By Bernsen S.B. No. 1653
77R4972 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to prohibition of disclosure of defense counsel's fee
1-3 statements by liability insurers; providing a civil penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle B, Title 2, Insurance Code, is amended by
1-6 adding Chapter 103 to read as follows:
1-7 CHAPTER 103. DISCLOSURE OF FEE STATEMENTS
1-8 Sec. 103.001. DEFINITION. In this chapter, "insurer" means a
1-9 partnership, corporation, association, or other group, however
1-10 organized, admitted to do business and authorized to write
1-11 liability insurance in this state, whether primary insurance
1-12 coverage, excess insurance coverage, or umbrella insurance
1-13 coverage. The term includes a Lloyd's plan insurer, a reciprocal
1-14 or interinsurance exchange, county mutual insurance company, or
1-15 farm mutual insurance company.
1-16 Sec. 103.002. APPLICABILITY. This chapter applies only to an
1-17 insurer that issues a liability insurance policy:
1-18 (1) to or covering any resident of this state;
1-19 (2) covering liability incurred by an insured in this
1-20 state; or
1-21 (3) under which the insurer provides a defense to an
1-22 insured in a claim or action pending in this state.
1-23 Sec. 103.003. DISCLOSURE PROHIBITED; EXCEPTION. (a) Except
1-24 as provided by Subsection (c), an insurer may not disclose defense
2-1 counsel fee statements regarding services provided for an insured
2-2 to any person, other than the insured, who is not an employee of
2-3 the insurer.
2-4 (b) An insurer may not require defense counsel to disclose
2-5 the defense counsel's fee statements to any person who is not an
2-6 employee of the insurer.
2-7 (c) To the extent, if any, otherwise permitted by law, an
2-8 insurer may disclose defense counsel's fee statements to a person
2-9 who is not an employee of the insurer for the purpose of reviewing
2-10 the fee statements in connection with a lawsuit over payment of the
2-11 fees. Disclosure under this subsection does not, in itself, waive
2-12 any attorney-client privilege.
2-13 Sec. 103.004. CONTRACT PROVISIONS VOID; WAIVER PROHIBITED.
2-14 (a) A provision in a contract entered into between an insurer and
2-15 defense counsel or between an insurer and an insured that requires
2-16 or permits disclosure of the defense counsel's fee statements to a
2-17 person who is not an employee of the insurer is against public
2-18 policy and is void and unenforceable.
2-19 (b) A waiver by an insured of the requirements of Sections
2-20 103.003(a) or (b) is against public policy and is void and
2-21 unenforceable.
2-22 Sec. 103.005. DAMAGES; INJUNCTIVE RELIEF. (a) A person may
2-23 bring an action against an insurer to:
2-24 (1) recover any actual damages proximately suffered by
2-25 an insured because of a violation of Section 103.003(a) or (b); and
2-26 (2) obtain injunctive relief to prevent the threatened
2-27 or continued violation of Section 103.003(a) or (b).
3-1 (b) A court shall award reasonable and necessary attorney's
3-2 fees to a person who recovers damages or obtains injunctive relief
3-3 under this section.
3-4 Sec. 103.006. CIVIL PENALTY. An insurer who violates Section
3-5 103.003(a) or (b) is liable for a civil penalty not to exceed
3-6 $10,000 for each act of violation. At the commissioner's request,
3-7 the attorney general shall institute an action in a district court
3-8 in Travis County to recover a civil penalty under this section.
3-9 SECTION 2. This Act applies only to a disclosure that occurs
3-10 on or after the effective date of this Act. A disclosure that
3-11 occurred before that date is governed by the law as it existed
3-12 immediately before the effective date of this Act, and that law is
3-13 continued in effect for that purpose.
3-14 SECTION 3. This Act takes effect September 1, 2001.