuable consideration
15-6 or inducement whatever not specified in the contract; or giving, or
15-7 selling, or purchasing or offering to give, sell, or purchase as
15-8 inducement to such insurance or annuity or in connection therewith,
15-9 any stocks, bonds, or other securities of any insurance company or
15-10 other corporation, association, or partnership, or any dividends or
15-11 profits accrued thereon, or anything of value whatsoever not
15-12 specified in the contract;
15-13 (b) Nothing in clause 7 or paragraph (a) of
15-14 clause 8 of this subsection shall be construed as including within
15-15 the definition of discrimination or rebates any of the following
15-16 practices:
15-17 (i) in the case of any contract of life
15-18 insurance or life annuity, paying bonuses to policyholders or
15-19 otherwise abating their premiums in whole or in part out of surplus
15-20 accumulated from non-participating insurance, provided that any
15-21 such bonuses or abatement of premiums shall be fair and equitable
15-22 to policyholders and for the best interests of the company and its
15-23 policyholders;
15-24 (ii) in the case of life insurance
15-25 policies issued on the industrial debit plan, making allowance to
15-26 policyholders who have continuously for a specified period made
15-27 premium payments directly to an office of the insurer in an amount
16-1 which fairly represents the saving in collection expenses;
16-2 (iii) readjustment of the rate of premium
16-3 for a group insurance policy based on the loss or expense
16-4 experience thereunder, at the end of the first or any subsequent
16-5 policy year of insurance thereunder, which may be made retroactive
16-6 only for such policy year.
16-7 (9) Deceptive Name, Word, Symbol, Device, or Slogan.
16-8 Using, displaying, publishing, circulating, distributing, or
16-9 causing to be used, displayed, published, circulated, or
16-10 distributed in any letter, pamphlet, circular, contract, policy,
16-11 evidence of coverage, article, poster, or other document,
16-12 literature, or public media of:
16-13 (a) a name as the corporate or business name of
16-14 a person or entity engaged in an insurance or insurance related
16-15 business in this state that is the same as, or deceptively similar
16-16 to, the name adopted and used by an insurance entity, health
16-17 maintenance organization, third party administrator, or group
16-18 hospital service company authorized to do business under the laws
16-19 of this state; or
16-20 (b) a word, symbol, device, slogan, or any
16-21 combination of these items, whether registered or not registered,
16-22 that is the same as or deceptively similar to one adopted and used
16-23 by an insurance entity, health maintenance organization, third
16-24 party administrator, or group hospital service company to
16-25 distinguish such entities, products, or service from other
16-26 entities, and includes the title, designation, character names, and
16-27 distinctive features of broadcast or other advertising.
17-1 Where two persons or entities are using a name, word,
17-2 symbol, device, slogan, or any combination of these items that are
17-3 the same or deceptively similar and are likely to cause confusion
17-4 or a mistake, the user who can demonstrate the first continuous
17-5 actual use of such name, word, symbol, device, slogan, or
17-6 combination of these items shall not have committed an unfair
17-7 method of competition or deceptive act or practice.
17-8 (10) Unfair Settlement Practices. (a) Engaging in
17-9 any of the following unfair settlement practices with respect to a
17-10 claim by an insured, [or] beneficiary, or health care provider:
17-11 (i) misrepresenting to a claimant a
17-12 material fact or policy provision relating to coverage at issue;
17-13 (ii) failing to attempt in good faith to
17-14 effectuate a prompt, fair, and equitable settlement of a claim with
17-15 respect to which the insurer's liability has become reasonably
17-16 clear;
17-17 (iii) failing to attempt, in good faith,
17-18 to effectuate a prompt, fair, and equitable settlement under one
17-19 portion of a policy of a claim with respect to which the insurer's
17-20 liability has become reasonably clear in order to influence the
17-21 claimant to settle an additional claim under another portion of the
17-22 coverage, provided that this prohibition does not apply if payment
17-23 under one portion of the coverage constitutes evidence of liability
17-24 under another portion of the policy;
17-25 (iv) failing to provide promptly to a
17-26 policyholder a reasonable explanation of the basis in the policy,
17-27 in relation to the facts or applicable law, for the insurer's
18-1 denial of a claim or for the offer of a compromise settlement of a
18-2 claim;
18-3 (v) failing within a reasonable time to:
18-4 (A) affirm or deny coverage of a
18-5 claim to a policyholder; or
18-6 (B) submit a reservation of rights
18-7 to a policyholder;
18-8 (vi) refusing, failing, or unreasonably
18-9 delaying an offer of settlement under applicable first-party
18-10 coverage on the basis that other coverage may be available or that
18-11 third parties are responsible for the damages suffered, except as
18-12 may be specifically provided in the policy;
18-13 (vii) undertaking to enforce a full and
18-14 final release of a claim from a policyholder when only a partial
18-15 payment has been made, provided that this prohibition does not
18-16 apply to a compromise settlement of a doubtful or disputed claim;
18-17 (viii) refusing to pay a claim without
18-18 conducting a reasonable investigation with respect to the claim;
18-19 (ix) with respect to a Texas personal auto
18-20 policy, delaying or refusing settlement of a claim solely because
18-21 there is other insurance of a different type available to satisfy
18-22 all or any part of the loss forming the basis of that claim; or
18-23 (x) requiring a claimant, as a condition
18-24 of settling a claim, to produce the claimant's federal income tax
18-25 returns for examination or investigation by the person unless:
18-26 (A) the claimant is ordered to
18-27 produce those tax returns by a court;
19-1 (B) the claim involves a fire loss;
19-2 or
19-3 (C) the claim involves lost profits
19-4 or income.
19-5 (b) Paragraph (a) of this clause does not
19-6 provide a cause of action to a third party asserting one or more
19-7 claims against an insured covered under a liability insurance
19-8 policy.
19-9 (11) Misrepresentation of Insurance Policy.
19-10 Misrepresenting an insurance policy by:
19-11 (a) making an untrue statement of material fact;
19-12 (b) failing to state a material fact that is
19-13 necessary to make other statements made not misleading, considering
19-14 the circumstances under which the statements were made;
19-15 (c) making a statement in such manner as to
19-16 mislead a reasonably prudent person to a false conclusion of a
19-17 material fact;
19-18 (d) making a material misstatement of law; or
19-19 (e) failing to disclose any matter required by
19-20 law to be disclosed, including a failure to make disclosure in
19-21 accordance with another provision of this code.
19-22 SECTION 7. Article 21.21, Insurance Code, is amended by
19-23 adding Section 4A to read as follows:
19-24 Sec. 4A. CLAIMS BY HEALTH CARE PROVIDERS. (a) In this
19-25 section:
19-26 (1) "Claim" means a demand for payment:
19-27 (A) under a contract under which a health care
20-1 provider provides health care services to persons entitled to
20-2 coverage under a health benefit plan;
20-3 (B) under an assignment of benefits or other
20-4 similar agreement; or
20-5 (C) for provision by a health care provider of a
20-6 health care service covered under a health benefit plan to a person
20-7 entitled to coverage under the plan, including a service provided
20-8 in an emergency situation.
20-9 (2) "Health care provider" means a person, including a
20-10 physician, who furnishes health care services under a license,
20-11 certificate, registration, or other authority issued by this state
20-12 or another state.
20-13 (3) "Person" includes a health maintenance
20-14 organization.
20-15 (b) A person engages in an unfair method of competition or
20-16 unfair or deceptive act or practice in the business of insurance if
20-17 the person:
20-18 (1) misrepresents to a health care provider a material
20-19 fact or a policy or contract provision relating to a claim;
20-20 (2) fails to make a payment or otherwise act in good
20-21 faith with respect to a service or procedure for which coverage is
20-22 reasonably clear under a health benefit plan;
20-23 (3) fails to provide promptly to a health care
20-24 provider a reasonable explanation of the basis in the policy or
20-25 contract, as the terms of the policy or contract relate to the
20-26 facts surrounding a claim or applicable law, for denying a claim
20-27 under a health benefit plan;
21-1 (4) fails within a reasonable time to affirm or deny
21-2 coverage for a claim under a health benefit plan;
21-3 (5) refuses or fails to make or unreasonably delays
21-4 payment of a claim on the basis that other coverage may be
21-5 available or that third parties are responsible for the payment; or
21-6 (6) refuses to make payment under the health benefit
21-7 plan without a reasonable basis.
21-8 (c) For purposes of enforcement, a person who engages in an
21-9 unfair method of competition or an unfair or deceptive act or
21-10 practice under Subsection (b) of this section is considered to be
21-11 engaging in an unfair method of competition or an unfair or
21-12 deceptive act or practice defined in Section 4 of this article.
21-13 (d) The provisions of this section may not be waived or
21-14 nullified by contract.
21-15 (e) The commissioner may adopt rules as necessary to
21-16 implement this section.
21-17 SECTION 8. (a) The changes in law made by this Act to
21-18 Section 3A(a), Article 3.70-3C, Insurance Code, as added by Chapter
21-19 1024, Acts of the 75th Legislature, Regular Session, 1997, and
21-20 Section 18B(a), Texas Health Maintenance Organization Act (Article
21-21 20A.18B, Vernon's Texas Insurance Code), apply only to a clean
21-22 claim submitted on or after the effective date of this Act. A
21-23 clean claim submitted before the effective date of this Act is
21-24 governed by the law in effect immediately before that date, and
21-25 that law is continued in effect for that purpose.
21-26 (b) Sections 3C and 3D, Article 3.70-3C, Insurance Code, as
21-27 added by Chapter 1024, Acts of the 75th Legislature, Regular
22-1 Session, 1997, as those sections are added by this Act, apply only
22-2 to a preferred provider contract entered into on or after the
22-3 effective date of this Act. A preferred provider contract entered
22-4 into before the effective date of this Act is governed by the law
22-5 in effect immediately before that date, and that law is continued
22-6 in effect for that purpose.
22-7 (c) Sections 18D and 18E, Texas Health Maintenance
22-8 Organization Act (Articles 20A.18D and 20A.18E, Vernon's Texas
22-9 Insurance Code), as added by this Act, apply only to a contract
22-10 between a physician and a health maintenance organization entered
22-11 into on or after the effective date of this Act. A contract
22-12 between a physician and a health maintenance organization entered
22-13 into before the effective date of this Act is governed by the law
22-14 in effect immediately before that date, and that law is continued
22-15 in effect for that purpose.
22-16 (d) Section 4, Article 21.21, Insurance Code, as amended by
22-17 this Act, and Section 4A, Article 21.21, Insurance Code, as added
22-18 by this Act, apply only to conduct that occurs on or after the
22-19 effective date of this Act. Conduct that occurs before the
22-20 effective date of this Act is governed by the law in effect
22-21 immediately before that date, and that law is continued in effect
22-22 for that purpose.
22-23 SECTION 9. This Act takes effect September 1, 2001.