By:  Eiland                                                       H.B. No. 2787



A BILL TO BE ENTITLED

AN ACT

relating to Self-Insurance Trusts.                                            
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Article 21.49-4, Insurance Code, is amended as 
follows:          
	(a)  In this article:                                                          
		(1)  "Physician" means a person licensed to practice 
medicine in this state.
		(2)  "Dentist" means a person licensed to practice 
dentistry in this state. 
		(3)  "Health care liability claim" means a cause of 
action against a physician or dentist for treatment, lack of 
treatment, or other claimed departure from accepted standards of 
health care or safety which proximately results in injury to or 
death of the patient, whether the patient's claim or cause of action 
sounds in tort or contract.
	(b)  An incorporated association, the purpose of which, 
among other things, shall be to federate and bring into one compact 
organization the entire profession licensed to practice medicine 
and surgery or dentistry in the State of Texas and to unite with 
similar associations of other states to form a nationwide medical 
association or dental association, may create a trust to 
self-insure physicians or dentists and by contract or otherwise 
agree to insure other members of the organization or association 
against health care liability claims and related risks on complying 
with the following conditions:
		(1)  the organization or association must have been in 
continuing existence for a period of at least two years prior to the 
effective date of this Act;
		(2)  establishment of a health care liability claim 
trust or other agreement to provide coverage against health care 
liability claims and related risks; and
		(3)  employment of appropriate professional staff and 
consultants for program management.
	(c)  The trust may purchase, on behalf of the members of the 
organizing association, medical professional liability insurance, 
specific excess insurance, aggregate excess insurance, and 
reinsurance, as in the opinion of the trustees are necessary.  The 
trust fund is further authorized to purchase such risk management 
services as may be required and pay claims that arise under any 
deductible provisions.
	(d)  The trust investment powers and limitations shall be the 
same as those of any state bank with trust powers.  The trust shall 
adopt rules [and regulations] to guarantee all contingent 
liabilities in the event of dissolution.
	(e)  The trust is not engaged in the business of insurance 
under this code and other laws of this state and the provisions of 
any chapters or sections of this code are declared inapplicable to a 
trust organized and operated under this article, except as 
identified in this article, provided that the Texas Department 
[State Board] of Insurance may require any trust created under this 
article to satisfy reasonable minimum requirements to insure the 
capability of the trust to satisfy its contractual obligations.
	[f  On request, the trust shall furnish such books, records 
and documents as are required by the State Board of Insurance to 
fulfill its obligations under Subsection (e) of this article 
relating to the solvency of the trust.]
	(f) [(g)]  The trust shall file [, for informational purposes 
only,] all rates and forms with the Texas Department of Insurance. 
[State Board of Insurance.]  Such rate and form filings are subject 
to the rate and form requirements of Article 5.13 - 2, Insurance 
Code.
	(g) [(h)]  The trust shall file with the Texas Department of 
Insurance [State Board of Insurance] all liability claims reports 
which are required pursuant to Sections 38.151 - 38.162 [Articles 
1.24A and 1.24B], Insurance Code.
	(h) [(i)]  If the trust is found to be in violation of or to 
have failed to comply with any provision of this code or any duly 
promulgated rule [or regulation] of the Texas Department of 
Insurance, [State Board of Insurance which is declared] applicable 
to a trust organized and operated under this article, the 
department [State Board of Insurance,] may order sanctions pursuant 
to Sections 82.001 - 82.003 and 82.051 - 82.056 [7, Article 1.10,] 
Insurance Code, [may order sanctions] for such violation.
	(i) [(j)]  The trust shall file its independently audited 
annual financial statement with the Texas Department of Insurance 
pursuant to Article 1.15A, Insurance Code [State Board of 
Insurance; this audit shall not be considered an examination 
document].
	(j)  The trust is subject to the examination authority of the 
Texas Department of Insurance pursuant to Article 1.15, Insurance 
Code.