By: Cook of Colorado H.B. No. 2095
A BILL TO BE ENTITLED
AN ACT
relating to provision of workers' compensation insurance coverage
through a certified self-insurance group; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 5, Labor Code, is amended by
adding Chapter 407A to read as follows:
CHAPTER 407A. GROUP SELF-INSURANCE COVERAGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 407A.001. DEFINITIONS. (a) In this chapter:
(1) "Administrator" means an individual, partnership,
or corporation engaged by the board of trustees of a group to
implement the policies established by the board of trustees and to
provide day-to-day management of the group.
(2) "Commissioner" means the commissioner of
insurance.
(3) "Department" means the Texas Department of
Insurance.
(4) "Group" means a workers' compensation
self-insurance group that holds a certificate of approval under
this chapter.
(5) "Modified annual premium" means premium derived
from standard premium adjusted by any advance schedule rating plan
factors.
(6) "Service company" means a person that provides
services to the group other than services provided by the
administrator, including:
(A) claims adjustment;
(B) safety engineering;
(C) compilation of statistics and the
preparation of premium, loss, and tax reports;
(D) preparation of other required self-insurance
reports;
(E) development of members' assessments and
fees; and
(F) administration of a claim fund.
(7) "Standard premium" means premium derived from the
filed rates as adjusted by experience modification factors but
before the application of any advance premium discounts.
(b) For purposes of this chapter, when used as a modifier of
"benefits," "liabilities," or "obligations," the term "workers'
compensation" includes both workers' compensation and employers'
liability.
Sec. 407A.002. APPLICATION OF CHAPTER; ESTABLISHMENT OF
PRIVATE GROUP. (a) An unincorporated association or business
trust composed of five or more private employers may establish a
workers' compensation self-insurance group under this chapter if
the employers:
(1) are engaged in the same or a similar type of
business;
(2) are members of a bona fide trade or professional
association that has been in existence in this state for purposes
other than insurance for at least five years before the
establishment of the group; and
(3) enter into agreements to pool their liabilities
for workers' compensation benefits and employers' liability in this
state.
(b) This chapter does not apply to public employees or
governmental entities.
Sec. 407A.003. MERGER OF GROUPS. (a) Subject to the
approval of the commissioner, a group may merge with another group
engaged in the same or a similar type of business if the resulting
group assumes in full all obligations of the merging groups.
(b) The commissioner may conduct a hearing on a proposed
merger and shall conduct a hearing if any party, including a member
of either group, requests a hearing.
Sec. 407A.004. GROUP NOT INSURER. A group issued a
certificate of approval by the commissioner under this chapter is
not:
(1) an insurer based on that certificate; and
(2) subject to the insurance laws and rules of this
state except as otherwise provided by this chapter.
Sec. 407A.005. CERTIFICATE OF APPROVAL REQUIRED. An
association of employers may not act as a workers' compensation
self-insurance group unless it has been issued a certificate of
approval by the commissioner under this chapter.
Sec. 407A.006. SERVICE OF PROCESS. (a) Each group shall be
deemed to have appointed the commissioner as its attorney to
receive service of legal process issued against the group in this
state.
(b) The appointment of the commissioner is irrevocable,
binds any successor in interest, and remains in effect as long as
any obligation or liability of the group for workers' compensation
benefits exists in this state.
Sec. 407A.007. HEARINGS. A hearing required under this
chapter shall be conducted by the State Office of Administrative
Hearings in the manner provided for a contested case under Chapter
2001, Government Code.
Sec. 407A.008. RULES. The commissioner shall adopt rules
as necessary to implement this chapter.
[Sections 407A.009-407A.050 reserved for expansion]
SUBCHAPTER B. APPLICATION REQUIREMENTS FOR
CERTIFICATE OF APPROVAL FOR SELF-INSURANCE GROUP
Sec. 407A.051. APPLICATION FOR INITIAL CERTIFICATE OF
APPROVAL; APPROVAL REQUIREMENTS. (a) An association of employers
that proposes to organize as a workers' compensation self-insurance
group shall file with the department an application for a
certificate of approval.
(b) The application must be in the form prescribed by the
commissioner and must include:
(1) the name of the group;
(2) the location of the group's principal office;
(3) the date of organization of the group;
(4) the name and address of each employer that is a
member of the group; and
(5) any other information reasonably required by the
commissioner.
(c) The application must be accompanied by:
(1) a nonrefundable $1,000 filing fee;
(2) proof of compliance with the financial
requirements under Section 407A.053;
(3) proof of compliance with the excess insurance
requirements under Section 407A.054;
(4) a copy of the articles of association or
declaration of trust of the group, if any;
(5) a copy of any agreements entered into with an
administrator or a service company;
(6) a copy of the bylaws of the proposed group;
(7) a copy of the agreement between the group and each
employer who is a member of the group that:
(A) secures the payment of workers' compensation
benefits; and
(B) includes provisions for payment of
assessments as provided by Section 407A.355;
(8) designation of the initial board of trustees and
administrator of the group;
(9) the address in this state where the books and
records of the group will be maintained at all times;
(10) a pro forma financial statement, in a form
acceptable to the commissioner, that shows the financial ability of
the group to pay the workers' compensation obligations of the
employers who are members of the group;
(11) proof of one of the following:
(A) payment to the group, or a bona fide promise
to pay on approval of the group, by each employer who is a member of
the group of not less than 25 percent of that member's first year
estimated annual net premium on a date prescribed by the
commissioner, which shall be considered part of the first year
premium payment of each member; or
(B) if the group is formed from a trust existing
on September 1, 2003, that the assets of the trust are sufficient to
cover the workers' compensation obligations of the trust;
(12) a $250,000 performance bond for the administrator
in the form prescribed by the commissioner;
(13) a $250,000 performance bond for the service
company in the form prescribed by the commissioner; and
(14) an indemnity agreement that meets the
requirements of Section 407A.056.
(d) Not later than the 30th day after the effective date of
the change, a group shall notify the commissioner of any change in:
(1) the information required to be filed under
Subsection (c); or
(2) the manner of the group's compliance with
Subsection (c).
(e) The commissioner shall evaluate the financial
information provided with the application as necessary to ensure
that:
(1) the funding is sufficient to cover expected losses
and expenses; and
(2) the funds necessary to pay workers' compensation
benefits will be available on a timely basis.
(f) Except as otherwise provided by this subsection, the
commissioner shall act on a complete application for a certificate
of approval not later than the 90th day after the date on which the
application is filed with the department. If, because of the number
of applications, the commissioner is unable to act on an
application in a timely manner, the commissioner may extend the
period for an additional 30 days.
Sec. 407A.052. ISSUANCE OF CERTIFICATE OF APPROVAL;
REFUSAL. (a) The commissioner shall issue a certificate of
approval to a proposed group on finding that the group has met the
requirements of this subchapter.
(b) If the commissioner determines that a proposed group
has not satisfied the requirements under this subchapter for a
certificate of approval, the commissioner shall issue an order
refusing the certificate. The order must set forth the reasons for
the refusal.
(c) On issuance of the certificate of approval, the group is
authorized to provide workers' compensation benefits.
Sec. 407A.053. FINANCIAL REQUIREMENTS. (a) To obtain an
initial certificate of approval and to be eligible to renew its
certificate of approval, each group shall comply with the financial
requirements adopted under this section.
(b) The combined net worth of all employers who are members
of the group must be at least $1 million. A member of the group may
not be required to submit an audited financial statement to
establish the $1 million combined net worth, but the group must file
a compiled report certified by a certified public accountant and
based on financial statements or tax returns to support the
existence of a combined net worth of at least $1 million for the
initial group. In the case of a group composed of a trust existing
on September 1, 2003, the trust may satisfy the financial
requirements of this section by showing that the trust has
participant surplus, including accrued participant dividends of at
least $2 million, in lieu of the requirement of the $1 million
combined net worth of its members.
(c) The group must post security in the form and amount
prescribed by the commissioner, not to exceed $200,000. The
security may be provided by a surety bond, security deposit,
financial security endorsement, or any combination of those
securities. If a surety bond is used to meet the security
requirement, the surety bond must be issued by a corporate surety
company authorized to transact business in this state. If a
security deposit is used to meet the security requirement, the
following are acceptable securities:
(1) a bond or other evidences of indebtedness issued,
assumed, or guaranteed by the United States of America or by an
agency or instrumentality of the United States of America;
(2) certificates of deposit in a federally insured
bank;
(3) shares or savings deposits in a federally insured
savings and loan association or credit union;
(4) a bond or security issued by a state and backed by
the full faith and credit of that state;
(5) a financial security endorsement described by
Subsection (e);
(6) public securities described by Subsection (f); and
(7) commercial paper payable in United States currency
that is rated in one of the two highest credit rating categories by
each rating agency.
(d) Any securities posted must be deposited in the state
treasury and must be assigned to and made negotiable by the
executive director of the commission under a trust document
acceptable to the commissioner. Interest accruing on a negotiable
security deposited under this subsection shall be collected and
transmitted to the depositor if the depositor is not in default.
(e) A financial security endorsement that is issued as part
of an acceptable contract for excess insurance coverage may be used
to meet all or part of the security requirement in lieu of a
security described under Subsection (c). A bond, security deposit,
or financial security endorsement must be:
(1) made for the benefit of the state, to be used
solely to pay claims and associated expenses; and
(2) payable on the failure of the group to pay workers'
compensation benefits that it is legally obligated to pay.
(f) Public securities may be used as security under this
section if the public securities bear interest or are sold at a
discount and are issued by any corporation, denominated in United
States dollars.
Sec. 407A.054. EXCESS INSURANCE REQUIREMENTS. (a) To
obtain an initial certificate of approval and to be eligible to
renew its certificate of approval, each group must comply with the
excess insurance requirements adopted under this section.
(b) Each group shall obtain specific excess insurance for
losses that exceed the group's retention in a form prescribed by the
commissioner. The commissioner may establish minimum requirements
for the amount of specific excess insurance based on differences
among groups in size, types of employment, years in existence, and
other relevant factors.
Sec. 407A.055. STANDARD PREMIUM REQUIREMENTS. Each group
must have an estimated annual standard premium of at least $250,000
during the group's first year of operation. Thereafter, the annual
standard premium must be at least $500,000.
Sec. 407A.056. INDEMNITY AGREEMENT REQUIREMENTS. (a) An
indemnity agreement filed under Section 407A.051 must jointly and
severally bind the group and each employer who is a member of the
group to meet the workers' compensation obligations of each member.
(b) The indemnity agreement must be in the form prescribed
by the commissioner and must include minimum uniform substantive
provisions as prescribed by the commissioner. Subject to the
commissioner's approval, a group may add other provisions necessary
because of that group's particular circumstances.
Sec. 407A.057. ADDITIONAL PERFORMANCE BOND REQUIREMENTS.
In addition to the requirements under Section 407A.051, the
commissioner may require a service company providing claim services
to furnish a performance bond of $250,000 in the form prescribed by
the commissioner.
[Sections 407A.058-407A.100 reserved for expansion]
SUBCHAPTER C. TERMINATION OF CERTIFICATE OF APPROVAL
Sec. 407A.101. CERTIFICATE OF APPROVAL; TERMINATION. (a)
A certificate of approval remains in effect until terminated at the
request of the group or revoked by the commissioner.
(b) The commissioner may not grant the request of any group
to terminate its certificate of approval unless the group has
insured or reinsured all incurred workers' compensation
obligations with an authorized insurer under an agreement filed
with and approved in writing by the commissioner. For purposes of
this subsection, those obligations include:
(1) known claims and expenses associated with those
claims; and
(2) incurred but not reported claims and expenses
associated with those claims.
[Sections 407A.102-407A.150 reserved for expansion]
SUBCHAPTER D. BOARD OF TRUSTEES
Sec. 407A.151. BOARD MEMBERSHIP. (a) Each group shall be
operated by a board of trustees composed of at least five persons
whom the members of the group elect for stated terms of office. The
trustees must be employees, officers, or directors of employers who
are members of the group. Each board member shall be a resident of
this state or an officer of a corporation authorized to do business
in this state.
(b) An administrator or service company of the group, or
owner, officer, employee of, or any other person affiliated with
the administrator or service company, may not serve on the board of
trustees.
Sec. 407A.152. BOARD GENERAL POWERS AND DUTIES. The board
of trustees shall:
(1) maintain minutes of its meetings and make the
minutes available to the commissioner;
(2) designate an administrator and delineate in the
written minutes of its meetings the areas of authority it delegates
to the administrator; and
(3) retain an independent certified public accountant
to audit the financial statements required by Section 407A.251.
Sec. 407A.153. PROHIBITED ACTIVITIES. The board of
trustees may not:
(1) extend credit to individual members for payment of
a premium, except under payment plans approved by the commissioner;
or
(2) without first advising the commissioner of the
nature and purpose of the loan and obtaining prior approval from the
commissioner, borrow any money from the group or in the name of the
group except in the ordinary course of business.
Sec. 407A.154. GROUP FUNDS. The board of trustees shall
maintain responsibility for all money collected or disbursed from
the group.
[Sections 407A.155-407A.200 reserved for expansion]
SUBCHAPTER E. GROUP MEMBERSHIP; TERMINATION; LIABILITY
Sec. 407A.201. ADMISSION OF EMPLOYER AS MEMBER. (a) An
employer who joins an approved workers' compensation
self-insurance group shall:
(1) submit an application for membership to the board
of trustees or its administrator; and
(2) enter into the indemnity agreement as required by
Section 407A.056.
(b) The board of trustees shall maintain as a permanent
record the employer's application for membership and the approval
of the application.
(c) The membership of an individual member of a group is
subject to cancellation by the group as provided by the bylaws of
the group. An individual member may also elect to terminate
participation in the group. The group shall notify the
commissioner and the commission of the cancellation or termination
of a membership not later than the 10th day after the date on which
the cancellation or termination takes effect and shall maintain
coverage of each canceled or terminated member until the 30th day
after the date of the notice, at the terminating member's expense,
unless before that date the commission notifies the group that the
canceled or terminated member has:
(1) obtained workers' compensation insurance
coverage;
(2) become a certified self-insurer; or
(3) become a member of another group.
(d) The group shall pay each workers' compensation claim for
which a member of the group incurs liability during the period of
membership. A member who elects to terminate membership or whose
membership is canceled by the group remains jointly and severally
liable for the workers' compensation obligations of the group and
its members incurred during the canceled or terminated member's
period of membership.
(e) A member of a group is not relieved of workers'
compensation liabilities incurred during its period of membership
except through payment by the group or the member of required
workers' compensation benefits.
(f) The insolvency or bankruptcy of a member does not
relieve a group or any other member of the group of liability for
the payment of any workers' compensation benefits incurred during
the insolvent or bankrupt member's period of membership.
[Sections 407A.202-407A.250 reserved for expansion]
SUBCHAPTER F. EXAMINATIONS, FINANCIAL STATEMENTS, AND OTHER
REPORTS
Sec. 407A.251. FINANCIAL STATEMENT. (a) Each group shall
submit to the commissioner financial statements audited by an
independent certified public accountant on or before the last day
of the sixth month following the end of the group's fiscal year.
(b) The financial statement must include a balance sheet,
income statement, and statement of cash flow and must be prepared on
the basis of accounting principles generally accepted in the United
States.
(c) The actuarial opinion required by this section must be
given by a member of the American Academy of Actuaries or another
qualified loss reserve specialist, as defined in the annual
statement adopted by the National Association of Insurance
Commissioners.
Sec. 407A.252. EXAMINATION. (a) The commissioner may
examine the financial condition of each group to determine the
group's ability to meet the group's obligations under this
subtitle. The commissioner may not examine a group more frequently
than once every three years unless the commissioner determines that
the group:
(1) is in an impaired financial condition; or
(2) otherwise may not be able to continue to meet the
group's obligations under this subtitle.
(b) The commissioner has full access to the records,
officers, agents, and employees of a group as necessary to complete
an examination under this section.
[Sections 407A.253-407A.300 reserved for expansion]
SUBCHAPTER G. TAXES, FEES, AND ASSESSMENTS
Sec. 407A.301. MAINTENANCE TAX FOR COMMISSION. (a) Each
group shall pay a self-insurance group maintenance tax under this
section for:
(1) the administration of the commission; and
(2) the prosecution of workers' compensation insurance
fraud in this state.
(b) The tax liability of a group under this section is based
on gross premium for the group's retention multiplied by the rate
assessed insurance carriers under Sections 403.002 and 403.003.
The tax under this section does not apply to premium collected by
the group for excess insurance.
Sec. 407A.302. MAINTENANCE TAX FOR DEPARTMENT. (a) Each
group shall pay a self-insurance group maintenance tax under this
section for the administrative costs incurred by the department in
implementing this chapter.
(b) The tax liability of a group under this section is based
on gross premium for the group's retention and does not include
premium collected by the group for excess insurance.
(c) The maintenance tax assessed under this section is
subject to Article 5.68, Insurance Code, and shall be collected by
the comptroller in the manner provided by that article.
Sec. 407A.303. COLLECTION AND PAYMENT OF TAXES. (a) The
taxes imposed under Section 407A.301 are due on the 60th day after
the date of the issuance of a certificate of approval and on the
60th day after each anniversary of the date of certificate of
approval.
(b) The commission shall compute the taxes due under Section
407A.301 and notify the group of the amounts due. The group shall
remit the taxes to the commission for deposit in the state treasury
to the credit of the commission.
(c) A group commits a violation if the group does not pay the
taxes imposed under Sections 407A.301 and 407A.302 in a timely
manner. A violation under this subsection is a Class B
administrative violation. Each day of noncompliance constitutes a
separate violation.
(d) If the certificate of approval of a group is terminated,
the commissioner or the executive director of the commission shall
immediately notify the comptroller to collect taxes as directed
under Sections 407A.301 and 407A.302.
Sec. 407A.304. PREMIUM TAX. (a) Each group shall pay to the
comptroller a premium tax on gross premiums for the group's
retention. The premium tax assessed under this subsection does not
apply to premium collected for excess insurance.
(b) The rate for the premium tax under this section is the
rate assessed under Article 4.10, Insurance Code.
[Sections 407A.305-407A.350 reserved for expansion]
SUBCHAPTER H. RATES; REFUNDS; PREMIUM PAYMENTS; RESERVES; DEFICITS
Sec. 407A.351. RATES. (a) Except as provided by
Subsection (b), each group shall use the uniform classification
system, experience rating plan, and rate relativities of the
department.
(b) A group may:
(1) use the relativities promulgated by the department
modified to produce rates in accordance with the group's historical
experience; or
(2) file its own rates with the department, including
any reasonable and supporting information required by the
commissioner.
(c) As approved by the commissioner, a group may use rating
debits or credits and optional rating plans.
(d) Rates of the group may not be excessive, inadequate, or
unfairly discriminatory.
Sec. 407A.352. AUDITS. Each member of a group shall be
audited annually by the administrator or by an auditor acceptable
to the commissioner to verify proper classifications, experience
rating, payroll, and rates. The group shall maintain a record of
the audit as part of the group's records that are available to the
commissioner during an examination conducted under Section
407A.252. The audit shall be performed at the expense of the group.
Sec. 407A.353. REFUNDS. (a) The board of trustees may
declare refundable any money for a fund year in excess of the amount
necessary to fund all obligations.
(b) The board of trustees shall give each member a written
description of the group's refund plan at the time of application
for membership.
Sec. 407A.354. PREMIUM PAYMENT PLAN; RESERVES. (a) Until
the assets of a group reach a level sufficient to cover the group's
liabilities, each group shall establish to the satisfaction of the
commissioner a premium payment plan.
(b) As long as the assets of the group remain sufficient to
cover the group's liabilities, the group may determine its own
premium plan if the premium plan is disclosed to each member at the
time of application and is filed with the commissioner.
(c) Each group shall establish and maintain actuarially
appropriate loss reserves, which must include reserves for:
(1) known claims and expenses associated with those
claims; and
(2) claims incurred but not reported and expenses
associated with those claims.
(d) Each group shall establish and maintain bad debt
reserves based on the historical experience of the group or of other
groups composed of similar employer members.
Sec. 407A.355. DEFICITS; INSOLVENCIES. (a) For purposes
of this section, "insolvent" means the inability of a group to pay
the group's outstanding lawful obligations as they mature in the
regular course of business.
(b) If the assets of a group are at any time insufficient to
enable the group to discharge its legal liabilities and other
obligations and to maintain the reserves required under this
chapter, the group shall make up the deficiency or levy an
assessment on its members for the amount needed to make up the
deficiency.
(c) In the event of a deficiency in any fund year, the
deficiency shall be made up immediately from:
(1) surplus from a fund year other than the current
fund year;
(2) administrative funds;
(3) assessments of the membership, if ordered by the
group; or
(4) any alternate method that the commissioner
approves or directs.
(d) The commissioner shall be notified before any transfer
of surplus funds from one fund year to another under Subsection (c).
(e) If the group fails to assess its members or to otherwise
make up a deficit, the commissioner shall order the group to do so.
If the commissioner determines that the group is in a hazardous
financial condition, the commissioner may order the group to
rectify the condition through an alternate method under Subsection
(c)(4).
(f) If the group fails to make the required assessment of
its members after the commissioner's order under Subsection (e), or
if the deficiency is not fully made up, the group shall be deemed to
be insolvent.
(g) If a group is liquidated, the commissioner shall secure
release of the security deposit and levy an assessment on the
members of the group in an amount determined necessary by the
commissioner to discharge all liabilities of the group, including
the reasonable cost of liquidation.
[Sections 407A.356-407A.400 reserved for expansion]
SUBCHAPTER I. DISCIPLINARY ACTIONS; PENALTIES
Sec. 407A.401. PROHIBITED SOLICITATION. In connection
with the solicitation of membership in a group, a person may not
make an untrue statement of a material fact, or omit to state a
material fact necessary to make the statement made, in light of the
circumstances under which it is made, not misleading.
Sec. 407A.402. FINES. After notice and an opportunity for
a hearing, the commissioner may impose a fine on any person or group
found to be in violation of this chapter or a rule adopted under
this chapter. A fine assessed under this section may not exceed
$1,000 for each act or violation and may not exceed $10,000 in the
aggregate. The amount of any fine assessed under this section shall
be paid to the commissioner and deposited in the state treasury.
Sec. 407A.403. CEASE AND DESIST ORDERS. (a) After notice
and an opportunity for a hearing, the commissioner may issue an
order requiring a person or group to cease and desist from engaging
in an act or practice found to be in violation of this chapter or a
rule adopted under this chapter.
(b) On a finding, after notice and opportunity for a
hearing, that a person or group has violated a cease and desist
order issued under this section, the commissioner may:
(1) impose a fine not to exceed $1,000 for each
violation of the order, not to exceed an aggregate fine of $100,000;
(2) revoke the group's certificate of approval or any
license held by the person issued under the Insurance Code; or
(3) impose the fine and revoke the certificate or
license.
Sec. 407A.404. REVOCATION OF CERTIFICATE OF APPROVAL. (a)
After notice and an opportunity for a hearing, the commissioner may
revoke a group's certificate of approval if the group:
(1) is found to be insolvent;
(2) fails to pay a tax, assessment, or special fund
contribution imposed on the group; or
(3) fails to comply in a timely manner with this
chapter, a rule adopted under this chapter, or an order of the
commissioner.
(b) In addition, the commissioner may revoke a group's
certificate of approval if, after notice and an opportunity for
hearing, the commissioner determines that:
(1) a certificate of approval issued to the group was
obtained by fraud;
(2) there was a material misrepresentation in the
application for the certificate of approval; or
(3) the group or its administrator has
misappropriated, converted, illegally withheld, or refused to pay
on proper demand any money that belongs to a member, an employee of
a member, or a person otherwise entitled to the money and that has
been entrusted to the group or its administrator in their fiduciary
capacities.
SECTION 2. Section 401.011(27), Labor Code, is amended to
read as follows:
(27) "Insurance carrier" means:
(A) an insurance company;
(B) a certified self-insurer for workers'
compensation insurance; [or]
(C) a certified self-insurance group under
Chapter 407A; or
(D) a governmental entity that self-insures,
either individually or collectively.
SECTION 3. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2003.
(b) A workers' compensation self-insurance group created
under Chapter 407A, Labor Code, as added by this Act, that is issued
a certificate of approval by the commissioner of insurance under
that chapter, may offer workers' compensation insurance coverage
beginning January 1, 2004. Chapter 407A, Labor Code, as added by
this Act, applies only to a claim for workers' compensation
benefits based on a compensable injury that occurs on or after
January 1, 2004. A claim based on a compensable injury that occurs
before that date is governed by the law in effect on the date that
the compensable injury occurred, and the former law is continued in
effect for that purpose.